The Blog of Marc Gayle

Banning VOIP calls can kill innovation

2014-06-30T19:01:00-05:00

The recent articles & discussions about the moves of LIME & Digicel to block all VOIP traffic on their network is disturbing for a number of reasons. The two biggest reasons are that it stifles consumer choice and creates larger hurdles for budding entrepreneurs (aka kills innovation).

For those not familiar with the way this works, what Digicel & LIME have done is said…you pay me $X per month for access to the internet. Then they go to the services that you use most - YouTube, WhatsApp, Skype, Viber, Facebook, Netflix and any other popular services - and begin charging them for YOU to be able to access their site/service in a reliable way. If those services don’t pay them, you - as a consumer - have wasted your money. In other words, they “double dip” - by getting paid on both ends.

This creates a two-tiered internet, where the companies with the most money get the “fast lane” and the smaller upstarts that don’t have a large warchest of cash get the “slow lane”. Let us bring this discussion home to discuss relevant examples. As a co-founder of 10 Pound Pledge - where our customers pay us for an in-home workout & nutrition guide where they can lose 10 pounds in 5 weeks - if our customer base continues to grow at the rate it has been since the launch a few weeks ago, within a short period of time there will be a non-trivial amount of Digicel & LIME subscribers potentially streaming our videos on their phones, tablets or computers. This action by Digicel & LIME today is a warning that they will come to us - a small technology & fitness startup built in Jamaica by Jamaicans - and start to demand payment. If we don’t pay them, then our customers get a bad streaming experience? That prospect is quite frightening and gives us pause.

We are not alone. This could happen to any of our friends across the local technology landscape. A good friend of mine, Gordon Swaby the founder of EduFocal, also has been doing a tremendous job growing usage on EduFocal and will eventually be getting into video. Imagine when students from all across Jamaica are improving their test scores & academic performance by learning through EduFocal on their Digicel & LIME devices and Digicel & LIME turn to Gordon and ask him for payment.

This policy is in effect anti-growth. As you succeed, you get taxed by these large telecoms. That has the potential to be innovation & growth killing.

10 Pound Pledge & EduFocal are just two obvious examples. The same could be said for AgroCentral - run by my friend Jermaine Henry - the up and coming clearing house for prices of fresh produce. In my humble opinion, this has the potential to change how we buy fresh produce in Jamaica. Yet…they are just getting started and should they become as successful as we all want them to, they now have to worry about being taxed by two of the largest telecom providers in Jamaica?

Slippery Slope & Future Implications

This is a very slippery slope and what is to stop these telecoms from going even further. If they get away with this, then what happens if they decide to launch a music service. Immediately, all music streaming services and radio stations - Zip 103, FameFM, Fyah 105, Jamaicans Music, iTunes, Spotify, SoundCloud and any future aspiring music tech entrepreneur to name just a few - have to start making a payment to the telcos. Think this is far-fetched? I am sure I am not the only one that has been getting SMS messages from Digicel about Loop - the recently launched news company that they seem to be pushing. Will OGNR, The Gleaner, The Observer and others have to start paying Digicel to get “fast lane access” too?

This is a familiar struggle that many countries seem to be dealing with. It seems that many telecoms and media companies can’t resist the urge to double dip. The OUR did a wonderful job introducing competition into the telecoms industry by granting the licenses to the telecoms over the last few decades. It is important for the growth of our economy - to preserve consumer choice and not deter much needed innovation - that they not allow these innovation killing, consumer restricting policies to take hold.

We sympathize with the plight of the telecom companies with WhatsApp recently announcing that they will be rolling out voice call features, and the impact that may have on their voice revenue - but using a sledgehammer to block all VOIP traffic and selectively giving the highest bidders the fastest lanes on the network can’t possibly be the solution.

Today it is VOIP from some services. What is the next stop? Where does it end?

It needs to stop right now. End right here.

We are all equally to blame for the banking tax

2014-04-20T20:12:00-05:00

Many of my esteemed colleagues have weighed in on the latest bank taxes imposed and their potential effects.

I respect their opinions and their intellect, but I would just like to address the elephant in the room. When all is said and done, the responsibility for this bank tax lies with us. The people. The silent majority. To be clear, I hate the idea of piecemeal tax implementation and would much rather the government implement wholesale tax reform. But, as Deika Morrison replied to me and said…it is not likely that any government will actually do this.

Now…don’t get me wrong. I actually agree with Dr. King’s assertion that given the current state of our fiscal house, the bank tax has many benefits. That is, the core problem the government currently faces is that of raising revenue. Many people avoid & evade taxes. So while they can escape the reach of the tax collection agency, they can’t escape things that they have to use on a regular basis - like banking transactions, phone credit, buying gas, etc. So it makes sense to tax those things, because in an ‘elegant’ way it broadens the tax base and costs little the gov’t. All they do is collect bigger checks from the same companies. From an economic & practical point of view…it’s perfect.

As unpleasant as this may be, because those that have been tax compliant do have to bear the burden for those that are not, we are all equally as culpable for the current state of affairs.

Not just those that pay bribes and do blatantly illicit activities, but everybody else that knows that these activities take place and say nothing. You know your neighbor is stealing light/water, yet don’t report them to JPS/NWC. You know that the ‘ridiculously cheap’ phone cases that you are buying from a “reliable” client were imported and escaped duty, yet you just look the other way. You know you shouldn’t speed or drive like a madman, but when you do you “beg a bligh” or “buy the officer a Guinness”. You knew that earning 25% interest from a government bond must have been too good to be true, but the returns were too great. You knew that those generous Air Jamaica ‘buddy passes’ were too sweet to give up, asking a “doctor friend” to write up a prescription for your friend in your name so you can use your gov’t issued health insurance to help them, and when someone was buying goods/services from your company and asked for the “No Receipt” discount in exchange for the business, were all wrong but you went ahead with them either way.

Now please don’t misunderstand me…I am not condemning/judging anyone in particular or pointing fingers. God knows there are times when I have looked the other way, knowing full well that I am benefitting from the State’s demise. But we would all do well to be conscious of the fact that as much as our policymakers have made bad decisions and been corrupt over the years, we are equally culpable because there is no way they are corrupt in 100% secrecy. Someone knows, quite often many people know. No one says anything. Very few hold anyone accountable. It is because everyone knows that they won’t be held accountable why it is perpetuated. Everyone knows, so no one knows.

It is also easy to point fingers at the “corrupt” politicians - when it is the bias inherent in our society towards corruption and “bun informer” mentality that has gotten us into this mess. If we all start rejecting those small infractions, start rebuking people when they litter, reporting known acts of rule-breaking, unethical or corrupt behavior, and generally just put pressure on everybody to behave better and start looking after our country that things will get better.

