Reader Question: What to do with my patents?

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Since nobody complained, here’s a great question regarding patents from an IMHO genuine and Certified Smart Guy, Erik, who took the trouble to e-mail me with this question regarding patents and how best to commercialize them:

I am writing you because I have ideas, but, do not know how to turn them into a business.

While at my university, I have been busy developing ideas and protecting these ideas with patents. I currently have 3 patent applications and am currently working on 2 more with a patent attorney. These are all through the university, so they do own 50% of rights to the patent, but at the same time, they are shouldering 100% of the costs. At this point in my life, that seems like a pretty good deal to me. Later when I have more money to invest, I can use any profit generated from these patents to own 100% of the rights to my work.

The problem is that I don’t really know how to move from owning a patent to creating a business to enable the idea and generate profit?

Erik  is talking about transitioning from idea to business.

Firstly, I would propose that ideas (and, their patents thereof) belong in the receptacle offered by the device in the carefully selected image, above …

… it’s all about execution. And, as we know; that’s 99% perspiration 😉

Given that, it seems Erik has quite a few paths available, to take Useless Idea # n to Highly Profitable Business # 1 […  and only. Because lighting rarely strikes twice yadayadayada], but I think I can summarize them into just two:

1. Become an idea/licensing machine: churn them out, begin the patent process, licence off … next idea!

http://7million7years.com/2008/09/08/if-its-not-passive-its-active/

http://7million7years.com/2008/09/09/how-to-build-a-perpetual-money-machine/

2. Pick the idea that Erik feels has the most commercial promise, fail fast (which means assess the market quickly by trying to get sales and feedback … even before the product is ready), continue with that idea OR shelve and move onto the next.

http://7million7years.com/2010/04/28/the-no-marketing-plan/

And, this series: http://7million7years.com/2011/03/07/anatomy-of-a-startup-part-v/

Having never done 1., I can’t advise Erik (that may be where you step in?)  …

However, if Erik is contemplating going down the  second path, he should pick the easiest patents, first … preferably something that can be implemented (at least at first) as software … using open-source architectures wherever possible and ‘”off the shelf” programmers (i.e. no PHD’s to develop, unless that’s going to be Erik).

In terms of resources, Erik should follow interesting threads on quora.com … he’ll learn a lot, from experts (unfortunately, he’ll first have to learn how to discern ‘expert’ from ‘wanna be’).

He should also buy a copy of  TechStar Founder, Brad Feld’s excellent book about startups: Do More Faster: TechStars Lessons to Accelerate Your Startup, and Guy Kawasaki’s outstanding book: The Art Of The Start.

Once he has launched and has gained traction (i.e. significant customers and sales; not necessarily profitable sales … yet), Erik can start working on building his back-end ‘business’ … in which case, he should also read Michael Gerber’s business classic – mandatory for established businesses of ANY size: The E-Myth Revisited.

Until then, Erik should focus totally on Product (what do the customers want?) and Sales (will they buy?) …

He can start testing/asking/even selling RIGHT NOW.

Oh, and if Erik has the opportunity to take a job, but start this part-time … he should do so!

That way he’ll be able to afford to fail often 😉

Anatomy Of A Startup – Part V

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I’m not sure if this is a useful series for my audience; on the other hand, I do encourage as many of you to start a part-time business as possible – with the Internet being an ideal platform – so it should be useful.

But, do let me know if you want to see more/less of this business-type of stuff on this personal finance blog …

There’s been a lot of Internet chatter about so-called ‘lean startups’: as far as I can see, it used to be called “bootstrapping” (Guy Kawasaki, the legendary Apple early employee, angel investor, startup junkie, and raconteur famously started Truemors for a little over $12k), but should just be called ‘common sense’.

Having said that, I’ve committed $100k to my latest startup, which is currently being spent on partial salary replacement for one guy (apparently, he doesn’t like eating dog food), a padded cell (one small, windowless room, 4 desks, 3 people …. plenty of stale air), and a little bit of web-type outsourcing:

– We purchased a logo on hatchwise for $250

– We purchased a home page image for $19 and spent another $36 on oDesk for two guys in India to turn it into a real web page with KISSinsights ($29/mth), and MailChimp (one of the guys already has an account) integration. $6 an hour buys an awful lot of basic code-cutting.

