Agora

This is my soapbox.

[tchadjeu]

SPIFFs (Rewards) Don’t Build Loyalty

I first heard the term SPIFF at my first job out of university. It was an entry level sales position at an advertising firm based out of Texas. Anytime we were close to hitting a target or lagging behind, our manager would introduce a SPIFF. SPIFF most commonly stands for Sales Promotion Incentive Fund (not sure why the extra ‘F’ is there). Essentially, the idea is that by building incentives that reward certain actions, companies can drive sales and hit targets. It seems like a no-brainer — offer your sales reps a reward (cash, gifts, trips) on top of their existing salary and commission to motivate them to sell more.

SPIFFs are also common in the customer and employee loyalty space. Different audience, same aim — drive behavior in a desired direction. Most of us have been influenced by SPIFFs or exposed to them in one form or another. Whether it’s your Sears credit card, your Costo membership card, or your Starbucks re-loadable card, various companies have offered you perks or benefits to attract your business. But what exactly is the aim of all this? What is the core reason, the real goal that these various businesses are trying to achieve by building out all these programs? Loyalty. Businesses want customers to be loyal to their product or brand. Sales managers want reps to regularly hit target.

But there’s a caveat. SPIFFs alone don’t build loyalty. It’s an obvious truth that can be seen all around us, but we somehow conveniently chosen to ignore it.

Take sports for example. One of the most dominant teams in the NBA are the San Antonio Spurs. Behind the leadership of Gregg Popovich and the dominant play of Duncan, Parker and Ginobli, the Spurs have been a championship contender for the better part of two decade. In fact, they have not missed the playoffs since the 1996 -1997 season and of the 6 times they’ve made it to the finals, they’ve only lost once. All three of the players mentioned have spent their careers with the Spurs and are all considered Hall of Famers. You’d be hard pressed to find another team with the type of pedigree and consistency that the Spurs have had. Equally as rare is the loyalty that the players have to the team. Considering all that, you’d assume that the Spurs have one of the highest payrolls in the NBA. The year the Spurs won their first championship (1998–99), they ranked 16th with a $42-million payroll with the Portland Trailblazers in the top spot with $73-million. 4 years later, they clinched their second championship and ranked 17th with the Trailblazers still in the top spot with a $105-million payroll. They won again in 2002–2004 and ranked 24th. Their most recent championship was for the 2013–2014 season where they ranked 18th.

Just this week, Popovich literally forced one of his players take a $21-million deal with another team rather than stay in San Antonio for $3-million. How can a player be so loyal, that he is willing to give up $18-million to stay with a team? Now that is loyalty! What’s the secret? Well there have been numerous articles written about Popovich’s coaching philosophy but the fundamental point is that the perks and rewards isn’t what keeps players loyal to the Spurs.

While teams are spending millions to attract the best players, Popovich has been able to convince players to take less money to join the Spurs. That’s because money isn’t what’s motivating them. They are drawn to the system in San Antonio and Popovich’s method of coaching. Essentially, they are drawn to the product. Sure you could spend millions attracting the best of the best. But when your focus is on the rewards rather than the product, it’s a race to the bottom — and when the well runs dry, the talent disappears in search for the highest bidder.

The same is true when it comes to customer or employee loyalty. If your loyalty and incentive programs focus solely on the reward aspect, they are doomed to fail. In fact,77% of rewards programs that focus on rewards alone will fail within two years. As my colleague likes to say, rewards are table stakes — everyone is doing rewards.

The means is as important as the end: Whether it’s your employees or customers, the road to loyalty is paved with trust, exceeding expectations and creating true value.

Know your audience: Your loyalty programs should be built around getting to know your audience deeper. The more you know about your audience, the more impact you can have. If you have a one-size fits all model, you are already going in the wrong direction.

Have a clear goal: Having a clear aim from the beginning and implementing ways to track progress is an important aspect to an effective loyalty program.

A well executed loyalty program can produce consumer sentiment results that register well beyond the balance sheet. Besides the impact rewards programs can have on a company’s bottom line, they also play a pivotal role in shaping the consumer’s perspective of the brand.

In fact, loyalty programs, according to this survey of more than 11,000 consumers, actually have more influence on brand satisfaction than price or perception of value.

Don’t build a relationship with your employees and customers that’s solely transactional and focused on monetary value extraction. Rather, make it one that is rooted in genuine value creation and transparency.

Simply put — don’t buy loyalty, earn it.

[tchadjeu]

Five Ways to Drive Adoption

With new technologies emerging daily to improve everything from operations to sales, it's common for companies to introduce new software to help improve their businesses. But what happens when your team has a hard time driving adoption. This is a challenge that many companies face when trying to implement a new platform/service across their organization. People tend to be adverse to change, even when it's a beneficial change. Below are five ways you can help improve adoption at your company.