You can’t expect to be able to stay silent, not put yourself at risk, but have the State operate flawlessly and make only long-term best interest decisions on behalf of your kids.

So before you complain about the bank tax, and any other tax that will have to be imposed on us due to the endemic “revenue leakage” - please keep in mind that as innocent and angellic as you think you are, you are equally to blame for this current predicament as are the politicians.

Oh…and to those politicians, or families and friends of politicians, that claim “disbelief” that people could be so troubled over “just $1” - if it were just $1 the gov’t wouldn’t implement it. It’s not just $1, which is why they have imposed it. They have a large hole to fill and “just $1” won’t fill it. So stop being disingenuous.

For everybody else, you no longer have the luxury of feigning ignorance of your own culpability.

Call to arms for all bloggers product launch upcoming

2013-12-09T13:17:00-05:00

I have a product launch coming up, and would love as much New Media help as I can get.

We will be doing a lot of traditional PR, but I feel like this would be a wikid opportunity for the Caribbean new media scene to support one of their own.

To let me know you are interested, email me at marc.gayle+launch@gmail.com.

In terms of help, I would love at least 1 article from anyone that runs a blog - with a link to the product page when it launches.

I can get you content or an angle to write up, customized for your audience (if you know what your audience is).

The first easy step you can do for me is to retweet this tweet.

Not only do I need your actual blogging help, but if you can pass along this message to anyone else you know that has a blog, tweets, IGs, anything to do with New/Social Media.

We will have lots of stuff to retweet, post on IG, content for blogs of all types, the whole nine yards. So if you have a blog, a twitter account, an IG account, FB or any other type of “Social Media” account and are interested in helping with the launch, please get in touch at marc.gayle+launch@gmail.com.

I am trying to pull off a Tim Ferris - 4 Hour Workweek Book launch - where there was so much groundswell from new media that traditional media couldn’t ignore him.

Look forward to any (and all assistance) I can get from you guys.

P.S. This will be a digital fitness product that anyone with a credit card from anywhere can buy - we are going after the “New Years Resolutions” storyline and “losing weight in the New Year”, etc.

Why currently listed JJSE firms should look forward to an increased tax rate

2013-10-02T19:04:00-05:00

I think it is safe to agree that the 10-year tax incentives for companies that list on the Junior Stock Exchange has been a real incentive. Policymakers did a good job of coming up with a package that is enticing to small businesses that need growth capital.

With the many successful listings we have seen to date, it can be deemed a roaring success.

The issue now is that in this current economic environment, one of the pre-requisites for successfully completing the IMF deal is an Omnibus Tax Incentive Bill, which in the current form will in effect eliminate the tax holiday that junior stock exchange firms enjoy for the first 10 years after they have listed (5 years of no tax, 5 years of half tax).

As can be expected, there has been push back.

The problem is that policymakers and bureacrats can’t be trusted to manage the fiscal affairs of this country properly. Every Tom, Dick and Harry will want a waiver - and there is no sign that they have enough backbone to say no. So, the solution that the IMF is insisting is a flat tax rate across the board, and no incentives, no waivers, no exceptions.

So let us examine the rationality behind why it makes sense for firms that are currently enjoying the tax breaks to give it up.

We have to make a few assumptions:

Let us start with the “worst case” - a firm that lists the day before the bill is made law, therefore they get $0 in tax benefits.
The firm has significant growth prospects, otherwise they wouldn’t need growth equity capital.
The management is not interested in just sucking cash from the company in the early years, but wants to grow the company.
The firm will eventually migrate to the JSE and be a major player in the private sector.

Sample Scenario before Omnibus Bill

Revenue before listing was $50M JMD/year.
At the end of the 10-year period, the firm is 10X bigger (i.e. $500M/year revenue - inflation adjusted) than when it started
The firm is still growing at a reasonable 20%/year
The firm has a net profit margin of 15%.
Corporate Tax Rate: 25%
Taxes paid: $0 for 10-years - due to the wavers.

For the 10-year period after the incentives expire, their Total Tax Bill will be roughly: $584M JMD.

Sample Scenario after Omnibus Bill

The same assumptions for the firm’s performance
Corporate Tax Rate: 15% (down from 25%)

For the 10-year period after the incentives would have expired, their Total Tax Bill will be roughly: $350.44M JMD.

For a total tax savings of: $233.68M JMD.

The beautiful thing about the latter scenario is this tax rate should (in theory) stay that rate forever - so the longer it stays that low is the more the benefits compound over the long term. If you assume the average life of a listed company in Jamaica - Life of Jamaica, Broilers, etc. - the tax savings over the long term, in aggregate, will likely be huge (assuming that future governments can resist the urge to raise the rate).

Another good thing that removing the tax incentive does is that it will encourage the JJSE listed firms to reinvest all/most of their profits back into the company - rather than taking it out and paying taxes on it. That will likely increase their growth rate, and increase the tax savings when they eventually start to declare a profit and pay taxes on that profit.

I have done up a basic spreadsheet with these scenarios that you can play with.

So in reality, by removing the tax incentive - and encouraging growing companies to keep reinvesting in growth that is actually a better outcome for the long-term health of the economy, and for the shareholders of the company as these numbers show. A lower tax rate is also beneficial to smaller companies before they get to the JJSE stage, so it increases the likelihood that there will be more listings.

Caveats

Naturally a lot of the benefits depend on the final corporate tax rate. If it is even lower than 15%, say 12.5% then the case looks even more compelling.

It also depends on the self-restraint of future policymakers to not try and raise the low rate and eradicate all the gains.

Depending on how the bill is written - and implemented, it has the potential be a win-win for all involved including those currently paying 0% corporate tax rate.

Thanks to Gordon Swaby for inspiring this post with a FB post today, and for proof-reading it.

Deploying octopress blog to an existing gh-pages static site

2013-09-21T05:17:00-05:00

The issue I faced was that I have an existing static site hosted on Github via gh-pages. That is just regular HTML/CSS/JS. It works perfectly.

But, I wanted to add an elegant Octopress blog to that same static site - so I can have both my company site & blog hosted on Github’s powerful hosting platform.

This is how I pulled it off.

