Neville's Financial Blog

The Texas Union frequently brings CEO’s and other speakers to UT, and this Thursday night was a speech given by Henry Juszkiewicz, the CEO of Gibson Guitar who took the company from small and unprofitable to the most recognizable brand of guitar in the world.

He claims his passion for music coupled with his love for electronics since he was a kid helped him excel at running Gibson. He strongly emphasized that true success is best accomplished with passionate leadership.

In his third year at Harvard Business School he became curious about buying/selling companies. His professors told him, “Just find a good lawyer.” Not satisfied with this answer, he went into investment banking for a few years to learn about buying and selling companies. He later tried buying several at-risk companies and restoring them. Like most successful people, he failed at some and succeeded at some.

A while later he was informed that Gibson Guitar Corp was for sale, but no one would buy it because it was a financial disaster. He moved to the Kansas to live near the company headquarters and observed the operation for a full 6 months while drawing up a concrete business plan. Once he purchased it, the company became profitable within 30 days because of his hard work and research. Since 1987 he has grown the business 20% every year.

Some of the main pieces of advice he gave were:

• Have the tenacity and boldness to do things others won’t.
• What’s possible is only what you think is possible. He said he wanted to grow the company to impossible levels. He has now far exceeded everyone’s expectations.
• Only allow people in your company who believe in your vision. If they don’t believe in the company, they must go.
• Constantly grow and innovate.
• Give back to the community that helped build you.

Of course I had to get a picture with him. I actually brought my own guitar I’ve had for over 10 years to the speech to take a picture with:

The pictures came out….interesting. He covered the head of my guitar in both pictures because it wasn’t a Gibson!

7:00pm my phone rings and “Bob” calls me from his regular hotspot, a swanky hotel, saying he happened to notice a large number of high powered individuals heading to the ballroom downstairs. Party crashing time. I took a quick shower, threw on a suit, got my roommate to tie my tie (because I still don’t know how) and drove to the hotel.

I met “Bob” in the lobby as dinner was being served. The place was packed and every seat was taken except at one table. We went up to the table, “Bob” did a little talking, and in an instant we were having a conversation with people we didn’t know, at an event we knew nothing about, and having a delicious meal.

After scoping out the room, it became very apparent that this was a big event with big people. In fact, while opening the bathroom door, I literally bumped into Lance Armstrong!

The event was in honor of Michael and Susan Dell for their philanthropic contributions. There were three billionaires in the room, the biggest being Michael. There was a movie about the Dell charity, several speakers and then they both gave a speech after being honored.

Michael Dell’s wife, Susan, is a tri-athlete and frequently goes bike riding with Lance Armstrong. Here is a picture of Lance, Susan and Michael together….well, their backs at least:

Later in the evening I got to meet Michael Dell, the famed founder of Dell Computers who started his company from a dorm room at the University of Texas. I talked with him briefly and found him to be a very approachable and extremely nice guy.

After the event was over, “Bob” and I headed back upstairs to the hotel lounge to finish up the night with an evening cocktail. That suit cost me $200 and the drinks cost me $25, but now I had the opportunity to meet Lance Armstrong and Michael Dell.

Thanks “Bob” for another great event!

I bought yet another scooter, same year, same brand. I saw it on Craigslist going for a great price, so I withdrew cash from the bank and bought it.

It hardly had any miles on it, and it runs like brand new. The guy selling it was a successful lawyer who stopped riding after he and his wife had a son. He just wanted it out of his garage, hence the great price I got.

I now own two 2003 Aprilia Scarabeo 50′s. My original one is awaiting a part from Italy that will arrive sometime this month. Once the work is complete, I will sell one of the scooters. I might also wait a few months for it to get warmer and then sell it (You get better prices).
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Recently I have been getting a lot of offers to write for stock market websites. One offer I got was from ADVFN.com that pays $500 a quarter or $2,000 a year. According to their agreement I must write a one paragraph post on their website about the stock market every day.

SO I would get $8 a day for writing one paragraph a day, 5 days a week….this sounds too much like a job.

…and honestly, I don’t want stock advice from someone doing it for the pay. I’d rather get advice from Kirk. He’s one of the few stock market writers that makes his money by actually trading stock. I’ve done ADVFN a favor and disqualified myself by discussing the terms:

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Ever since I made up my mind to increase profits for House Of Rave, it has worked.
Here was my hopeful profit chart:

I set my October profit goal at $975, and I slightly surpassed that goal with a total profit of $1,120 for October. Over the next three weeks I will be making more changes that should hopefully boost my profits even more. I enjoy the ease of running HoR, and I know I can increase profits enough to completely cover all my monthly expenses after graduation.

Inundated with emails about this, I decided to show how House Of Rave works. This is just one example of how I use a drop shipping service to make money on the internet. There are still some inefficiencies, but this is the way I handle things now.

