A place for us - somewhere, a place for us

Yes, it’s a blatant quote of Barbara Streisand, but the reality is that in a world where the rich get richer, the big get bigger and the small are trampled, how does someone who is trying to just get by, not create any ripples and be financially sustainable survive?

Watching the DJIA go up and up every day, while one in three people seems to be out of work, furloughed, or at least economically struggling, is hard to take.  I mean for a couple of weeks, sure.  A month, maybe.  But six months?  What the hell is going on?

I think I’m starting to see what is happening.  The big corporations (the ones that are publicly traded companies) have a ton of money.  They got it by 0% interest rate borrowings that they can have, that most of us cannot.  They got it by holding earnings and buying back their shares so they are impervious to hostile takeovers.  And they are cashed up, and able to get through these economic struggles.

You probably are not.  You don’t have access to the mounds of cash that they do.  So it is not surprising to see the Mom & Pop cafes being destroyed by the likes of Starbucks, or the micro-brewery being stomped on by big beer.  And I hate to say it, but they are not coming back.  The big bully won and won big.

The things that made a city interesting where the nooks & crannies of small business and micro-operators who did things differently.  They invented new products, new services, or took old products and old services and delivered them with their own special twist.  But they are the most vulnerable.  No government loan programs will help - they can’t survive on handouts and they don’t want to either.

It seems that unless you are trying to be some mega-rich monocle wearing Wall Street tycoon, you are SOL in the 2020 economy.  I do believe that we can start calling this “The Great Reset” as many have predicted before.  But I don’t think it will be the end of the USA or $USD as they are predicting.  That may take 10 years or so, and probably will happen.  But for now, we have to look at what we need to do to get through this.

Digitize yourself

I’ve been a firm believer of doing this for a long time, and even before the Internet was “a thing” so to speak.  The driver for me was moving from one country to another.  You learn to be mobile and nomadic.  You learn that being transportable matters.  You don’t have filing cabinets - you scan all your documents.  You don’t have huge book libraries, you digitize and “Kindle” everything.  You don’t run big desktop computers - its all in a Macbook Pro.

You establish your identity online.  You don’t have a store front.  You have a great website.  You don’t rely on some mega-corporation search engine like Google - you actively promote and market on dozens of social media, directories and other sites.  You get busy creating an identity using self-publishing, podcasts, YouTube videos, LBRY.tv content, etc.  You find ways to generate income using crypto-currency where there is no big bank standing between you and your money.

It takes a lot of work to set this up.  But with constant attention, over time you will build the opportunity to monetize it.  And you own it.  

If you have content that people want, then you have a product.  And that product just needs to be distributed in such a way that you generate wealth.  It probably isn’t the core product that makes you wealthy.  Like a gas station, they can’t make money on the gas.  It’s the convenience store where they make their profits.  Maybe that is some “swag” that you sell through a 3rd party fulfillment center.  T-Shirts, Coffee Mugs, stickers, whatever.  Get creative.

Scale your content so that premium stuff costs money.  Your subscribers will see the benefit from consuming the free content, which is free advertising.  That’s advertising you didn’t pay Google on a “Per Click” basis for.  But there is something that is super valuable that you do, and your fans will pay for that.  That’s where the monetization model kicks in.  If you are too stingy to want to give stuff away, you will spend way more on advertising to get a following, and you can’t compete with the big corps for that.

You have to embrace the “open source” model

If you have any association with technology, we can learn a lot from the past 20 years.  Back in the 1990s and early 2000s, there was one dominant corporation - Microsoft.  They literally controlled the desktop computer, and with that attempted to control everything that the computer touched.  They controlled the servers, the web servers, the database servers, the programming languages that developers used to build things.  Even they tried to control the web browser and the search engine.  Typical big corporation - stomping out the small guy if they could.

But there was one place they failed and this eventually lead to their pivoting and giving up the fight - Open source.

Open source is a concept that you can have anything you want for free.  There are derivatives of the model, but this was best explained in the book/paper “The Cathedral & The Bazaar” by Eric Raymond.  By giving away things for free, you create a following.  And that following will spend money either through donations (ie. Patreon) or through associated purchases for premier content.  

As a result, Microsoft lost the battle to the free and open source Linux operating system.  Consequently every web server out there these days runs free Linux software, and because of not having to pay license fees, big data centers, Internet service providers and “Cloud” companies emerged.  Of course, they got gobbled up by big corporations but you still retained the right to have free stuff.

If you consider what you do as a small operator, and you want to generate a following, you can’t afford to spend the millions that big corporations do on advertising.  So you give away what you do for free.  No one says No to free stuff.  If you are honest, trustworthy and you stand behind what you do, you will generate a following.  That following will become grateful to you for what you do, and will offer to help fund you.  If your product, service, message, etc. touches enough people because you clearly are offering something the big corps don’t offer, the fans will support you.

Musicians and bands learned this the hard way.  When they couldn’t make more than $0.20 in physical royalties for selling CDs through record labels, and many became indebted to the very same record labels that helped launch them due to advertising budgets that they didn’t have, either they broke up and stopped making music, or they self-published.  And with that they retained the rights to sell their music on the road, and returned back to the days of the traveling bard rather than some MTV like branded product.

That returned music back to the musicians that created it.  Chances are that the next “big thing” isn’t coming from a major record label, but some unique, quirky and alternative thing that is playing at the local dive bar or in some cheap van traveling from city to city, playing at low profile festivals or clubs.  And that’s probably the music you discovered at college, or in your early years that defined much of your taste in the musical arts for the rest of your life.

Give it way.  It will come back to you 10 fold.  But you have to be smart enough to understand where it will come back, and be ready with a bucket to catch it.

