NevBlog

Neville's Digital Surrogate Brain

Business

Lousy Interest Rates = Spend

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When the economy sucks, the government will generally lower interest rates so it’s more enticing for you to SPEND money rather than SAVE.

Well they’ve done that big time right now, and I did a little sleuthing around at some of my non-risk-bearing accounts.
Example:
About 5 years ago I set up an Emigrant Direct account because internet banks usually offer higher interest rates than most traditional banks…and I’ve pretty much forgotten about it.
I stashed away about $25,000 in that account and checked it recently to be greeted with:

1.2% annual return??? HAHAHAH!!

This means my roughly $25,000 will earn $300 for a whole year of sitting there. Meanwhile the inflation rate right now is “officially” between 3-4%….and in reality is probably much higher.

So while I earn $300, my money loses $750 in value (at least). The account is no longer a “No risk” account…it’s now a money pit.

Well that’s a losing proposition, so while I already have an investment account I use to throw into businesses that make me money, it looks like I’ll be almost forced to put some of that money to good use.

However with all the current tax breaks encouraging businesses to spend right now, taking money out of permanent savings accounts and spending them on money-making endeavors seems a smart idea right now.

Shopping spree time :-D

My Very First Business

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I consider my first REAL business to be House Of Rave (link), but before that were a bunch of other hair brained ideas to make money.

Of one of the very first was selling custom CD’s in 9th grade. I’m taking a guess this was around 1997 or 1998 that me and my dad outfitted the family computer (a 33Mhz CPU with around 600 MB’s of storage) with a CD burner.
This was a relatively rare thing…at least not many of my friends had access to a CD burner back then.
Around the same time MP3’s had come on the scene. Most people didn’t know what they were, but Napster was starting to make headlines here and there as an “illegal” file sharing service. I was all over Napster, downloading as many songs as I could over my dial-up connection and making CD’s for my personal use.
Well it didn’t take long for friends to see I could get ANY song and make a CD with different songs on it. I had something they wanted and couldn’t get elsewhere, so the natural laws of supply and demand kicked in and I started selling custom made CD’s!
People would make me a list of 17-20 songs on a sheet of paper…usually I’d already have the popular songs downloaded or on a CD already. The songs I didn’t have I’d download on Napster (keep in mind…I was still using a dial-up at the time).
I would sell the CD’s for about $1 per song, but would charge a little more if I had to download a lot of the songs. Generally the CD would cost them about $20 or $25. Close friends got special deals.

Making a CD back then wasn’t especially hard, but there were a lot of constraints I had on my old family computer:
  1. It was slow, so everything was sluggish.
  2. I only had 400MB of free space, so I couldn’t make a full 720MB CD at once, I had to chop it up into sections.
  3. I couldn’t store all the songs on the computer, so I’d have to delete something to make space, insert a CD with the song, rip the song to the computer, then burn the ripped song to the custom CD, then delete that file again. Process varied depending on the song source.
  4. MP3’s were so new, so I had to manually convert the MP3’s to huge .WAV files for the burning software.
Making a single CD with all these swaps, changes, deletes, downloads etc. could sometimes take almost 2 hours or boring work. Remember, this was an old computer and stalls were common place. However it normally took me 30 min to 1 hour per CD. I did this all after school.
The next day at school I’d show up with the CD, they’d show up with the money and I’d make a 100% profit since I had no expenses (my parents paid for the computer, burner and CD’s…unknowing I was making money off it)!
Due to all the constraints my limit was about one custom CD per day….and $20 for a CD was a lot to me, so I was fine with it.
Then one day I got caught. I didn’t even realize I COULD get “caught” for what I was doing. It just didn’t seem wrong. I made a CD transaction in my English class, and the teacher saw it….no big deal, I traded all my CD’s in class.
The teacher yanked the CD and questioned me. She got really furious and said, “I read an article about these “M…P……..3’s?” and they’re ILLEGAL.” It sounded like I was selling drugs in her classroom! I remember it pretty vividly because she was a teacher that never raised her voice, but all of a sudden SNAPPED when it came to MP3’s!
She took me aside after class and sternly warned that she wasn’t going to report me…but if I EVER brought an “M…P…3” in school again she would.
I remember thinking, “report me for WHAT?” Since the recording industry was so behind on moving into digital downloads, a whole generation of kids like me never thought twice that downloading a song might be punishable.
So my side hobby of selling CD’s went on for a while (although not in the classrooms of course) until more and more people had access to CD burners, plus summer came and there was no school. Eventually everyone knew someone with a CD burner and the small technology advantage I had faded. I made my cash and I was happy to not have to sit in front of the computer watching a status bar!