I will show what happens from the time I get an order, till the customer receives their order. Everything is done in 5 steps. I can accept, process, account for and send off 2 orders in around 2 minutes with this system. 10 orders will take me about 10 minutes with this system:

1.) Check, View and Review Orders.
I login to the backend of my Shopsite software to see how many new orders I have waiting. I click to view all the orders and do a quick skim of the order information. I am looking for any subtle signs of fraud at this point. After 5 years, I’ve become pretty good.

I can view individual orders or all the orders at the same time:

2.) Charge Orders.
This is the most inefficient step, as I choose to process cards manually to become more familiar with the customer names, locations and spot fraud. I login to my merchant account digital gateway and copy/paste from Shopsite the needed customer information. This step goes quicker than imagined because I use my tablet PC pen.

Here I find out if each order is legit. If the order is declined, I make a note of it and move on. If the order was paid for using PayPal, I login there to find if payment was made. If the order looks suspicious or comes back with negative address verification, I will often call the person on the spot to verify the order.

Manually charging orders seems a waste since I can simply press a “Charge” button instead. However, over time I have noticed that I start to remember customer names, locations and ordered items. Since this step exposes me to the orders, it helps me identify order patterns and it drastically reduces my fraudulent orders (Although this isn’t as much of a problem compared to a few years ago).

3.) Enter Into Accounting System.
This step is very quick and allows me to see my estimated current profit, my expenses, what I owe etc.. I’ve used some pre-made accounting modules for Shopsite in the past, but I like my Excel sheet better. Over the years I have honed it to help predict my profit at the end of each month. I don’t know my exact profit until I get the monthly bill from my supplier, but this Excel sheet gets me damn close.

4.) Create with Word & Send.
This step is the way THIS particular business of mine works. Once an order is ready to go, I copy/paste the information into a Word document and send it via email to my supplier. From there, they print it as an invoice and send the order. This is the way my particular supplier chooses to do business, others may have different methods.

5.)Followup.
My supplier will send me a tracking number once the order is sent. These go into my tracking system where customers can check the status of their order. The tracking module also sends customers their tracking numbers via email automatically.

How I make Money:
I pay wholesale price for the products I send out from my supplier. They send me a bill for the products & shipping each month. I charge retail price on the website and bring in all the money myself. At the end of the month, I cut a check to my supplier and the difference is my income after product expenses. I then subtract my server costs, merchant account costs, PayPal costs and phone bill costs to get my total profit amount.

I’ve made about $800 – $1,000 every month for 5 years doing this. I’ve recently made additions to the site which have doubled my profit to about $1,600 a month. I plan to make this side income generate about $5,000/month in 2006.

I’ve had other online businesses which operate differently, but this process works best for HoR. There is still a lot of room for improving the efficiency of this system, and in 2006 I’ll have time to concentrate on it.

One thing I find the funniest about this business was my first order. I had no clue what to do with it. I just got the business running first, and was forced to figure the rest out very quickly.

Hopefully this helps someone further understand the inner workings of this type of small business!

Before attending a meeting with someone new or listening to a speaker, here is what I do beforehand almost every time. It really helps:

1.) Google their name. If they have a unique name, you may be in luck, but John Smith will be harder to pinpoint. Try to read about them, find their address/phone and see what they are all about.

2.) Zabasearch. If I can’t find their address or phone from Google or Yahoo People Search, I can almost ALWAYS find them by ZabaSearching their name.

3.) Lookup their address on Google Maps. Depending on the situation, you might want to see where this person lives. If they are right next to a golf course or along the water, that says something. This is just a step I enjoy doing out of curiosity.

4.) Write down facts and findings. If you are seeing a speaker, tidbits of information can formulate great questions, and show that you’ve taken further interest in the speaker than others. This is a powerful method I use to help meet prominent people.

Doing this takes only a few minutes or less and can help create a relationship that otherwise would not happen so quickly. I am always impressed and slightly flattered when people take the time to research me before meeting with them.

There is a short video clip of Steve Balmer, the billionaire CEO of Microsoft, which has been out for a while now, but I find myself watching it everyday.

To get people motivated, you have to lead by example, and this guy DOES IT. This is a famous video from a Microsoft company meeting where he comes out screaming and jumping with unsurpassed energy, apparently he pulls stuff like this at all the speeches he makes…I love CRAZY business people!

If a guy 30 years older than me can show THAT much enthusiasm (or insanity) for what he does, as a 23 years old with all the opportunity in the world, what am I doing?

While looking up some more videos of Steve Balmer, I found some interviews with him by Robert Scoble:

(Video Link)

I was again enthralled with Balmers enthusiasm, but I picked up something else from this video….by watching it on mute. He NEVER crosses his hands or hides them, and he frequently uses them in combination with his speech in a very animated manner. Interesting.