Get Executives Onboard

Implementation works best when the entire company is onboard. To that end, it’s important to implement new platforms from the top down. Ideally, this means getting the CEO, COO, CTO and as many members of the executive team on board as possible. Employees look to leadership for direction so having the leadership not just talking but also acting, really helps get the ball rolling.

Assign a Company Ambassador

It’s also helpful to assign someone from within your organization to be the official ‘Ambassador’. Make them the company expert on all things regarding the new platform. This creates a sense of intentionality in regards to successfully rolling out the service across the company. A lot of the challenges stem from employees learning the ins and outs of the new software. Having someone to talk to on the spot makes it easier for employees to get answers to their questions when they need it.

Have an Official Company Re-launch

With the executives onboard, it’s important to have an official internal launch. This not only announces the program to the entire company, it creates awareness and gets them excited. It shows that the company is serious about the new implementation and helps to get everyone on the same page.

Implement Incentives

A key driver of adoption is creating incentives within the organization. Use incentives to encourage employees to actively use the platform/service. Incentives can vary and are entirely up to you. Everything from extra vacation days and free lunch, to work from home days and cash prizes. What you decide on is entirely up to you but the end goal should always be to promote adoption.

Schedule Department Specific Webinars/Training Sessions

It’s important to properly train your employees on not only how to use the service/platform but how properly using it can make their job easier. Whether you get the service provider or run it internally, properly training your team is key.

You want to demonstrate the ROI of fully and properly committing to the new software and to do that you need to educate your staff. Making each webinar department specific also helps to customize the sessions to each respective department.

[tchadjeu]

Selfishness is not living as one wishes to live, it is asking others to live as one wishes to live.

Oscar Wilde

[tchadjeu]

People are living longer than ever before, a phenomenon undoubtedly made necessary by the 30-year mortgage.

Doug Larson

[thisisaircare]

Five reasons why medical care is more affordable abroad

The medical tourism industry is booming. Every year, over 1.2 million Americans take advantage of the low cost, high quality medical care available abroad and save a lot of money in the process.

But how is it that medical care abroad can be both low cost and high quality? There are many reasons. We’ll outline five big ones here: 1. Lower cost of labor

Doctors and medical staff overall are paid much more in the US than they are in the countries we focus on. These labor cost savings are passed on to consumers in the form of lower prices for medical care.

2. Lower insurance rates.

The US has a very active medical litigation industry. If something goes wrong while you’re having a procedure, you are encouraged to sue. Damages can run in the millions of dollars. There is therefore an equally active medical insurance industry in the US to cover these damages, and medical staff and practices are required to hold very substantial insurance policies, driving up costs. This is not the case in the countries we focus on. As a result, professional liability insurance premiums are a fraction of what they are in the US.

3. Greater simplicity and transparency

The financial workings of the US healthcare system are incredibly complex and bloated. You (as a patient) rarely pay directly for the service. Most often, there’s an insurance company acting as an intermediary. Medical practices and insurance companies negotiate to agree to costs. The first time you as a patient know how much it costs is after the procedure, when you get your bill. Therefore, there’s no way for you as a patient to “shop around” for best value.

For international patients, the process is much more straightforward abroad. Medical care is largely paid for directly by the patient. This introduces a greater degree of competition between medical practices which in turn puts downward pressure on prices.

4. Greater supply relative demand

There are many medical care supply restrictions in the US that contribute to high prices. From a paper on the topic by University of Chicago Economics professor John Cochrane:

A small example: in Illinois as in 35 other states, every new hospital, or even major purchase, requires a “certificate of need.” This certificate is issued by our “hospital equalization board,” appointed by the governor and, like much of Illinois politics, is regularly in the newspapers for various scandals. The board has an explicit mandate to defend the profitability of existing hospitals. It holds hearings at which they can complain that a new entrant would hurt their bottom line.

Specialized practices that deliver single kinds of service or targeted groups of customers cheaply face additional hurdles, as they undermine the cross-subsidization provided by “full service” hospitals. For example, the Institute for Justice is bringing a major suit by a speciality colonoscopy practice in Virginia, which local “full service” hospitals managed to ban. This is exactly the form of regulation put in place by the Civil Aeronautics Board until the late 1970s, which produced airline prices much higher than they are today.

In contrast, new medical tourism initiatives have been announced by the governments of India, South Korea, Malaysia, UAE, Puerto Rico, and others to aggressively expand total hospital capacity.

5. Favorable currency exchange rates

Finally, American patients benefit from the purchasing power of the US dollar relative the currencies of the countries they’re visiting – say, the Costa Rican colón. This, combined with the other reasons listed above, makes a big difference.

[tchadjeu]

Response to Oct 12th National Post article by Andray Domise

A recent National Post article by Andray Domise discussed how the Liberal Party of Canada had dropped the ball when it came to black communities. He outlined how his family had long supported the Liberals starting with Pierre Elliott Trudeau and contrasted how today's Liberal Party was no longer the same as the one during the “golden years” of Trudeaumania.