Weird Holiday Products

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Over at House Of Rave it’s been busy because of the Christmas holiday shopping season. Owning a store that sells light-up and relatively unique items, I’m always tickled by the surprise hit products that seem to sell like crazy during the holidays.

Every year I see odd products that previously didn’t really sell, then all of a sudden see huge spikes in demand. Often it’s products that are unexpected hits, the manufacturer runs out of stock, so it goes out of stock at most stores, so people flock to whatever store they can get it at.

By far, the most demanded item I saw on HoR this year was this Lava Plasma Lamp:

It’s basically a Lava Lamp that has one of those electricity-looking plasma balls inside. It’s a new product and actually looks like a slick little room decoration…which makes it prime gift-giving material.

Unfortunately the Lava company didn’t anticipate such a high demand for it (likely because this tight economy doesn’t permit companies to easily extend huge lines of credit for large manufacturing runs). Or maybe there was a fire at the warehouse and they all got burned up. Who the hell knows. The end result was EVERY store was sold out.

I opened my orders one day and found 20+ orders for JUST this item, all from new customers…it was a little odd. For a while I could send them out, but of course my supply dried up also. I of course immediately cancelled and refunded all the orders since I couldn’t fulfill them….but kept the item up for a while in order to grab new customer info (so I can send them my email newsletter later). Kind of sneaky actually….

I eventually put the “out of stock” status on the item because so many people kept ordering it and the customer service required for canceling and refunding got a little tedious….plus it pisses people off when they order something so close to Christmas then get an email their order has been cancelled.

Another funny runaway product line this year was BACON stuff. Yes, bacon. These are some of the items that recently came out and started selling REALLY well this holiday season:

Bacon Bandages:
There’s a whole lineup of these novelty bandages, and by far the bacon strips sell the best.

Bacon Gumballs:
Why bacon flavored gumballs sell so well is beyond my understanding.

Bacon Toothpicks:
I’m not even kidding…

Who would’ve thought the American public has such a fascination with BACON products?? Like the popular Lava Plasma Lamp a lot of these bacon-related products sold out quickly too.

Another weird item that really took off and I had to keep canceling orders for was this Gravy Fountain Gag Gift Box:

It’s a fake gift box you put a real gift inside to fool your unsuspecting subject. I presume this gag box is great for White Elephant gift exchanges, hence the popularity. What’s weird is there are other gift boxes like this, but by an exceedingly large margin the gravy fountain box was the most popular. Baffling and kind of hilarious.

Most of these small items don’t have a huge margin, so even if you get lots of orders per day for them it’s not a huge amount of profit. However you gain new customers, some of them buy a lot of other stuff, and it’s always fun to see the weird products that hit a nerve with the buying public!

A Traffic Tour Through the Years

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I though it’d be interesting to take a look at all the Google Analytics since I installed them on House of Rave somewhere around the beginning of 2006. I’ll only use Google Analytics because they are probably far more accurate than my server’s reports (which I believe counts viewing an image as a full unique visit which may distort the number of TRUE visitors to the site):

2006:
I had to put this report on a weekly view rather than daily so the rest of the years analytics even show. There was an “event” that caused hits to go from a few hundred per day to about 50,000 one day then 25,000 the next day. That was great, but it really screws up viewing the yearly analytics.

HoR has always been a very “sticky” website, and 5.41 pages per visitor is a pretty good stat I’d say.

2007:
Some funny activity in the beginning of the year was most likely attributed to this very blog. Whenever I talk about the business in a way that interests people, I can see little spikes in traffic. I don’t particularly care because those visitors from my blog rarely buy anything from HoR…so it doesn’t make me any money. In fact simply talking openly about this business has caused a slew of people to copy. Why on EARTH anyone would want to copy a business model I did back in high school is beyond me… If I could do it over again I would’ve preferably picked a much larger niche.

Judging from this chart, HoR was pretty stagnant or even declining during 2007.

2008:
I ended up doing all sorts of improvements to HoR in 2008 in my own sporadic way. I suppose it helped as traffic went up. Traffic may also have something to do with this blog. Once again, traffic doesn’t necessarily = income. Although I’m sure it doesn’t hurt.