– We’ve also spent $1,200 locally getting a real home page built, with plenty of back-end functionality [AJC: we need a few different types of home pages for some of the stuff we’re doing, all at different levels of complexity]; but, we’re doing that with the engineer that we want working with us, and this is a sort of ‘feel each other out first’ kind of project.

The other key part of Lean Startup / Bootstrapping / Common Sense is simply getting something out there real quick to test the market response. This is called a Minimum Viable Product (MVP) …

This should be taken to mean:

Get a landing page up now!

Fortunately, that’s really easy with the abundance of new tools and services that have been coming onto the market recently (including unbounce, mybetali.st and launchrock).

This is an example of one built using launchrock [AJC: no, it’s not mine … just some random one that I found; click on the image to get to the site, anyway]:

It’s probably not the best example of one that I’ve seen (why would you want to put down your name just to jump “square to square”?), and I’m betting that it’s a mobile app (think local) because the URL is usehopscotch.com …. but, that’s only a guess and it’s not really important.

What is important is to go ahead and sign up and see how launchrock gives you a share page, complete with a customized URL so that you can track which user has invited whom … and, you can incent them accordingly!

Fork.ly famously did this with the incentive of getting to the top of their beta-invite list e.g. “after 3 people sign up with your link, you make our “priority access list” and we let you know via email.”

The reason WE’RE putting up prelaunch home pages (as they are known) is so that we can test keywords to see (a) if we can drive traffic to our site (and our value proposition), if so (b) which keywords work best.

This is how to implement the strategy outlined in this post where I shared some great advice from my good online friend Brandon – it’s simplicity in itself … here’s what Brandon says:

Let me sum this up in one sentence:
As a startup or new business, the amount of time you spend writing up a sexy business plan to pitch investors would be better spent running a $500 PPC campaign testing your idea.

[Note: PPC = Pay Per Click online advertising]

You are lucky enough to live in a world with Google Adwords.  This is a good thing.  The costs of launching a new business online are hastily reducing to zero.  Testing a business idea or even a half-baked, half-assed business-sorta idea, is easy.  So do it.

Stop thinking about writing a business plan (that you mostly copy of some web template – be honest), and start here:

1. Register a domain name.  Doesn’t have to be good.  Starting a bird feeder biz?  Get birdfeederdepot1.com.
2. Get hosting, install the CMS [e.g. WordPress or Blogger] of your choice.
3. Make 3-4 landing pages.  Ask questions.  Find out some key answers to the market you are hoping to serve with your genius new idea.  Offer to sell your service right now.
4. Setup [a Google] Adwords campaign and spend $500.
5. Read the answers you get.  Scour the analytics, the keywords and clicks.  Any sale or response is good.  Email your new ‘customers’ and find out more about them.

The point is, this is so easy and cheap to do, you should do it.  There’s no risk in doing so, and the upside is possibly priceless.

It could save you from wasting 9 months of your life chasing a bad idea.  It could teach you what people really want, not what you think they want.  It makes you get serious.

We’ve been experimenting right now with a FaceBook advertising (watch out Google!) campaign at $5 – $10 a day (!), and have already learned some interesting things for less than $50 total spend (!):

1. Targeting our competitors’ names in our keywords is a great way to reach our exact target market,

2. Paying CPM is usually better than CPC: worst case, we seem to pay roughly the same CPC that we would have paid had we been bidding CPC (about $1 to $2 per click for our keyword niche) and, occasionally, we even see massive spikes where our CPC mysteriously (and miraculously) drops to $0.01 on (comparatively) huge volume of clicks and signups.

… now, that’s good!

 

My retirement hypothesis …

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I’ve said it before, and I’ll say it again, I think that personal finance in America is broken.

I say it’s broken because advice is being doled out without any qualification: work hard, be frugal, save hard and …

… and, what?

