More Than A Third Of U.S. Workers Are Freelancers Now, But Is That Good For Them?

9/05/2014

The rise of Uber, Lyft, Task Rabbit, Elance and other online labor marketplaces, combined with employers’ desire to lower payroll and insurance costs, has driven up the number of people cobbling together a living from freelancing. According to a survey released this week by the Freelancers Union together with freelance platform Elance-oDesk, 53 million Americans, or 34% of the population, qualify as freelancers.

Not all of them make their living exclusively as freelancers. The number includes 14.3 million workers who would be called “moonlighters”—people who have a primary, traditional job that pays benefits, and supplement their income with extra work, like a full-time tech support worker at a corporation who also does consulting with private clients on the side or a web developer who takes on projects for non-profits in the evening.

Of the remaining 38.7 million, 21.1 million are what the survey calls “traditional” freelancers who do  temporary work on a project basis. Some 9.3 million have multiple sources of income which can include a part-time job like working 20 hours a week at a dentist’s office. Another 5.5 million are temporary staffers who work for a single employer but not on a permanent basis that comes with benefits, like a business strategy consultant working for a startup on a contract that can include months of employment. Then there are the 2.8 million business owners who have between one and five employees, like my friend Cynthia Cross who does boutique market research through her Hagen/Sinclair Research Recruiting, which puts together focus groups and interviews for clients including Samsung, Wellpoint, Google and AT&T.

The last time the government took a tally of freelance workers was in 2006 when the Government Accountability Office produced a report that found that 31% of American workers were employed on some kind of contingent basis, including as freelancers, part-time or temporary workers.

The Freelancers Union survey, conducted in July with an online questionnaire it put to 5,050 workers over age 18, including 1,720 who identified themselves as freelancers, paints the freelancing trend in upbeat colors. Founded in 2003 as a nonprofit group that provides portable health, dental, disability and life insurance in addition to retirement accounts through its for-profit Freelancers Insurance Company, it has 250,000 members nationwide. “Freelancing is the new normal—and this survey shows that America’s new workforce is big, crucial and here to stay,” said Sara Horowitz, founder and executive director of the Freelancers Union in a statement. Given its for-profit insurance arm, the group has reason to claim the trend is a positive one.

According to the union’s data, freelancers are enjoying an increase in demand for their services, with 32% saying that their workload has increased over the last year. Other positive trends, according to the survey: Some 65% said freelancing as a career path is more respected today than it was three years ago. More than a third, or 38%, said they expect their hours to increase in the next year. Also a greater share of Millennials are working freelance, with 38% of those under 35 saying they do freelance work. Elance-oDesk, which collaborated on the study, bills itself as “the world’s largest online workplace,” with 2.5 million businesses and 8 million workers using its platform. Headquartered in Mountain View, CA, like the Freelancers Union, it has a vested interest in putting a silver lining on the freelancing trend.

In the same vein, another work platform for independent contractors, Minneapolis-based Field Nation, released a survey this week showing that freelancers are more engaged with their work than what it calls “full- and part-time W2 employees.” Though the sample size was small, just 846 people who filled out a questionnaire, Field Nation is broadcasting the following: 90% of independent contractors “view themselves as deeply committed to the work they do for their clients.” Those workers, it says, are three times more engaged in their work than the 30% of W2 workers who said they feel engaged.

Meanwhile, the progressive non-profit group National Employment Law Project released a report this week, Temped Out: How The Domestic Outsourcing of Blue-Collar Jobs Harms America’s Workers, that explores the dark side of contingent work. It focuses on the 12 million people who got jobs through staffing agencies last year. Though NELP’s focus is on blue collar workers and it tallies its numbers differently from the Freelancers Union, Rebecca Smith, the report’s co-author, says the report’s findings extend to many of the jobs highlighted by the Freelancers Union.

The focus of NELP’s study is the spread of temporary work to areas of the economy like manufacturing and warehousing, where workers were traditionally full-time and often unionized, with full benefits and good wages. Now that those workers are temporary, employers are paying median wages that are 22% lower than in the overall economy, according to NELP’s research. Says Smith, “Staffing agencies not only fail to provide livable wages, benefits or job security for their workers, but their influence in an industry can lower standards for all workers in that industry.” When a worker has an issue, it’s not clear whether the staffing agency or the top-line company is responsible for setting wages or controlling working conditions.