Note to self:
Start working on developing better body language and becoming more energetic.

I’ve tried and used tons of different Ecommerce shopping carts over the years, and some online shopping carts can be very expensive. Nowadays, open source shopping carts have sprung up all over the place that offer novice web users the chance to open an Ecommerce store…..FREE.

For a recent partnership business I’m helping start, I did a review of several open source shopping carts which allow you to start a fully functioning Ecommerce store with little know-how and little money:
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OScommerce:
This is the big daddy of open source shopping carts. It has an enormous amount of users who regularly contribute to their support groups and add on modules.

Pros:

• FREE
• Easy to install
• Huge support section and forum.
• Add on modules created by the community for free
• Great selection of out-of-the-box OScommerce templates available (for money) at TemplateMonster.com
• When you purchase a template, the entire shopping cart is already included for free.
• Can have a store up, running and accepting orders within minutes.
• Simple checkout screens.

Cons:

• Templates are extremely hard to manipulate, will most likely need to buy a professionally made template or have someone help.
• A little “Bulky” on the backend.
• Will take a little getting used to the backend: adding products, adding options. Not as intuitive as some of the for-pay shopping carts.

OScommerce Frontend

OScommerce Backend

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Zen Cart

This is basically an easier to use offspring of OScommerce. From my experience, it is almost identical in every aspect to OScommerce, just a cleaned up interface. The only major difference I saw was the ability to easily upload multiple templates, something OScommerce is pretty fussy about. Zen Cart is also slightly easier to use in the backend, but once again, is almost identical to OScommerce.

Zen Cart templates are not hard to find (for pay), but OScommerce has more templates, more add-on modules and a larger community of users.

ZenCart Frontend

ZenCart Backend

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X-Cart:
This is a for-pay shopping cart that allows a full, turnkey solution to Ecommerce:

Pros:

• Easy to install
• All add on modules and templates usually cost money, but are professionally done.
• Easier to use than OScommerce and ZenCart.
• Has easier add-on features and a clean interface
• Easier to get professional help than the open source carts.
• Has very nice upselling features and makes it easy to upload multiple images for a product.

Cons:

• Not open source. If you have complicated modifications to make (which most people don’t), this shopping cart will be much harder to manipulate than OScommerce/ZenCart.
• Costs at least $200 for the software, plus extra money for templates and add on modules. Probably not the choice for an uber-cheap startup.

Xcart Frontend

Xcart Backend

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All of the above shopping carts allow for easy merchant account integration and are a complete out-of-the-box solution for starting an Ecommerce store. I’d suggest first downloading OScommerce and trying it out. Add a few products, add some categories, place a few orders yourself and get used to the feel of it. The only requirement is a web hosting plan that allows you to create databases.

Verdict:

OScommerce: Use if a free solution is needed. Best option when looking for free upgrade modules. Best options when looking for great looking templates.

ZenCart: Use if a free solution is needed. Works slightly simpler than OScommerce.

X-Cart: If you’ve got a few hundred dollars to spend and want a nice looking store with upsell features and easy multiple image uploads, I’d recommend Xcart. They have a free demo also.

If familiarized with these sorts of shopping carts, you can have a brilliant idea for an Ecommerce store and actually exectute the idea while you’re still motivated about it rather than first having to learn about ecommerce!

Yesterday I went to see Jeffrey Immelt speak on the UT campus, the CEO of one of the worlds oldest and largest companies, General Electric (GE). Originally founded by Thomas Edison, this company has grown up with America and has been one of the leading innovators in American technology. I fortunately got the chance to meet Mr. Immelt before and after the speech.

Some point of interest from his speech:

–Three big trends he says will get stronger: Globalization, larger interaction between government and business, volatility and face paced business.

–He says one of the secrets GE uses is turning their enormous size into an advantage, and not making it a disadvantage. He also says reinvesting so much money in research is a HUGE factor in their success.

–Good Business Leaders Must: Lead with an undying sense of optimism, believe in change, have a healthy disrespect of history, know the difference between confidence and arrogance.

–He reads 4 newspapers a day, 40 journals a week and about 50 books per year. He says he is an avid reader, something I’ve noticed most great business leaders are.

–He says his main job as a CEO is to: Pick initiatives and businesses to get involved in, shape the company culture, pick great people.

–”If you want something done, ask a busy person.”

–He started out at a very lowly position at GE in 1982. He worked his way up over the years, but never really planned on becoming CEO. He was hand picked by Jack Welch.

–He gave the standard spiel about being successful in a company: Make your job fun, have a passion for it, work hard yadda yadda yadda.

