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Monday, December 24, 2007
Sunday, December 2, 2007
Why “A loquacious Antartic fowl entered a libations establishment…” doesn’t pack the same punch as “A penguin walks into a bar…”
Never confuse “smart sounding speech” with real communication. “A loquacious Antartic fowl entered a libations establishment…” doesn’t pack the same punch as “A penguin walks into a bar…” when you’re telling a joke.
And the guy who wins the debate will always be the one who connects with the audience in the most fundamental, feisty way. Facts won’t win, carefully constructed diatribes won’t win, and even being right won’t win.
Nope.
The winner will always be the dude who cracks the crowd up, and delights their ear with unexpected language.
Thus, I have never offered a plain old seminar before. Instead, I host “Copywriting Sweatshops” and “License To Steal Workshops” (where I teach you how to literally rip-off my best ads for your own nefarious use).
There is real pleasure in a well-turned phrase. All the top writers and marketers I know are constantly on the look-out for cool, off-beat, riveting word play we can use in our copy.
But it’s also important to give credit where it’s due. People rip me off all the time, and it rankles me most when they claim they made up original phrases I’ve penned.
Karma usually takes care of the little thieving bastards (I love how that works)… but it is also important for me not to take credit for phrases that aren’t originally mine.
There are plenty of words to go around… excellent words, too, combined in unique and startling ways… so there’s no need to ever get greedy.
I tell you all this because, for a few hours last week, I thought I’d hit the motherlode of invented phrases while talking with my pal Rich Schefren. I mis-heard him at one point, and thought he’d said “fraudcasting” when he actually said “broadcasting”. (It was late, he’d been up for days putting the finish on his latest manifesto, and he was starting to slur.)
What a great word! It is rare when you come up with a slight change in the original phrase like that, to arrive at something so obviously and clearly askew… and so powerfully charged with shock value.
Alas, it’s not mine to claim.
A quick Google search brought up multiple references for “fraudcasting” (and yeah, some dude has the URL, though he doesn’t seem to quite know what to do with it).
Still, though… it seems not to have slithered into common useage yet.
And yet, it should.
Because fraudcasting is out there. And it’s nasty.
I’m referring to the increasing number of Big Damn Corporations engaging in actual fraudulent activity online.
Let’s be clear here: My trusty beat-to-shit Webster’s dictionary defines “fraud” as “the intentional perversion of truth in order to induce another to part with something of value or surrender a legal right”.
Bar room translation: The Man wants to cheat you out of money by gaining your trust… and then shitting on it.
Sorry for the harsh wording there… but that’s what’s going on.
And it’s poisoning the Web for all of the decent entrepreneurs and small biz owners out there.
Here’s the story: It’s no secret that The Man loathes the freedom and easy democratic access of the Web. He prefers a non-level playing field, like television, where he wins just because he has more money than you.
And boy, is The Man ever pissed off that guys like you and me can just throw up a blog and get heavy readership… and more attention than he can with all his expensive commericials and sponsorships. (Well, the opportunity to get more attention is there, if you’re smart, anyway. And that’s enough to get The Man all itchy and upset.)
Every so often, some corportate honcho will get a brainstorm like: “Hey! Let’s just make up our OWN damn blog… and cash in on this stupid Web thing-a-mah-hootie by duping people into believing we’re just like them, only we’ll really SELL them shit! Get me the Creative Department…”
The evidence: Sony did a fake blog, using repulsive phony rappers to stir up cravings for their new versioin of Playstation.
Wal-Mart heavily pushed a completely fictional blog by completely fictional RV folks touting the beneficent wonders of Wal-Marts everywhere. (”Please let these marvelous big box stores into your community! Only good things will happen, we swear!”)
McDonalds even floated a bullshit blog, until they got busted.
And that’s the punch line, really. They ALL got busted… because The Man doesn’t even begin to understand the new order of things online.
Real bloggers have real power. And they’re not amused by cynical attempts to take advantage of this wonderous new tool we all share on the Web.
Right now, regular old bloggers are doing the fact-checking and investigative journalism that the professional journalists are ignoring. And this is changing the game on multiple levels.
Word spreads fast. YouTube has become a judge/trial/jury wasteland for phonies — just ask AOL (who refused to let a dude cancel his account), Jet Blue (videoed lying to passengers during interminable waits on the tarmac), Dell and other corporations stung by the new online Robin Hoods out there shuttling their grievances past all the usual (and “Man-controlled”) paths for complaining, straight to the huddled masses yearning to be set free of bullshit.
Fraudcasting. It’s like broadcasting, except you’re lying like a rug.
And, for now, chances are good you’ll get busted if you try it.
But do NOT be lulled into thinking this is the way it will always be. This “truth will out” environment is absolutely unique in human history. Throughout the long trudge toward the freedom we now enjoy, MOST of your ancestors who have spoken out against The Man were promptly crushed like bugs.
And in MOST of the world today, that’s still the case.
Get straight on this.
The reason Google — for example — has permanently soiled its reputation is because they folded up their principles of privacy and freedom when dealing with China… and people are in jail because of it. They went for the easy cash, and people got hurt.
You cannot take any freedom for granted. When you do, The Man will pounce and strip it away from you.
And if you think it can’t happen here, you’re delusional.
There is NO guarantee the Web will continue to be as unregulated and free as it is today. Remember — it doesn’t run on magic, but on very real networks that can easily be hijacked by the Powers That Be, and subjugated completely.
Many of the fraudcasting episodes of corporations were exposed not by mainstream media, but by regular dudes who cared deeply about truth.
But we’re relying on the utter cluelessness of The Man in most of these cases. Politicians routinely get caught with email they thought they’d “deleted” (cuz they can’t get their brains around the idea of “deletion” not being permanent) that ruin thier careers. Corporate beasts get busted because they treat blogging like some stupid, irrelevant geekoid hobby.
They don’t get it. Yet.
But they soon will.
(Side note: With just a touch of self-abusing irony, Big Biz could get the results they seek — a little good PR, some thumbs-up word-of-mouth buzz, even sales. I don’t know if Jack In The Box has a blog, but if he does, I’ll bet it’s funny, ironic and readable. And isn’t trying to fool or defraud anyone.)
Anyway, that’s the larger picture.
For entrepreneurs and small biz owners, it’s important to understand how blogs can fit into a real marketing model.
First rule: Don’t bullshit your readers.
The Web is crawling with scams and lies and nonsense (both small-time and corporate)… and that’s an opening for smart marketers.
BE that guy who tells the truth, and EARNS the trust of your readers, every time you post.
The Web is entertaining… it’s informative… and it’s a snakepit of propoganda and fraud.
Getting the attention of people interested in what you offer is the hardest part of your gig. Holding onto that attention is your main job.
It’s okay to sell stuff online. That’s how the economy works.
But pulling a “Blair Witch” kind of trick is risky, because people are getting paranoid and touchy about the increasing amount of fraudcasting out there. It’s neither unique nor amusing anymore.
When the noise of the market reaches ear-splitting levels, you’ll gain more listeners if you speak softly and tell the truth, as simply and eloquently as possible.
And the guy who wins the debate will always be the one who connects with the audience in the most fundamental, feisty way. Facts won’t win, carefully constructed diatribes won’t win, and even being right won’t win.
Nope.
The winner will always be the dude who cracks the crowd up, and delights their ear with unexpected language.
Thus, I have never offered a plain old seminar before. Instead, I host “Copywriting Sweatshops” and “License To Steal Workshops” (where I teach you how to literally rip-off my best ads for your own nefarious use).
There is real pleasure in a well-turned phrase. All the top writers and marketers I know are constantly on the look-out for cool, off-beat, riveting word play we can use in our copy.
But it’s also important to give credit where it’s due. People rip me off all the time, and it rankles me most when they claim they made up original phrases I’ve penned.
Karma usually takes care of the little thieving bastards (I love how that works)… but it is also important for me not to take credit for phrases that aren’t originally mine.
There are plenty of words to go around… excellent words, too, combined in unique and startling ways… so there’s no need to ever get greedy.
I tell you all this because, for a few hours last week, I thought I’d hit the motherlode of invented phrases while talking with my pal Rich Schefren. I mis-heard him at one point, and thought he’d said “fraudcasting” when he actually said “broadcasting”. (It was late, he’d been up for days putting the finish on his latest manifesto, and he was starting to slur.)
What a great word! It is rare when you come up with a slight change in the original phrase like that, to arrive at something so obviously and clearly askew… and so powerfully charged with shock value.
Alas, it’s not mine to claim.
A quick Google search brought up multiple references for “fraudcasting” (and yeah, some dude has the URL, though he doesn’t seem to quite know what to do with it).
Still, though… it seems not to have slithered into common useage yet.
And yet, it should.
Because fraudcasting is out there. And it’s nasty.
I’m referring to the increasing number of Big Damn Corporations engaging in actual fraudulent activity online.
Let’s be clear here: My trusty beat-to-shit Webster’s dictionary defines “fraud” as “the intentional perversion of truth in order to induce another to part with something of value or surrender a legal right”.
Bar room translation: The Man wants to cheat you out of money by gaining your trust… and then shitting on it.
Sorry for the harsh wording there… but that’s what’s going on.
And it’s poisoning the Web for all of the decent entrepreneurs and small biz owners out there.
Here’s the story: It’s no secret that The Man loathes the freedom and easy democratic access of the Web. He prefers a non-level playing field, like television, where he wins just because he has more money than you.
And boy, is The Man ever pissed off that guys like you and me can just throw up a blog and get heavy readership… and more attention than he can with all his expensive commericials and sponsorships. (Well, the opportunity to get more attention is there, if you’re smart, anyway. And that’s enough to get The Man all itchy and upset.)
Every so often, some corportate honcho will get a brainstorm like: “Hey! Let’s just make up our OWN damn blog… and cash in on this stupid Web thing-a-mah-hootie by duping people into believing we’re just like them, only we’ll really SELL them shit! Get me the Creative Department…”
The evidence: Sony did a fake blog, using repulsive phony rappers to stir up cravings for their new versioin of Playstation.
Wal-Mart heavily pushed a completely fictional blog by completely fictional RV folks touting the beneficent wonders of Wal-Marts everywhere. (”Please let these marvelous big box stores into your community! Only good things will happen, we swear!”)
McDonalds even floated a bullshit blog, until they got busted.
And that’s the punch line, really. They ALL got busted… because The Man doesn’t even begin to understand the new order of things online.
Real bloggers have real power. And they’re not amused by cynical attempts to take advantage of this wonderous new tool we all share on the Web.
Right now, regular old bloggers are doing the fact-checking and investigative journalism that the professional journalists are ignoring. And this is changing the game on multiple levels.
Word spreads fast. YouTube has become a judge/trial/jury wasteland for phonies — just ask AOL (who refused to let a dude cancel his account), Jet Blue (videoed lying to passengers during interminable waits on the tarmac), Dell and other corporations stung by the new online Robin Hoods out there shuttling their grievances past all the usual (and “Man-controlled”) paths for complaining, straight to the huddled masses yearning to be set free of bullshit.
Fraudcasting. It’s like broadcasting, except you’re lying like a rug.
And, for now, chances are good you’ll get busted if you try it.
But do NOT be lulled into thinking this is the way it will always be. This “truth will out” environment is absolutely unique in human history. Throughout the long trudge toward the freedom we now enjoy, MOST of your ancestors who have spoken out against The Man were promptly crushed like bugs.
And in MOST of the world today, that’s still the case.
Get straight on this.
The reason Google — for example — has permanently soiled its reputation is because they folded up their principles of privacy and freedom when dealing with China… and people are in jail because of it. They went for the easy cash, and people got hurt.
You cannot take any freedom for granted. When you do, The Man will pounce and strip it away from you.
And if you think it can’t happen here, you’re delusional.
There is NO guarantee the Web will continue to be as unregulated and free as it is today. Remember — it doesn’t run on magic, but on very real networks that can easily be hijacked by the Powers That Be, and subjugated completely.
Many of the fraudcasting episodes of corporations were exposed not by mainstream media, but by regular dudes who cared deeply about truth.
But we’re relying on the utter cluelessness of The Man in most of these cases. Politicians routinely get caught with email they thought they’d “deleted” (cuz they can’t get their brains around the idea of “deletion” not being permanent) that ruin thier careers. Corporate beasts get busted because they treat blogging like some stupid, irrelevant geekoid hobby.
They don’t get it. Yet.
But they soon will.
(Side note: With just a touch of self-abusing irony, Big Biz could get the results they seek — a little good PR, some thumbs-up word-of-mouth buzz, even sales. I don’t know if Jack In The Box has a blog, but if he does, I’ll bet it’s funny, ironic and readable. And isn’t trying to fool or defraud anyone.)
Anyway, that’s the larger picture.
For entrepreneurs and small biz owners, it’s important to understand how blogs can fit into a real marketing model.
First rule: Don’t bullshit your readers.
The Web is crawling with scams and lies and nonsense (both small-time and corporate)… and that’s an opening for smart marketers.
BE that guy who tells the truth, and EARNS the trust of your readers, every time you post.
The Web is entertaining… it’s informative… and it’s a snakepit of propoganda and fraud.
Getting the attention of people interested in what you offer is the hardest part of your gig. Holding onto that attention is your main job.
It’s okay to sell stuff online. That’s how the economy works.