The NELP report highlights the conditions faced by several workers who got their jobs through staffing agencies, like David Fields, a 45-year-old father of four who worked for staffing agency LINC Logistics in a Walmart consolidation center in Hammond, IN, where he toiled outside in sub-zero temperatures on a warehouse loading dock during the Christmas rush. “It’s dangerous to move heavy equipment when you can’t feel your hands and you’re walking on ice,” Fields told the NELP researchers. “But as temp workers, we were expendable, so we just kept on working.” Fields wound up organizing fellow workers and presenting a petition to LINC and Walmart, which put a turbine heater on the dock and granted workers warm-up breaks. The vast majority of workers who are employed through staffing firms are not as successful, says Smith.

What seems clear: The pendulum is not going to swing back toward traditional work arrangements. Lawmakers will have to grapple with the fact that old labor laws do not necessarily apply. Robert Reich, the secretary of labor during  the Clinton administration, who is now a professor at the University of California, Berkeley, talked to The Wall Street Journal earlier this week, and observed that independent workers “don’t have the workforce protections that have developed over the last 80 years. They are simply on their own.”

Source: Forbes

Posted in Economy, Freelancer, Human Resources, Leadership, Millennials, Salary, Statistics, Survey, Technology

Why are they called that? The silly stories behind six tech brands

By JR Raphael, ITworld

Oct 19, 2012 10:30 AM

When you stop and think about it, most tech brand names don’t make a whole lot of sense.

Really, if you told someone 20 years ago that “Go Daddy” would soon be one of the biggest names in computing, they probably would have called you crazy. If you told them 10 years ago that most Americans would one day know “Hulu” as a service that piped entertainment into homes, they might have had you committed.

Those brands work, though—as do scores of other seemingly senseless names like eBay, Skype, and Wii. So where did these strange-sounding syllables come from, and how did they blossom into the powerful forces we know today?

Here are some answers.

Nintendo Wii

Nintendo’s Wii console is one of the weirder—or should I say “wiirder”—brands in the world of technology. So why in the world would Nintendo pick an almost unpronounceable double-voweled word for its gaming console?

Toss your phallic theories aside, my friends: The actual answer is far less titillating. According to remarks made by Nintendo at the time of the Wii’s unveiling, the word Wii—at least, the way it’s pronounced—is meant to emphasize that the system is “for everyone.” (Everyone who knows how to pronounce two back-to-back i’s, anyway.)

The word Wii was also seen as being consistent and memorable across all languages, according to Nintendo. And as for those double i’s? The game-maker thought they symbolized “both the unique controllers and the image of people gathering to play.”

Riight.

Skype

It may now be Microsoft’s child, but make no mistake: Skype wasn’t born in the halls of Redmond. If it were, it probably would have been called Microsoft PC Voice Chat and come in a choice of Home, Professional, and Ultra Premium Professional editions.

But no—Skype was the brainchild of two European entrepreneurs. They sold the service to eBay in 2005; eBay then pawned it off to Microsoft six years later.

The guys behind the service wanted to come up with a name that explained what their product could do. As the story goes, they started out calling it “Sky Peer-to-Peer,” since the connection utilized peer-to-peer technology that worked without wires.

“Sky Peer-to-Peer” wasn’t exactly a name you’d remember, though, so the duo soon shortened the moniker to “Skyper.” As luck would have it, skyper.com was already taken—go figure—and so the name became Skype.

And just like that, a brand was born.

TiVo

Even if you don’t have a TiVo, odds are you’ve used the term as a verb—you know, like “I’m totally going to TiVo that nudie show on Cinemax.” (Or, um, whatever you might say.)

When you think about it, though, the word “TiVo” doesn’t really mean anything. So where did it come from?

Turns out TiVo—at least according to one version of the tale—is a combination of abbreviations (hey, it’s no crime to rhyme). The company supposedly took the “T” and “V” from television and the “I” and “O” from I/O—the term for input/output, not the annual Google developers’ convention—and mashed ‘em all up to form a word that’s maddeningly memorable and oh-so-fun to say.

