Robert Smith of Vista Equity Partners famously said, “Software companies taste like chicken. They’re selling different products, but 80% of what they do is pretty much the same.”
Service businesses are no different.
You buy someone’s labor, mark it up, resell it, and spend opex to operate the business. You also spend money on capex to improve the “infrastructure” of the business, and what’s left over is your profit.
Markup – Opex – Capex = Profit
The challenge is that in the long term, the free market is annoyed with your business model.
Continue reading “The Secret Sauce of Valuable Service Businesses”
The best reason to start a company is to solve a problem that you genuinely, to your core, care about, and you can’t see another way to do it. People who find this are truly blessed.
And then there are the rest of us, and we are complicated. Here is my take.
The motivations for starting a company are complex – there are “light” and “shadow” forces.
Continue reading “Entrepreneurial Motivations: Light and Shadow Forces”
Businesses that are two-sided marketplaces, built around network effects and transaction fees (Uber, Lyft, eBay, Airbnb), will be especially vulnerable to disruption from businesses built around crypto tokens.
I have spent much of the past six months trying to understand the world of Bitcoin, Ethereum, alt-coins, crypto currencies, crypto commodities, and crypto tokens.
If history teaches us one lesson, it is those who adapt will survive, and those who fight tooth and nail for the status quo will flounder when the world invariably changes. If many smart people say that something “is the future”, it is generally worthwhile to try to figure out why.
Continue reading “How Crypto Tokens Will Enable the Disruption of Businesses like Uber and Airbnb”
I thought long and hard about what would most help a Bootstrapped Service Business (“BSB”) like ours grow faster and create more jobs, and it all comes down to improving access to meaningful investment capital – not small changes to tax rates, increasing deductions, payroll tax holidays, or tweaking regulations
‘Tis the season for tax reform, and in tax reform season, politicians talk about how changing the tax code will help small businesses grow and create more jobs.
I thought long and hard about what would most help a Bootstrapped Service Business (“BSB”) like ours grow faster and create more jobs, and it all comes down to improving access to meaningful investment capital – not small changes to tax rates, increasing deductions, payroll tax holidays, or tweaking regulations (which doesn’t even help if you happen to be a vassal with a feudal lord like the state of CA or NY…side gripe for another time).
Continue reading “Two Major Ways We Can Help Small Businesses Grow”
Tim (from Wait But Why) did a very funny thing to one of our oldest and best friends, and I felt compelled to post it (names and brands have been changed). Continue reading “The Best Fake Reference Email Ever”
America does not have an income inequality problem so much as it has a wealth inequality problem. The top 1% make about the same total income as the bottom 40% combined, which is significant, but it is nothing compared to the wealth gap.
The top 1% have 139x as much wealth as the bottom 40%.
So, why are income and capital gains tax rates based on income, not wealth? This is an outdated and oversimplistic way to ballpark wealth, and modern technology makes it much easier for track wealth now than in the past.
If we want to devise a more sensible tax system, we should strongly consider basing income and capital tax rates on a metric I will call Liquid Net Worth, instead of the traditional “taxable income”. This ensures that tax rates are assessed on a more full picture of someone’s financial situation, not just their year-to-year income.
Continue reading “Liquid Net Worth may be a Better Basis than Income for Income Tax Rates”
Ever since sharing economy companies burst on to the scene, there have been disputes between governments, like the State of California, and companies, like Uber, about the employee/contractor classification of its workers.
Some companies surrendered (Instacart), a few are still fighting (Uber), and some had to shut their doors because of the changes (Homejoy).
None of these policies are good for the long-term of labor in America. They massively discourage entrepreneurs from building business that revolve around human workers, and they accelerate the transition to a job-lite world that is built on robot, not human, labor.
Continue reading “Government to Business – “Robots, Not Humans, are the Workers You Want””
I was fortunate enough to trek to Everest Base Camp this month, and I wrote this up about my experience.
It was mainly for friends and family and isn’t my tightest piece of writing, but I thought I’d post it on Finn’s Cave, because fck it, if you’re procrastinating so hard that you’re reading Finn’s Cave, you’re might be interested in this account.
Continue reading “Everest Base Camp, Type 2 Fun, and Apocolypse Draft”