While I applaud Domise for his contribution to the political discussion, his views don’t seem to stack up.

First, to do away with the fallacy that Pierre Trudeau was ever good for Canada generally or black Canadians in specific. Aside from his charisma, Trudeau’s tenure as PM was one of the worst in Canada’s history and with the exception of the Charter of Rights and Freedom, his legacy is plagued with failure. David Frum has a great piece on this. While in office, Trudeau tripled government spending within 10 years and as Canada plunged into recession in the early 80s, lenders feared a Canadian default with deficits exploding. During WWII, he openly opposed the entry of Jewish refugees into Canada and only helped to marginalize Canadians during the Quebec separatist crisis. So when Domise says Trudeau was either motivated by “tolerance or political strategy” when opening his arms to black immigrants, the latter seem most plausible.

Domise continues by stating that the Liberal Party was once a “champion for diversity” and lists former black members of the Liberal caucus to support his case like Hedy Fry and Jean Augustine. He then criticizes today’s Liberals for failing to continue and improve on racial representation. But how does equal representation of race naturally equates to fair policy or legislation. Where does he get the data to make the claim that having more blacks represented at any level of government leads to better policies towards said race? Why should race be a factor when it comes to electing or appointing any candidate to any office -- Shouldn’t merit be the only basis?

Domise second target is the Liberal Party’s support for bill C-51 as he bashes them for voting with the conservatives on the bill. While there have been numerous back and forths around the bill C-51, we should applaud the Liberals for supporting the bill but requesting some amendments. Like most bills, this one has its good, its bad, and its ugly. When Domise argues that the bill should be repealed -- it’s reckless and shows naiveté around the current realities we face when it comes to terrorism. There are crucial aspects of the bill which are important in a post 9/11 world such as better management of Canada’s no-fly list or enabling law enforcement to act quickly if they suspect a terror plot is imminent. There are also dangerous sections that must be reviewed and better defined like its prohibition on speech that promotes and glorifies terrorism or expanding the kinetic powers of CSIS. 

While the bill may have “serious implications for Canada’s black communities” as Domise claims, that is neither its aim nor its mandate. 

If we can agree that our goal is to protect all Canadians from terrorist threats, we would have a better discussion on how to make bill C-51 more effective while remaining conscious of the protections of all Canadians under the Charter of Rights and Freedoms.

Domise makes the comment that protests such as Black Lives Matter could be deemed a threat to national security under the proposed bill also seems very calculated. Rather than discussing reasons why such protests would be considered a threat under the new bill, he subtly implies it is targeting the motive behind the protest. He is essentially saying that anyone supporting the bill doesn’t believe that black lives matter.

Lastly, Domise addresses the controversial carding practices in Toronto. He is correct in that the practice disproportionately targets blacks, and its proponents have failed to show any concrete evidence supporting its effectiveness. But then he condemns Trudeau for not speaking authoritatively on the issue. Carding is a local and municipal issue and that’s where it should and needs to be addressed. It does not fall in the scope of the federal government so criticizing the party leader based on that is baseless. Trudeau’s focus should generally be geared towards issues that affect Canada as a whole such as the economy, military, energy and foreign policy. Carding is not a federal issue rather it is one that should be addressed by the premier, the mayor and city council rather than the Prime Minister.

So yes, you shouldn’t vote Liberal in the upcoming elections but it has nothing to do with the color of your skin. Before being black, I am Canadian. I don’t endorse the notion that race should play a role in which party I support. While others may believe that their race defines them, I don’t join them in that declaration. My identity is far more complex than simply my race. I desire many of the things that Canadians of all races seek, such as a stable economy, safe neighbourhoods, freedom of speech and so on. Domise attempts to argue that yesteryears Liberal party is somehow better than today’s Party doesn’t add up. By racializing politics, Domise is guilty of the same accusation he throws at Justin Trudeau and the Liberal Party.

[1] - http://news.nationalpost.com/full-comment/andray-domise-canadas-black-community-shouldnt-vote-liberal

[2] - http://news.nationalpost.com/full-comment/david-frum-the-disastrous-legacy-of-pierre-trudeau

[3] - http://www.parl.gc.ca/content/LOP/ResearchPublications/bp276-e.htm

[tchadjeu]

Remote Work is the New Standard

It’s no secret that Silicon Valley is seen as a mecca for startups. The assumption is that once you join the startup community in the valley, the sky's the limit. Entrepreneurs are flocking in droves to Silicon Valley in hopes of attracting the network and talent required to build and scale a successful company. But there’s a catch. While the valley is touted as the place to be, it is far more difficult to join the fray if you aren’t a U.S citizen.