Get the folder of your static site all setup like normal. Get all the pathings right for your /img, /css, /js, etc.
Follow all the directions in the Octopress setup and deployment guide.
Install the theme you want for Octopress (it is important to do this step before the rest of the steps, because everytime you install a theme it resets your index.html).
Follow these instructions about moving your blog index page - make sure to update the Rakefile, per the instructions.
Then use these settings in your files:

_config.yml (you can customize all the other settings, but these worked for me)

url: http://5kmvp.com
subscribe_rss: /atom.xml
root: /
permalink: /blog/:year/:month/:day/:title/
source: source
destination: public
category_dir: blog/categories

Rakefile

public_dir      = "public"    # compiled site directory
source_dir      = "source"    # source file directory
blog_index_dir  = 'source/blog'    # directory for your blog's index page (if you put your index in source/blog/index.html, set this to 'source/blog')

Then once that is done, you copy your existing static site (with the exact structure that you setup earlier) into your /octopress/source/ folder - so yours should look similar to mine here.

What you will notice is that now Octopress will publish to /blog (which is a subfolder called ‘blog’ in your ‘source’ folder).

Basically the way Octopress works is that at it’s core, it copies everything from /source/ except for a few exceptions (all folders that start with _, etc.)

If you have any conflicts with your folders (e.g. if you have /img/ and Octopress has /images/) then just copy both if you don’t want have to update your paths in all your HTML files. It’s no big deal.

That’s pretty much it.

Remember that rake preview and rake generate are your friends. Use them religiously.

If you have any issues with styling, then you may need to play around with some of the paths in the various variables in your _config.yml and Rakefile a bit. But you should’t have to, because all of these values worked for me - and I did A LOT of playing around.

Special Note: You should end up with your static site index.html in the root folder of the generated site - you can see the source here and the generated version here - and you should also have an octopress generated index in the /blog/ subfolder - again…the source here and generated version here.

You can always just look at my entire source to see what I did.

Most other setup & deployment instructions apply and work fine (including remembering to include a CNAME file for your custom domain).

Whenever you want to change one of the static sites - i.e. a non-octopress file - then edit/update it locally and use rake deploy when you are done (as opposed to a git push like you would for a normal non-static site hosted on gh-pages).

Remember to backup your entire repo to a source or master branch or some other branch, so you can always revert to it if you mess stuff up.

Good luck and I hope this saves some poor soul from spending weeks trying to figure this out.

Avoiding market failure should be your only focus

2013-03-02T16:01:48-05:00

I am assuming that whatever you are working on, whether it is your instrument playing skills, programming chops, or a tech startup, that you want to work on it/do it for a long time. I mean many, many years.

That doesn’t mean that you want to continue working on the same tech startup or you want to continuing hacking away at PHP (only) for the next 30 years. It just means that you want to continue building startups, or programming for the better part of the next 30 years.

Given that, your #1 priority should be avoiding market failure. Paul Graham simplified it to ‘make something people want’. But it is broader than just making. It is, whatever you are doing - e.g. playing the violin, make sure other people are interested in what you are doing (and how you are doing it). Really interested. i.e. follow you on Twitter and jones for every video you post, every mp3 you give away free, every album of photos you release, every product iteration you roll out.

There may not be a direct correlation between the number of people interested in what you do, and the number of customers you have, but once you can get people interested (i.e. consistently avoid market failure) and keep them interested - you have a much higher probability of financial success. By financial success I mean, the ability to earn a living doing what you love - so you can continue doing what you love for a long time (in a sustainable way).

It sounds so simple, but it is very hard. In fact, it is the hardest thing to do - because the market is ruthless. People have seen all manners of things, and their tastes change. They get bored and tired easily. So to build a sustainable following, you have to be sincere and you have to be innovatively unique. It takes a long time, and there are no shortcuts.

That’s the hard part. That’s the only thing that should matter. So, don’t worry about raising money, using the best/latest technology, running 200 A/B tests looking for that copy that will improve your conversions by 20% or anything else that is inconsequential in the early days. Once you focus on avoiding market failure - that forces you to figure out how you can add value in a way that no one else is doing currently, which will dictate everything else. It will dictate the technology you ultimately use, your marketing plan, the features you implement, the team you build, and the investors you raise money from.

That’s the great thing about helping people build their minimum viable product. The best part is helping them figure out/begin to figure out, where that unique value proposition is.

Once you avoid market failure - or conversely achieve product/market fit - the market will forgive you for all the other mistakes. They will forgive your servers constantly crashing for the first few months/years, your PR gaffes, your sloppy marketing page copy and even your animated gifs. As if not having to worry about those issues killing you, an added bonus is….once you have done the hard-work on your own….you will have maximum control and maximum leverage. When you want to raise money, it will be on your terms. You can hire the people you want, because you will have the pick of the litter. It won’t be a cakewalk, but in comparison to avoiding market failure it will sure feel like it.

If the market never notices you, and you fail there first….then the upside is you won’t need to worry about all those other problems.

If you liked this, you should follow me on Twitter.

How a $20 MVP has made me $X0,000

2013-01-22T19:15:28-05:00

For months before I launched 5KMVP, I had been running experiments on Hacker News.

Part of the experiment was to validate my thesis.

Thesis: At some fixed price point, people are willing to invest in building an MVP.

After getting some leads (and projects), over the space of a few months, from HN and talking to many people (from Twitter and HN), a few things jumped out at me.

The $5K price point is perfect for what I want to do. It is high enough to weed out people that would likely not value what I bring to the table. It is low enough to reduce friction to get potential customers to say ‘Yes’. It also provides the perfect jumping off point for larger projects. I tried other price points too, from $3K to $7K to $10K. $5K works best for MVPs.
Fixed budget & timeline work well - leaving variable scope (to be negotiated with the client). Given that this is an MVP, that works well - because the focus should be on the core ‘viable product’ portion of the MVP. So bells & whistles need to be cut.
Targeting customers that know what an MVP is, also helps to improve the quality of clients I interact with. They don’t want a web page that their cousin’s son-in-law’s first cousin can build for them, when s(he) is not fixing computers. They want helping figuring out what is their MVP and how should they build it.

These realizations gave me the confidence to setup a landing page for a service dedicated to building minimum viable products.

The next decision I had to make was….what will my landing page do? Given that I am a Rails dev, will it be a Rails App? I spoke to a few trusted colleagues and got a variety of responses. Some feedback I got was that I should build a minimalist Rails App that handles the entire engagement (i.e. someone fills out a form, and it pushes that form down a funnel and has all these nice features that allow them to pay easily and keep track of the project as it progresses).

I liked the idea at first, but it didn’t quite sit well with the notion of an MVP. What kept playing in a loop in my head is that I needed to validate the $5K MVP idea before devoting any significant development time to building an app for it.

So I bought a theme from Themeforest (roughly $20) and decided to go meta. Make as minimal an MVP as I can, that validates my hypothesis.

I have one call to action button which is a simple ‘mailto:’ button - that launches your email client. Perfect? No…..but it gets the job done. People that want an MVP built, don’t want to have to interact with a fancy system. They just want the quickest and easiest way to get in touch with me. Email is that way.