If you start after college, you’ll work 20+ (probably, 40+) years, and you will aim to retire on what kind of income?

Let’s take a quick look at Bristol’s case again; he is 23 years old yet: he already has a stable job; he invests in his 401k up to his company’s match%; he has $20k (split evenly between a savings account and some blue chip stocks).

He has run a few numbers through the CNN retirement calculator and realizes that, by age 55, he would need $5.9 mill. ($2.2 mill. in todays dollars) to “spend retirement happily”.

After some discussion, and more analysis, Bristol came to the conclusion that this is impossible on an 8% assumed after tax return.

Now, one of Bristol’s assumptions – and, one that I am guilty of supporting – is that he would need a minimum of $90k annual salary (today’s dollars) in retirement.

But, is that the case?

I can’t speak for Bristol – I don’t know how he came up with the $90k p.a. figure (hence, the $2.2 mill. today’s dollars nest egg requirement). And, maybe my view is skewed because we – and almost everybody that we know – need a LOT more than $90k a year in retirement (we’re budgeting for our current run rate of $250k – $350k per year to continue)?

So, do you think it’s acceptable to work for 20 to 40 years, be frugal, save hard, yet aim for less (keeping in mind the need to help support an adult family, partner, lifestyle, health … without any guarantees of government handouts and safety nets still being in place by then)?

The myth of semi-retirement …

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We were driving through Sedona and stopped into some sort of Big Box Store to pick up some rubber beach shoes so that we could take the kids to Slide Rock.

We met a nice, older lady at the checkout and – as I tend to do with anybody and everybody – we got chatting.

Then she said something that took me totally by surprise:

She said that she moved to Sedona now that she is retired!

Retired?! Hang about, I thought, isn’t she standing at the cash register swiping my credit card?

Perhaps, reading my mind (more likely, the expression on my face), she clarified: she moved to Sedona when she retired from full-time work, and now that she is ‘retired’ (there it is again!) she only works part-time.

Why is that when you are studying – or perhaps slowly returning to the workforce post-parenthood – you are happy to tell your friends that you are “working part-time”.

But, when you reach 65 and suddenly find that you still need to work (perhaps with reduced hours, or in some sort of micro-business that you set up for yourself) you are “retired” or you are in that even less definable state of “semi-retirement”?

In fact, there are whole websites and books devoted to the subject of semi-retirement. One of those books is “Work Less, Live More” by Bob Clyatt; I bought it on the recommendation of Jacob from Early Retirement Extreme (he left a comment on this post) … I’ll be commenting on one specific aspect of this book (in fact, the very aspect that prompted Jacob to recommend it to me ) in an upcoming post.

In the meantime, Bob did confirm that I am not retired … I am semi-retired.

According to Bob, I am semi-retired because I do various income-earning activities: I still own a business; I own two development sites (and, am going though the process of having development plans approved by council); I have started an angel investing incubator (or, at least, started to put the foundations in place); have a web 2.0 startup and a book well under development.

But, if I am doing these things because I am a hobbyist, am I any different from the guy who is game fishing every other day as a hobby?

But, if I am game fishing every other day because I need the income (e.g. I take some paying clients out on my boat, or I sell the fish), am I any different to the guy who needs to have a part-time business – or blogs – because he needs the money?

In other words, isn’t the difference between working part-time and being semi-retired the need to bring in income from the activities that you undertake?

Doesn’t that change the dynamic just a little?

Even though he may enjoy the core activity, isn’t the part-time game fisherman who needs the money a little bit more upset when a trip is canceled due to bad weather (or customer cancelation) than the guy who is doing it purely because of his love of the sport?

Whether you agree or not, let’s at least agree on something … at least for the purposes of this blog:

1. If you are retired, you don’t need the money – you just do stuff for fun.

2. If you need the money, you aren’t retired, you are [insert activity of choice: writing a book; blogging; game fishing; real-estate developing; etc.] part-time.

The day that I need to consult to top up the income from my investments is the day that I am no longer just having fun: I’m working part-time.