The other explanation comes by way of a branding expert named Michael Cronan. In an interview with The San Francisco Chronicle, Cronan said he came up with the idea for the name by randomly drawing tiles from a bag of Scrabble letters. (Cronan also apparently came up with the brand “Kindle,” though he won’t say whether his Scrabble bag helped out with that one.)

The TiVo-makers reportedly toyed with hundreds of other possible names for their product, including Lasso and Bongo. It’s just as well those two didn’t work out; asking someone if they “Bongoed Letterman last night” could lead to some pretty awkward stares.

eBay

Most of us know the name eBay as well as we know Coke—so what the hell does it actually mean? (eBay, that is; we’ll leave the tale of Coke to the fine folks at the DEA.)

Here’s the scoop: The guy who founded eBay also ran a consulting company called Echo Bay. The auction site was originally envisioned as a hobby and almost fell under his Echo Bay brand.

One problem: Someone else had already snatched up the domain echobay.com—current domain records show it’s belonged to Vincent Lanci of Stamford, Connecticut since October of 1994—so the blossoming auction site landed instead at ebay.com, which amazingly was still available at that point.

In a way, good ol’ Vincent Lanci may have indirectly helped eBay become what it is today. Think the site would have ever turned into a top-tier brand with Echo Bay as its name?

Hulu

It may sound like a simple tropical drink, but the name Hulu is actually intoxicatingly complex (and—sorry Mai Tai fans—has nothing to do with rum).

Believe it or not, the online video service’s etymology revolves around Mandarin Chinese. Hulu CEO Jason Kilar has said he and his fellow executives held a “series of marathon naming sessions” at which they came up with dozens of possible names for the company. An early standout was—you guessed it—Hulu.

Hulu, Kilar says, has two separate meanings in Mandarin: one that translates to “gourd” and is used to describe a receptacle for precious things (insert your own off-color joke here) and another that means “interactive recording.” Kilar and his crew thought both meanings seemed like perfect fits for the product they were pushing.

Other perks of the name, according to Kilar: It has no English meaning, it’s short and memorable, and it’s “approachable and fun.”

Hey, at least they didn’t go with “Bob.”

Hotmail

What better way to end than with one of the Web’s most damning domains? Let’s face it: If you’ve got an email address at hotmail.com—much like having one at aol.com—it’s the modern-day equivalent of walking down your high school hall with a “KICK ME” sign taped to your back.

(Outlook.com is a little better, but it might still earn you a swirlie if you aren’t careful.)

Hotmail was cool once, back in the days when AOL was more than a punchline. The service launched in the late ’90s, when the notion of Web-based email was still new and uncharted.

The company’s founders wanted a name that ended in “mail,” for obvious reasons. They liked Hotmail because it had the letters “H,” “T,” “M,” and “L”—as in HTML, or HyperText Markup Language, the code used to create basic Web content. In fact, Hotmail was originally stylized as HoTMaiL to emphasize the connection.

And here you thought it couldn’t be any worse than it is today.

Posted in CEO, Creative, Inspirational, Start-Up

Freelancers can aid small businesses

By Marlin Marketing

Millennials that have recently entered the workforce may witness a change in the way labor is organized. Many of the new workers, generally from their early 20’s to early 30’s, value flexibility and meaning in their work over pay and benefits, according to a study by Morley Winograd and Dr. Michael Hais. As a result, freelance positions are becoming a more reasonable and agreeable option for both employers and the workforce.
Rather than traditional jobs, in which a full-time employee shows up to work at nine in the morning, leaves at five in the evening, five days a week, with a week or two of allotted vacation time, freelancers work on an as-needed basis. Some jobs hire freelancers as part-time workers that may develop into full-time, and some jobs need a freelancer for one task and that’s it. Freelancers often take on as much responsibility as necessary for them to make the money they need, and they can choose companies they feel positively about.
Rewards on the business end
For startups and small businesses, hiring freelancers makes enormous sense. The risk of hiring the wrong person is mitigated because a freelancer has fewer ties to the company. They are not salaried, they don’t receive benefits and they are often temporary. Plus, the company can be confident of a quality performance because freelancers usually won’t apply for a job unless it is one they have interest in or the skill for. Frequently, creative types become freelancers so they can apply their craft in a professional setting.
Keeping up with the times
More and more companies realize that working with freelancers makes sense. According to Forbes, over the last 12 months, freelancing continued to rise even as the economy recovered. This is the first time economic growth and freelancing have not had an inverse relationship – typically, full-time job growth meant fewer freelance jobs. This means that more Americans prefer to work on their own terms rather than tethering themselves to a full-time position. Plus, with the proliferation of mobile devices, working remotely, and working non-traditional hours, freelancers are the more logical choice.
Equipment and business industry piece brought to you by Marlin Equipment Finance, leaders in equipment financing. Marlin is a nationwide provider of equipment financing solutions supporting equipment suppliers and manufacturers in the security, food services, healthcare, information technology, office technology and telecommunications sectors.