I worked on the copy, got my portfolio together and just put it together in a day or 2.

Then, I used Github Pages to host it (free) along with Google Apps (also free) and launched.

Tweeted it, posted on HN, and wrote a guest post on Techcrunch.

I am pleased to announce that it has been validated many times over.

I have gotten multiple projects directly from 5KMVP - at least 1 of which is a multiple of a 5KMVP. It is a multi-phase project that is broken up into manageable chunks.

The best thing about this experiment is that 5KMVP is proof positive of me eating my own dogfood. It is also a “successful” case study, about correctly deciding what your MVP should be based on what your business goals are.

If you liked this, you should follow me on Twitter.

IE 8 Filter Style + Heroku Rake Asset Pre-Compile Error

2013-01-21T19:47:00-05:00

If you are getting an error that looks like this:

could not connect to server: Connection refused Is the server running on host "127.0.0.1" and accepting TCP/IP connections on port xxxx?

…when pushing your Rails 3.2+ app to Heroku, there could be two problems at play.

If that is all that you are seeing, then it likely means that Heroku is trying to initialize your app when it does `rake asset:precompile`. The issue is that there is no DB configured in a `non-initialized` state, so Heroku throws a fit.

To fix that, they have a nice guide here (which basically involves just adding 1 line to your `config/application.rb` file).

However, if you are seeing something like this:

Running: rake assets:precompile
      rake aborted!
      Invalid CSS after "...: alpha(opacity": expected comma, was ":0);"
      (in /tmp/build_1lypjy898u7o0/app/assets/stylesheets/application.css.scss)     (sass):3665

Then it is very likely that you have another issue.

Apparently, the common css style rule that is used to apply an opacity filter to CSS objects in IE8 and below is illegal syntax.

Meaning that: `filter: alpha(opacity:0);` is an illegal CSS rule. As a result of that, SASS throws an error when it’s parser comes across these rules - which causes the entire precompile process to fail.

It is apparently a problem discussed and addressed in Rails before, but given that it is a SASS issue - and also that it involves illegal CSS syntax - the Rails maintainers have decided not to do anything to allow this call (understandably so).

So…the simple fix is to comment out all occurrences of that call in your stylesheets. IE9 allows the regular, `opacity: 0;`, I believe - so you should be fine for all browsers in the future.

An easy way to test this further, locally, is just to create a new git branch and run ‘rake asset:precompile’. You will see the errors it generates locally and you can work your way through it like that.

However, I went through many different solutions and commenting them out - turned out to be the easiest.

Let me know if you come up with any other solutions.

You should follow me on Twitter here.

Wanted for the Caribbean: Digital Craftsmen.

2012-12-20T15:41:00-05:00

Whenever I think about our regional tech industry, I struggle to understand the disconnect between what other people are doing in the world and what we are doing. There are many exemplary tech companies from all over the world that compete well on the world stage. There are at least two from Australia, many from China, India, and many other countries.

What creates even more confusion on my part is when I look at our other local industries. The Caribbean and Jamaica in particular have many industries that we participate on the world stage in and excel.

From the obvious reggae & dancehall break-out mainstream artistes (The Marley Men, Sean Paul, Shaggy) to less mainstream but with major followings (Mavado, Kartel, Tami Chynn, Jah Cure, Beres Hammond, etc.).

Not to mention our tourism product. That is by definition a global competitor, and we also excel there - with Jamaica being one of the few Caribbean territories to experience an increase in tourist arrivals in the midst of the global recession. What better to test the quality of our product offering than a global recession that hits all tourism markets?

We also have our track & field industry, where we absolutely dominate. Not just on the field, but also off the field with branding, marketing & revenue generation. This despite having a track that isn’t the best in the world - yet we produce the best athletes in the world, in almost every category.

The common thread in all of these cases is that all the participants didn’t have outside help (i.e. help from outside of the region). They all had to pull themselves up by their bootstraps and compete in harsh conditions. They all earn USD as their primary revenue stream (in most cases). They speak to a global audience. They are unique & innovative in their own right.

I am constantly marveled by the lyrics that our dancehall artistes come up with. While I don’t condone or support the vast majority of the lyrics, there were 2 lines that jumped out at me yesterday while listening to the radio from Mavado. Now, please don’t interpret my appreciation of the wordsmithness of this phrase as support/endorsement of any intent behind the lines. I just love seeing people innovate in their craft - even if I don’t necessarily agree with their position.

I don’t remember the name of the song (if you know it, please leave it in the comments and I will update my post), but Mavado said this:

I am not a fish/Because I am not afraid of the gully-side.

If you are not Jamaican (or have an interest in Dancehall), and don’t understand the nuance of that line let me break it down for you.

In Jamaica, gay people are called ‘fish’ - colloquially. Mavado refers to himself as ‘gully god’. He is from a ‘ghetto’ in Jamaica called Casava Piece (spelling??). That community is built around one large gully. Hence his name ‘gully god’.

He is reiterating the oft-repeated maxim that many artists say “I don’t hang out with gays” - i.e. no gay people can hang out on the gully-side. So, by extension, if you are gay you should be afraid of the gully side.

He is drawing a parallel to gay people and the culture of homophobia on the gully-side, to literal fish that swim in water and their fear of being washed up on the gully-side where they will be stuck and likely die.

In 2 lines, he captured the essence of Jamaican pop culture, his status in the local dancehall scene, where he grew up, and made a clever pun out of it. This is wordsmanship at its best.

Yes, many Jamaican artistes do crappy work and pirate other people’s lyrics and songs. But many come up with original content. They study their craft, they train, and they innovate.

That is what is missing from our tech scene.

We need to make a conscious effort to invest in our craft, learn about how we can generate revenue from customers all over the world - while still living in Jamaica - and compete on a world stage. After discussing this at length with David Bain & Matthew McNaughton yesterday at an informal meetup, David discusses it here, we have all decided that we are going to make a conscious effort to talk more about ‘Digital Craftsmanship’. Not just to raise awareness, but also to do our part - either through workshops or mentoring or anyway we can.

We, our industry, get too complacent by aiming for “The first in Jamaica” or “The first in the Caribbean”. Imagine if Merlene Ottey aimed to just be fast in Jamaica - and didn’t compete on the world stage. Imagine if Bob Marley never toured and kept his music to himself and to Trench Town. Imagine if Butch Stewart didn’t pioneer all-inclusive hotels and raise the standards of the Jamaican Tourism product. We wouldn’t have those industries that we take for granted.

