Source

The other day I was in a lecture about trends. The presenter was talking about what he does in his company, identifying trends and his theories, I came to realized that I didn’t have a concrete definition of a trend. So, turned to Google to find out and got to a point that all the definitions that I got didn’t satisfy me. Also the word “trend” depends on the context, since we can have fashion trends, market trends, financial trends, etc., so a definition that applies to various contexts should be “the best”.

But then again, what is a trend? Well I found a definition I like: “A pattern that is evident from past events”[1]. The reason of my liking lies on the word pattern. For a trend to exist a pattern is needed, even if it evident or not. However identifying a “early” trend is basically identifying the pattern developing and that is where the first mover advantage can occur.

source

[1] http://ag.arizona.edu/futures/home/glossary.html, Glossary – Definitions of Selected Futures Terms, University of Arizona

Recently I did the post “Why aren’t you a millionaire entrepreneur?” which show a video, used to point out, it might just take to change the lens of how we view life. With the purpose to identify a profitable business opportunity (if you’re in the mood of a wacky explanation then check the post). I got a comment on this post stating (in the commentator’s opinion) that being a millionaire doesn’t guarantee that will be happy since she knows many that are not, and prefers a “simple life”. The comment turn into food for thought and this post was a result.

First concrete thing that came into my mind was that is not that hard to be considered a millionaire. To qualify as a millionaire as define by the Merriam-Webster Online Dictionary, the estimated wealth should be a million or more (as of dollars or pounds). If you think about it, that isn’t much when you consider a person with a house, a couple of cars and a paying job that provides you with 200,000 USD a year (after taxes) of course assuming that the person owns the cars, house, etc and is not on a lease. Add to that the retiring fund, to reach a million after some time working, is not a impossible task. If that person has a successful and growing  business (a mom a pop shop could could count if its big), instead of a job, that million doesn’t look such a big deal, right? Well that depends on the opportunities and background of every individual, but there are more millionaires out there than what we think.

Source

Most people that own a business and fit this mold I just described might be hard working families, couples or individuals, sure they don’t have the life a Jack Ma, Bill Gates or Pierre Omidyar, but surely that live a good life. And it might be better because they are not always expected to pay the bill. The three mentioned are high profile people, but when the network of people that you know, know you have money, things might get tough.

If you or anybody that you know is a millionaire and unhappy, it might be time to rethink your way a of life and this leads to the second thing I remember when reading the comment: as somebody once told me, “happiness is a journey.. not a destination”. As pointed out in the article/Q&A called the “The Entrepreneurship Myth”:

You do point to this data that people are so much happier working for themselves that they’d need to earn 2.5 times as much working for someone else to be as happy. If that’s the case, then despite the personal financial risks they take on, is there anything wrong with that?

It makes a lot of sense if people say, “You know what? I’m going to earn less money running my own business, but I really don’t like to work for other people, and that’s why I’m doing it. It’s making me happier and I really don’t care.” I think that’s great. The part of it that becomes a problem is when people just won’t admit the reality that it may make them happy and they’re doing it because they want to be independent, [but] then they delude themselves into believing that also it’s financially better.

Having a million or none will not make you happy, but I bet that there are people that went from nothing to a million and are “smart” enough to not get caught up, look back, will be happy (at least for a moment) and continue living. Working hard, but having the presence of mind to take your time to enjoy other things, will give you those glimpses of happiness that will continue to fuel your tank in these ride called life. It all depends on who you are and if you are up to having a boss or being the boss. Maybe getting to the first million or having your business survive for more than 5 years is what made you happy, but somewhere in the road, we lose perception of what really counts and the value of the intangibles (health, friends, family, peace of mind, etc.) And there is where the questions and dilemmas start: can money buys happiness?, how happy I am?, what makes me happy?, how come I’m not happy, I have everything but I feel so empty, etc.