Regulation has long been the enemy of innovation in startup circles. You will usually find that where there is heavy regulation, innovation is slow to take root. There are numerous key factors that can make or break a startup – most agree that at the top of the list is the quality of the team. Having a strong, well rounded team is crucial to the future success of any startup. As the world becomes increasingly globalized, some of the world’s best talent isn’t in Silicon Valley but can be found abroad. Countries like India, Romania, Israel and many more are breeding grounds for some of the best tech and business minds. But strict and often detrimental immigration laws make it difficult for companies to recruit the right talent to help scale their company. There are countless horror stories from founders recalling the tiresome process they’ve had to go through in an attempt to get a visa for their employee or co-founder who may reside outside of the U.S. A good example are the hurdles one of Instagram’s co-founders faced.

While the challenges are clear, innovation has no ceiling. As more and more teams are forced to work remotely, we’ve seen the emergence of tools to help remote teams work more efficiently. My first exposure to such tools was when I came across Teleport. 

Teleport is a startup that helps people find the most efficient place to live based on a number of factors. Suppose for example you need to move to Paris but you're unsure of where exactly to live or whether Paris should even be a city you move to. Using Teleport, you input data such as your salary, the climate you prefer, time zone, population size, the presence of venture capitalists and dozens of other preferences for an ideal location. Teleport then processes all that data and presents you with a ranked list of cities best suited for you based on all the information you imputed. Similar to Teleport, Nomad List ranks cities around the world based on how hospitable they are for remote workers or digital nomads (usually freelance workers who travel the world while working remotely - very common in the digital economy). While both these platforms focus on helping you find habitable cities, there are a plethora of tools out there that directly improve your actual efficiency whether you need.

Platforms like Trello which helps teams manage projects and stay on top of roadmaps, Slack and Twoodo who simplify communications between teams to Every Time Zone and Toggl that helps you managing different time zones and helps you keep track of your work hours. The emergence of virtual reality could also have a significant impact in addressing some of the perceived drawbacks of working remotely. While Sqwiggle (acquired by Speak.io) allows online video collaboration, imagine using Oculus Rift to hold meetings with your team -- it would be as if everyone is in the same room. These along with many others not only make remote work more efficient but sometimes even favorable.

The implications to this are still largely unrealized but will begin to take root as the world continues to become more and more globalized. Not only could startups leverage labor arbitrage by employing workers in other countries, it would open up a previously untapped labor pool. Startups would no longer see international employees or founders as a potential liability but rather embrace the advantages they bring. Rather than paying 100k for a strong tech lead, they could recruit the same talent abroad for a fraction of the price. An organization like Dev Without Borders that pairs 'on-the-ground' NGOs and nonprofits with talented developers abroad to build mobile solutions could take their mission one step further and employ local talent and take advantage of the all these tools to enable seamless workflow. 

Immigration reform is overdue and change is always slow and painful. But thanks to innovation, we don’t need to wait for policy makers and politicians to act. These barriers have only given birth to all these tools that I foresee will make remote work the new standard.

[tchadjeu]

The Startup Deception

The media is good for a lot of reasons, but it tends to be terrible for a lot more. In the last decade or so, the startup culture has experienced what I would call the ‘golden years’. With a record breaking amount of funding from investors and an unprecedented amount of unicorns gracing the world stage, the media has been successful in its mission of romanticizing the startup culture. Being an entrepreneur has become a badge of honor and a claim to fame. Through the help of the media and the plethora of resources at hand, everyone has been told that they too can become entrepreneurs.

This misconstrued portrayal of entrepreneurship has led many dreamers astray. What they thought would be a 10 step program to a successful exit was in fact something completely different. The truth of the matter is most startups are destined to fail -- that is just the nature of the beast. With that in mind, anyone considering embracing such a calling must understand the reality of the situation. As an entrepreneur, your failures are far more important than your success. During your entrepreneurial journey, you will fail and you will fail often. Like life, starting a company is a series of hills and valleys. The hilltop can get high but the valley will go deep. It is precisely in the midst of those valley that you are able to separate true entrepreneurs from glory seekers.

In 2007, there were two friends named Joe and Brian living in San Francisco, and like many, were struggling to pay rent. They decided to turn their loft into a bed and breakfast and bought three blowup mattresses with which they planned to rent out to travellers. They enlisted their former roommate Nathan to help them build a simple site with pictures and info to allow others to view and book the beds on the floor of their loft. Soon after, they got their first three renters who paid $80 each for a bed. That following weekend, they began receiving emails from potential renters inquiring about whether they had different locations. That’s when they realized they may have stumbled onto a big idea. A few months later, they launched at SXSW but were only able to get two bookings. For the longest time they were not growing and were unable to get seed capital because no one really believed in their business model. Then they had an idea. As the 2008 elections approached they made custom branded cereal for each candidate and sold them at various conventions. Selling Obama O’s and Cap’N McCain’s for $40 a box, they were able to raise $30,000. However, they still had trouble with growing the business, and were making only about $900 a month. Friends, investors, strangers all encouraged them to abandon the idea but they stuck at it. Living off the remaining cereal from their hustle, they continue to plow through. At one point, they went door to door in NYC to all their listed properties and took professional pictures of the spaces. Slowly they began to grow and started making roughly $1800 a month. But still they were getting rejected by investors who didn’t believe in the business. One well known investor, Fred Wilson,  was quoted telling them:

“this problem is a bitch, you won’t solve it, and it will kill you.”