In a day and age when you can create any digital product your mind can imagine, when you can live in Australia and run a tech company that competes with Silicon Valley’s best - I challenge the entire tech industry to not try to be a “Silicon Valley in Jamaica” or even a “Silicon Mountain”.

Let people say….first they dominate reggae, tourism and track…now they are dominating tech.

There is no reason we shouldn’t be able to, our peers have shown us the way. Any reasons you come up with, are just excuses.

If you are a developer and want to become a digital craftsman, please feel free to reach out to me. I am on that journey myself, and I would be glad to lend a helping hand where I can.

You can either Tweet @me on Twitter or contact me via the form on my blog.

Empathy for the "other" side

2012-08-31T01:09:59-05:00

People tend to be tribalistic. Whether it is politics, religion, football (Jamaican and American), technology (vim vs TextMate, Ruby vs Java), etc.

It’s very easy to be caught up in your own dogma, but at the very least (I would encourage you to) be reasonable. Before denigrating/slandering/ridiculing someone else because they prefer something different than you, be cognizant of the fact that they may prefer it because of different circumstances than you.

For instance, not because you support Obama means that everyone that supports Romney/Ryan are idiots/stupid/crazy/dumb.

There could be a lot of reasons people support Romney/Ryan.

For starters, they could generally be disenchanted with what Obama has done - or hasn’t.

He promised that the bailouts will jump start the economy and the economic recovery would be more robust than it has been.
He has come out in support of gay marriage - there are many that voted for him that are uncomfortable with that, and it could be a deal breaker for them.
He has allowed the Republicans to hold many things hostage - like tackling the deficit in a comprehensive way, and such. In my opinion, he managed that process sub-optimally.
He seems to be quick to spend, and not quick to fix the budget gap. I am not saying that he hasn’t offered any suggestions on how to fix it - but it clearly has not been his priority. I am also not saying that it SHOULD have been his priority, but that could be a perception (especially when Europe is melting down as a result of fiscal issues).
He will raise taxes on a bunch of people - both middle class and high income earners. He will offset those higher taxes with more tax credits for middle class - hoping that the net effect will be lower taxes for the middle class - but the fact is, there is a lot of uncertainty when it comes to taxes for a lot of people. Keep in mind that ‘middle class’ is up to $250K/year - i.e. small business owners.
He has done A LOT more for ‘large corporations’ than he has for small businesses - or rather, the effects of the stuff he has done for small businesses, won’t be felt for another few years.
Not to mention the fact that people might not like the idea of being forced to buy health insurance. I do agree that people should be forced, like they are with auto insurance - but not because someone doesn’t want to buy it, means that they are “dumb”. It could be a better financial move for MOST people (especially young people) to not do it. For the vast majority of the people that buy it, they won’t need to consume as much as they pay in premiums. That’s the very basis of the reason that insurance works. So there are many people that think they won’t need it right now - so they shouldn’t be forced to buy it.
There are many people in many industries that will be displaced as a result of Obama’s policies - for instance, many middle class workers in the Oil industry that will be laid off and forced to learn new skills if Obama closes the tax loopholes that they take advantage of. Those people might not want to go through the headache of learning a new trade/skill/profession after 30 years on the job!

There are many reasons that people will support Obama too - that you may not be able to identify with.

The same goes for your local Orange or Green politician, black or white, rich or poor.

Let’s have a little more empathy for the “other” side, and try not to paint with a broad brush.

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What the media is missing about the Apple vs Samsung Case

2012-08-29T21:46:54-05:00

I made a comment in response to a blog post about the Apple vs Samsung case on Hacker News recently - that got a ton more upvotes than I thought it would have (and a few friends of mine encouraged me to write this post), so I thought I would post the jist of my thoughts here.

Apple wasn’t suing Samsung because they ‘copied’ one of their products. What Samsung has done is straight up IP (Intellectual property) theft.

There are many other companies that come out with many features in their products that Apple doesn’t sue. See Windows, Safari vs Chrome, iPod vs Zune, Adobe Premiere vs Final Cut Pro, most “ultrabooks” vs Macbook Air, etc. The issue here is that Samsung, HTC, et al. essentially have done what many manufacturers in China have done (and are still doing).

They acted like a hardware manufacturing partner - then using the inside knowledge they gained of the intimate architecture of the products, they reverse engineered them and competed directly.

That’s like you hiring a web developer to build your startup - and both of you build it to traction, and once you take all the risk and prove the market, (s)he leaves and builds a direct competitor using his insider knowledge. It’s the most insiduous kind of ‘IP stealing’ that exists.

So Apple’s response is perfectly rational.

If you had that done to you, and your ex-developer (in fact, he is still managing your codebase) is making a ton of money off of your ideas and IP in your market, I am sure you would be pissed too. The money is just sprinkling on top…and a definitive statement to other “partners”.

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Einstein's productivity is a model for all entrepreneuers

2012-07-27T20:26:28-05:00

The next time you think “I will start {X} another time. I have too much going on now….” consider this.

During the period when Albert Einstein wrote his 4 papers that revolutionized physics (including “The General Theory of Relativity”), he had a few things going in his life….including but not limited to:

A full-time job in a patent office in Bern, Switzerland where he worked 6 days - 8 hours a day (yes 6 days).
A relatively new wife (who most of his family hated/despised, at least initially)
They had a daughter, but there is no record of what happened with the daughter (insinuating that maybe his wife lost the baby or they gave her up for adoption - though there is no evidence to suggest as much). Either way, this must have been taxing emotionally.
They then had a son - Hans Albert Einstein
Einstein played in a string quartet once a week.
He had no access to a library to read other publications (because the library was usually closed when he wasn’t at work).
Oh…and he had no computer & no Google =)

Even despite these obstacles, he wrote 4 papers that fundamentally transformed physics and subsequently engineering.

Source - Einstein: His Life & Universe

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The biggest problem, for Jamaica's tech industry, is the sum of our smaller problems

2012-07-27T15:37:00-05:00

I just came from lunch with Chad Cunningham and Gordon Swaby. We are trying to figure out, and put into words, the issues facing tech (more specifically internet/web) companies in Jamaica for a meeting with a government official coming up shortly.

After going through many scenarios of issues we face, the recurring theme always came back to the “small problems”.

Registering an LLC easily & cheaply
Getting all documentation and tax compliance information in order for everything to be above board.
Getting health insurance for the owner and the handful of employees (and their families)
Accepting VISA, Mastercard, Discover, American Express from any consumer around the world
Doing business with US-based organizations
Importing any equipment we may need (laptops, computers, networking equipment, iPads, etc.) for everyday use - with a predictable cost. Right now, you never know what the end cost will be once the various duties and levies are attached.