Maybe we can coin a new term: flexi-working? Semi-working? Whatever you call it, there ain’t no retirement happening …

How about you? Where do you draw the line between work and retirement? And, does it even matter?

Wrapping up …

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You can check out the latest Carnival of Personal Finance (#298 – The Best Money Articles Online) here.

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I didn’t expect that one of my most argued series of posts would be about dividends; I thought it would be around my vehemently anti-anti-debt stance (see if you can work THAT out).

So, I’d like to wrap up that discussion with a point-by-point review of a really interesting comment left by Deek:

I see where you are coming from and disagree to a point. It depends on what your outlook is. 7 mil in 7 years of course dividends aren’t going to get you their.

But my grandfather who was a coal miner who cannot work into his 70s because of the type of job. He was able to be a dividend millionaire. When he did retire the income from dividends, his pension and social security was more than enough for him to live comfortable into his 90s and leave money for his children.

At 90 years old he isn’t going to work,build a business or mess around with real estate. He wanted to check he dividend paying stocks once a month and enjoy retirement, drink a few beers and his biggest worry was cutting the grass.

I also find it interesting you mention Berkshire Hathaway. Depending on when you look at BRK holdings they do invest a significant amount of money into dividend paying stocks even though they do not themselves pay a dividend.

This really summarizes a lot of the for/against arguments around dividend stocks, at least as raised by the many reader comments to my earlier posts, so I thought I should run my readers through it:

1. Yes, this blog is specifically aimed at those who want to make what I call a Large Number / Soon Date (eg $7m7y or $2m5y, etc.); however, in this case, I don’t think it makes any difference: investing in stocks just because they happen to produce dividends is dumb.

In my businesses, I am free to create a dividend whether the business is performing well or otherwise. So can the boards of public companies. If that simple point doesn’t win the pro-dividend lobby over, nothing will.

2. It seems like Deek’s grandfather did an amazing job! Investing in a bunch of “dividend stocks” – and, holding for long periods – is certainly a lot better than many other strategies, certainly for non-$7m7y’ers.

But, he may – probably (certainly!) – have done even better by following a Value Investing approach (e.g. such as that proposed by Rule # 1 Investing author, Phil Town). Buying and holding great stocks – ones that produce a steadily growing profit stream – is an even better way to make long-term money than buying and holding stocks just because they happen to pay a steady dividend stream. The two should be synonymous, sadly that’s not always the case.

3. I’m not suggesting that you (or Deek’s grandfather) should invest in business or real-estate etc. Although, I strongly argue that in retirement RE, in particular, provides a much more secure retirement, again for $7m7y’ers.

4. Deek’s point about Warren Buffett (“BRK holdings they do invest a significant amount of money into dividend paying stocks even though they do not themselves pay a dividend”) neatly summarizes my key point:

Like Warren Buffett, I am not against investing in stocks that pay a dividend; I am simply for investing in great businesses – or, the stocks of great businesses – regardless of whether or not they pay a dividend.

Get it?

Anatomy Of A Startup – Part IV

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If you caught my podcast (Jaime from Eventual Millionaire interviewed me here) then you will know that I am obsessed with business … after all, it’s how I made my second $7m7y!

My passion remains personal finance (which is how I made my first $7m7y): living, breathing, writing, teaching …

But, my hobby (lucrative or expensive, as fate and fortune may rule) is to work on startups; I am already ‘angel funding’ a few … this series is the story of one of them.

I eat my own dog food (actually, it’s cheap, and I kind of like the crunchiness): I just used this tool for my new startup. In fact, I use it for every startup that I have worked on … and, there have been quite a few:

If you’re buying or starting a business, the first thing you absolutely MUST be able to do is put your ‘reason for being’ into a sentence or two.

This is commonly called your ‘elevator pitch’ because you should be able to use it to tell a stranger what you do in between getting on and getting off an elevator!

But, it’s use is far more important than that … it’s to help you make sure that you really have something unique. If you don’t have anything unique in your offering, you will be struggling to sell it to your customers let alone to the people who will one day (you hope) want to buy your business!