September 17, 2014
– See more at: http://mediaroom.marlinfinance.com/small-business-news/freelancers-can-aid-small-businesses/#sthash.74iLDR0B.dpuf

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Posted in Economy, Freelancer

More millennials say ‘no’ to credit cards

By Jeanine Skowronski

Twenty-seven-year-old Omaha, Nebraska, resident Erin Duffy has never had — or even wanted — a credit card.

“I’ve been able to get along without it,” she says, attributing the choice to ambivalence and a wariness of plastic her parents fostered in her during her formative years. “I’ve liked being able to pay for things as I go, not having to worry about missing a bill.”

Duffy’s decision to live without credit cards is more common than you may think. A whopping 63 percent of millennials (ages 18 to 29) don’t have a credit card, according to a survey commissioned by Bankrate and compiled by Princeton Survey Research Associates International.

Comparatively, only 35 percent of adults 30 and over don’t have credit cards.

There are, admittedly, external factors influencing the statistics. An April 2014 Gallup poll found Americans’ reliance on credit cards, in general, has declined steadily since the Great Recession. Moreover, the Credit Card Accountability, Responsibility and Disclosure Act of 2009, or CARD Act, made it harder for anyone under 21 to get a credit card.

There’s also a more straightforward reason why a majority of millennials aren’t carrying the payment method: Many, like Duffy, just don’t want credit cards.

“I don’t really feel like there’s a need for one in the way I live my life,” says Melissa Pileiro, a 24-year-old resident of Vineland, New Jersey. “The idea with a credit card is you’re essentially putting money down that you don’t have.”

Like many members of her demographic, Pileiro is perfectly content with her debit card, a payment method whose existence has eaten into the credit card’s market share.

Debit “eliminates that convenience advantage” credit cards previously enjoyed, says Eric Lindeen, director of marketing at Zoot Enterprises, since traditional or prepaid debit cards are just as easy to use for making purchases or paying bills online.

Debt-adverse, not credit-averse

New payment methods aren’t the sole reason millennials have been turned off of credit cards.

Millennials “grew up in a world where the economy was tanking,” says David Pommerehn, senior counsel with the Consumer Bankers Association. “There was great concern about jobs and debts and paying off bills.”

At the same time, college costs — and subsequently student loans — have ballooned. According to the Project for Student Debt, student debt increased an average of 6 percent each year from 2008 to 2012, with college graduates from 2012 having an average student loan debt of $29,400.

“When you look at that and the implications of the ability to repay … the idea of having a credit card (is) far less valuable,” says Lindeen of credit solutions provider Zoot Enterprises. “It’s not so much (that millennials are) anti-credit card, but it’s more the risk of debt” they fear.

This fear isn’t exactly unfounded. Bankrate’s survey found that millennials who do have credit cards aren’t as good at paying down their bills as other demographic groups. Only 40 percent of people ages 18 to 29 pay off their balances in full each month, compared with 53 percent of adults 30 and over. Additionally, 18- to 29-year-olds were most likely to often miss payments completely.

Given this proclivity, it’s easy to see why many millennials are avoiding the payment entirely.

“It’s a relief to not deal with paying a credit card bill every month, especially when I’m just beginning to enter the not-so-wonderful world of repaying student loans,” says Jamie Primeau, a 23-year-old resident of Middlesex, New Jersey. “Basically it’s one less thing to worry about.”