Right now, all of the above are a headache in one way or another.

I have had to register a US-based Delaware Corp to get a US bank account to allow me to get a US payment processor account to process US-issued credit cards. All of that was easier (not easy) than working with the local banks. Not to mention that the local banks don’t process (the last I checked) Discover and American Express issued cards.

Gordon eloquently summed up our current problems with this phrase that I love so much that I had to write a post about it.

“Our biggest problem is the sum of our smaller problems.”

Tech startups don’t need a government run Venture Capital arm - what we need is a regulatory & justice system that allows investors to purchase preferred shares (or even common shares) in our companies and be adequately protected (both from culpability & liability for the wrong-doings of any companies they invest in). Just like a typical equity investment in the US.
Tech startups don’t need a government run health insurance program - what we need is to be able to buy insurance from the existing entities on similar terms that any individual can get by joining Churches Credit Union, or JN.
Tech startups don’t need large tax incentives because our net margins are high, and paying taxes is a good problem to have.
Tech startups don’t need any government land or buildings - because we can get by in our own homes/garages/offices.
Tech startups don’t need special treatment - all we need is fair treatment. We need the government to either issue new banking licenses to encourage competition in the banking industry - specifically to a bank interested in specializing in e-commerce transactions. From selling products online, to managing subscription payments in Software-as-a-Service (SaaS) apps. Or heavily lean on existing institutions to be more e-commerce friendly, although…the skeptic in me thinks we would be better off with good old-fashioned competition. Issuing a new banking license to an entity interested in mobile & e-commerce would probably be the best bet.
Tech startups don’t even need import waivers, we just need certainty. We need to know that if we are bringing in an iPad, once it touches the shores we will be paying a flat fee (that is reasonable, 50%+ is NOT reasonable) for duty. We already know, via Mailpac, what the flat fee for the shipping will be. We need to know all the other flat fees.

Once those problems are fixed, the last thing we need is for JAMPRO to tell the world that Jamaica’s tech industry is open for business.

Show investors that there is a clear path to liquidity via our Junior Stock Exchange and JSE (especially through a USD offering).

In short, we just need the government to streamline the basic issues that we have to deal with - i.e. the “small, every day problems”, and we will take care of the rest.

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The life of a bootstrapper - Canada denied me a visitors visa because "I am too poor"

2012-06-13T16:42:00-05:00

Update: I re-applied with additional information about my business and financial situation and they approved the visa for 2 - 3 years.

I recently applied for a visitors visa to Canada (officially known as a ‘Temporary Residents Visa’) because my best friend is getting married in July. I went to Canada about 3 years ago for his brother’s wedding - around the same time of year - and it was nice. I have been looking forward to the trip.

Granted, I had my suspicions that my application was weaker than it could be - for a number of reasons.

I am a bootstrapper. A few months ago, I started doing freelance web development to pay the bills. The issue with that is the cash flow fluctuates significantly. So when a good month happens, I have to put aside for slower months.

Needless to say, I couldn’t provide a ‘job letter’ or show any ‘proof of employment’ to a Jamaican company that requires that I live in Jamaica - because no such thing exists. The best I can do is show company registration documentation, and bank account statements in all my bank accounts (locally, and US-based). Also, the application process has collided with a “slower period” - so the bank statements are not flattering, to say the least.

I don’t own where I live, I rent.

I purposely chose not to use my parents as financial support, because…well…I am almost 30 and have 2 kids (with 1 on the way). Plus…I earn my own living (kinda), damnit!

Before deciding to go down this road, I read ENDLESS stories and blog posts about others that have trod a similar path. I debated doing something where I raise money, or bootstrap. I hated the idea of losing control and I seem to have an affinity to doing things the hard way (not that raising money isn’t the hard way).

One of the things I didn’t quite realize is that even though you are bootstrapping, life doesn’t stop. You still need to interact with institutions that don’t understand the concept of a bootstrapper or even the startup life or even freelancing.

So let this be another data point you should consider when you think about bootstrapping. I always thought, “nah…that will never happen to me”. Seems it’s more the rule than the exception.

Now, it seems, I will be missing my best friend’s wedding in July.

I read about rock-bottom, but never knew what it felt like. I know you might scoff “Pfftt…I used to live in my car”, but compared to what I am accustomed to, these last few months have been pretty damn hard and this almost feels like the nail in the coffin.

I am a pretty private guy, but I didn’t know what else to do other than let it all out.

The worst part about this all, is that I can’t see myself doing anything else - no matter how tempting it may be.

In other news, I am working on another product that I hope to launch in the coming days/week. If you are a freelancer, and want to find new business leads easier, follow me on Twitter so you can know when I launch that.

Can’t stop, won’t stop.

This is the life I chose, or better yet, the life that chose me.

The Simplicity of Apple

2011-12-29T13:38:34-05:00

My mom just got a Macbook Air for Christmas, and I got the wonderful job of setting it up for her. I am a geek and for some reason, even though my Macbook Pro is about 2.5 years old, I get giddy just holding such a small but sturdy form factor in my hand. I might seem like a fan boy, but I am a cautious one. Even though I do development on my MBP, I still have a Windows 7 machine (dual-monitor) for ‘everyday use’. I can’t quite make the jump fully.

Anyway, back to the migration. I started thinking like I would for any normal PC migration. Where are the Application CDs, let’s get an external hard drive to track down her files and move everything there - then from the drive to the new machine. I immediately started to wrack my brain to figure out where her ‘profile’ files are stored - i.e. when you are doing a PC migration, to save your bookmarks and browser information (pre-Chrome sync), you had to manually search for those files in My Documents and transfer them.

I also started thinking about setting up iTunes and adding the new files and folders to iTunes so she can find it EXACTLY the way she had it - otherwise I would get ENDLESS support phone calls about finding her music and other media files (which I just treasure to get - Hi Mom :))

So I boot the Macbook Air, and about 2 screens in, it asks me for WiFi credentials. I enter password and move on. ~2 screens later it asks if I want to migrate anything from an old machine.

“Holy crap” I think…this cannot possibly be suggesting what I think it is.

I see a screen that looks like it is scanning for a WiFi network with some directions (go to old computer, go to Applications -> Migration Assistant and select the option ‘Migrate FROM this computer’). I do that, then come back to the Macbook Air. It finds my mom’s old machine, and asks me for the verification code that’s on her screen. I confirm it, and press ok.

It then calculates the amount of things that need to be migrated, 13.5GB.

5.3GB of which are APPLICATIONS. “No way, I think. That can’t be possible.”

