Monday, November 30, 2020

The Legend of Poopy Britches

The Legend of Poopy Britches

Occasionally a story is so bizarre, so outrageous, so unreal that it obviously MUST be true...hence is the case with Poopy Britches. Dubbed "the most significant fraud on taxpayer funds in California history," (which is actually really, really saying something), California has paid in excess of $1,000,000,000 in fraudulent unemployment claims to prison and jail inmates.

For some unknown reason, there doesn't exist a system to cross-check whether a citizen is in jail prior to paying out unemployment benefits. There are cameras at every street corner in LA to fine motorists. There are elaborate sting operations to catch people with more than 3 households for Thanksgiving. A surfer was arrested for...surfing. But things are so bad at the EDD (Employment Development Department) that not only are funds being dispersed to criminals currently in jail, but debit cards were issued to such outrageous names as Poopy Britches without any sanity checks.

Politicians are poor stewards of taxpayer funds because there is no incentive for them to be good stewards. Has there been any bigger victim to the largesse of government than the taxpayer? If ever there was a concrete reason to dismantle a complicated taxation system, this is it. Any time money is laundered through the government for benefit programs, inevitably there is "leakage." Why not change the policy to reward work? Eliminating the payroll tax benefits everyone, yet billions in PPP loans were issued with massive amounts of fraud, waste, and abuse.

Poppy Britches should teach us all that rather than launching payment programs funded by taxpayer funds, we should rather eliminate or reduce existing taxes and laws. Streamlining efficiency should be the goal, work should be rewarded, and ultimately bureaucracy that is not a good steward of taxpayer funds needs to be eliminated tout de suite.


Saturday, November 21, 2020

House of Cards

 House of Cards

As Covid rages across the world, a house of cards has been revealed; commercial office space concentrated in costly urban areas. Changes in behaviors have resulted in massive shifts in commercial office space. Literally hundreds of billions of dollars in "value" in this sector has been destroyed. Commercial office space has experienced its own Chicxulub Impact Event.

It has taken a global pandemic of epic proportions to reveal something many office workers (especially the younger generations) have know for years; save for some special situations, workers can achieve more productivity and teamwork outside the office than in it. The office has almost always been a "round-up" corral for mid-level management to practice management techniques on their employees or bring in management consultants to do the same. Work in many office environments was a kabuki dance of office politics and fleeting attempts of productivity in-between endless meetings, training, and continuing education. But alas, Covid has demonstrated that productivity does not collapse and the right hires who have had the opportunity to embrace the corporate ethos do just fine.

What next? Changes in work behavior has significant secondary and tertiary effects. From an urban perspective, many people living in a city also work in that city. There has been a significant urban exodus into the suburbs and interestingly the exurbs. People with traditional office jobs are fleeing (or have fled) and many aren't coming back; if they can execute their job functions or run their small businesses remotely they will.

The impact of an urban exodus to local restaurants, that were already teetering on the edge, will be fatal. Same for entertainment venues. Retail shopping. The list is long. Malls in urban areas might survive, but it's hard to see how (or why.) The one lynchpin keeping the urban communities together for the most part was education, either in public or private schools. As that has become severely disrupted and other avenues of learning emerged, that may have been the last straw for many families who have the ability to leave cities and put their roots down in communities with lower student to teacher ratios, quality clinics rather than emergency rooms and leverage the ability to perform job functions via technology.

Technology has helped the United States and many developed counties weather the Covid storm; by one measure, between February and October this year savings account balances have increased by $2 trillion. So toilet paper isn't the only paper we're hoarding. There are literally tons of cash sitting on the sidelines! Yes our Federal deficit has soared by tens of trillions of dollars, but there is no doubt that as a country we have significant dry powder right now.

If the stay-at-home economy is here to stay then as a society we should embrace a strong hub-and-spoke philosophy in terms, education, medicine, farming, manufacturing, all of it. Think Amazon, but in terms of society and that's where I think we're going. The emphasis going forward should be on strengthening the spokes, while ensuring the hubs survive. We have too much office space, but not enough residential space. That solution seems pretty obvious. The answer to the excess in high-rent urban office space is pretty simple: convert stunning corporate offices in the heart of major urban areas into housing. What to do with all these mid-level managers and consultants? Hub-and-spoke farms seem like a great solution. Farming is an honorable profession and keeps this country alive. Viva the farm!

Wednesday, November 18, 2020

Buy Then Build

 Buy Then Build

Occasionally a book is so profoundly simple in its premise a reader is taken aback as to why he hasn't thought of this idea before; such is the case with Walker Deibel's "Buy Then Build"

Many of my friends and clients are always on the prowl for a side hustle or a retirement job and usually the path has been the well-trodden and well-marketed push toward converting either a hobby into a business or...gulp...starting a business from scratch. Theoretically either of this two methods can and do work, but for every Uber, Airbnb, or Slack there are literally tens of thousands of expensive failures. Put another way, there is only one Ferrari in California with the license plate "EPICWIN" 

Not to beleaguer the point, but for those readers who haven't had the pleasure of a very public start-up failure, it is unpleasant from many aspects; typically you lose (lots of) money, (lots of) time, and even friends or colleagues. So with that in mind, Walker Deibel's approach makes perfect sense.

They say a picture is worth a thousand words, and the major takeaway is clear as day on page 32:

Feel free to zoom in on that image. Deibel illustrates the "Odds of Success" comparing a startup, VC-backed startup, and the acquisition of a going concern. This is the proverbial money shot of why those interested in either starting a new career or adding a business to their existing schedule should strongly consider buying an existing business and building on it from there. Your odds of success increase exponentially when you buy an existing business and build it out.

Using Buy Then Build as a roadmap and having a handle on your time commitments as well as a potential budget, two resources I have found to be extremely helpful include: BizBuySell and Flippa. Perusing all the listings on both sites is really intriguing as to what is out there and also the different methods and techniques business owners have built their companies over the years. 

Hopefully this post acts as an entrepreneurial lightning rod and helps those readers interested in running a business or side hustle or both the value of approaching the startup cycle from the position of an acquisition then building on the existing customer base, infrastructure, and cash flow.