For that reason, some call it your Unique Selling Proposition (USP), but whatever you call it, this tool will make it dead simple to come up with yours:

Note: I found this tool a long time ago, but can’t remember the source; if I could, I would share the link here. Until then, use it well. The example provided is from a real business that I looked at starting, and the USP is the real one that we came up with using this tool.

Click to download the Automatic-USP-Generator <<<<==== CLICK HERE

[click on the image to expand in new window]

Instructions:

1. Download the Automatic USP Generator and answer the questions in the right hand column as best you can.

2. Use those answers to “fill in the blanks” in the two sentences just below the question/answer box.

3. Rewrite in plain english – you may need to fiddle a little with both your answers and the sentences that you come up with to make them read well.

Remember: you are trying to come up with something unique!

This tool will take you 90% of the way there, the other 10% is iteration until somebody that you trust, but who knows nothing about your business concept, says “wow”.

Why don’t you share your elevator pitch – it can be for your business, your startup, or just for an idea you are working on – with our readers (in the comments section below)?

I’ll send the best one $100 by PayPal towards your own startup idea. No strings attached!

How Much House Can You Really Afford?

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Jaime from Eventual Millionaire interviewed me. Check out the interview (you can even download the podcast) here!

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I have two house-related rules of thumb:

1. never have more than 20% of your Net Worth tied up as equity in your house (i.e. borrow the rest)

2. Don’t let your mortgage payments be more than 25% of your Net Income (i.e. after tax)

Ryan questions the first of these:

Regarding the first tip, I”m assuming you are referring to not using more than 20% of your net worth as a down payment, correct? Because as time goes by, your equity should grow, and it wouldn’t make sense for most people to withdraw equity from their home value.

As I explained to Ryan, I think it makes great sense for “most people” to withdraw equity from their homes … but, only for the purposes of investing ;)

My overarching rule of thumb is to always have 75% of your net worth in investments.

The remaining 25% can typically be:

20% in your house

2.5% in your car

2.5% in your other possessions

[AJC: by “in” your house/car/possessions, I mean “in the current value of the equity that you hold”; so it’s a good idea to reevaluate yearly e.g. using tools like Zillow or an MLS search tool to check the current value of your house and Kelly’s Blue Book to check the current value of your car and a finger in the wind – or eBay / Craig’s List – for your possessions, etc.]

Since you can only buy a shoebox (literally) for 20% of Net Worth, if you’re a typical person just entering the workforce … don’t sweat it: just apply these rules AFTER you have bought your first house/car/TV/etc.

Then, if you abide by these simple rules, they will stop you from buying more too soon AND from over-investing your hard-come-by Net Worth in ‘stuff’ 🙂

Dividends: real cashflow or fake cashflow?

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If you’ve noticed, I made a couple of adjustments to this blog:

The first is that I have reduced my posting schedule to (generally) twice a week; I’m trying for a Mon./Thur. posting schedule, but – if you enjoy reading this blog (near-future multi-millionaires need only apply!) – your best bet is to sign up for the RSS/e-mail feed on my home page because I’m fickle … if I get the urge, I’ll post daily, or simply shift days to suit my increasingly challenged schedule 🙂

The second is that I’m posting more business-related posts (e.g. my Anatomy Of A Startup occasional series) … I am funding a series of startups with the ultimate aim of a Y-Combinator style of early stage entrepreneurship mentoring / funding program and what I am sharing in this series is real ‘special sauce’ stuff … like everything that I do, it’s usually simple but works!

Back to the first change: if I write less frequently, I’m hoping to challenge myself and my readers even more. To whit, my last post (inspired by Canadian Couch Potato’s brilliant post on the same subject) inspired a one week long comment-debate … one of the best that I have seen on this blog.

The main thrust was the debate around income v capital growth.

Jeff stated the ‘for’ argument best when he said:

The reasons why people desire rental income from real estate are the same reasons why people desire dividends from stocks…you get a cash flow without having to sell the asset at an inopportune time.