He recalls meeting them and regrets not funding the group to this day. That’s because at a estimated valuation of $25.5-billion, Airbnb was able to thrive when the going got tough.

When you launch a business, obstacles will come and they will come fast. There comes a point where you will find yourself in a 20 foot pit with no way out -- these are the moments that entrepreneurs live for. As the walls close in around you and the light at the end of the tunnel slowly disappears, the entrepreneur finds himself in his element and relishes the challenge. Unwilling to become a victim-- a product of his environment, he choose to make his environment a product of himself. The entrepreneur is addicted to the hustle!

The main difference is the real entrepreneurs, the ones who will make real change in the world and introduce ground breaking products that disrupt industries and change lives are the ones able to stick it out when the future looks bleak. The others, they will simply walk away and return to their comfortable lives. That’s because the only way to persevere in the valley, is if you are in it for the journey and not the destination. To them, the worst part of being an entrepreneur is actually the best part.

[tchadjeu]

Minimum wage and the Fallacy of Good Intentions

Debates are meant to be settled. But there are some issues that re-emerge every couple of years under the veil of good intentions, ignoring the reality that empirical data consistently undermine them. One such issue is that of minimum wage legislation, the argument for which has always been the same: unskilled workers, including young people and minorities, are not getting paid enough to survive and thus companies should be coerced into paying them a higher minimum wage. Proponents of such legislation never care to observe the data to see the effects of such policy have on the very people they claim to be trying to help. Most are content ending the discussion there and congratulating themselves for helping the less fortunate. The few that do see the data tend to point the finger at everyone else such as employers for being greedy and getting such high salaries compared to workers (this is an entirely different discussion for another time), but never do they dare question the true effects of minimum wage legislation.

Basic economics teaches us that the more expensive something is, whether it is a commodity or labor, the smaller the quantity demanded will be. Demand curves slope downwards. In plain English: the higher the price, the smaller the sales. You can look as far back as you want and it won't be hard to see that correlation between minimum wage and unemployment -- especially, again, among young people and minorities. When the minimum wage was first introduced through the Fair Labor Standards Act of 1938, the intention was still the same.  Some minimum hourly rate of pay should be legislated so that people will have sufficient income to support themselves and their families. But time has told a different story since then.

For one, when examining the labor pool of minimum wage workers we find that about half (49%) are teenagers and young adults under the age of 24. Of that 49%, roughly 62% still live at home with families that make two or more times the official poverty level. In the other 51% of that labor pool, less than half had family incomes less than 1.5 times the poverty level. The popular belief that minimum wage workers are poor adults (25 years old or older), working full time and trying to raise a family is largely untrue. Just 4.7% match that description. So in passing such legislations, policy makers falsely believe they are helping millions of workers when in fact that number is far smaller. More importantly though is that rather then helping them, the legislation simply acts as a barrier or prices them out of the labor market[1].

Just recently, San Francisco and Seattle passed legislation to increase the minimum wage (in segmented increases) significantly above the state level and already the negative impacts  are being felt. Rising costs, layoffs and companies closing up shop. You can read some of the reports here, here and here for specific details.

The dilemma  is that it is easy to confuse the ends with the means. But if you take the time to understand the economics of the issue, you begin to see a clearer picture. When you increase the cost of labor -- that is, when you force employers to pay more for each employee -- not only will they hire less, most will also layoff workers to offset the high cost of labor. Because employers want to maximize the value of their dollar, the workers laid off usually tend to be those with the lowest skills. In fact, if they do decide to hire, they will seek out prospects who have the most skills to bring to the table. So minimum wage actually results primarily in increased unemployment among the most vulnerable sectors of society.

Renowned (I use the term loosely) Fabian socialist Sidney Webb was as blunt as anyone in his 1912 article “The Economic Theory of the Minimum Wage” when he said:

“Legal Minimum Wage positively increases the productivity of the nation’s industry, by ensuring that the surplus of unemployed workmen shall be exclusively the least efficient workmen; or, to put it in another way, by ensuring that all the situations shall be filled by the most efficient operatives who are available.”