The downsides of icing out credit cards

But the rejection of credit cards could cause problems for millennials down the road. The payment method is one of the quicker ways to build a strong credit score, says Rod Griffin, director of public education at credit bureau Experian.

And a strong credit score “matters more in this generation than it did in past generations,” says Bill Pratt, author of “Extra Credit: The 7 Things Every College Student Needs to Know About Credit, Debt & Ca$h,” because “it’s used for so many things.”

Good scores, for instance, qualify a consumer for insurance policies, cellphone plans and even certain employment opportunities. They are also the key to securing home, auto and other loans at affordable rates.

Allen Walton, a 26-year-old from Dallas, found this out the hard way when he tried to borrow $5,000 to buy a car two years ago, sans credit history.

“I couldn’t get any loans,” he says, even though he had $30,000 in his bank account and, at the time, was making $60,000 a year. Walton, who had avoided credit cards in an effort to stay frugal, ended up having to a get a loan through the auto dealership.

“They made me print out my entire banking history for the past 24 months,” he says. They also required him to buy an extended warranty in order to get a 6.7 percent interest rate.

Carly Romalino, a 29-year-old resident of Mantua, New Jersey, who doesn’t use credit cards because she ran up a balance on one in college, had her search for a used car loan end “with a big, fat, embarrassing denial.

“In my late 20s, I hadn’t built up enough credit to qualify,” she says. Ultimately, to finance the purchase, she “sold one car (and) used that money to buy another from a family member.”

Walton and Romalino are likely not the only millennials who’ve had to jump through hoops for less-than-stellar financing. According to Experian, the average VantageScore for millennials is 628, which lenders largely consider subprime. (Baby boomers and Generation Xers have an average VantageScore of 700 and 653, respectively.)

Millennials “have to understand that it costs you money not to use credit just as it costs you money to use credit,” says Mike Sullivan, director of education at nonprofit credit and debt counseling agency Take Charge America, because low credit scores or no credit scores won’t qualify for low loan rates.

Source: Bankrate.com

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Posted in Baby Boomers, Debt, Millennials, Student Loans

From Full-Time To Freelance: How To Make The Leap

By Laura Shin

This is half of a two-part series. Don’t miss the related story on how 1 in 3 American workers is now freelancing.

Four out of five non-freelancers say they would be willing to do paid freelance work, and 36% of moonlighters say they would like to quit and freelance full-time, according to a new study by The Freelancers Union and Elance-oDesk, a platform that connects freelancers and employers.

These stats may not be surprising considering the benefits of freelancing, such as a flexible schedule, which 42% of freelancers said was one reason they chose this lifestyle (the second-highest reason after earning more money). Who wouldn’t want to be able to take a mid-day nap if that’s what you need?

But freelancing may not provide a stable income and work may be hard to find — problems experienced by half the freelancers in the study.

If you’re a full-timer itching to freelance but held back by financial fears, here are tips to successfully making the leap.

Before You Quit: The Financial Prep

Going from full-time to freelance is really about launching a business. Even if you think you’re going to be teaching yoga or coding mobile apps or designing websites, first and foremost, you’ll be running a business. This is a really important point. If you don’t adopt a business mindset, you may end up worrying so much about your finances that you don’t even have the mental space to focus on your yoga teaching or coding or designing. Setting up systems in place to keep the business going will free up time and energy for you to focus on your actual work.

With that in mind, here’s what you need to get in place for your big launch.

1. Get your basic finances in order.

This means you should have:

- emergency savings, most likely six months’ worth of essential expenses like housing, transportation, groceries and insurance since, in an actual emergency, you probably wouldn’t be spending money on things like shopping or dining out
– a retirement plan with accounts and contributions in place, even if you pause the contributions during the transition (read here to find out how freelancers should set up their retirement accounts)
– disability insurance (you can get a policy giving you greater coverage now while you’re full-time; check out professional associations to see if they offer better rates than you can get on an individual plan)
– a plan for covering your health insurance once you quit whether that’s buying COBRA, signing up on a health exchange or getting on your spouse’s plan
– Find out here if there are any other financial tasks you need to check off.

And if you feel trapped in a job you don’t love by the high salary, then learn how to break free of your “golden handcuffs.”