Source

What if you already have enough millions or your business is so good that it will make a lot in the upcoming years? Well, you could use that money and invested in a VC fund. This VC fund will not be like those that funded those high or green tech startups, but how about investing  people that don’t have much in life. Its high risk, may take while, but the return of investment might be greater any hot startup. Some people called micro finance, other social entrepreneurship, but at the end of the day these tags are just part of the trend. If you think about it is a investment, since you are providing financial resources, which you expect back and may not get back (part of the risk). In addition the return of investment is not money, but social impact, satisfaction given from helping people and providing the resources (and that is life) you had and they didn’t. It’s not a game of feeling guilty or just giving out money, for it to really work it should be treated like any investment. Why? Well, so the money doesn’t go to waste and when people are given things, they don’t work as much as when they have to earn it and pay it back.

Investing on people business and providing them with this “loans”, is not the only way to go. How about setting up computer labs at public schools for kids in developing countries. This again is not charity, because you are investing on this kids, to learn to use a great tool (computer & Internet) and then they can because part of the work force or an entrepreneur that you might later invest on. In the other hand you hare also investing in the future of your kids, since the more educated people we have in the present, the better the future will look.

You don’t need to develop big initiatives like One Laptop per Child, that at the end are just big marketing campaigns to make companies look good. Its not needed, especially today with all this low cost portable laptops like the Asus Eee PC. They are good enough for Internet and office apps, and they are cheap and can resist a lot of punishment (look at the video bellow).

Even if the places where the kids live don’t have electricity to charge the laptop, that is not a problem but a opportunity to provide the community with something else: source of electricity. The community can use it for their needs and to enhanced the business.

At the end of the day is all about the perspective and how we look at life and that will determine if we get caught up in things that are just not worth it. Of course like most things that are not done: is easier said than done. Which reminds me that is time to figure out how to walk the walk.

It was reported by The Local (Swedish online newspaper in English) that Young Swedes trapped by the SMS loan debt. If I google “sms loans in Sweden” I get this news from a lot of sources, but what I was looking for how it actually worked and what it needed. So I found in a site that reports on new ideas popping out over the world (Springwise) how the Finnish service by Ferratum works. You just need to send name, birth date, bank account and address in 10 minutes you receive the loan (max 300 euro) and if its first time you have to wait 24 hours.

Main problem is that is too easy and there is no way for people to really compromise. It’s understandable that they want to make it easy enough so that the low income teens or young adult can do it in a breeze, but you steel need collateral. If there is no collateral then what you are providing is a “character loan”, similar to microfinance. At the end we see the same concept of microloan but for first world country citizens (without collateral).

As you can see they just though it was a good idea and tried it and failed to evaluated constantly. They forgot the famous Reality Test. (The reality test (RT) is the last part of a framework called DDART thought at my master.)

How to solve it? Natural reaction is to start to ask for collaterals and be stricter; but if they lose a most customers. That is because, as microloans in developing countries, they don’t have collateral. The Local reports that they have high interest rates, short payment period (30 days), low amount and 35.9% percent are from the age 18-25.  So what it’s needed is to create a culture of payment and that this is serious business. In comparison micro loaners in third world countries appreciate the small amount given and don’t spend it in shopping or traveling, they invest in their health, children’s education and their micro businesses.  

Solution

Deduct monthly payments from the loaner’s paycheck and calculate interest rate that fits the time the payment will be done. If the loaner has a small paycheck then the payment plan will be longer but with higher interest rate. If the paycheck is good enough for a 3 month payment, then interest rate goes down. To motivate for early payment, they could reduce the interest if paid earlier.

If the loaner doesn’t have a job, help them get one. If the person doesn’t have any competent skills, there is a lot of graffiti that needs cleaning. Also public transportation may need some cleaning. An entrepreneur could provide the service to the city, the city pays them, the entrepreneur gets a commission and the loaners have a job to pay.

If there is no entrepreneur that wishes to take on the challenge the government can do it. They hire people to clean their city cities directly. If there is enough cleaning to do, they could do other stuff or find companies that wish to higher temporary help (at lower wedges so it’s attractive enough).

This way we create a win-win-win-.. Situation, keeps a useful service for emergencies running, the culture of payment is established, and we clean the city. Finally the loaners pay back and learn their lesson, with a compelling story to spread around.