The truth of the matter is that for every study (and here) I point to, that show the negative impacts of minimum wage legislation, supporters of such a move will point to their own studies. The reality is that empirically dissecting in a globalized and increasingly dynamic economy the full effects on employment of legislation that directly affects a small percentage of the workforce is a fool’s errand. So rather than sparring back and forth on whether or not said legislation does or does not affect the employment prospects of possibly millions of low skilled workers I'd like to put forth the same question I came across recently.

Consider the following: Suppose we were to enact a minimum wage of $100 per hour. Would this reduce employment? The obvious answer is: of course it would.  Now, consider several other possible increases of less than $100. It makes sense to assume that the larger of these increases would have substantial effects and the smaller ones smaller effects. So if you accept as a fact that a minimum wage of $100 would reduce employment,  then logic compels you to believe that a small increase in the minimum wage above the current market rate will have at least a small negative effect on employment. The only escape from this logic is to believe that at some point there is a discontinuity in the relationship between minimum wage and employment.

This relationship between employment and wage isn’t exclusive to North America. In a recent piece in the National Review, Thomas Sowell discusses how minimum wage effects countries abroad as well:

“Go to your local public library and pick up a copy of the distinguished British magazine The Economist. Whether it is the current issue or a back issue doesn’t matter. Spain, Greece, and South Africa will be easy to locate in the table near the back, which lists data for various countries. Just look down the unemployment column for countries with unemployment rates around 25 percent. Spain, Greece, and South Africa are always there, whether or not there is a recession. Why? Because they have very generous minimum-wage laws. While you are there, you can look up the unemployment rate for Switzerland, which has no minimum-wage law at all. Over the years, I have never seen the unemployment rate in Switzerland reach as high as 4 percent. Back in 2003, The Economist reported: “Switzerland’s unemployment neared a five-year high of 3.9% in February.”

I strongly believe that the large majority of people who support minimum wage legislation fail to accept or understand basic economics and are blinded by the notion that they are helping the less fortunate. This blind allegiance to such a destructive policy is far more dangerous because those behind such policies are typically the one least affected. To them, justification stems from a lie they've told so many times they've started to believe it. We are helping the less fortunate get a fair wage. Unfortunately, the stats tell an entirely different story, and it's the "less fortunate" that must bear that burden.

[tchadjeu]

The best way to predict the future is to create it"

Peter Drucker

[tchadjeu]

[tchadjeu]

The Cost of Discrimination

There’s a wave sweeping across the tech industry and it’s demanding to be reckoned with. It’s not a new wave – it’s already made its way through numerous other industries in the past. But with the growing prominence of tech over the past 30+ years, it has found its next target.

I’m referring the the push for gender parity in the workplace. While the push for equal representation seems well-intended, I believe that it is not only misguided, but will ultimately do more harm than good. It unfairly discriminates against one group while downplaying the capabilities of another. It risks creating rifts within firms, and ultimately, harms industries overall.

The first thing that many fail to understand when thinking about this issue is that, in a competitive market, there is a cost to discrimination. A free market is gender-blind – it only sees skill, productivity, and it rewards those who think along those same lines while punishing those who don’t. When someone is discriminated against, they are not the only person harmed. An employer who makes hiring decisions based on gender often does so at the cost of hiring lesser qualified candidates. A competitor who decides to hire solely based merit will end up with a higher skilled workforce at or below the market rate and will thus soon outperform the sexist employer.

Over time, more firms will realize they can outperform their sexist counterparts and as the trend continues, firms that practice discriminatory hiring practices will eventually get pushed out of the market as they become less competitive. As economist Thomas Sowell puts it, “The competitiveness of the market puts a price on discrimination, thereby reducing it but not necessarily eliminating it.”

Suppose under a new initiative to hire more women, Twitter suddenly hired enough women to claim a 1:1 male female ratio. Whether all their hires were the best candidates for the position would surely be up for debate but let’s assume that they were. We can be sure that tension would rise between incumbent workers and new hires as one group would question whether the other got hired based on merit.

The common misconception is that gender and race disparity exists due to a systemic problem embedded in the hiring process. While that may be the case in some instances, I believe the broader reality is far less sinister. For one, I think the pool of labor is reflective of the disparity. There are far more men graduating with engineering and math degrees than females so when it comes to the choices hiring managers in tech are offered, there are far more male engineers than women in the hiring pool. So rather than blaming tech companies for not hiring enough women, a better initiative would be to encourage more girls to get interested in maths and sciences at an early age. 