But pulling a “Blair Witch” kind of trick is risky, because people are getting paranoid and touchy about the increasing amount of fraudcasting out there. It’s neither unique nor amusing anymore.
When the noise of the market reaches ear-splitting levels, you’ll gain more listeners if you speak softly and tell the truth, as simply and eloquently as possible.
Stay frosty,
The Power Of Negative Keywords
Today, a tale of two clients and their Negative Keywords. A story of success and failure, and the reason why....
Client #1:
Terrence spends $70,000 a month on AdWords (quite profitably, I might add) and one day last month his webmaster printed out the web stats that show all the different searches that actually brought people to his website.
He spent some time combing through the list and made a huge list of negative keywords.The next month his sales stayed exactly the same and his spend dropped to $40,000 a month. 40% down, overnight.
Hey, it doesn't matter whether you're spending $70,000 or just $70 per month, a 40% cost reduction is a big deal! This guy was already dominating his market... and now he's unstoppable.
Client #2:
William spends $9,000 a month on AdWords, also quite profitably, thank you very much. He did pretty much the same thing - a big exhaustive list of negative keywords - and he dropped his spend down to $6,000.
But his sales dropped even MORE than that. 33% cost savings, and maybe 40% dent in sales. Oops... better get rid of those negative keywords.
OK.... so what was going on?
Here's the difference: Terrence, who saved a ton of dough, identified a number of completely different itches that people want to scratch, with very similar keywords. Identify the negative keywords because THOSE people ain't NEVER gonna buy.
William's product has very broad appeal in a market where potential buyers could come from almost anywhere. They could even come from outside the niche and still be interested. William needs to buy as much traffic as he can reasonably get and not really worry too much about the negative keywords - actually only a few.
Situations where negative keywords stop wasted clicks - very common. Everybody should have negative keywords. Situations where negative keywords hurt - less common. But it happens. When you make major changes, pay close attention and be ready to back off if the strategy isn't working.
Client #1:
Terrence spends $70,000 a month on AdWords (quite profitably, I might add) and one day last month his webmaster printed out the web stats that show all the different searches that actually brought people to his website.
He spent some time combing through the list and made a huge list of negative keywords.The next month his sales stayed exactly the same and his spend dropped to $40,000 a month. 40% down, overnight.
Hey, it doesn't matter whether you're spending $70,000 or just $70 per month, a 40% cost reduction is a big deal! This guy was already dominating his market... and now he's unstoppable.
Client #2:
William spends $9,000 a month on AdWords, also quite profitably, thank you very much. He did pretty much the same thing - a big exhaustive list of negative keywords - and he dropped his spend down to $6,000.
But his sales dropped even MORE than that. 33% cost savings, and maybe 40% dent in sales. Oops... better get rid of those negative keywords.
OK.... so what was going on?
Here's the difference: Terrence, who saved a ton of dough, identified a number of completely different itches that people want to scratch, with very similar keywords. Identify the negative keywords because THOSE people ain't NEVER gonna buy.
William's product has very broad appeal in a market where potential buyers could come from almost anywhere. They could even come from outside the niche and still be interested. William needs to buy as much traffic as he can reasonably get and not really worry too much about the negative keywords - actually only a few.
Situations where negative keywords stop wasted clicks - very common. Everybody should have negative keywords. Situations where negative keywords hurt - less common. But it happens. When you make major changes, pay close attention and be ready to back off if the strategy isn't working.
To your success, Perry Marshall
Joe Sugarman's Triggers - Airplane Tail Collecting Made Easy
In direct marketing, there are products classified as collectibles. Stamps, plates, dolls, and coins are but a few that have been offered by direct marketers in the past, and it is a very healthy and robust market niche. It’s pretty easy to understand that an emotional urge exists to collect many of these items. But what you might be surprised to learn is that collecting is also true in practically every business.
Take my experience with a mail order watch buyer. An enthusiastic watch buyer is your perfect prospect for another watch. When I was selling watches in my catalog, I would periodically send mailings to customers who had previously ordered other products from me. I also mailed to my customers who had ordered watches.
My best list for watches consisted of my existing watch owners. Now you might think, if you had a watch, what would you need another one for? Wrong. Many people actually collect them. They’ll have several watches, several pairs of sunglasses, several pairs of jeans, a library of videos or compact disks, and even a dozen Hawaiian shirts. The list is endless.
I’m always amazed at the number of dolls collected by QVC viewers. Some of their viewers are older women, long past childhood, yet among QVC’s most avid collectors. And they have dozens of dolls. Small car models are also sold on QVC. They are some of the most popular products for men. And not to be outdone, there must be thousands of viewers who own many BluBlocker sunglasses—some in several different styles.
The point is, when selling (whether in print, on TV, or in a personal selling situation),
recognize that there is a very large segment of the population who, for whatever reason, has an emotional need to collect a series of similar products. These products bring great joy and satisfaction and in some cases utility.
Think about those who collect real cars. Many who can afford them have collections that range up to hundreds of full-sized automobiles. What kind of emotional need are they fulfilling?
One of the ways the direct marketers optimize sales via the collecting instinct is by first sending, free of charge with the very first shipment, some sort of device to hold the collection.
I can remember ordering silver airplane tails with various airline logos embossed on them from the Franklin Mint, a successful direct mail company that specialized in collectibles. I started collecting them to see how the Franklin Mint conducted its program rather than from any emotional interest in collecting airplane tails.
Each one of the flat, eighth-inch-thick tails was made of pure silver, giving it value. The tails consisted of the vertical tail element, the part where the airline logo and symbol are located.
And each of the logos was engraved into the silver tail. They were only a few inches wide, weighed about an ounce, and by virtue of just their silver content, they were obviously valuable.
I received a beautiful four-drawer hand-crafted walnut chest with cutouts for each of the silver tails. The chest was so expensive-looking that I felt a subconscious sense of guilt. I had to do something in return to show my appreciation to the Franklin Mint for sending it to me. Something like filling it up with airplane tails.
Now I realize that you might think I’m exaggerating but in truth, these were some of the emotions I felt when I received the chest. Then another emotion came over me. The chest had all these cutouts in which you placed the tails. I had this overwhelming anticipation of wanting to fill up each of the cutouts. Kinda like when I was a little kid and put round pegs in round holes. We’re talking some very basic early childhood stuff here.
And those tails indeed came once a month. I remember the thrill of seeing the Franklin Mint’s envelope arrive each month and my anticipation in opening the envelope to discover what airline’s tail I had received. After opening the envelope and placing the tail in my hand-crafted walnut chest, I saw I was getting closer to filling up the slots. First filling up the first drawer. Then I started the second drawer. I looked at my collection each time I put in a new tail and felt the pride of knowing that my tail collection was growing. That indeed I was accomplishing something that was not that hard to do, something I didn’t have to really work hard to accomplish, but showed that I had real consistency in my life, like that scientific and psychological stuff I talked about in Chapter 1.
Finally, I had enough tails in my chest that when guests visited in my home, I could show them my collection which was now in a prominent position in my living room. I had achieved a level of self-actualization, of self-esteem, and of accomplishment that I had not felt before.
I finally sobered up and stopped collecting. It was costing me a fortune and after all, the only reason I started was for the research—to personally feel the emotional reasons why people get sucked into these schemes. And the collection was kind of silly to start with. The airlines were either merging, going out of business, or changing their names so fast that even the Franklin Mint couldn’t keep up.
But this experience convinced me that there were lots of opportunities in the sales process for selling products to people who would not normally be considered collectors. I found that there were even people who collected gadgets or everything I offered, for that matter. To these people it was like I was their drug supplier. They couldn’t get enough of my products.
Just because you have sold a customer a product, don’t ignore the opportunity to sell him the same product again or a new variation of that product. Just as I found out that my best watch customers were the ones who already owned watches, you might find that your best prospects are the ones who are already your customers and own an almost identical product. They often represent a powerful and overlooked market.
A printer might like to collect printing presses; a gardener might like to collect garden tools; an architect might like to collect unusual drafting tools. You name the category and there will probably be some large percentage of prospects in that group who have the motivation to collect whatever you are offering. This is often associated with consistency, as I outlined in Chapter 1. Once you have set a buying pattern, it is easy and comforting to be consistent in your future buying activity.
The desire to collect extends beyond the obvious collectible products. If you’ve sold your customer a product, consider the fact that the customer might also like to collect similar products. I wonder if there is a market for old airplane tails?
Trigger 18: Desire to Collect
Take my experience with a mail order watch buyer. An enthusiastic watch buyer is your perfect prospect for another watch. When I was selling watches in my catalog, I would periodically send mailings to customers who had previously ordered other products from me. I also mailed to my customers who had ordered watches.
My best list for watches consisted of my existing watch owners. Now you might think, if you had a watch, what would you need another one for? Wrong. Many people actually collect them. They’ll have several watches, several pairs of sunglasses, several pairs of jeans, a library of videos or compact disks, and even a dozen Hawaiian shirts. The list is endless.
I’m always amazed at the number of dolls collected by QVC viewers. Some of their viewers are older women, long past childhood, yet among QVC’s most avid collectors. And they have dozens of dolls. Small car models are also sold on QVC. They are some of the most popular products for men. And not to be outdone, there must be thousands of viewers who own many BluBlocker sunglasses—some in several different styles.
The point is, when selling (whether in print, on TV, or in a personal selling situation),
recognize that there is a very large segment of the population who, for whatever reason, has an emotional need to collect a series of similar products. These products bring great joy and satisfaction and in some cases utility.
Think about those who collect real cars. Many who can afford them have collections that range up to hundreds of full-sized automobiles. What kind of emotional need are they fulfilling?
One of the ways the direct marketers optimize sales via the collecting instinct is by first sending, free of charge with the very first shipment, some sort of device to hold the collection.
I can remember ordering silver airplane tails with various airline logos embossed on them from the Franklin Mint, a successful direct mail company that specialized in collectibles. I started collecting them to see how the Franklin Mint conducted its program rather than from any emotional interest in collecting airplane tails.
Each one of the flat, eighth-inch-thick tails was made of pure silver, giving it value. The tails consisted of the vertical tail element, the part where the airline logo and symbol are located.
And each of the logos was engraved into the silver tail. They were only a few inches wide, weighed about an ounce, and by virtue of just their silver content, they were obviously valuable.
I received a beautiful four-drawer hand-crafted walnut chest with cutouts for each of the silver tails. The chest was so expensive-looking that I felt a subconscious sense of guilt. I had to do something in return to show my appreciation to the Franklin Mint for sending it to me. Something like filling it up with airplane tails.
Now I realize that you might think I’m exaggerating but in truth, these were some of the emotions I felt when I received the chest. Then another emotion came over me. The chest had all these cutouts in which you placed the tails. I had this overwhelming anticipation of wanting to fill up each of the cutouts. Kinda like when I was a little kid and put round pegs in round holes. We’re talking some very basic early childhood stuff here.
And those tails indeed came once a month. I remember the thrill of seeing the Franklin Mint’s envelope arrive each month and my anticipation in opening the envelope to discover what airline’s tail I had received. After opening the envelope and placing the tail in my hand-crafted walnut chest, I saw I was getting closer to filling up the slots. First filling up the first drawer. Then I started the second drawer. I looked at my collection each time I put in a new tail and felt the pride of knowing that my tail collection was growing. That indeed I was accomplishing something that was not that hard to do, something I didn’t have to really work hard to accomplish, but showed that I had real consistency in my life, like that scientific and psychological stuff I talked about in Chapter 1.
Finally, I had enough tails in my chest that when guests visited in my home, I could show them my collection which was now in a prominent position in my living room. I had achieved a level of self-actualization, of self-esteem, and of accomplishment that I had not felt before.
I finally sobered up and stopped collecting. It was costing me a fortune and after all, the only reason I started was for the research—to personally feel the emotional reasons why people get sucked into these schemes. And the collection was kind of silly to start with. The airlines were either merging, going out of business, or changing their names so fast that even the Franklin Mint couldn’t keep up.
But this experience convinced me that there were lots of opportunities in the sales process for selling products to people who would not normally be considered collectors. I found that there were even people who collected gadgets or everything I offered, for that matter. To these people it was like I was their drug supplier. They couldn’t get enough of my products.
Just because you have sold a customer a product, don’t ignore the opportunity to sell him the same product again or a new variation of that product. Just as I found out that my best watch customers were the ones who already owned watches, you might find that your best prospects are the ones who are already your customers and own an almost identical product. They often represent a powerful and overlooked market.
A printer might like to collect printing presses; a gardener might like to collect garden tools; an architect might like to collect unusual drafting tools. You name the category and there will probably be some large percentage of prospects in that group who have the motivation to collect whatever you are offering. This is often associated with consistency, as I outlined in Chapter 1. Once you have set a buying pattern, it is easy and comforting to be consistent in your future buying activity.
The desire to collect extends beyond the obvious collectible products. If you’ve sold your customer a product, consider the fact that the customer might also like to collect similar products. I wonder if there is a market for old airplane tails?
Trigger 18: Desire to Collect
[Via - Triggers]
AdSense Niches - Refurbished Laptops And Home Business
$0.40-$0.65
Refurbished laptops.