So I press continue and it goes. I leave it for about 6 hours while it transfers everything via WiFi from the old machine….I go back to the Macbook Air….literally everything is transferred. Office is installed and registered with the same product key (as her old machine) and in her name, Skype is installed with her credentials, it even transfers her OS X username and password, all her documents, pictures, music and movies. Dropbox is installed and configured properly and everything is in it’s place. The only thing that had a problem was an HP utility app for her printer/scanner. So I went online, downloaded the latest drivers and installed that - like I expected to have to do for everything else.

That’s it….everything installed. All programs setup, all documents in place, iTunes works with all her music, everything.

From an OLD computer to a brand spanking new one, with everything intact, with a few clicks + a few hours waiting for the transfer via WiFi, then a few corrections.

I don’t think I will ever be able to do another PC migration and not be more annoyed than I used to be.

Mind. Blown!

P.S. You can follow me on Twitter here.

Development has built-in network effects

2011-10-13T15:52:00-05:00

It just occurred to me that the more you actually build stuff, is the easier it is to build stuff.

Not only because you get better, but because your library of solutions expands…which encourages you to build more stuff (because you are creating less ‘novel’ pieces of your new project) which expands your library even more and makes you even better. Creating a virtuous positive cycle.

That happened to me just now. I needed a divider, something simple, elegant, doesn’t involve a GIF or any images, and pure CSS. Well, I remember struggling with this for CompVersions, so I painstakingly took the time to create one.

It’s nice, simple and very elegant.

I literally just copied and pasted that one CSS rule from CompVersions to my new project and added an empty div…BAM! Perfect divider.

Yes, I am a relatively n00bie ‘full-time’ developer, so these sorts of ‘obvious stuff’ are just now clicking with me - so you have to forgive my bouts of spontaneous joy when I come across them.

I imagine there must be other professions where this is true, take Law for instance (where you have a sample contract that is just re-used as the basis for all future contracts) - but it never occurred to me that it would be so powerful for development.

Btw, for anyone interested, here is the code for the divider:

https://gist.github.com/1285517

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Hacker's Guide to Cashflow vs Profit

2011-09-30T17:41:24-05:00

Had a wonderful time at Kingston Beta last night.

There was a point brought up by one of the presenters that entrepreneurs should focus on cash-flow instead of profitability. There were a few questions and I don’t think that the questioners fully understood, so I figured it was time for a post to try and explain (if I am still not clear, let me know in the comments).

—–

Cash Flow

Simply put the flow of cash in and out of your company. Cash can flow in from three sources: Operations, Investments, Financing.

Operations - This is what your business does. If you are a doctor, your cash INFLOW from operations would be what your patients pay you (as well as health insurance companies), while your cash OUTFLOW from operations would be what you paid your secretary, the office supplies you bought at the store yesterday. If you sell books, your cash INFLOW is the cash that your customers pay you for the books. Likewise, your cash OUTFLOW is the cash you then hand over to the distributor that you got the books from that you sold + the expenses you had to pay (utilities, etc.).

Investments - Say your business is doing really well and you always have excess cash in your bank account every month after you have paid all your expenses, it is fiscally prudent to put that cash to work rather than letting it sit idle. Either by investing in your company (say opening a new branch, or buying new manufacturing facilities or new servers, etc.) or by investing in some security (buying government bonds, or stocks of publicly traded companies, etc.). The cash OUTFLOW is what happens when you spend the cash initially to make the investment. The cash INFLOW is what happens when your investment pays you (e.g. a stock that you own pays a dividend) or you sell that investment and get back cash. Most startups won’t do this though, because in the early stages of a company you can usually get a better bang for your buck by investing in your own company and growing it until you reach the point where you can get better returns elsewhere.

Financing - This usually involves raising money for your company. If you are startup, then that usually means that you are raising a round of Angel/Venture investment. Your cash INFLOW would be when they wire you the money. The OUTFLOW would only occur when the company is either sold, or you have enough cash to buy by the stock from an early investor/founder once you reach later stages. This is more and more common now, than it was a few years ago. From the Founder’s perspective, it is typically said the Founder is ‘taking money off the table’. Meaning, they are cashing out a small portion of their stock - the idea here is that it allows the founder to swing for the fences and go for a big IPO or a big acquisition without feeling like they will lose it all.

Profit

Profit is the amount of money you have received in income (typically from operations) that you have left over after you have paid (or accounted for) all expenses in any particular period.

However, this metric is fuzzy. Here is why.

Say you sell security software to enterprises. Each enterprise license is $5,000/mo. All customers have to buy in annual contracts, so each contract you sign is worth $60,000 USD, all things being equal. However, most enterprise contracts don’t pay you the entire $60,000 upfront. They might pay you $10,000 now, then another $10,000 every 2 months for the next 10 months. Or they might pay you $30,000 (half) now, and say they are going to pay you in 2 months. But in 2 months, they say they need another 2 months, and keep doing that for the entire year. In some cases you will eventually get the money, but there are the occasional cases where you don’t. If you don’t manage your cash flow you might incur expenses in anticipation of that revenue that might come too late or not at all.

That’s how companies go out of business.

For instance, say you sign up 10 of those contracts in month one. You feel happy. You just ‘made’ $600,000. If you bulk up and hire $600,000 worth of labour in month 1, to invest in product development and supporting this new contract, you could find yourself in a situation where you don’t have enough money to pay their salaries. If that happens you have at least three options a) lay them off - and face possible legal action depending on local labour laws, b) explaining the situation to your employees and asking them to forego pay - this too might expose you to legal action or c) getting more business to make up for the shortfall.

This is just month 1. Typically what leads companies to go out of business is this happens in too many consecutive months with too many clients and you get caught flat-footed or too underwater and can’t get a short-term loan to bridge you over until your customers pay.

That’s why, as a startup, it is fiscally prudent to focus on becoming cash flow positive - which basically means that every month you are taking in more cash than you are spending.

There are two obvious ways to do this:

Increase your ability to collect from customers (i.e. increase the % of customers that actually hand over cash)
Extend the time period you have to pay your bills. For some things it’s harder (e.g. utilities, wages, etc.), but there are some things that you buy that you can usually get a break on - that give you another 30 - 60 days to pay.

Once you understand these concepts, you can then understand why companies like Twitter, Facebook and GroupOn work the way they do.

Very briefly, here are some thoughts on the way these concepts affect those companies - without me having any internal knowledge of them, just speculating based on what is available in the public domain.

Twitter - The most famous thing to be said about Twitter is that they are not making any money. So let’s assume that they are actually not earning any money (even though that’s clearly not true from the Promoted Tweets and other advertising we see creeping into Twitter slowly but surely), the way they stay alive is by continually raising rounds of financing. According to Crunchbase they have raised about $1.16B to date, in 8 different rounds of financing. So they can use the money from investors to pay their monthly bills while they figure out how to make money.