Organizations like Ladies Learning Code and other like it are great because they focus on getting young girls interested in coding. Other organizations like Women Who Code focus on women rather than young girls who may be interested in a career chance. Both are awesome approaches to solving the gender disparity in tech. A recent BLS report suggests that there is an increasing trajectory of wage equality. Most of the 17.9% wage gap in the U.S can be attributed by the number of hours worked, marriage, kids, and age. In fact, women who work full-time and who have never married make 95.2% of male earnings narrowing the gender-wage gap to less than 5%. [1] 

But times are changing and so is the typical structure of the family. More women are deciding to have less kids or no kids. More men are deciding to stay at home and raise children while their wives work. Organizations like the ones mentioned and numerous others are doing great work in getting young girls and women excited about tech. I don’t think our goal should be to see women better represented in tech. I think our efforts should focus instead on removing barriers that would prevent women from entering the talent pool of tech engineers. In the end, employment should be based on merit, and if hiring managers have as many women as men to choose from, that is a win in my book. 

[tchadjeu]

Why you should Hire Entrepreneurs

After my first startup stagnated, I found myself in a difficult position. I was low on cash, with no revenue, and my debt was mounting. I realized that I needed to get a job and fast -- so I started applying. After a couple of interviews, I landed one that I felt was a good fit. It was with  a small, privately owned financial services company. It was a growing company and offered a number of growth opportunities, which was important to me. I was also looking forward to improving my financial literacy and diversifying my skill set. But something happened that caught me by surprise. I got a call from the hiring manager letting me know that they’d changed their minds and would be retracting their offer. After doing some digging, I found out that when the company found out that I was an entrepreneur, they deemed me a flight risk and decided against hiring me.

After that, I downplayed my entrepreneurial background for all future interviews because I realized that what I considered my greatest asset, many companies saw as a liability. I believe companies that overlook candidates because they are entrepreneurs are making a mistake which is rooted in common misconceptions.

Entrepreneurs are hard to retain since they’ll likely end up starting another company. There’s also a perception that they are more likely to spend more time pursuing their own ideas rather than their employers’ goals. While these are valid concerns, they are far from absolute. I find that companies that would benefit the most from hiring entrepreneurs are the one that are most hesitant because they would feel the effects of a good or bad hire far quicker. What I mean is: TD Bank wouldn't be as affected by one hire (good or bad) as a small business of 50-100 employees. Further, placing entrepreneurs in the right roles is far more important than the size of the company.

Entrepreneurs are visionaries, hellbent on making an impact in the world. To us, it’s more than just being our own boss, which is a common misconception. Here are three reasons why companies should place their bets on entrepreneurs in light of their potential flight risk.

1. They are all about self development

Entrepreneurs are always learning. Whether we are at work or not, we are sponges and absorb information around us. You will find that entrepreneurs will tend to quickly grasp various aspects of your organization. This is one of the things that makes us creative and enables us to offer new ideas and perspectives to a company. The more opportunity you provide for an entrepreneur to learn new things, the more beneficial we will be to your organization. We will always look for ways to improve processes  across the organization based on past experience and what we’ve learned.

2. They see risks as opportunities

An entrepreneurs’ livelihood is rooted in risk. Unlike most 9-5ers, we embrace, sometimes even pursue, risks. Our risks are calculated and not frivolous. This enables us to see opportunities where many may not. Our experience with failure also enables us to be far more intuitive when looking at risks and opportunities. We will challenge the status quo and force organizations to validate assumptions that they’ve previously held. We are visionaries and are able to turn abstract ideas and concepts into real life given the opportunity. We constantly want to innovate and will keep exploring new and better ways to stay ahead of the competition.

3. They see the bigger picture

Having ran our own business, entrepreneurs are accustomed to wearing multiple hats and thus, are able to see the bigger picture where other employees may not. We understand that the road to success and growth is riddled with road blocks and we are excellent at living externally to our circumstances and stay focused on the bigger picture. If your company hits a rough patch, we are likely the ones to stick it out when others may leave. 

When hiring entrepreneur, employers should leverage what they see as a liability and turn it into an asset. Place them in a role that allows them to utilize their arsenal of skills and keeps them challenged. Keeping them in a box will quickly disengage them and render them useless. Make them Intrepreneurs -- that is, allow them to innovate from within your organization. 

[tchadjeu]

The Great 'Fall' Of China

About three years ago, I wrote the book, The Coming China Crisis, which predicted the sequence, such as record debt, mal-investments, excessive debt-financed speculation in real estate, 64 million empty condominiums, a credit crunch followed by a credit crisis, and then a crash. Furthermore, the book said this crisis would [...]

[tchadjeu]

The argument is that because of the market failures, the government has to intervene.  That is a classical example of the goodwill theory of government.  It expresses a belief that the government will find the proper solution to maximize social welfare and will act to achieve that solution.  But “government failure” characterizes the reality of political institutions.  The goodwill theory of government offers us little guidance to understand our socio-political world.  The “government failure” can frequently be much worse than the alleged “market failure” when assessed in terms of the public’s welfare.

Arjo Klamer’s 1983 volume, Conversations with Economists

[tchadjeu]

Google Cofounders Just Made About $8 Billion In a Day

It’s all thanks to Wall Street.