Did you know that margins on refurbished laptops are a lot higher than on new ones. Every time a shop or a website sells you a laptop, they make 50-100
dollar profit. Even on notebooks that cost $3000. Refurbished laptops, on the other hand, are 30% profit. I’ve never been able to make the laptop niche
work for me due to have MFA and traffic arbitrage activity, but refurbished laptops are making some major bucks for me right now. I also find that
“refurbished laptops” work better than “used laptops” for AdSense.
$0.55-$0.80
Work At Home, Homebusiness
I don’t think that this is a very ethical niche, since almost all ads that run on my sites that deal with “work at home” and “homebusiness” issues are
either 100% scams or near scams or MLMish bizopps that work by “now you find another idiot like to pay for this and get commission”. But the bids are high.
Refurbished laptops.
Did you know that margins on refurbished laptops are a lot higher than on new ones. Every time a shop or a website sells you a laptop, they make 50-100
dollar profit. Even on notebooks that cost $3000. Refurbished laptops, on the other hand, are 30% profit. I’ve never been able to make the laptop niche
work for me due to have MFA and traffic arbitrage activity, but refurbished laptops are making some major bucks for me right now. I also find that
“refurbished laptops” work better than “used laptops” for AdSense.
$0.55-$0.80
Work At Home, Homebusiness
I don’t think that this is a very ethical niche, since almost all ads that run on my sites that deal with “work at home” and “homebusiness” issues are
either 100% scams or near scams or MLMish bizopps that work by “now you find another idiot like to pay for this and get commission”. But the bids are high.
Why MBA Degree Is A Waste Of Time
Most people who knew Gabriel Hammond at Johns Hopkins in the late 1990s could have predicted he would rise quickly on Wall Street. As a freshman, he traded stocks from his dorm room, making a $1,000 bet on Caterpillar. Soon after, he abandoned his childhood dream of becoming a lawyer and, upon graduation, joined Goldman Sachs as a stock analyst.
Three years into his new job, Mr. Hammond noticed something. Very few of his young co-workers were taking a hiatus from Wall Street to go to business school, long considered an essential rung on the way to the top of the corporate ladder.
So he, too, decided to forgo an M.B.A.. Instead, he raised $5 million and started his own hedge fund, Alerian Capital Management, in 2004. The fund now manages $300 million out of offices in New York and Dallas, and Mr. Hammond, 28, enjoys seven-figure payouts.
Like other young people on the fast track, Mr. Hammond has run the numbers and figures that an M.B.A. is a waste of money and time — time that could be spent making money. “There’s no way that I would consider it,” he says.
As more Americans have become abundantly wealthy, young people are recalculating old assumptions about success. The flood of money into private equity and hedge funds over the last decade has made billionaires out of people like Kenneth Griffin, 38, chief executive of the Citadel Investment Group, and Eddie Lampert, 45, the hedge fund king who bought Sears and Kmart. These men are icons for the fast buck set — particularly the mathematically gifted cohort of rising stars known as “quants.” Many college graduates who are bright enough to be top computer scientists or medical researchers are becoming traders instead, and they measure their status in dollars instead of titles.
Many of the brightest don’t covet a corner office at Goldman Sachs or Morgan Stanley. Instead, they’re happy to work at a little-known hedge fund run out of a two-room office in Greenwich, Conn., as long as they get a fat payday. The competition from alternative investment firms — private equity and hedge funds in particular — is driving up salaries of entry-level analysts at much larger banks. And top performers at the banks make so much money today that they don’t want to take two years off for business school, even if it’s a prestigious institution like the Wharton School or Harvard.
The new ranks of traders and high-octane number crunchers on Wall Street are also a breed apart from celebrated long-term investors like Warren E. Buffett and investment banking gurus like Felix G. Rohatyn. What sets the new crowd apart is the need for speed and a thirst for instant riches.
“With the growth of hedge funds, you’re getting a lot of really smart people who are getting paid a lot very young,” says Arjuna Rajasingham, 29, an analyst and a trader at a hedge fund in London. “I know it’s a bit of a short-term view, but it’s hard to walk away from something that’s going really well.”
The shift has not gone unnoticed by administrators at some business schools. Richard Schmalensee, who was dean of the M.I.T. Sloan School of Management until June, chalked it up to the changing nature of money-making. In many banks and investment boutiques, traders with math and science backgrounds now contribute more to the bottom line than the white-shoed investment bankers who long presided over Wall Street. And traders tend to be less likely to go to business school.
“I don’t think you will see M.B.A.’s less represented in executive suites, but you may see M.B.A.’s less represented in the lists of the world’s richest people,” Professor Schmalensee says.
BUSINESS school has not fallen out of favor among the student population at large. The number of students who earned M.B.A.’s in 2005 was about 142,600, nearly twice the level in 1991. But as M.B.A.’s become more common, the degree seems to carry less prestige with people who land top-paying jobs in finance soon after college.
And recent upheavals in the financial markets don’t seem to be changing the thinking of these younger high-fliers and their employers.
Hedge fund managers are unlikely to punish their younger workers for any dip in returns this year, says Adam Zoia, managing partner at Glocap, a headhunter in New York. Management fees charged by funds — typically 2 percent — come in regardless of return levels and can more than cover large salaries for young employees at many funds.
“Most managers say, ‘If I don’t pony up a decent bonus, then I’m going to lose people,’ ” Mr. Zoia says. “It’d be short-sighted of them not to retain their good people.”
At funds that manage $1 billion to $3 billion, people with just a few years of finance experience will make $337,000 this year, Mr. Zoia says, and those with five to nine years of experience will average $830,000, up 6 percent from last year. These estimates include analysts and researchers but not portfolio traders, who can make much more because they sometimes share in profits.
Dozens of young people (mostly male) who want to be, or already are, successful traders said in interviews that they relished the challenge of their jobs, in addition to the lofty paychecks.
But they also spoke as if a money-clock were ticking: many said they wanted to make as much money as fast as they could so that they could live in style later in life while doing less lucrative things like running a charity, working for the government, spending time with their families, or inventing new technologies. Some, of course, plan to stay in finance their entire careers, and they, too, are very focused on earning fat bonuses fast.
“The sales pitch of these private equity funds or these hedge funds is, ‘Come here, and you’ll make a million bucks in two years,’ ” says Gregg R. Lemkau, 38, managing director and chief operating officer of investment banking at Goldman Sachs, who passed up business school to stay at Goldman in the early 1990s when that choice was more rare.
And because today there are more self-made millionaires — and billionaires — than ever before, 20-something traders seem bolder in their monetary ambitions. Business school often does not fit into these plans.
“If you want to make the most money in the shortest period of time, you can’t be away from work for two years,” says Vitaly Dukhon, 30, who recently left the Fortress Investment Group in New York to join another hedge fund.
While in college at Harvard, Mr. Dukhon thought he would go to business school in his mid-20s, but in his first job on the Treasury desk at Deutsche Bank, he realized that the smartest people just a few years his senior were staying put. “I saw that people that had been working for 20 years did have M.B.A.’s, but people five to six years older than me were not going,” he says. “Going to business school is a way for people to try to open the door, to try to get into a company or hedge fund. But if you’re already there, it doesn’t make sense to go.”
Mr. Hammond of Alerian noticed the same trend while he was an analyst at Goldman Sachs. His co-workers who went to business school either wanted to change careers, or they were not doing well in their current jobs, he says.
Part of the shift comes as investment banks like Goldman Sachs and Credit Suisse have changed their tune on business school. Instead of pushing all their young employees into M.B.A. programs, banks are telling the best ones to stay put.
“We are the perfect training ground for people who want to have careers in finance,” says Caitlin McLaughlin, director of campus recruiting for Citi, the former Citigroup. Just 15 years ago, Ms. McLaughlin estimates, 85 to 90 percent of Citi’s analyst classes ended up attending business school. Now, she thinks that figure is closer to 50 percent.
Samir Ahmad, 25, has worked at Citi since college. This summer, he was promoted to associate, an M.B.A.-level position, in the fixed-income, currencies and commodities division. Despite advice from his older brother that he should attend business school, Mr. Ahmad says he cannot see what he would gain to justify the time. “If I were to spend two years at business school, I’d get an M.B.A. degree, but I think learning a different product or a different group here at Citi would be more valuable,” he says.
To be sure, business school can still be a valuable investment, especially for those who want to change careers. Most schools teach a well-rounded curriculum that exposes students to the full picture of the way the business world works. They are great places to make friends and connections that can help throughout a career. And the top business schools serve as a useful filtering system, placing a seal of approval on graduates that can help them find jobs.
“Most banking — and that includes private equity — is about deals and about relationships,” says Timothy Butler, director of M.B.A. career development programs at Harvard Business School. “That will always be M.B.A. territory.”
YET even some students at top schools like Harvard say the decision to go is tougher now than it likely was two decades ago. “We all struggled with it,” says Katie Shaw, 28, who is in her second year of business school there. “It’s not only, ‘Where do I go to business school?’ It’s also, ‘Do I go?’ ”
Ms. Shaw worked in private equity before business school and plans to return to a position in finance. In private equity, she says, an M.B.A. is valued because buying and selling companies involves relationships and company analysis skills. Still, most private equity firms used to require their young hires to leave to go to business school, and some are now letting talented ones keep working instead.
Headhunters for hedge funds and private equity firms say hedge funds, in particular, do not value an M.B.A. “I have some clients that will legitimately say, ‘An M.B.A. means absolutely nothing to us,’ ” says Tim Zack, principal of In-Site Search, a headhunting firm in Westport, Conn., that is a division of Chaves and Associates.
Mr. Hammond of the Alerian hedge fund recently hired someone from Carnegie Mellon’s business school because of that person’s engineering talent, not the skills he learned in business school. While Mr. Hammond says he understands why his new employee went to business school to move into finance, he would look less favorably on someone in an M.B.A. program who had left finance to go to business school.
If he were looking at someone who went to Harvard Business School after the two-year analyst program at Goldman, “I’d be suspicious,” he says. “I’d be saying, ‘What was it you were doing wrong that you couldn’t get a promotion at Goldman or did not pursue an opportunity with a private equity or hedge fund?’ ”
When young people on Wall Street consider the benefits of business school, Mr. Hammond says, the upside no longer outweighs lost salaries and bonuses they would have earned. He calculates the cost of going to a two-year business school to be at least half a million dollars for the average bank employee — $250,000 or more each year in lost salary, plus $50,000 a year in tuition and living expenses. For hedge fund employees, Mr. Hammond says, the number would be considerably higher.
The result, headhunters say, is that many of the best people in finance are no longer entering the M.B.A. pipeline. “If someone is doing well at a hedge fund, they absolutely do not encourage their employees to go off to business school,” says Mr. Zoia of Glocap.
Some young people are pursuing alternatives that can be completed without leaving their jobs. Some take the certified financial adviser tests or study part-time at night at schools like N.Y.U. that offer master’s degrees in subjects like financial engineering.
“There’s a real shift in assumptions as to what is going to make you a better applicant or a prospect for a job,” says Art Hogan, chief market analyst for Jefferies & Company, noting that he had seen an increased interest in young people pursuing a degree as a certified financial adviser at night rather than leaving their jobs for an M.B.A.
At the banks, there has been a push in recent years to keep top performers around after their time as analysts, the most junior position, ends. “Strong performers we want to keep at the firm for as long as possible,” says Julie Kalish, 28, head of United States recruiting for Credit Suisse. “The amount of analysts that we try to keep for the associate promotion process has grown over recent years.”
Admissions officers at top business schools say finance firms always try to hold onto their best employees when the economy is good. They say interest from applicants working in finance is not declining and their graduates still land a large number of top finance jobs. What administrators at business schools do not know — largely because their admissions and career placement offices are separate — is whether their students with a finance background are staying in that industry.
Recruiters at banks say a large number of the students that they are hiring from business schools are from an international background or are changing careers. These students are valuable, they say, but they come in with a different background from someone who has been in finance since age 22.
Jeffrey Talpins, chief investment officer at Element Capital Management, a small fixed-income hedge fund in New York, says he likes to hire people fresh out of school so he can teach them himself. Mr. Talpins attended Yale as an undergraduate but did not go to business school. If a young employee asked his advice on business school, he says, he would tell them not to go if they wanted to stay in finance. “I’d say, ‘You already have a great platform for a job in finance,’ ” he says. “If you’re a superstar, and you’re very good, you’ll grow very rapidly in this field.”
Eventually, these young people may want to raise money and start their own fund, suggests Thomas Caleel, director of admissions at Wharton, and that’s where an M.B.A. and the connections that come with it could help. “If you are trying to raise money for a hedge fund, you will need that network,” he says.
Mr. Talpins of Element said he had no trouble raising money for his hedge fund without an M.B.A. After all, he had a track record from Citi and Goldman Sachs to show to potential investors. In his corner of the world, where math equations are likely to be scrawled on white boards around the office and young people hold the purse strings to millions of dollars in investor money, it seems there is no point in going to business school just to punch a ticket.
In 2005, Trader Monthly named Mr. Talpins one of the top 30 traders under 30. “Youth is not wasted on this crop, any of whom could be a billionaire by 40,” the magazine said. “Or, then again, they could be belly up and bust.”
Mr. Hammond of Alerian, who was featured on the magazine’s list last year, said he has seen people go to hedge funds and get fired in six months “because they couldn’t hack it.”
But he says the risk is worth it.
“If you look at the really successful hedge fund managers — the Eddie Lamperts,” he says, “they’re all in their 40s now. They were probably making only low single-digit millions in their 20s.