–Immelt and Steve Balmer used to share a cubicle at Proctor & Gamble many years ago.

–He is very interested in doing business with Eastern Europe and the Middle East. He also sees much more growth ahead in China and India. He says in 5-10 years half of all business done by GE will be outside the U.S. He constantly stressed that globalization is here to stay and extremely important.

–I asked if he works out, and he said EVERY DAY at 5:30 am for one hour.

Of course I had to take a picture with him. This man is just about one of the most powerful people in the world. He was actually genuinely interested in what all the people who swarmed him after the speech had to say, and a very nice guy in general.

After the speech there was a private session for an hour and half with him which contained about 10 representatives from the business school, 10 representatives from the engineering school, three GE employees…and me (Of which I don’t fit any of those categories). I think the main thing that drew me in however was the free food! No matter how much money I ever have, free food will always lure me in.

At this session Jeff Immelt mainly took a barrage of questions from the curious audience about his daily routines, views, business opinions and personal life. It was great fun meeting him, and I even got a make-shift dinner of finger foods and some free GE bags and other goodies!

I’m back from Chicaaago, and had a great time in a great city.

Fortunately I stayed with friends, so didn’t have to pay for housing. The whole trip was pretty cheap considering I stayed for 5 nights and was constantly out & about.

$300 plane flight
$350 spending.
5 days Total = $650

This was actually way under budget, yet I didn’t hold back on any expenses while there.
Now I must meet my goals for the next few months, and I’ll take another trip.

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Some Random Observations:

• Flying with ear plugs makes plane flights so much more pleasant.
• I give Chicago two thumbs up.
• My Treo 700w actually came in handy.
• Favorite picture during the trip:

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On Tuesday I saw/met Kevin Rollins the CEO of Dell at a speech he gave at UT. He was brought in to speak about ethics by a Mormon organization. He’s Mormon himself, so he also talked about how his upbringing has helped him bring strong business ethics into the company.

He originally started out as a consultant for Dell in 1993, but then soon was escalated to regional manager, then overseer of North American operations, then CEO. His speech was mainly geared towards how ethics is a strong virtue at Dell. Of course I’ve never heard a CEO say otherwise about their company!

His last words of advice were:
–Work hard now, because you can’t redo it later.
–Don’t have regrets.
–Dream Big.

Pretty standard stuff, but important nonetheless.

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I just finished my taxes, and I filed independently for the first time. I used TurboTax, and it was relatively painless. For 2006 I’ve been keeping excellent financial records, so next tax season should be a cinch…I’m actually looking forward to it!

Also, I’ve had experience with the homeless before in my bottled water experiment, but next week I’m doing a “homeless experiment” where I’ll actually be homeless for a few days to see what I can learn. I’m not sure how it’ll go, but that’s why I’m doing it!

I’ve been been running House Of Rave as a part time income for around 5 years now, and by FAR the most trafficked portion of the site is the rave videos section. When I first started the website, I was forced off every hosting plan I had due to high bandwidth usage. I’ve always burned through about 400 to 700 gigs of videos per month….several years ago that was a big deal and a large expense.

I am getting more traffic than ever on House Of Rave, but I’m concerned about the videos.

It was only recently that YouTube.com and Google Video showed up….but they have very quickly established themselves as THE place to go for all types of videos. So if people want videos of club/rave stuff, then YouTube will eventually steal much of my traffic. To counter this, I will instead fully utilize these two free services to my advantage.

I am in the process of revamping the video section to allow users to comment on the videos and view them directly from the site using YouTube. I’ve also started uploading all the good videos to YouTube and Google video, so House Of Rave still gets exposure when people search for club/rave videos on those websites.

I’ve even started using YouTube for individual product videos on HoR, and so far people seem to like them. Sales of certain products definitely increased when visitors could watch the product in action. My first test trial was for the High Intensity Glowsticks, and that worked pretty well.

Instead of fighting a losing battle against these dominating video services, I can get MORE traffic by joining them.

Now I need to translate these changes into results. House Of Rave is around the $2,000/month range, I need to step it up.

Steady Monthly Income - Much Work = Good.

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Due to several confounding factors I could not perform my homeless experiment this week. I was planning on being homeless for about 3 days to see what I could learn. This is not the end of the experiment, simply a temporary delay.

I stopped shaving in preparation for the experiment, and it was a surprise to see I grew this in only 6 days:

!!!

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I already met Michael Dell once, and I get to see him again in Austin. He is giving a speech at UT:
When: Tuesday April 25th 2006 – 7:00pm
Where: Texas Union Ballroom @ University of Texas Austin

I found this upcoming speech surprising, because Michael Dell is notoriously shy in front of crowds. When I saw him, his wife and Lance Armstrong did all the talking…he didn’t speak a word in front of the crowd!