Focus on the product - not the distribution

This is the #1 problem I see 95% of people falling into.  They think that because the CAN do something - often due to the barrier to entry being lower because of technology, that they should and will succeed in it.  That rarely happens.

Take podcasts, for example.  In 2006 I created a major podcast hosting company in partnership with Alesis.  Alesis invented the first affordable digital audio recording system (the ADAT) that enabled many of the artists in the 1990s to come into your home.  What used to be a million dollar cost to setup a recording studio, could now be done for under $5,000.   Musicians could record and release their own music because of this amazing achievement.

But few succeeded.  Why?  Because they were bad musicians, had nothing new to offer, and if they were not in this category, then they got found by record labels anyway.  The home recording boom industry basically fizzled out.  Eventually that went away and into computer based recording systems (or DAWs - Digital Audio Workstations) and as a result Alesis fizzled out.  And with that, so did my podcast hosting company.  It’s still around because many of the podcast hosts that have been using it for 14+ years now, still do.  And since it isn’t a burden to me, I keep it alive.  But I’m not encouraging new customers.  It is a legacy that I’m happy to keep going for now.

The thing is that I’ve seen tens of thousands of those that create something digital giving up.  And the #1 reason is that they didn’t have anything unique or helpful to say.  If you are just another “me too” podcast, because you read some article on the Internet somewhere that says “You too can be a super star podcast host”, you got scammed.  Most podcasters don’t last the distance, and the term “pod-fade” (where podcast hosts eventually give up on it) is quickly becoming a part of Webster’s dictionary and our normal language.

Same is true of blogs.  I see thousands and thousands of blogs from people that are on the path to “financial independence”.  They expose their earnings, wealth and their journey attempting to be an inspiration to others.  Well take a number - they are not that special.  The reality is that this might help keep them honest on their journey, but are they actually offering anything of substance here?  Is there anything unusual, different, contrary, or alternative to what Suzie Orman or Mr. Money Moustache has been talking about for the past decade?  Nope.  Most are just another “me too” blog.  And maybe a few people will rally around the call, but the “squirrel” phenomena will be alive and well and they will flitter off to the next flashing light website on the Internet.

Just because you CAN do something as the distribution mechanism is affordable, doesn’t mean you should.  If you have a real innovative, unique and valuable product, then it doesn’t matter if your website sucks, you have bad quality sound on your recordings, or you are using some crappy phone for your YouTube video camera.  It is the content that matters.  And the content will allow you to monetize.

Will small business come back?

I do not believe it will in its previous form.  There are a number of reasons why it might not be in your interest for it to come back that way.

First, we live in a world of 8 billion people.  You need to be able to reach out and touch all of them, particularly if you expect to get a very small number of those people who want what you have to offer.  The local cafe is cute & quaint and I love them.  But the cafe owner can’t leave their business for a few days, is working 100 hours a week just to keep the place alive, constantly being let down by employees, harassed over the late rent, taxes, insurance and paying their vendors.  Is that the world you want to live in?

I am also a firm believer that the advancement of technology has and will continue to redistribute wealth and opportunity away from the centers of control of the 20th century.  That means you might be surprised to find out who wants what you have to offer, and in what country that they are.  Countries you used to think had no money, no economy and no prospects.  And yet they are the ones that may be 50% of your entire customer base because the Internet and cheap airline travel transformed them from backwaters to active economic participants.  No, not all emails from Africa are Nigerian Prince scams.

And you might find that the online business you’ve created around your unique and valuable thing you make or do, can be moved to a country where the costs of operating are 1/4 of the costs you are used to.  That changes the dynamic.  Like the reduced cost of distribution because of the Internet, now you have a reduced cost of living and with that comes more spare time and more of a chance to think out of the box.

If you only need to make 1/4 of the earnings because you live in a less expensive place, you can easily afford to give more stuff away, garner a bigger following and make money on the volumes of fans that will adore you.  You can’t do that if you have an $8,000 apartment in Manhattan you have to pay rent on.  If that is you, then you are cursed to be working for one of those big, evil corporations that just stomped out the small businesses in their wake.

A deal with the devil

Look, maybe you are not the small business or entrepreneur type.  Maybe you prefer the institutionalized world of universities, corporations or working in that govt job.  You just want to get through the week, and have some time off.  Maybe you want to dream of what life could have been, but you lack the courage to break free of the shackles.

If so, I probably can’t help you.  Those things must be overcome to first be able to seize opportunity.  And for you, maybe just working hard, saving and investing in Index funds is the answer.  I mean those corporations are doing pretty well, and I’m sure your 401K is going to be fine.  You can live in the illusion of a retirement, drawing down enough to keep your net worth solid.

But is that really what life should be?  Are you not offering your true potential to the world?  Are you depriving everyone else of that “special thing you do”?   Will you live your life in regret because you were too fearful to take the plunge?

I believe that you don’t need to make the deal with the devil.  You don’t need to put all your chips on black and bet on the stock market to be wealthy and fulfilled.  If you do something special, and can sustain yourself to cover your burn rate (getting it down as low as possible), then you will be happy and at peace.  Peace doesn’t come from spending 6 months sitting on the beach.  It gets really boring after a few days, and then what?  

The very same corporations that are destroying the interesting, new and creative parts of the world are not worth supporting in my opinion.  I’m not a fan of giving up and just buckling under the pressure.  You can be creative, have your platform, but you have to give it away to garner fans.  Once you do that, and you build a community and following, then you don’t need the corporations.  You can poke fun at them from afar and you’ll be just fine.

Then you can entertain being a contrarian and doing the polar opposite of everyone else.  The returns can be life changing and massive, but you have to be in a position where you can afford to fail more times than you will win.  But when you win, you will win 100x what everyone else is getting.

Life is supposed to be exciting and exhilarating.  So make it so.  Be new, be innovative and be different.