“That’s why you do this,” he continues. “That’s why it’s so attractive, because the payoff of being the winner, the next Eddie Lampert, is so high.”
Three years into his new job, Mr. Hammond noticed something. Very few of his young co-workers were taking a hiatus from Wall Street to go to business school, long considered an essential rung on the way to the top of the corporate ladder.
So he, too, decided to forgo an M.B.A.. Instead, he raised $5 million and started his own hedge fund, Alerian Capital Management, in 2004. The fund now manages $300 million out of offices in New York and Dallas, and Mr. Hammond, 28, enjoys seven-figure payouts.
Like other young people on the fast track, Mr. Hammond has run the numbers and figures that an M.B.A. is a waste of money and time — time that could be spent making money. “There’s no way that I would consider it,” he says.
As more Americans have become abundantly wealthy, young people are recalculating old assumptions about success. The flood of money into private equity and hedge funds over the last decade has made billionaires out of people like Kenneth Griffin, 38, chief executive of the Citadel Investment Group, and Eddie Lampert, 45, the hedge fund king who bought Sears and Kmart. These men are icons for the fast buck set — particularly the mathematically gifted cohort of rising stars known as “quants.” Many college graduates who are bright enough to be top computer scientists or medical researchers are becoming traders instead, and they measure their status in dollars instead of titles.
Many of the brightest don’t covet a corner office at Goldman Sachs or Morgan Stanley. Instead, they’re happy to work at a little-known hedge fund run out of a two-room office in Greenwich, Conn., as long as they get a fat payday. The competition from alternative investment firms — private equity and hedge funds in particular — is driving up salaries of entry-level analysts at much larger banks. And top performers at the banks make so much money today that they don’t want to take two years off for business school, even if it’s a prestigious institution like the Wharton School or Harvard.
The new ranks of traders and high-octane number crunchers on Wall Street are also a breed apart from celebrated long-term investors like Warren E. Buffett and investment banking gurus like Felix G. Rohatyn. What sets the new crowd apart is the need for speed and a thirst for instant riches.
“With the growth of hedge funds, you’re getting a lot of really smart people who are getting paid a lot very young,” says Arjuna Rajasingham, 29, an analyst and a trader at a hedge fund in London. “I know it’s a bit of a short-term view, but it’s hard to walk away from something that’s going really well.”
The shift has not gone unnoticed by administrators at some business schools. Richard Schmalensee, who was dean of the M.I.T. Sloan School of Management until June, chalked it up to the changing nature of money-making. In many banks and investment boutiques, traders with math and science backgrounds now contribute more to the bottom line than the white-shoed investment bankers who long presided over Wall Street. And traders tend to be less likely to go to business school.
“I don’t think you will see M.B.A.’s less represented in executive suites, but you may see M.B.A.’s less represented in the lists of the world’s richest people,” Professor Schmalensee says.
BUSINESS school has not fallen out of favor among the student population at large. The number of students who earned M.B.A.’s in 2005 was about 142,600, nearly twice the level in 1991. But as M.B.A.’s become more common, the degree seems to carry less prestige with people who land top-paying jobs in finance soon after college.
And recent upheavals in the financial markets don’t seem to be changing the thinking of these younger high-fliers and their employers.
Hedge fund managers are unlikely to punish their younger workers for any dip in returns this year, says Adam Zoia, managing partner at Glocap, a headhunter in New York. Management fees charged by funds — typically 2 percent — come in regardless of return levels and can more than cover large salaries for young employees at many funds.
“Most managers say, ‘If I don’t pony up a decent bonus, then I’m going to lose people,’ ” Mr. Zoia says. “It’d be short-sighted of them not to retain their good people.”
At funds that manage $1 billion to $3 billion, people with just a few years of finance experience will make $337,000 this year, Mr. Zoia says, and those with five to nine years of experience will average $830,000, up 6 percent from last year. These estimates include analysts and researchers but not portfolio traders, who can make much more because they sometimes share in profits.
Dozens of young people (mostly male) who want to be, or already are, successful traders said in interviews that they relished the challenge of their jobs, in addition to the lofty paychecks.
But they also spoke as if a money-clock were ticking: many said they wanted to make as much money as fast as they could so that they could live in style later in life while doing less lucrative things like running a charity, working for the government, spending time with their families, or inventing new technologies. Some, of course, plan to stay in finance their entire careers, and they, too, are very focused on earning fat bonuses fast.
“The sales pitch of these private equity funds or these hedge funds is, ‘Come here, and you’ll make a million bucks in two years,’ ” says Gregg R. Lemkau, 38, managing director and chief operating officer of investment banking at Goldman Sachs, who passed up business school to stay at Goldman in the early 1990s when that choice was more rare.
And because today there are more self-made millionaires — and billionaires — than ever before, 20-something traders seem bolder in their monetary ambitions. Business school often does not fit into these plans.
“If you want to make the most money in the shortest period of time, you can’t be away from work for two years,” says Vitaly Dukhon, 30, who recently left the Fortress Investment Group in New York to join another hedge fund.
While in college at Harvard, Mr. Dukhon thought he would go to business school in his mid-20s, but in his first job on the Treasury desk at Deutsche Bank, he realized that the smartest people just a few years his senior were staying put. “I saw that people that had been working for 20 years did have M.B.A.’s, but people five to six years older than me were not going,” he says. “Going to business school is a way for people to try to open the door, to try to get into a company or hedge fund. But if you’re already there, it doesn’t make sense to go.”
Mr. Hammond of Alerian noticed the same trend while he was an analyst at Goldman Sachs. His co-workers who went to business school either wanted to change careers, or they were not doing well in their current jobs, he says.
Part of the shift comes as investment banks like Goldman Sachs and Credit Suisse have changed their tune on business school. Instead of pushing all their young employees into M.B.A. programs, banks are telling the best ones to stay put.
“We are the perfect training ground for people who want to have careers in finance,” says Caitlin McLaughlin, director of campus recruiting for Citi, the former Citigroup. Just 15 years ago, Ms. McLaughlin estimates, 85 to 90 percent of Citi’s analyst classes ended up attending business school. Now, she thinks that figure is closer to 50 percent.
Samir Ahmad, 25, has worked at Citi since college. This summer, he was promoted to associate, an M.B.A.-level position, in the fixed-income, currencies and commodities division. Despite advice from his older brother that he should attend business school, Mr. Ahmad says he cannot see what he would gain to justify the time. “If I were to spend two years at business school, I’d get an M.B.A. degree, but I think learning a different product or a different group here at Citi would be more valuable,” he says.
To be sure, business school can still be a valuable investment, especially for those who want to change careers. Most schools teach a well-rounded curriculum that exposes students to the full picture of the way the business world works. They are great places to make friends and connections that can help throughout a career. And the top business schools serve as a useful filtering system, placing a seal of approval on graduates that can help them find jobs.
“Most banking — and that includes private equity — is about deals and about relationships,” says Timothy Butler, director of M.B.A. career development programs at Harvard Business School. “That will always be M.B.A. territory.”
YET even some students at top schools like Harvard say the decision to go is tougher now than it likely was two decades ago. “We all struggled with it,” says Katie Shaw, 28, who is in her second year of business school there. “It’s not only, ‘Where do I go to business school?’ It’s also, ‘Do I go?’ ”
Ms. Shaw worked in private equity before business school and plans to return to a position in finance. In private equity, she says, an M.B.A. is valued because buying and selling companies involves relationships and company analysis skills. Still, most private equity firms used to require their young hires to leave to go to business school, and some are now letting talented ones keep working instead.
Headhunters for hedge funds and private equity firms say hedge funds, in particular, do not value an M.B.A. “I have some clients that will legitimately say, ‘An M.B.A. means absolutely nothing to us,’ ” says Tim Zack, principal of In-Site Search, a headhunting firm in Westport, Conn., that is a division of Chaves and Associates.
Mr. Hammond of the Alerian hedge fund recently hired someone from Carnegie Mellon’s business school because of that person’s engineering talent, not the skills he learned in business school. While Mr. Hammond says he understands why his new employee went to business school to move into finance, he would look less favorably on someone in an M.B.A. program who had left finance to go to business school.
If he were looking at someone who went to Harvard Business School after the two-year analyst program at Goldman, “I’d be suspicious,” he says. “I’d be saying, ‘What was it you were doing wrong that you couldn’t get a promotion at Goldman or did not pursue an opportunity with a private equity or hedge fund?’ ”
When young people on Wall Street consider the benefits of business school, Mr. Hammond says, the upside no longer outweighs lost salaries and bonuses they would have earned. He calculates the cost of going to a two-year business school to be at least half a million dollars for the average bank employee — $250,000 or more each year in lost salary, plus $50,000 a year in tuition and living expenses. For hedge fund employees, Mr. Hammond says, the number would be considerably higher.
The result, headhunters say, is that many of the best people in finance are no longer entering the M.B.A. pipeline. “If someone is doing well at a hedge fund, they absolutely do not encourage their employees to go off to business school,” says Mr. Zoia of Glocap.
Some young people are pursuing alternatives that can be completed without leaving their jobs. Some take the certified financial adviser tests or study part-time at night at schools like N.Y.U. that offer master’s degrees in subjects like financial engineering.
“There’s a real shift in assumptions as to what is going to make you a better applicant or a prospect for a job,” says Art Hogan, chief market analyst for Jefferies & Company, noting that he had seen an increased interest in young people pursuing a degree as a certified financial adviser at night rather than leaving their jobs for an M.B.A.
At the banks, there has been a push in recent years to keep top performers around after their time as analysts, the most junior position, ends. “Strong performers we want to keep at the firm for as long as possible,” says Julie Kalish, 28, head of United States recruiting for Credit Suisse. “The amount of analysts that we try to keep for the associate promotion process has grown over recent years.”
Admissions officers at top business schools say finance firms always try to hold onto their best employees when the economy is good. They say interest from applicants working in finance is not declining and their graduates still land a large number of top finance jobs. What administrators at business schools do not know — largely because their admissions and career placement offices are separate — is whether their students with a finance background are staying in that industry.
Recruiters at banks say a large number of the students that they are hiring from business schools are from an international background or are changing careers. These students are valuable, they say, but they come in with a different background from someone who has been in finance since age 22.
Jeffrey Talpins, chief investment officer at Element Capital Management, a small fixed-income hedge fund in New York, says he likes to hire people fresh out of school so he can teach them himself. Mr. Talpins attended Yale as an undergraduate but did not go to business school. If a young employee asked his advice on business school, he says, he would tell them not to go if they wanted to stay in finance. “I’d say, ‘You already have a great platform for a job in finance,’ ” he says. “If you’re a superstar, and you’re very good, you’ll grow very rapidly in this field.”
Eventually, these young people may want to raise money and start their own fund, suggests Thomas Caleel, director of admissions at Wharton, and that’s where an M.B.A. and the connections that come with it could help. “If you are trying to raise money for a hedge fund, you will need that network,” he says.
Mr. Talpins of Element said he had no trouble raising money for his hedge fund without an M.B.A. After all, he had a track record from Citi and Goldman Sachs to show to potential investors. In his corner of the world, where math equations are likely to be scrawled on white boards around the office and young people hold the purse strings to millions of dollars in investor money, it seems there is no point in going to business school just to punch a ticket.
In 2005, Trader Monthly named Mr. Talpins one of the top 30 traders under 30. “Youth is not wasted on this crop, any of whom could be a billionaire by 40,” the magazine said. “Or, then again, they could be belly up and bust.”
Mr. Hammond of Alerian, who was featured on the magazine’s list last year, said he has seen people go to hedge funds and get fired in six months “because they couldn’t hack it.”
But he says the risk is worth it.
“If you look at the really successful hedge fund managers — the Eddie Lamperts,” he says, “they’re all in their 40s now. They were probably making only low single-digit millions in their 20s.
“That’s why you do this,” he continues. “That’s why it’s so attractive, because the payoff of being the winner, the next Eddie Lampert, is so high.”
[Via - Simply Put, Smart People Don't Need An MBA]
The Common Link Between A Copywriter And A Mafia Boss
One of the “forum rats”, as we affectionately refer to each other, posted the question that is on the mind of most business owners’ when they first encounter the concept of “learning” to write their own copy.
Essentially, that question is this: “Really, why should I bother to learn the skills of writing copy at all?
When you look around at the mega-wealthy, they OWN things and manage from the top.
Like a crime boss. They want someone hit, they send out Guido.
Hard to imagine Donald Trump chewing a pencil, coming up with a dozen new headlines.
So… why bother to learn copy, if your dreams are big? Wouldn’t that time be better spent playing Monopoly-style biz boss, amassing property and holdings and moving and shaking?
And just hire the best writers to do your copywriting work?”
And here is my answer:
You ask a very good question. It’s so good, in fact, that it mimics exactly how I’ve been postioning my copywriting course lately in seminars.
My general message is this: Sure, you can (and probably will, in some cases) end up hiring writers to do the bulk of the writing for you as you grow your biz.
However, just as a crime boss hires hit men to do the dirty work… chances are, the boss still knows HOW to do the hit himself… and probably spent mucho time in his “rise to power” days actually doing just that. (Very Shakespearean, these modern crime lords.)
Same with biz.
ALL the top multi-millionaire marketers I know — from Jay Abraham to Dan Kennedy, from Eben Pagan to Frank Kern, from Rich Schefren to Mike Filsaime — know how to write killer copy.