But, there’s a key difference between so-called ‘Income Real-Estate’ and its stock market equivalent – Dividend Stocks: Income RE produces REAL cashflow, Dividend Stocks produce FAKE cashflow!

To illustrate, let’s take a look, first, at income-producing real-estate:

Tenants pay rent; you pay costs; what’s left (if any) is real, spendable, excess income/cashflow that generally increases with inflation. Bad RE doesn’t produce an income. Period.

Now, let’s take a look at so-called Dividend Stocks (i.e. Company stocks that you buy specifically because they produce a nice, steady dividend stream):

Dividend-paying company sells stuff; they pay their suppliers and other costs; Good company produces profits / Bad company produces losses.

In either case, the Board meets and says “we gotta pay some dividends”.

The CFO says “But, we got bills to pay!”; CTO says “I got R&D to do!”; COO says “I got warehouses to build!”; CEO just wants to keep his job (he is hired/fired by the Board, remember) and says nothing …

The Board says: “Too bad. If we don’t look after our shareholders they’ll crucify us … even worse, they’ll vote us off our nice cushy board positions and we’ll even have to buy our own lunches!”

“Let the CEO deal with poor cashflow and working capital, insufficient warehouses space, outmoded products and technology, lack of marketing, and so on … heck, we’ll even borrow money from our provisioning funds or the open market, if we have to. No matter what, those Dividends must be paid … after all, we are a Dividend Stock!”

So, they say “no” to the CFO, COO, CTO, CMO … and, every other shmo’

Do you want your board fussing over distributing cash that it may or may not be able to spare? Or, would you rather that your Board focussed on building a GREAT company, with GREAT long-term growth and profitability prospects?

In order to answer that question, there’s one more feature of dividend stocks that we still need to examine; Kevin @ Invest It Wisely says:

The pro-dividend guys do have a compelling case that dividends grow more smoothly than the ups/downs of the markets.

To which I say, “so what?”

As we have already seen, the apparent  ‘smoothness’ of the dividend stream can be illusory.

And, what are you going to do with any dividends that you have received pre-retirement?

I presume that you are going to reinvest them so that you, too, can get to $7 Million in 7 Years (or, at least to your own relatively large Number by your own relatively soon Date).

In other words, you’ll just take that relatively nice, smooth dividend stream and throw it right back into the choppy market [AJC: Next, you’ll be telling me that you’re Dollar Cost Averaging … somebody, grab me a Tylenol, please!].

If you’re going to be fully invested in the stock market, for a number of years, then why don’t you at least buy some stocks in great companies that are going to grow, grow, grow … profits?!

If they happen to pay dividends, well great [AJC: you’re going to give it straight back to them, anyway, aren’t you?], and if they don’t, well who cares?

I mean, would you rather own “this dividend stock [that] has delivered an annualized total return of 3.10% to its loyal shareholders”? Or, would you rather own this never-ever-paid-a-dividend stock that has delivered an annualized total return of 20+% to its loyal shareholders for over 40 years?!

However, there is one special case (i.e what if you are already retired?) that I want to examine next time …

PF advice in America is broken …

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Thanks for the great – and, well thought out – responses to Bristol’s shout out for help with his debts:

I was stuck in an internal conflict about paying off debt or investing for years until now. I would like to apply your debt cascade to my financial situation and need your help.

You’ll have to take a quick look at my original post for the details, but the jury was pretty much split over whether Bristol could (or should) pay off his debts now or later (for the purposes of investing instead).

Marie summarized the ‘FOR paying off the debt fast’ case quite succinctly:

Seems like he can pay off his loans in 19 months

But, many were on the AGAINST side, including traineeinvestor who offered some great advice:

I would invest it all and not make any early debt repayments. Five percent (the most expensive debt – assuming it is not tax deductable) is a pretty low threshold rate of return to beat and mortgages and student loans are unlikely to be called early unless you miss a payment.

Me?