Facebook - While on the surface looks similar to Twitter, with $2.34B raised in 11 rounds, in 2009 they announced that they were cash-flow positive (meaning they took in more cash every month than they spent). That doesn’t mean that they are profitable, but that definitely is a great sign. It indicates that they can continue growing and are in no immediate threat of going bankrupt.

GroupOn - They too raised many rounds ($1.14B over 6 rounds, according to Crunchbase as a matter of fact), but they have been famously not-profitable. They have also been expanding rapidly - in January 2011 they were at 4500 employees up from 3000+ in November the year before. So how have they been able to keep up that dizzying pace of growth? Not just venture financing….it’s also how they treat their revenue. What they do is collect the total amount of the coupon (say $50 for $500 worth of pink high heels??), then they pay out say 50% of the $50, so $25 to the store at some point in the future. The longer they can hold on to that $25 that they have for the store, is the more things they can do with it.

So while most companies do try to extend the amount of time they have to pay their vendors, GroupOn seems to have it baked into their revenue model.

In my humble opinion, that’s not sustainable and that’s just one of the many reasons that investors have been crying foul over GroupOn’s filings.

One last example of a company that is ‘highly profitable’ but can go bankrupt from lack of cash is what we saw happened with GE in the middle of the credit crisis. GE made about $12B in profit in 2010, on revenues of $150B. However, a big portion of the stuff they sell (airplane engines, locomotive parts, MRI machines, etc.) are very expensive. So they extend a line of credit to their customers. So even though they have booked an accounting ‘profit’, they don’t collect the cash from their customers very frequently for those sales. What they do is go to the investing public and sell investing products very frequently. To see all the ways you can ‘invest’ in GE check out this, this, this and this. As a matter of fact, while I was doing research for this post, I learned something I never knew before….apparently GE issues commercial paper in 1-day increments. That means, they will borrow money from you for 1-day and pay you back the next day - with interest of course, but there is a catch.

Range of Maturities

Commercial Paper is generally offered from 1 to 270 days.

Minimum Investment Amount

The minimum is $100,000 for transactions with a term of seven days or more. For transactions with a term of one to six days, the minimum amount is $500,000.

That completely blows my mind. I am used to seeing 1-year, 10-year and 30-year maturities on bonds. But 1 day? WOW! That really shows you that they need the cash every day just to keep going.

So in the middle of the crisis, when they could no longer borrow for 1-day, they ran out of cash (literally overnight). They had to apply to the US gov’t for a temporary life-line.

If they didn’t get that, large sections of the company would have been in trouble (if not the entire company).

So that’s why it is better advised to focus on becoming cash-flow positive and not ‘just’ profitability.

I hope that helps with any confusion around this topic.

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Tab Debt

2011-09-10T17:21:00-05:00

The act of accumulating a number (say ‘n’) of unread/unprocessed tabs left open in a browser window such that the next day rather than starting with 0 tabs open, you start with n.

Also can be summed up as: X = X + Y,

where X = the number of tabs open at the beginning of the day,

and Y = the number of tabs opened throughout the day.

This has become a major problem, so much so that when my browser crashes and I am forced to start over, I actually breathe a sigh of relief as I start from a fresh canvas.

Every single day I start the day with both my browsers looking like these two images:

So many tabs that I can’t even see the name. It’s not long before I I can’t even see the favicons.

Btw, these are tabs left open after I have sent those that I can send to my Kindle and closed those.

This is almost as bad as having an unwieldy inbox. But what is the solution to this?

I would love some help with this problem, because it is becoming more ridiculous by the day.

Help!

P.S. You can follow me on Twitter here.

President Obama You Lied

2011-08-10T03:43:37-05:00

Please don’t get me wrong. I am one of those people that supported your nascent campaign once you declared in Illinois. If I could have voted in 2008, I would have voted for you.

Even though I am not Congressman Wilson, I have to say it, you lied!

You have said that you would rather be a really good one-term president, than a mediocre two-term president.

As is evidenced from the way you recklessly managed the debt ceiling issue, you clearly had the 2012 re-election campaign in your sights.

The right thing for the country, and the world, would have been for you to stick to loose fiscal policy in the immediate-short term, and lay out a credible medium term plan for reigning in the deficits and paying down the debt once the economy has fully recovered. But you did just the opposite - with allowing the Republicans to cajoling you into short-term spending cuts and shirking the responsibility for the real tough decisions (like tackling social security, and medicare reform) to a Congressional Committee.

The ironic thing is, as you can see from the markets reaction, if the economy continues to deteriorate and slips back into a recession just in the nick of time of the next re-election - you will likely be the worst combination of what you wanted.

A mediocre one-term president.

That would be a travesty, because you had so much potential.

A simple solution to America's Social Security Problem

2011-08-06T16:00:54-05:00

TL;DR - Legalize all illegal immigrants and have an open immigration policy that makes up for the shortfall in the workforce.

Long version

The way Social Security works is, every dollar you pay in taxes today, goes to paying the check for a retiree.

To get a full appreciation for the Social Security Problem, let’s run some quick math.

Let’s assume that each Baby Boomer is retiring at the age of 65. Also assume that each retiree lives for 30 years after retirement.

Also assume that each retiree is expecting to get $45K/year - which is likely to be VERY conservative, but, for simplicity’s sake let’s just use $45K/year.

Each retiree would have to be paid $45K * 30 years = $1.35M during retirement (let’s round it up to $1.5M to make it easier on the math).

Also assume that there is a gap of about 30 million people, meaning there are 30 million more people retiring (i.e. baby boomers) than there are replacing them (i.e. young people entering the work force for the first time) - and the gap could be wider, but for math’s sake, let’s go with that.

That means, it’s: 30,000,000 people * $1.5M = $45,000,000,000,000 (i.e. $30 Trillion)

This ignores the health care related expenses for those retirees. This is a major problem, and this is what people mean when they say that Social Security is ‘unfunded’. i.e. there is a chunk of retirees that have no one just entering the workforce that will support them.

Solution: Expand the workforce to be greater than the number of retirees. i.e. Legalize all the illegal immigrants and open the gates so anyone can come and work in America….up to a comfortable number over and above the number of retirees.

Obviously, I know there are political consequences to making a move like this and other repercussions, but if America’s leaders were honest enough about this solution they would start having this debate and figuring out how to solve it properly. This solution would also have to be done in tandem with other things like raising the retirement age, migrating from Defined Benefits to Defined Contribution, etc. But, by far, this solution would take care of the major driver of the problem - that more people are retiring than entering the workforce.

It really is that simple.

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