And, for the most part, they still handle the important jobs themselves. Even though they may hire out the less-than-critical projects. (Eben — who will gross tens of millions this year — recently spent weeks sequestered, alone, in his home office pounding out copy for his recent launch. Wrote every word himself.)
The reason for this is fundamental: If you don’t know how to write good copy, how will you be able to JUDGE whether whoever you hire has done a good job?
If you are clueless, you’ll be at the mercy of your freelancers. You won’t understand what’s needed, you won’t know if the copy submitted is any good, you won’t be able to set real deadlines… you’re just a babe in the woods, vulnerable and potential lunch for every predator who catches your scent. (And even good, ethical writers will take advantage of you, because it’s so easy. Never forget that the writer/client relationship is inherently hostile – each person wants the best deal for themselves, and wants to do as little work/pay as little money for the process as possible. It’s the nature of the world.)
Just like a crime boss who has no idea how hits happen. The freelance killers he hires (if they know he’s clueless) will jack him around, take forever, botch the job, etc. It’s the stuff that built the Sopranos lore. Remember: Tony did his own hits, when he wanted it done right. (Like offing his cousin.)
There is NO other skill in biz more important than writing copy.
Period.
Show me a CEO who doesn’t understand advertising (which is built around the copy), and I’ll show you a screw-up about to tank the stock. He may get the recognition, but he’s utterly dependent on whoever he has doing the actual marketing… and his entire existence rests on the competence/incompetence of that hired dude behind the scenes.
Shudders all around. Sleepless nights. Ulcers and early death.
But hey — he didn’t “waste” any valuable time learning how to write copy.
Same with politics. The guys who rock as politicians write most or all of their own speeches. The hacks hire it out, oblivious of how embarrassing and exposed they become when their ghost writers put the wrong words in their mouths. (Plus, they get that “deer in the headlights” look whenever they face the press without a script.)
You ever see an actor on his own in an interview? Fielding tough, unexpected questions, they reveal that they are not even close to being as witty, or charming, or smart as the characters they play.
The power of writing has never been proven more important than the way network and cable television has nearly shut down entirely due to the current writer’s strike. Leno, Letterman, Stewart, Colbert, et al, are funny dudes… but they rely on writers to provide the bulk of their show’s wit. (Slight twist here: All those guys COULD write their own stuff, if they had the time, though. They are all seething bastards when it comes to judging the quality of their hired writers, because they know what they want. Thus, they produce high-end shows that rock. But pay attention: During free-form interviews, they are on their own, and they’re “writing” their own witty, funny stuff AS THEY TALK. This, too, is writing copy, even though there’s no typing involved. When you understand HOW to write what you need, you eventually get good enough to write it in your head as you talk. You become a living, breathing copy-producing monster.)
No copy, no action. It really is that simple.
Operation MoneySuck demands that you spend your precious (and very limited) time honing your most important chops. And yes, amassing the outside fortifications of larger and more efficient businesses is important… but they will crumble without the foundational support of killer copy. (All the largest mailers in the world — Rodale, Phillips, Agora — were started by people who understood and wrote copy. Some have stumbled along the way, whenever non-writers gained control and lost sight of basic salesmanship. Great lesson there.)
Copy is salesmanship-in-print. Selling is what you do. The largest and most efficient business is just an empty shell if it cannot sell what it produces.
Essentially, that question is this: “Really, why should I bother to learn the skills of writing copy at all?
When you look around at the mega-wealthy, they OWN things and manage from the top.
Like a crime boss. They want someone hit, they send out Guido.
Hard to imagine Donald Trump chewing a pencil, coming up with a dozen new headlines.
So… why bother to learn copy, if your dreams are big? Wouldn’t that time be better spent playing Monopoly-style biz boss, amassing property and holdings and moving and shaking?
And just hire the best writers to do your copywriting work?”
And here is my answer:
You ask a very good question. It’s so good, in fact, that it mimics exactly how I’ve been postioning my copywriting course lately in seminars.
My general message is this: Sure, you can (and probably will, in some cases) end up hiring writers to do the bulk of the writing for you as you grow your biz.
However, just as a crime boss hires hit men to do the dirty work… chances are, the boss still knows HOW to do the hit himself… and probably spent mucho time in his “rise to power” days actually doing just that. (Very Shakespearean, these modern crime lords.)
Same with biz.
ALL the top multi-millionaire marketers I know — from Jay Abraham to Dan Kennedy, from Eben Pagan to Frank Kern, from Rich Schefren to Mike Filsaime — know how to write killer copy.
And, for the most part, they still handle the important jobs themselves. Even though they may hire out the less-than-critical projects. (Eben — who will gross tens of millions this year — recently spent weeks sequestered, alone, in his home office pounding out copy for his recent launch. Wrote every word himself.)
The reason for this is fundamental: If you don’t know how to write good copy, how will you be able to JUDGE whether whoever you hire has done a good job?
If you are clueless, you’ll be at the mercy of your freelancers. You won’t understand what’s needed, you won’t know if the copy submitted is any good, you won’t be able to set real deadlines… you’re just a babe in the woods, vulnerable and potential lunch for every predator who catches your scent. (And even good, ethical writers will take advantage of you, because it’s so easy. Never forget that the writer/client relationship is inherently hostile – each person wants the best deal for themselves, and wants to do as little work/pay as little money for the process as possible. It’s the nature of the world.)
Just like a crime boss who has no idea how hits happen. The freelance killers he hires (if they know he’s clueless) will jack him around, take forever, botch the job, etc. It’s the stuff that built the Sopranos lore. Remember: Tony did his own hits, when he wanted it done right. (Like offing his cousin.)
There is NO other skill in biz more important than writing copy.
Period.
Show me a CEO who doesn’t understand advertising (which is built around the copy), and I’ll show you a screw-up about to tank the stock. He may get the recognition, but he’s utterly dependent on whoever he has doing the actual marketing… and his entire existence rests on the competence/incompetence of that hired dude behind the scenes.
Shudders all around. Sleepless nights. Ulcers and early death.
But hey — he didn’t “waste” any valuable time learning how to write copy.
Same with politics. The guys who rock as politicians write most or all of their own speeches. The hacks hire it out, oblivious of how embarrassing and exposed they become when their ghost writers put the wrong words in their mouths. (Plus, they get that “deer in the headlights” look whenever they face the press without a script.)
You ever see an actor on his own in an interview? Fielding tough, unexpected questions, they reveal that they are not even close to being as witty, or charming, or smart as the characters they play.
The power of writing has never been proven more important than the way network and cable television has nearly shut down entirely due to the current writer’s strike. Leno, Letterman, Stewart, Colbert, et al, are funny dudes… but they rely on writers to provide the bulk of their show’s wit. (Slight twist here: All those guys COULD write their own stuff, if they had the time, though. They are all seething bastards when it comes to judging the quality of their hired writers, because they know what they want. Thus, they produce high-end shows that rock. But pay attention: During free-form interviews, they are on their own, and they’re “writing” their own witty, funny stuff AS THEY TALK. This, too, is writing copy, even though there’s no typing involved. When you understand HOW to write what you need, you eventually get good enough to write it in your head as you talk. You become a living, breathing copy-producing monster.)
No copy, no action. It really is that simple.
Operation MoneySuck demands that you spend your precious (and very limited) time honing your most important chops. And yes, amassing the outside fortifications of larger and more efficient businesses is important… but they will crumble without the foundational support of killer copy. (All the largest mailers in the world — Rodale, Phillips, Agora — were started by people who understood and wrote copy. Some have stumbled along the way, whenever non-writers gained control and lost sight of basic salesmanship. Great lesson there.)
Copy is salesmanship-in-print. Selling is what you do. The largest and most efficient business is just an empty shell if it cannot sell what it produces.
Learn the craft.
Stay frosty.
[via - John Carlton www.carltoncoaching.com]
P.S. One last point: The idea that you can just hire the “best” writers to do your copy has a big hole in it.
Why?
Because, the “A List” of top writers is only around two-dozen names long. And they are all pretty much booked through eternity. No amount of moolah can get them to write for you, until you start offering partner-sized equity in your biz.
The “B List” of writers are also booked solid, most of the time. If you intend to pay for your most important copy, you may as well hook up an umbilical cord from the writer to your bank account… because you’re gonna pay a LOT (even if you can’t find an “A List” writer to do your job).
Worse — there’s a mob of untested, unproven, and weak-skilled freelancers out there masquerading as grizzled professionals… charging huge bucks to write lame-ass copy.
So you can’t tell from their fees how good they are.
You can shell out gold for peanuts… unless you know how to judge good copy.
The only way to do that: Learn the craft.
Don’t make me come down there…
Why?
Because, the “A List” of top writers is only around two-dozen names long. And they are all pretty much booked through eternity. No amount of moolah can get them to write for you, until you start offering partner-sized equity in your biz.
The “B List” of writers are also booked solid, most of the time. If you intend to pay for your most important copy, you may as well hook up an umbilical cord from the writer to your bank account… because you’re gonna pay a LOT (even if you can’t find an “A List” writer to do your job).
Worse — there’s a mob of untested, unproven, and weak-skilled freelancers out there masquerading as grizzled professionals… charging huge bucks to write lame-ass copy.
So you can’t tell from their fees how good they are.
You can shell out gold for peanuts… unless you know how to judge good copy.
The only way to do that: Learn the craft.
Don’t make me come down there…
How To Make $1,200 A Month From A Blog With 250 Readers
Angie Mecklenburg, a mother of four in Sutter, Ill., blogs about chickens, God, and her farm. For an estimated $15, she'll write about soy-wax candles for a marketer.
Over the last 18 months, Mecklenburg has kept up three blogs, the most popular being Ang's Chicken Coop, which has the tagline "a view of the world from the coop." With about 250 daily visitors to her sites, she said she manages to make as much as $1,200 a month, collecting fees from Google advertising and marketers who pay her to write about their products via the blog ad network iZea.
For example, iZea recently paid her about $15 to write about candles from the Maddison Avenue Candles Company. She also was paid to write a blog about the Christian movie The Last Sin Eater earlier this year.
"iZea sent me a synopsis and movie clip. I blogged it and then I went and saw it," Mecklenburg said at the BlogWorld conference and expo here, a three-day event for blog entrepreneurs and professionals. She said she loved the movie.
Mecklenburg's story is just one of many here this week at the Las Vegas Convention Center, which is also playing host to GodblogCon, a gathering of religious bloggers. Many of the attendees are trying to figure out how to make money from their small publishing ventures, whether it's a political, military, or God-related blog.
iZea, formerly called Pay for Post, is one company trying to capitalize on that desire. Founded in June 2006, the company pays as many as 85,000 bloggers to write about a range of products, including household products, cars, wireless phones, and new movies. According to Randy Mountz, vice president of sales, iZea has roughly 11,000 advertisers in its network, including Hewlett-Packard, Ford, and MGM.
Mountz said the company pays bloggers an average of $18 for a 200-word post on a product or service. Its top blogger, the Florida mom behind Simplekindoflife.com, has made as much as $18,000 over the last year, he said.
Still, the company has had some push-back from other bloggers for buying blog editorial, he said. That's why, "we strongly encourage full disclosure in the post of the sponsorship," he said.
And so far, that's working for Mecklenburg, who now has as many as six blogs to discuss her different interests. Those sites include Twitter-patted.com and Ang's Brood.
"I blog about God and the things I see he does in my life," she said. "But it's not my sole focus. I have many interests and it's really hard to wrap all of them in one blog."
Over the last 18 months, Mecklenburg has kept up three blogs, the most popular being Ang's Chicken Coop, which has the tagline "a view of the world from the coop." With about 250 daily visitors to her sites, she said she manages to make as much as $1,200 a month, collecting fees from Google advertising and marketers who pay her to write about their products via the blog ad network iZea.
For example, iZea recently paid her about $15 to write about candles from the Maddison Avenue Candles Company. She also was paid to write a blog about the Christian movie The Last Sin Eater earlier this year.
"iZea sent me a synopsis and movie clip. I blogged it and then I went and saw it," Mecklenburg said at the BlogWorld conference and expo here, a three-day event for blog entrepreneurs and professionals. She said she loved the movie.
Mecklenburg's story is just one of many here this week at the Las Vegas Convention Center, which is also playing host to GodblogCon, a gathering of religious bloggers. Many of the attendees are trying to figure out how to make money from their small publishing ventures, whether it's a political, military, or God-related blog.
iZea, formerly called Pay for Post, is one company trying to capitalize on that desire. Founded in June 2006, the company pays as many as 85,000 bloggers to write about a range of products, including household products, cars, wireless phones, and new movies. According to Randy Mountz, vice president of sales, iZea has roughly 11,000 advertisers in its network, including Hewlett-Packard, Ford, and MGM.
Mountz said the company pays bloggers an average of $18 for a 200-word post on a product or service. Its top blogger, the Florida mom behind Simplekindoflife.com, has made as much as $18,000 over the last year, he said.
Still, the company has had some push-back from other bloggers for buying blog editorial, he said. That's why, "we strongly encourage full disclosure in the post of the sponsorship," he said.
And so far, that's working for Mecklenburg, who now has as many as six blogs to discuss her different interests. Those sites include Twitter-patted.com and Ang's Brood.