I’m right on the fence with this one … for two reasons:

The first is that, while average returns are much better than the interest rates being earned (actually saved … but a dollar saved is a dollar earned right?), if Bristol also applies his $10k cash stash to the debt, it may take him <2 years to pay off all of the loans … over that short period who knows what investment returns will be?

And, there is something to be said for being debt free … especially when it can happen so quickly!

[AJC: on the proviso that the debt repayments are immediately rolled into an aggressive – and, maintained – investment program]

On the other hand, if Bristol has a plan to make an immediate investment (found a great business to buy or invest in; found a great real-estate investment; has a brilliant idea for anew business; and so on) then why hold off on ‘the big payoff’ to pay down circa 5% debt, instead?

But, Bristol has none of those plans right now, and that brings me to my second – much more important – point, foreshadowed by Luis:

Who cares about your debt at this time! What do you want to do with your life?

Bristol’s current life plan – not what to do with his debt – is the problem … because his current life plan is impossible!

Here’s what Bristol shared:

I do have a stable job where I invest in the 401k up to the match% only. I have $10000 in a savings [account] and $10000 in a few blue chip stocks. I would  be willing to invest the majority of my savings. I am currently 23years old and would like to retire at least by age 55. So that would be 2066 and per cnn retirement calculator i would need 5.9million dollars (2.2million in todays dollars) to spend retirement happily. I think i could reasonably get 8% return. I think I would mostly like to invest in the stock market.

I think the expectation of working hard, living sensibly, saving hard, and starting young to retire on $2.2 million dollars (today’s dollars) in 30+ years would seem reasonable, wouldn’t it? In fact, this seems to be the mantra of much personal finance advice right now …

Yet, this is what happened when I sent Bristol off to play with an online calculator for a while:

I have been plugging my numbers into a similar calculator one that takes into consideration additional monthy contributions and have realized that if I want to reach my goal I will have to be much more aggresive. Although it is possible for me to get there, its just not happening on 8%. So I have alot of thinking to do about how to get there and how much risk Im willing to take. One thing is for sure, time is money and I will not be putting extra money onto the school loans anymore!

Inflation forces very large Numbers for even relatively modest retirements:  <$90k p.a. in today’s dollars (Bristol’s approx. target, based on a 4% ‘safe’ withdrawal rate on his $2.2 mill. pre-inflation target) may be considered luxurious by many, but – be honest – would you be happy working hard and being financially disciplined for 30 years and retiring on less?

So, inflated (at a relatively modest 3% inflation rate) an ‘easy’ target like $90k a year (today’s dollars) requires you to save nearly $6 million over your working life; simple logic tells you that this is impossible for a normal working person … Bristol included.

Bristol’s problem isn’t how to pay his debt; it’s how to amass at least $6 million in 30 years!

And, Bristol’s not the only one …

Personal finance in America is broken; the advice is small picture (pay debt, live frugally).

Who’s there to give the Bristol’s of this world the big picture?

Anatomy Of A Startup – Part III

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Now that the term sheet bartering (i.e. “how come you got more equity worth nothing than I did?!”) is out of the way, we moved on to (re)creating the business model; if you don’t know what a business model is, then this fantastic presentation should give you all the help that you need:

10 business models that rocked 2010 – by @nickdemey (boardofinnovation.com)

It may seem trivial, but just getting this down with the absolute minimum of lines, and icons (representing our features and benefits etc.) was very difficult but absolutely key. We changed our business model a number of times (esp. around how we charge for our services) through this exercise!
Hint: If you find a model here that’s fairly similar to what you have in mind, then modifying it is a great way to jump-start the process!
[AJC: we ended up choosing a model fairly similar to Groupon’s, although our startup has absolutely nothing – well, very little – to do with coupons and group buying … I’m guessing that every second VC pitch for the next couple of years will start with “Like Groupon, we” at which point the VC will quickly show them the door; a sure sign that copying Groupon’s business model is a VERY BAD IDEA … but, the general ‘shape’ – graphically – of their model seemed to fit our business concept]
If you want to give this a try, and I recommend it, start by downloading the free powerpoint template from the Board Of Innovation’s website here.