[tchadjeu]

The SMS Revolution

An interesting development is afoot and it is forcing everyone to rethink simplicity when it comes to design and communication.  One of the simplest modes of communication, that was almost forgotten and definitely overlooked, is regaining prominence. SMS, which stands for Short Message Service, was introduced in the early 1980s. It is mostly used by people sending text messages between mobile devices. SMS was the most widely used data application, with an estimated 3.5 billion active users, or about 80% of all mobile phone subscribers at the end of 2010 [1]. But while SMS has been and continues to be popular among consumers, the tech industry for the most part dismissed it. It has instead sought after new and better means of facilitating communication. But some companies have emerged in the last year or two whose core user interface and functionality relies on SMS.

Magic is a prime example. Its entire model centers around customers texting any request to a number provided and the entire interaction occurs via SMS messaging. As simple and low tech as that appears to be, it seems to have struck a chord with customers. In just three days, Magic added over 1,000 customers to its database, fulfilled over 1,700 requests and has more than 25,000 people on a waiting list [2]. Assist is another growing company who, like Magic, relies on SMS for all communication. They enable users to instantly message a local expert to discover where to go, where to eat, where to drink, what to see, etc. Now some companies are realizing the value in simple text messaging and are reverting back to SMS. Tab is a payment dining app that has built out a beautiful yet simple iOS and Android app enabling users to reserve and pay for meals at local restaurant. They’ve recently introduced Tab Talk which enables customers to text requests and speak directly with someone rather than going through the iOS or Android ordering flow.

With SMS making a comeback as a core application interface, I’m sure this is just the beginning of a significant shift with how apps, especially within the service economy, build out their services. This trend has already been occurring in China via services like WeChat, which boasts 500+ million users across the globe. Because WeChat is open to integration, it has encouraged the addition of a number of interesting features. For example, users can use the messaging platform to check into hotel rooms, purchase train tickets, order food for delivery, schedule doctor appointments, pay tuition, and much much more [3]. While at first, designers might be scratching their heads about the use of simple SMS rather than their beautifully designed ux/ui -- the answer might be far simpler than it seems.

Texting is familiar. It is as simple as it gets and it doesn’t change. Unlike going through an app, whether you’re texting on an iPhone or Android device, there is essentially no learning curve. Imagine a world where all apps (specifically service providers like Uber, Yelp, Airbnb, OpenTable, etc) could be accessed via a simple SMS request. Rather than navigating through a task-specific UI, you would simply open up your text message and text “I need an UberX” and get a reply “John will be there in 5″. That’s it. Suppose you want to book a flight, so you message flight-brokerage company Hipmunk, “I need to fly to Miami on Monday and be back in Toronto by Saturday morning”. Shortly after, you get the reply: “We have a flight getting back to Toronto at 5:30am and one coming in at 10am. The 10am flight is $60 more expensive at $475 USD”. You reply, “I’ll take 10am, thank you.” They reply, “Flight is booked. Check your email for your ticket and booking details”. Done.

The uses cases for messaging based platforms are many, but they generally break down along two broad go-to-market strategies. You can attempt to corner a particular vertical similar to what Tab and Assist are doing with restaurant reservations and local recommendations, or you can focus on a horizontal approach. While time will determine which approach ultimately wins in the market, I believe going horizontal offers a more compelling value proposition for both users and founders. While it is clearly a more difficult feat, it seems to be a more attractive opportunity. Focusing on a vertical may have a lower barrier to entry and you are likely to spend a lot of time and money fending off competition as you try to control marketshare.

While Magic is a close example of a company attacking the horizontal market, they still rely on the messaging OS of whatever device it’s customers use and would still be competing with a company like Postmates if they decide to implement SMS in their offering. Even Operator, whose touts “Make a request and we’ll find it for you” is still limited to what i can do if it lacks users. For example, Facebook messenger recently released a feature that enables users to send each other money [4]. This is something Operator may have a difficult time fulfilling. It is important to differentiate SMS vs. Messaging. Operator for example is a messaging app which means you can send messages from within the app to others who've downloaded the app. Magic isn't an app at all and relies entirely on the SMS (text messaging). When it comes to building a horizontal service, I think WeChat is doing it right and Facebook is also a potential player with its 1.44 billion active users (don’t forget they also own WhatsApp). The key is building the messaging platform and allowing third parties to integrate into it. This would enable users to download a single app, but have access to virtually every service they would ever need.

An interesting idea I came across was the potential for Apple to turn iMessage into an open platform and allow third parties to integrate their services into its messaging platform. You could delete 90% of the apps on your device and replace them all with iMessage. You’ll be able to text Ticketmaster for tickets to the concert or Groupon for deals to the restaurant down the street and never leave your messaging app. Imagine a home screen with almost no apps. With almost a billion iPhones sold world wide, a move like that by Apple could open up the door to a lot of interesting ways to use SMS.