"I blog about God and the things I see he does in my life," she said. "But it's not my sole focus. I have many interests and it's really hard to wrap all of them in one blog."
[Via - CNET]
Success Story
Eric Royal Lybeck, a former smoker, once told his friend and 13-year band mate, Henry Rich, 27, that he was going on a smoke break to feed his "oral fixation." Rich thought it was an excellent name for a mint company--and Oral Fixation was born in 2003. While still playing in their band, Rich and Royal, the pair researched mint production and decided to sell high-end mints in fashionable tins to upscale outlets like The Ritz Carlton, W Hotels, specialty food stores and coffeehouses, as well as online at oralfix.com.
Merging their band's touring schedule with their $5 million business's growing needs, Rich and Lybeck, 26, schedule tour dates in the same cities as major trade shows. "We do business in 15 to 20 countries at any given time, so it's really important for me to come and meet with distributors and just communicate the brand message to them," says Rich. Still, it helps to know that when Rich is hobnobbing with distributors overseas, his superb staff of five in Oral Fixation's Hopewell, New Jersey, office is at the helm.
[via - Entrepreneur]
With 100 Million Dollars In Annual Sales, Life Really Is Good
Even though he broke his foot dancing at his brother’s wedding one recent weekend, life is still good for Bert Jacobs.
Mr. Jacobs is the 42-year-old co-founder of Life is good, a popular apparel brand based in Boston that is on track to break $100 million in sales this year. This is rarefied air for Mr. Jacobs, who a dozen years ago was selling T-shirts out of a battered van on the streets of Boston with his brother John, now 39.
From a single childlike drawing of a character they named Jake and their uplifting three-word slogan, the brothers have developed a fashion brand sold in 4,500 independent retail outlets in the United States and 27 other countries.
Since 1994, they have sold nearly 20 million Life is good T-shirts and now have a product line with more than 900 items, from hats to dog beds, and the company continues to grow 30 to 40 percent annually. There are now 93 independently owned Life is good retail shops selling only their merchandise, and the company plans to have a total of 200 by the end of 2009. With all that, Life is good has just 250 employees.
Life is good, which rations its use of capital letters, offers one more example of a small company creating a big brand. Though most consumers associate great brands with marketing giants like Procter & Gamble, General Motors, Apple and Nike, the ability to build a powerful brand is no longer reserved for the big spenders. Small companies with great ideas and well-planned strategies — Kryptonite bicycle locks, Stonyfield Farm yogurt, Zipcar — have spawned prominent brands.
“A big brand comes from big insights about culture and consumers and what it is that they need,” said Susan Fournier, a brand expert and associate professor of marketing at the School of Management at Boston University. “To me, that has nothing to do with big budgets.”
“Life is good tapped into an emotional ethos that struck a chord with where the culture was at a certain point in time. That is not done by a marketing budget but by their customers who become evangelists and give the brand visibility and credibility.”
Internet start-ups like Google, YouTube, Craigslist and Facebook used the Web to promote themselves and have now grown into giants themselves. Facebook, the popular social networking Web site, for example, was started in a Harvard dormitory room by three undergraduates less than four years ago, and today, with just over 300 employees, has nearly 50 million active users and has been signing up 200,000 new ones a day since January. New brands can be started online with stunning speed and efficiency by small groups of entrepreneurs who understand the impact of the viral environment of the Web.
Creating that ubiquity for a brand in the nondigital world is tougher. Though they had been reasonably content to sell enough of their wares to pay a meager rent and avoid taking real jobs, the Jacobs brothers always believed that they could make a better T-shirt and turn it into a bona fide business.
They posted their own drawings and slogans on the wall of their apartment near Boston and regularly polled friends at their frequent keg parties for feedback about their ideas. “It was truly like a focus group,” Bert Jacobs recalled.
In search of something that would resonate with a broad audience, they created Jake, a crudely drawn stick character not all that far removed from the Smiley Face, and were amazed at how he inspired an intensely positive reaction.
“This guy has life figured out,” wrote one friend next to the drawing.
They later posted a list of 50 slogans they had compiled and got a similar reaction to the unremarkable phrase “life is good.” A girlfriend concluded that the slogan with three simple words “kind of says it all.”
The brothers printed 48 test T-shirts that combined the slogan with the drawing for a street fair in Cambridge, Mass., in 1994, and sold the entire lot in 45 minutes.
That night, the brothers huddled and decided that the gold they had seemingly struck was a result of their message of optimism. “The reason people bought those shirts was because they understood it instantly,” Bert Jacobs said. “It made them smile, and it was tangible. They could reach out and get a little sunshine.”
Doug Gladstone, chief executive of Brand Content, an ad agency in Boston, agreed. “They tapped into something positive yet benign,” he said. “The product makes you feel good but it’s not over the top.”
By the end of 1994, the brothers had sold $82,000 of Life is good shirts through a couple of willing retail outlets. Within four years, they broke the $1 million barrier and believed they had found the small business they had always dreamed of and that they were sitting on an emerging brand.
The outside world did not see it that way. “It was a real uphill battle to get other people to say we had a brand,” Bert Jacobs said. “At $10 million and even $20 million in sales, they were still asking us when we were going to launch something different.”
With no business acumen, the brothers sought out successful retailers and peppered them with questions. Bert Jacobs acknowledged that smarter businessmen could have expanded the company more quickly but that was never the point.
Prof. Fournier said that slow growth is an asset for small companies trying to build brands.
“People with deep pockets put the pedal to the metal and do too much too quickly,” she said. “Big companies try to do everything in the first two years but often fall off the cliff. Small companies have to hold back and build the brand more carefully and diligently. Slow and steady often wins the race.”
The Jacobs brothers considered a consumer advertising campaign several years ago but decided to wait until growth slowed to start it. Growth has never slowed. Instead of advertising, the company spends its money on charitable fund-raising festivals for children’s causes.
“People who are facing adversity embrace our message the most,” Bert Jacobs said.
Skeptics have warned the brothers that their concept has a limited shelf life, and, indeed, they plan to extend the brand to try to keep it vibrant. Next spring, Life is good plans to start several apparel and product lines like Good Karma, Good Kids, Good Dog and Good Vibes that will aim at specific audiences. Good Karma, for example, is an environmentally sustainable clothing line. Good Kids will extend the product line for children.
Bert Jacobs is confident the brand has legs. “So much of fashion and culture is cyclical. It comes and goes,” he said. “When the trend tails off, so does your business. But optimism is not a trend. It’s empowering to celebrate life’s simple pleasures.”
[via - NYTimes]
Friday, November 2, 2007
Mathematical Fortune-Telling
How well can game theory solve business and political disputes?
Predicting the future is not very hard, according to Bruce Bueno de Mesquita: a little mathematics is all you need. Figuring out how to manipulate a situation to achieve specific aims is a bit less straightforward, but Bueno de Mesquita says his mathematical tools can usually do that, too.
The New York University political science professor has developed a computerized game theory model that predicts the future of many business and political negotiations and also figures out ways to influence the outcome. Two independent evaluations, one by academics and one by the U.S. Central Intelligence Agency, have both shown that about 90 percent of his predictions have been accurate. Most recently, he has used his mathematical tools to offer approaches for handling the growing nuclear crisis with Iran.
Bueno de Mesquita provides the computer tools, but he relies on political or business experts to identify specific issues, their possible outcomes, and the key players. He asks experts narrow, carefully delineated questions about which outcome each player would prefer, how important the issue is to each player, and how much influence each player can exert. But he does not ask about the history of the conflict, the cultural norms of the area, or what the experts think will happen.
With careful interviewing, Bueno de Mesquita finds that he can get experts to agree on what information the model needs as input, even when the experts disagree sharply on expected outcomes. Once, after generating a report for the CIA using information from the agency's experts, he had his students assemble the same information from news reports. "Over 90 percent of them came up with the same results as I got [when I was] locked in a lead-lined vault at the CIA headquarters," Bueno de Mesquita says. "It's basic information that experts agree on and that you can even find in The Economist."
The New York University political science professor has developed a computerized game theory model that predicts the future of many business and political negotiations and also figures out ways to influence the outcome. Two independent evaluations, one by academics and one by the U.S. Central Intelligence Agency, have both shown that about 90 percent of his predictions have been accurate. Most recently, he has used his mathematical tools to offer approaches for handling the growing nuclear crisis with Iran.
Bueno de Mesquita provides the computer tools, but he relies on political or business experts to identify specific issues, their possible outcomes, and the key players. He asks experts narrow, carefully delineated questions about which outcome each player would prefer, how important the issue is to each player, and how much influence each player can exert. But he does not ask about the history of the conflict, the cultural norms of the area, or what the experts think will happen.
With careful interviewing, Bueno de Mesquita finds that he can get experts to agree on what information the model needs as input, even when the experts disagree sharply on expected outcomes. Once, after generating a report for the CIA using information from the agency's experts, he had his students assemble the same information from news reports. "Over 90 percent of them came up with the same results as I got [when I was] locked in a lead-lined vault at the CIA headquarters," Bueno de Mesquita says. "It's basic information that experts agree on and that you can even find in The Economist."
Bruce Bueno de Mesquita has led a shift inpolitical science toward quantitative models.
Analyses of his model of political decision-making
show that it has a 90 percent accuracy rate.
Courtesy of Bueno de Mesquita
The elements of the model are players standing in for the real-life people who influence a negotiation or decision. At each round of the game, players make proposals to one or more of the other players and reject or accept proposals made to them. Through this process, the players learn about one another and adapt their future proposals accordingly. Each player incurs a small cost for making a proposal. Once the accepted proposals are good enough that no player is willing to go to the trouble to make another proposal, the game ends. The accepted proposals are the predicted outcome.
To accommodate the vagaries of human nature, the players are cursed with divided souls. Although all the players want to get their own preferred policies adopted, they also want personal glory. Some players are policy-wonks who care only a little about glory, while others resemble egomaniacs for whom policies are secondary. Only the players themselves know how much they care about each of those goals. An important aspect of the negotiation process is that by seeing which proposals are accepted or rejected, players are able to figure out more about how much other players care about getting their preferred policy or getting the glory.
The details of his study of negotiation options with Iran are classified, but Bueno de Mesquita says that the broad outline is that there is nothing the United States can do to prevent Iran from pursuing nuclear energy for civilian power generation. The more aggressively the U.S. responds to Iran, he says, the more likely it is that Iran will develop nuclear weapons. The upshot of the study, Bueno de Mesquita argues, is that the international community needs to find out if there is a way to monitor civilian nuclear energy projects in Iran thoroughly enough to ensure that Iran is not developing weapons.
One of his most famous past predictions also concerned Iran. In 1984, the model predicted that when Ayatollah Khomeini died, an ayatollah named Hojatolislam Khameini and a little-known cleric named Hasheimi Rafsanjani would rise to succeed Khomeini as leaders of Iran. At the time, most experts considered that outcome exceedingly unlikely, since Khomeini had designated a different person as his successor. But in fact, when Khomeini died five years later, Rafsanjani and Khameini succeeded him.
Bueno de Mesquita says he also predicted that Andropov would succeed Brezhnev long before experts considered it likely. He foresaw that China would reclaim Hong Kong 12 years before it happened, and he predicted that France would narrowly pass the European Union's Maastricht Treaty.
Former CIA analyst Stanley Feder says that he has used Bueno de Mesquita's model well over a thousand times since the early 1980s to make predictions about specific policies. Like others, he has found it to be more than 90 percent accurate. In situations where predictions of the model differed from experts' predictions, the model always turned out to be correct.
"I'm always stunned that it works so well," Bueno de Mesquita says. "This 90 percent is not my assessment."
The main reason that the model generates more reliable predictions than experts do is that "the computer doesn't get bored, it doesn't get tired, and it doesn't forget," he says. In the analysis of nuclear technology development in Iran, for example, experts identified 80 relevant players. Because no individual can keep track of all the possible interactions between so many players, human analysts focus on five or six key players. The lesser players may not have a lot of power, Buena de Mesquita says, but they tend to be knowledgeable enough to influence how key decision-makers understand the issues. His model can keep track of those influences when a human can't.
"Given expert input of data for the variables for such a model, it would not surprise me in the least to see that it would perform well," says Branislav L. Slantchev, a political scientist and game theorist at the University of California at San Diego. Predictions based on game theory can fail in a context where people don't act rationally, but in Buena de Mesquita's work, Slantchev says, rational action mostly means that the players are promoting their own perceived interests as best they can, something humans tend to do.
To accommodate the vagaries of human nature, the players are cursed with divided souls. Although all the players want to get their own preferred policies adopted, they also want personal glory. Some players are policy-wonks who care only a little about glory, while others resemble egomaniacs for whom policies are secondary. Only the players themselves know how much they care about each of those goals. An important aspect of the negotiation process is that by seeing which proposals are accepted or rejected, players are able to figure out more about how much other players care about getting their preferred policy or getting the glory.
The details of his study of negotiation options with Iran are classified, but Bueno de Mesquita says that the broad outline is that there is nothing the United States can do to prevent Iran from pursuing nuclear energy for civilian power generation. The more aggressively the U.S. responds to Iran, he says, the more likely it is that Iran will develop nuclear weapons. The upshot of the study, Bueno de Mesquita argues, is that the international community needs to find out if there is a way to monitor civilian nuclear energy projects in Iran thoroughly enough to ensure that Iran is not developing weapons.