2009 (Up till Sept. 1, 2009):
Here is a snapshot of 2009 thus far. These stats don’t account for 4 busy months of the year, so I’m not sure how trusting I am of them yet. Looking at the stats I notice the Avg. time on site is lower than it was 3 years ago. I suspect 3 years ago people had slower computers and less web savvy. Or maybe the site just sucks and people aren’t staying as long. Who knows.

Site traffic seems to be consistently growing a small bit. Based off my estimates (with information not presented here) it should overall grow to a new high.

From the information presented I need 102,689 more visits this year to equal the traffic of the heavily inflated 2006 sample. Based on the 2008 sample, a yearly avg. for monthly traffic would be 27,303 uniques per month. Multiply that by the extra 4 months in the year and that comes to 109,214 which would put 2009 as the highest traffic year. That 27K average is also probably a low average, since generally the 4th quarter is a higher traffic time for almost every business in the United States.

In addition HoR has an ancillary rave blog that gets 200+ visits per day…those are not included here.

Effects of recession:
I always get asked if this recession has had any effect. Well…yea.
Anytime you get people making less money, lots of money fear etc. etc. people will buy less…especially stuff in the party/retail sector. Also, with lots of big corporations in extreme money-saving mode, most of the really large orders I would get from them have disappeared along with those fat-ass budgets.

This business also sells stuff people don’t really need. We actually have managed to grow believe it or not, but not by the 4X factor we were hoping for late last year. What hurts the most is the indirect effect the recession has taken. HoR sells “hard to find light up stuff“…and “hard to find” roughly equates to “not manufactured that often.” It takes LOTS of money, time and resources to manufacture/store/ship/distribute a single product, and lots of the cool products we once used to carry have gone bye-bye (much to my chagrin). If anything, this has been the single most destructive part of the recession to the business.

Well, recession or not, cheers to a decent 2009! *clink*

I Hate Chargebacks

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I read Adam’s post about a large chargeback a while ago and could completely relate to the pure helplessness felt when dealing with these.

A chargeback is when someone files a claim to get their money back from you. This is a great consumer protection device, but it can be abused.

It’s almost obscenely rare that the merchant will ever win one of these disputes. I’ve tried many times to no avail. I fully understand that this is simply a cost of doing business, but I’d still like to send a message:

As you know I own a business called House Of Rave and over the years we’ve had to deal with chargebacks. Since customer service is good and everyone gets handled properly, legitimate chargebacks are quite rare. However the occasional piece of fraud slips through the system, and it really sucks losing even $1.00 to these people.

I’m not in position to change how this entire system works, but I’d like to do something to help. Whenever I see a suspicious order, I’ll basically just Google the name, address, email etc. to see if I can find results. Based on this I can often make a judgement to send the order or not.

Inspired by Adam’s post, in the archives of the House of Rave Blog I’ve created the Chargeback and Fraud Warning Page:

We don’t get many chargebacks, but I listed two of them we’ve recieved in the last five months. I’ll list more if they come along.

This way if any other merchant Google’s some of this information, it will give them a hint that this person/address has done this before. They can make their own judgement call from there.

If you own a store or have the resources to make one of these pages, I’d suggest you do. I’m not sure if it’s worth it, but if this manages to stop even one jackass from ripping off someone else’s store, I’d be happy.

To Serve

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I’m still immature and am slightly fascinated by monetary success, and was thrilled when I first read about this simple measure of success a while back.

It’s pretty much an easy way to see WHY a person (or organization) has a certain amount of wealth.

Simply look at a person or organization and ask: Who do they serve?

Look at what they do for other people and how many people they serve. Almost immediately it becomes apparent.

It breaks down like this:
Serve few + not valuable work = Little money
Serve few + valuable work = Good money
Serve few + very valuable work = Lots of money

Serve lots + not valuable work = Little money
Serve lots + valuable work = Good money
Serve lots + very valuable work = Lots of money

If you’re a numbers person you can make into a simple mathematic function:
People Served = a
Value of Service = b
Success = c

a X b = c

If you want ‘c‘ to be higher, you just have to increase ‘a‘ or ‘b‘ (or both).

Perhaps it’s easiest to demonstrate with real life examples:

The guy making your burger at McDonald’s:
Makes little money.
He performs a job almost any person can quickly learn. If he cannot show up, someone can easily replace him. Serves one organization and doesn’t serve much.