One of his most famous past predictions also concerned Iran. In 1984, the model predicted that when Ayatollah Khomeini died, an ayatollah named Hojatolislam Khameini and a little-known cleric named Hasheimi Rafsanjani would rise to succeed Khomeini as leaders of Iran. At the time, most experts considered that outcome exceedingly unlikely, since Khomeini had designated a different person as his successor. But in fact, when Khomeini died five years later, Rafsanjani and Khameini succeeded him.
Bueno de Mesquita says he also predicted that Andropov would succeed Brezhnev long before experts considered it likely. He foresaw that China would reclaim Hong Kong 12 years before it happened, and he predicted that France would narrowly pass the European Union's Maastricht Treaty.
Former CIA analyst Stanley Feder says that he has used Bueno de Mesquita's model well over a thousand times since the early 1980s to make predictions about specific policies. Like others, he has found it to be more than 90 percent accurate. In situations where predictions of the model differed from experts' predictions, the model always turned out to be correct.
"I'm always stunned that it works so well," Bueno de Mesquita says. "This 90 percent is not my assessment."
The main reason that the model generates more reliable predictions than experts do is that "the computer doesn't get bored, it doesn't get tired, and it doesn't forget," he says. In the analysis of nuclear technology development in Iran, for example, experts identified 80 relevant players. Because no individual can keep track of all the possible interactions between so many players, human analysts focus on five or six key players. The lesser players may not have a lot of power, Buena de Mesquita says, but they tend to be knowledgeable enough to influence how key decision-makers understand the issues. His model can keep track of those influences when a human can't.
"Given expert input of data for the variables for such a model, it would not surprise me in the least to see that it would perform well," says Branislav L. Slantchev, a political scientist and game theorist at the University of California at San Diego. Predictions based on game theory can fail in a context where people don't act rationally, but in Buena de Mesquita's work, Slantchev says, rational action mostly means that the players are promoting their own perceived interests as best they can, something humans tend to do.
However, he points out that the model relies on having a considerable amount of expert input. "Honestly, if you had all this information," Slantchev says, "you should be able to predict fairly well how the issue would be resolved." The main reason that the model does this better than experts is that it "strips ideological blindfolds, cultural prejudice, and normative commitments that very often color the view of experts."
Buena de Mesquita offers his services through Mesquita and Roundell, a company he founded that uses his model to advise businesses and governments. "It's pretty exciting when you sit down with a client," he says, "and you know that they're making decisions involving life and death questions or billions of dollars, and at the end of the day they are relying on a body of equations."
[via - Julie J. Rehmeyer]
The New Nostradamus
Can a fringe branch of mathematics forecast the future? A special adviser to the CIA, Fortune 500 companies, and the U.S. Department of Defense certainly thinks so.
If you listen to Bruce Bueno de Mesquita, and a lot of people don’t, he’ll claim that mathematics can tell you the future. In fact, the professor says that a computer model he built and has perfected over the last 25 years can predict the outcome of virtually any international conflict, provided the basic input is accurate. What’s more, his predictions are alarmingly specific. His fans include at least one current presidential hopeful, a gaggle of Fortune 500 companies, the CIA, and the Department of Defense. Naturally, there is also no shortage of people less fond of his work. “Some people think Bruce is the most brilliant foreign policy analyst there is,” says one colleague. “Others think he’s a quack.”
Today, on a rare sunny summer day in San Francisco, Bueno de Mesquita appears to be neither. He’s relaxing in his stately home, answering my questions with exceeding politesse. Sunlight streams through the tall windows, the melodic sound of a French horn echoing from somewhere upstairs; his daughter, a musician in a symphony orchestra, is practicing for an upcoming recital. It’s all so complacent and genteel, which is exactly what Bueno de Mesquita isn’t. As if on cue, a question sets him off. “I found it to be offensive,” he says about a colleague’s critique of his work. “This is absolutely, totally, and utterly false,” he says about the attack of another.
The criticism rankles him, because, to his mind, the proof is right there on the page. “I’ve published a lot of forecasting papers over the years,” he says. “Papers that are about things that had not yet happened when the paper was published but would happen within some reasonable amount of time. There’s a track record that I can point to.” And indeed there is. Bueno de Mesquita has made a slew of uncannily accurate predictions—more than 2,000, on subjects ranging from the terrorist threat to America to the peace process in Northern Ireland—that would seem to prove him right.
“The days of the digital watch are numbered,” quipped Tom Stoppard. After spending a few hours with Bueno de Mesquita, you might come to believe that so is everything else. Numbered as in “mathematics”—more precisely, game theory, an esoteric branch of mathematics used to analyze interaction. “Game theory is math for how people behave strategically,” Bueno de Mesquita says.
Bueno de Mesquita has big ideas, and he’s more than happy to put his career on the line for them. Back in March 2004, when al-Qaeda bombed a Madrid train station, influencing the course of Spain’s general election three days later, a lot of U.S. security folks were nervous. Worried that al-Qaeda might try something similar here in the run-up to the November, 2004, presidential elections, the Pentagon hired Bueno de Mesquita to run some data through his forecasting model to tell them what to expect. The results were unequivocal. “I said there would be no homeland attack. I also indicated that bin Laden’s second-in-command, Ayman al-Zawahiri, would resurface around Thanksgiving, 2004,” he says. Just after the elections in November that year, Zawahiri released a new videotape. Bueno de Mesquita was right on both counts. “One of the things government needs most is advice that’s not wishy-washy. I try to be as precise as I can.”
For the record, this man is not some lunatic soothsayer sequestered in a musty, forgotten basement office. He is the chairman of New York University’s Department of Politics, a senior fellow at the Hoover Institution at Stanford, and the author of many weighty academic tomes. He regularly consults with the CIA and the Department of Defense—most recently on such hot-button topics as Iran and North Korea—and has a new book coming out in the fall that he cowrote with his pal Secretary of State Condoleezza Rice. His curriculum vitae, which details his various Ph.Ds, academic appointments, editorial-board memberships, writings, honors, awards, and grants, runs 17 small-font pages long.
He is wildly controversial, though. As one of the foremost scholars of game theory—or “rational choice,” as its political-science practitioners prefer to call it—Bueno de Mesquita is at the center of a raging hullabaloo that has taken over some of the most prestigious halls of learning in this country. Exclusive, highly complex mathematically, and messianic in its certainty of universal truths, rational-choice theory is not only changing the way political science is taught, but the way it’s defined.
To verify the accuracy of his model, the CIA set up a kind of forecasting face-off that pit predictions from his model against those of Langley’s more traditional in-house intelligence analysts and area specialists. “We tested Bueno de Mesquita’s model on scores of issues that were conducted in real time—that is, the forecasts were made before the events actually happened,” says Stanley Feder, a former high-level CIA analyst. “We found the model to be accurate 90 percent of the time,” he wrote. Another study evaluating Bueno de Mesquita’s real-time forecasts of 21 policy decisions in the European community concluded that “the probability that the predicted outcome was what indeed occurred was an astounding 97 percent.” What’s more, Bueno de Mesquita’s forecasts were much more detailed than those of the more traditional analysts. “The real issue is the specificity of the accuracy,” says Feder. “We found that DI (Directorate of National Intelligence) analyses, even when they were right, were vague compared to the model’s forecasts. To use an archery metaphor, if you hit the target, that’s great. But if you hit the bull’s eye—that’s amazing.”
How does Bueno de Mesquita do this? With mathematics. “You start with a set of assumptions, as you do with anything, but you do it in a formal, mathematical way,” he says. “You break them down as equations and work from there to see what follows logically from those assumptions.” The assumptions he’s talking about concern each actor’s motives. You configure those motives into equations that are, essentially, statements of logic based on a predictive theory of how people with those motives will behave. From there, you start building your mathematical model. You determine whether the predictive theory holds true by plugging in data, which are numbers derived from scales of preferences that you ascribe to each actor based on the various choices they face.
The Prisoner’s Dilemma, a basic in game theory, explains it well: Two burglars are apprehended near the scene of a crime and are interrogated separately by the police. The police know these two goons did it, but they don’t know how, so they offer each one a deal. If they both confess and cooperate, they’ll both get a minor sentence of five years. If neither man confesses, they’ll both only get one year (for having been caught with some of the stolen loot on them). But, and here’s where it gets interesting, if one confesses and the other doesn’t, the one who confesses walks out scot-free while the other will do 10 years. What will they do? Will they trust each other and do what’s obviously in their best interest, which is not confess? Based on game theory’s assumptions about human nature, the math derived from this dilemma tells you squarely that the two goons will turn each other in.
“In the foreboding world view of rational choice, everyone is a raging dirtbag.”
Which illustrates the next incontrovertible fact about game theory: In the foreboding world view of rational choice, everyone is a raging dirtbag. Bueno de Mesquita points to dictatorships to prove his point: “If you liberate people from the constraint of having to satisfy other people in order to advance themselves, people don’t do good things.” When analyzing a problem in international relations, Bueno de Mesquita doesn’t give a whit about the local culture, history, economy, or any of the other considerations that more traditional political scientists weigh. In fact, rational choicers like Bueno de Mesquita tend to view such traditional approaches with a condescension bordering on disdain. “One is the study of politics as an expression of personal opinion as opposed to political science,” he says dryly. His only concern is with what the political actors want, what they say they want (often two very different things), and how each of their various options will affect their career advancement. He feeds this data into his computer model and out pop the answers.
Though controversial in the academic world, Bueno de Mesquita and his model have proven quite popular in the private sector. In addition to his teaching responsibilities and consulting for the government, he also runs a successful private business, Mesquita & Roundell, with offices in Rockefeller Center. Advising some of the top companies in the country, he earns a tidy sum: Mesquita & Roundell’s minimum fee is $50,000 for a project that includes two issues. Most projects involve multiple issues. “I’m not selling my wisdom,” he says. “I’m selling a tool that can help them get better results. That tool is the model.”
“In the private sector, we deal with three areas: litigation, mergers and acquisitions, and regulation,” he says. “On average in litigation, we produce a settlement that is 40 percent better than what the attorneys think is the best that can be achieved.” While Bueno de Mesquita’s present client list is confidential, past clients include Union Carbide, which needed a little help in structuring its defense after its 1984 chemical-plant disaster in Bhopal, India, claimed the lives of an estimated 22,000 people; the giant accounting firm Arthur Andersen; and British Aerospace during its merger with GEC-Marconi.
But there are limits to what his company will do. For example, Bueno de Mesquita may already know, but he won’t say who’ll succeed George W. Bush in the White House. “We have a corporate policy that we will not, on a commercial basis, use the model in campaigns,” he says. “We don’t think it’s appropriate to manipulate the democratic process. We won’t take a client who wants to manipulate U.S. government policy, even if we agree with the manipulation. And we won’t take a foreign client whose objectives are contrary to the objectives of the United States government.”
There’s also the book he’s written with Condoleezza Rice and two other authors, The Strategy of Campaigning, which comes out in the fall. Given the Bush administration’s heavy ideological bent—which would seem to represent everything a rationalist like Bueno de Mesquita opposes—how does he justify putting his name on the same dust jacket as Rice’s? Bueno de Mesquita repositions himself in his chair. “The central question in this book is a question that Condi raised before she came to Washington,” he says. (So is her name there just to sell books? “We are making a concerted effort not to play up the fact that the Secretary of State is a co-author,” he later adds.)
Meanwhile, he has just launched and is the director of NYU’s Alexander Hamilton Center. “The mission for the center is the application of logic and evidence to solving fundamental policy problems. Not to a bipartisan solution, but to a nonpartisan solution.” In his continuing work for the CIA and the Defense Department, one of his most recent assignments has been North Korea and its nuclear program. His analysis starts from the premise that what Kim Jong Il cares most about is his political survival. As Bueno de Mesquita sees it, the principal reason for his nuclear program is to deter the United States from taking him out, by raising the costs of doing so. “The solution, then, lies in a mechanism that guarantees us that he not use these weapons and guarantees him that we not interfere with his political survival,” he says.
“They said my work was evil, offensive, that it should be suppressed. It was a very difficult time in my career.—Bruce Bueno de Mesquita”
Perhaps not coincidentally, the recent agreement that the United States reached with the government of Pyongyang closely resembles the one that Bueno de Mesquita’s model suggested: Kim agrees to dismantle his existing nuclear weapons but not his existing nuclear capability. “He puts it in mothballs with IAEA (International Atomic Energy Agency) inspectors on site 24 hours a day, 365 days a year. And in exchange, we provide him with $1.2 billion a year, which we label ‘foreign aid,’ of course.” The “foreign-aid” figure published in the newspapers was $400 million, which concerns Bueno de Mesquita. “I read that and I said, I hope that’s not the deal because it’s not enough money. He needs $1.2 billion, approximately, to sustain the loyalty of his cronies in the military and so forth. It’s unpleasant, this is a nasty man, but we’re stuck with it. The nice part of the deal is that it’s self-enforcing. Each side has a reason to credibly commit to their part of the deal.”