Cardiac Surgeon:
Makes good money.
Goes through over a decade of grueling medical training to be prepared for any circumstance that arises in their specialty. They serve relatively few people in the grand scheme of things, but they serve those individuals A LOT (he can either save you or kill you). Can he be replaced? Yes. However there are relatively few cardiac surgeons in the general population, so it’s very difficult. This means if someone is particularly “good” amongst their peers they could make quite sizable sums of money for their premium service. Serves few but serves them a lot.


Elton John:
Makes lots of money.
Provides a small amount of service (entertaining them is still serving them) to a large amount of people. Has a unique style, voice and persona that’s nearly impossible to duplicate. Serves a little but serves a lot of people.


Google:
Makes lots of money.
Here’s a fun one. Google serves A LOT of people (billions) and provides them a lot of service. Almost everything they offer is free, and it’s almost always a few grades better than competing services that charge money. They provide lots of service to lots of people. It’s no wonder they will make lots of money.

  • So who do you serve?
  • How much value are you providing them?

I bet your answers will clearly reflect your income. For fun, take a look at everyone around you and calculate their incomes using this method. Pretty cool huh?

Since you know this, you can now improve your own outcome (c) by improving one or both of those areas.

a X b = c

Analogy

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Like most crazy/new/different things in life this is generally the pattern:

  1. Come up with an idea or something you want to do
  2. Most people think it’s crazy, silly or just “eeh”
  3. You start doing it
  4. For a while it’s just you without much support
  5. Turns out what you’re doing is pretty cool
  6. People starting joining you
  7. More people join you
  8. Your success starts to compound on itself

Perfect and hilarious example, this video (which has been buzzing around the net after it was on front page Digg):

Vacationing and Owning A Business

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For Christmas I went on vacation to Cancun with my family and friends. There were lots of relaxing and fun activities like this:

….and this:


(Notice the House Of Rave shirt)!

…but there are some definite upsides and downsides to owning a business and taking a vacation. For the most part I prepared for my absence and there was little work to be done, so it wasn’t that bad.

While I was the only one who generated any income during the trip (good), I was also the only one who had to take time out of the day to work (bad). Fortunately I don’t see this as a bad thing because I start going crazy if I don’t stay at least slightly productive several days in a row.

On two different occasions I whipped out my laptop in the lobby of the resort (working in the room isn’t as fun) and started handling business. Each session was maybe 1-2 hours, and pretty much looked like this the whole time:

Getting the work done during vacation actually makes the vacation more enjoyable in my case because I get a feeling of accomplishment out of it. However if you want a week completely void from thoughts about work, owning a business may not always be the best thing.

Hi. I’m Neville, I Own A Rave Company

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Here’s a typical introductory conversation with me:

Nev: Hi, I’m Neville.
Person: Nice to meet you, what do you do?
Nev: I own the largest online rave company.
Person: Rave company!? ::eyes bug out::
Nev: Yes, rave company.
Person: So, do you…like…throw rave parties?
Nev: Nope, I’ve never been to a rave in my life.
Person: Then what do you do?
Nev: I sell light up stuff.
Person: So you sell glowsticks?
Nev: That’s part of it. The store mainly sells hard to find lightup novelties.
Person: So are raves still popular?
Nev: Not really sure. Most of my customers aren’t ravers.
Person: So do you keep all the stuff in your garage or a warehouse?
Nev: It’s all drop shipped. I rarely touch any of the products.
Person: That’s so (cool/odd/interesting).
Here’s what I imagine it’d look like if I told this to the Prime Minister of Malaysia when I met him at The WCIT 2006:
Ever since high school I’ve been running some small business or the other, but I’d always considered myself a student first. No longer a student, that response doesn’t work, so I started saying I was a “business owner” or something like that, but that elicits an avalanche of questions about every business I was involved in. Much as I enjoy talking about them, it became a cumbersome question.

So over time I’ve just started saying, “I own a rave company” which is actually pretty fitting for what I do (HouseOfRave.com). This response is interesting enough to keep the conversation going, keeps the questions fun to answer, and allows for an easy segue into another conversation.
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One trick I learned to avoid the whole “what do you do” conversation is say, “I’m unemployed.” The conversation generally stops immediately! Great for people you don’t want to speak with or when you’re in a hurry to leave.