Recently, he’s applied his science to come up with some novel ideas on how to resolve the Israeli-Palestinian conflict. “In my view, it is a mistake to look for strategies that build mutual trust because it ain’t going to happen. Neither side has any reason to trust the other, for good reason,” he says. “Land for peace is an inherently flawed concept because it has a fundamental commitment problem. If I give you land on your promise of peace in the future, after you have the land, as the Israelis well know, it is very costly to take it back if you renege. You have an incentive to say, ‘You made a good step, it’s a gesture in the right direction, but I thought you were giving me more than this. I can’t give you peace just for this, it’s not enough.’ Conversely, if we have peace for land—you disarm, put down your weapons, and get rid of the threats to me and I will then give you the land—the reverse is true: I have no commitment to follow through. Once you’ve laid down your weapons, you have no threat.”
Bueno de Mesquita’s answer to this dilemma, which he discussed with the former Israeli prime minister and recently elected Labor leader Ehud Barak, is a formula that guarantees mutual incentives to cooperate. “In a peaceful world, what do the Palestinians anticipate will be their main source of economic viability? Tourism. This is what their own documents say. And, of course, the Israelis make a lot of money from tourism, and that revenue is very easy to track. As a starting point requiring no trust, no mutual cooperation, I would suggest that all tourist revenue be [divided by] a fixed formula based on the current population of the region, which is roughly 40 percent Palestinian, 60 percent Israeli. The money would go automatically to each side. Now, when there is violence, tourists don’t come. So the tourist revenue is automatically responsive to the level of violence on either side for both sides. You have an accounting firm that both sides agree to, you let the U.N. do it, whatever. It’s completely self-enforcing, it requires no cooperation except the initial agreement by the Israelis that they are going to turn this part of the revenue over, on a fixed formula based on population, to some international agency, and that’s that.”
His first foray into forecasting controversy took place in 1984, when he published an article in PS, the flagship journal of the American Political Science Association, predicting who would succeed Iran’s ruling Ayatollah Khomeini upon his death. He had developed a rudimentary forecasting model that was different from anything anyone had seen before in that it was not designed around one particular foreign-policy problem, but could be applied to any international conflict. “It was the first attempt at a general mathematical model of international conflict,” he says. His model predicted that upon Khomeini’s death, an ayatollah named Hojatolislam Khamenei and an obscure junior cleric named Akbar Hashemi Rafsanjani would emerge to lead the country together. At the time, Rafsanjani was so little known that his name had yet to appear in the New York Times.Even more improbably, Khomeini had already designated his successor, and it was neither Ayatollah Khamenei nor Rafsanjani. Khomeini’s stature among Iran’s ruling clerics made it inconceivable that they would defy their leader’s choice. At the APSA meeting subsequent to the article’s publication, Bueno de Mesquita was roundly denounced as a quack by the Iran experts—a charlatan peddling voodoo mathematics. “They said I was an idiot, basically. They said my work was evil, offensive, that it should be suppressed,” he recalls. “It was a very difficult time in my career.” Five years later, when Khomeini died, lo and behold, Iran’s fractious ruling clerics chose Ayatollah Khamenei and Hashemi Rafsanjani to jointly lead the country. At the next APSA meeting, the man who had been Bueno de Mesquita’s most vocal detractor raised his hand and publicly apologized to him.
Bueno de Mesquita had arrived, and so, too, had rational-choice theory. Rational choicers began sprouting up in political-science departments around the country and, say their critics, strangling anyone and anything in their way. By 2000, according to one estimate, some 40 percent of all articles published in the prestigious American Political Science Review were rational-choice themed. Increasingly, graduate students in political science viewed a fluency in formal mathematic modeling as a prerequisite for career advancement. And the leaps in technology taking place only fueled rational choice’s advance: faster, more powerful computers allowed rational choicers to build bigger, ever more complex models that could be applied to ever more complex situations. And, naturally enough, an intellectual counteroffensive was launched.
It began in 1994 when two Yale political-science professors, Donald Green and Ian Shapiro, published their book, Pathologies of Rational Choice Theory, which disputed much of the scientific underpinnings that rational choice claimed for itself. In essence, the authors said that when rational choice was actually put to the practical test, much of it simply didn’t work. This was followed by a 1999 (lightning speed in academia) article by Stephen M. Walt in the journal International Security called “Rigor or Rigor Mortis?” Walt, a political-science professor at Harvard’s John F. Kennedy School of Government, conceded some value to formal modeling but ultimately likened rational choice to a “cult of irrelevance” that stifled creativity and had little practical value in actual policy formulation. Most vexing, Walt accused rational choicers of regarding nonrational choice theorists such as himself as “methodological Luddites whose opposition rests largely on ignorance.”
“We found that [national intelligence] analyses, even when they were right, were vague compared to [Bueno de Mesquita’s] forecasts. If you hit the target, that’s great. But if you hit the bull’s eye—that’s amazing.—Stanley Feder, former CIA analyst”
Since no one snaps a towel back harder than a scorned academic, Bueno de Mesquita and several of his rational-choice cohorts immediately mounted a blistering counter-counteroffensive, firing off a series of lengthy rebuttals to Walt’s piece that deconstructed his criticism, questioned his facts, and cited what was in their view Walt’s muddled logic as a prime example of why rational choice was so desperately needed in the field. “In the piece that Steve Walt wrote, in which he acknowledged that logical consistency was important, he also argued that it was overrated, that it stifled creativity. To me this is a bizarre idea,” says Bueno de Mesquita, “because really what that statement means to me is, if you relax logical consistency, you can say whatever you feel like and therefore you are back to a world in which the study of politics is the expression of personal opinion instead of being political science. It’s the art of politics or the articulation of beliefs, which is what dominates much of advising to government. It’s rhetoric.”
The brouhaha culminated at a raucous APSA meeting in 2001 at San Francisco’s Hilton Hotel with the open revolt of a group of major-league political scientists who, one by one, took to the podium to rail against rational choice and its encroaching methodological orthodoxy. Dubbed the “Perestroika Movement” by its anonymous founder (apparently, rational-choice folk are a powerful and vindictive lot), the dissident group vowed to take a stand against “the domination of mathematical approaches to the discipline.” There is a “hegemonic threat out there,” warned John J. Mearsheimer, a noted professor of international relations at the University of Chicago. “This is about the mathematicization of political science,” he said. “I’m in favor of filling the zoo with all kinds of animals. But I’m concerned about them running us out of the business or making us marginal.” Ultimately, the Perestroikans did win some concessions: a new editor of the APSR who vowed to make the flagship journal more hospitable to mathematics-free articles and a pledge from the APSA to open up its method of appointing officers. “The APSA had become dominated by those practicing so-called rigorous analyses,” says Walt. “Now the pendulum has swung back a bit.”
For Bueno de Mesquita, getting his methodology accepted by the policy-making establishment remains somewhat of an uphill slog. The most pointed criticism of rational choice has been that, unlike with more traditional political scientists, very little cross-pollination takes place between rational-choice academics and government policy-makers. Bueno de Mesquita says it’s just a matter of time before that changes. “Because people who are in a position to appoint people weren’t trained in this way, they don’t feel as comfortable as with people who were trained in what I would describe as a less rigorous form of study of politics. And, so, the folks who do more rigorous work typically don’t get invited in,” he says. Of course, the same was true of economics 40 years ago when nontechnical types like John Kenneth Galbraith dominated the field. Paul Samuelson and Milton Friedman changed all that, and Bueno de Mesquita sees himself playing the same role for politics.
Bueno de Mesquita remains unfazed, ever certain that rational choice will ultimately prevail. “When I moved to Rochester in 1973, if you wanted to be trained in this kind of political science, you could go to Rochester, period,” he says. “Ten years later, you could go to Rochester, Caltech, and Washington University in St. Louis. If you asked me today, you could go to the places I just mentioned, and you could go to NYU, you could go to Stanford—there’s a long list of places you could go. Except, of course, Harvard. But it will happen there, too. I’m on their syllabus.”
Back to the Future
A sample of Bruce Bueno de Mesquita’s wilder—and most accurate—predictions
Forecasted the second Intifada and the death of the Mideast peace process, two years before it happened.
Defied Russia specialists by predicting who would succeed Brezhnev. “The model identified Andropov, who nobody at the time even considered a possibility,” he says.
Predicted that Daniel Ortega and the Sandanistas would be voted out of office in Nicaragua, two years before it happened.
Four months before Tiananmen Square, said China’s hardliners would crack down harshly on dissidents.
Predicted France’s hair’s-breadth passage of the European Union’s Maastricht Treaty.
Predicted the exact implementation of the 1998 Good Friday Agreement between Britain and the IRA.
Predicted China’s reclaiming of Hong Kong and the exact manner the handover would take place, 12 years before it happened.
Sunday, October 28, 2007
How to make easy money using Internet
1. Get a credit card with 12-month 0% APR balance transfer promotion
2. Request a convenient check to transfer balance
3. Or make the transfer over the phone
4. Consolidate credit limits to get the most out of the deal
5. Don’t spend the money and don’t buy stocks with the money as well
6. Pay more than the minimum on time every month
7. Confirm the payoff date
If the only purpose of getting a new card is to use the interest free period to make money, then length of the promotion period is the key. There are many cards offer a 12-month period with 0% introductory rate. Any period that’s shorter than 12 months is less desirable, unless you can use the card even without the 0% rate. For existing cards, however, a shorter term such as 9 months or 6 months is acceptable, but you need even larger amount to make up the fees. The shortest term I had was 4 months.
2. Request a convenient check to transfer balance
Not all issuers send out convenient checks right after the card is issued. If the promotion period starts from the time a balance is transferred, you can wait till the condition is right (such as the interest rate of your savings account if you expect it to go up in the coming months). I know Discover Card’s promotion starts when the card is issued. If that’s the case, do the transfer immediately after receiving the card.
To expedite the process, call the issuer when the card arrives and request a convenient check. It’s better to get a blank check, but there are credit card company requires your name and the amount you want to transfer be printed on the check before they can send it to you. Once the check is in, just deposit the money into your bank account.
3. Or make the transfer over the phone
If you feel comfortable, you also initiate the transfer on the phone and have the money sent to your bank account directly (you have to provide your bank’s routing number and your account number). I did that a couple of time with Bank of America and Chase which already have my bank information from the online bill pay.
Things will a lot easier if you transfer the money right to your bank account, but that’s not always the case. For instance, last year Discover insisted I can only use the money to pay balance on another credit card. If this is what’s happening, it’s less desirable but still doable if you have cards that can issue refund for over payment. Check out my previous post on how to use Citi card to transfer balance.
4. Consolidate credit limits to get the most out of the deal
It would be impossible for me to have $100K in balance transfer without some consolidations. If you have multiple accounts with the same issuer, you can get the most out of the deal by consolidating your existing credit limits. All you need to is call the credit card company and tell them to move credit lines from this and that card to the card with 0% offer. Just move the credit lines, but don’t close the accounts as they are likely to be older than the card you just got. When the game is over, you can always move the lines back to those cards if you wish. I have done credit consolidations before and it’s quite easy to do.
5. Don’t spend the money and don’t buy stocks with the money as well
Nobody can predict where the market will be one year from now. If you don’t have other funds to cover the balance when the transfer expires, you will have to sell your stocks which could be losing money at that time. Just save the money in a high yield savings account. There are plenty of online savings accounts offer 5+% interest rate. Keep the money in liquid accounts so you can have an easy access. In case something unexpected happens (like late in making payment), you can pay the money back right away.
6. Pay more than the minimum on time every month
If you are late in making minimum payment, even once, you are screwed. So make sure you give enough time to let your payment hit the card ahead of the deadline. And paying the bill online instead of mailing a check can reduce the risk of late payment. In addition, adding $10 more to the minimum payment is always a good practice.
7. Confirm the payoff date
Call the issuer one month early to confirm the last day the balance has to be paid off to avoid any financial charge. Don’t just assume the date on the offer letter is the deadline. Also, since transferring money via ACH usually requires at least three business days before the fund settles, give yourself enough time to arrange the money and pay off the entire balance without any delay.
Finally, there are a couple of items that you should be careful when playing the credit card arbitrage:
Finally, there are a couple of items that you should be careful when playing the credit card arbitrage:
Think twice before getting a new card for balance transfer if the fee depends on the amount transferred (such as the 3% fee that Citi charges). The profit will be eroded even if you can get 5+% return from a savings account.
Make sure there’s no balance from purchases on the card before making the transfer. Since any payment you make will be automatically used to pay balance with the lowest interest rate, the charge from your regular purchase will started to accumulate interests until you pay off the entire balance, including that from 0% transfer. Edit: And don’t use the credit card until the balance transfer money is paid off either for the same reason (Thanks Tim ).
Read carefully the deadline on your offer letter. If it says something like “the billing cycle includes August 31, 2008,” then August 31, 2008 is NOT the deadline to pay off the balance and avoid financial charges. Depending on the date of your billing cycle, you may have to give the money back well ahead of August 31, 2008. Call the issuer to confirm the deadline.
Make sure there’s no balance from purchases on the card before making the transfer. Since any payment you make will be automatically used to pay balance with the lowest interest rate, the charge from your regular purchase will started to accumulate interests until you pay off the entire balance, including that from 0% transfer. Edit: And don’t use the credit card until the balance transfer money is paid off either for the same reason (Thanks Tim ).
Read carefully the deadline on your offer letter. If it says something like “the billing cycle includes August 31, 2008,” then August 31, 2008 is NOT the deadline to pay off the balance and avoid financial charges. Depending on the date of your billing cycle, you may have to give the money back well ahead of August 31, 2008. Call the issuer to confirm the deadline.
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