2. Redo your budget.

If you’re single, you may need “startup savings,” which is the money you’ll live on during the first few months, says Mary Beth Storjohann, a certified financial planner and CEO of Workable Wealth. And your startup savings is not the same as your emergency fund — it’s in addition to. If you can line up regular gigs before you quit, you may not need the startup savings. (I didn’t have startup savings but used a combo of steady gigs and cutting my expenses by moving to another country temporarily to manage the transition.)

If you’re part of a dual income household, talk with your partner to “make sure you can cover the expenses with the other income coming in, and meet the need and wants for your lifestyle — or what sacrifices you’re willing to make,” says Storjohann.

To calculate how much startup savings you need, first figure out how you can bring money in during those starting months and how much it will be. Could you cut down your hours at your current job so you retain some percentage of your salary while you build up clients? Can you start freelancing now during your spare time so that when you quit, you already have a few clients? Be conservative in your projections.

Then, take your monthly budget and subtract your projected income in those months to see what your monthly shortfall will be. Multiply that by the number of months you think it will take you to begin earning your normal income, and that’s the amount you need in your startup savings.

If that number seems daunting, trim your expenses and then redo the calculation. “When I made the jump, I knew I need $10,000 and then we made a conscious decision to reduce our lifestyle,” says Storjohann.

Before You Quit: The Non-Financial Prep

Since you’re launching a new venture, it’s important to get the word out so that business will be good from day 1. Here’s how:

1. Create a business website or online portfolio, and flesh out your LinkedIn Profile. Set up a webpage, portfolio and LinkedIn profile to make it easy for people to find you. You can also create a profile of your experience with a portfolio on Odesk, Elance or on the websites of professional associations in your field that have databases of freelancers. (For instance, freelance journalists can post a profile at the American Society of Journalists and Authors, Mediabistro and more.)

2. Spread the word.

Tell people you’re setting out on your own, or that you’re available for freelance work. And also, be open to new opportunities — whether you find them at traditional networking events or through your family and friends, your alumni networks or former colleagues. The people who know you will be your best advocates.

3. Start moonlighting.

Many full-time freelancers began freelancing while they were still employed. (It’s how I got started.) As the work builds and clients recommend you, your freelance work just may get busy enough that you have enough confidence to strike out on your own. “Eventually [moonlighters] reach a tipping point where they would be more fulfilled and make more money by full-time freelancing. We’ve seen a lot of people start freelancing a few hours a week and then over a period of time, be able to switch to full-time freelancing,” says Rosati.

4. See if you can get your employer’s support.

Some enviable workers are able to talk their current employers into hiring them as freelancers. But judge your current situation and your relationship with your boss before aiming for this setup.

“If you walk in and say to your boss you want to start a freelance career and you think there’s a chance they’ll fire you for that, then don’t do that,” says Horowitz. “Instead, engage in a conversation about how the work could be done with you taking a piece of it as a freelancer. Is it a project? A significant part-time thing? Do you want to take the responsibility for something and hire subcontracted freelancers?” If you think they’d be game, try to work out a plan together.

Once You’ve Made The Leap: Your Finances

Remember, once you start freelancing full-time, you become a business person. Here’s how to keep your books straight.

1. Set up business bank accounts.

As you’ll quickly discover, taxes are a pain when you’re a freelancer. There are a few ways you can make them easier for yourself, such as having a separate savings, checking and credit card solely for business expenses. “That’s for ease of tracking, tax purposes and that’ll make your life a lot easier to not be commingling funds,” says Storjohann. (I haven’t done this so far but likely will set up a separate checking account; however, I’ll stick with my current credit card, to rack up the most points on it.)

Having separate business and personal accounts isn’t 100% necessary, but not having them might make your taxes more difficult, and you could lose out on deductions. For instance, says Storjohann, “if you’re traveling, and you go out for meals, those are business expenses if you’re talking about business or with a potential client. They’re not fully deductible but half deductible.”

If you do have business and personal checking accounts, all your freelance checks go into your business account, and then you can transfer money to your personal checking account to create a “paycheck” for yourself. (Read here for information on how to create a paycheck for yourself.) Use your business savings account to save for big business expenses like a computer or attending an expensive conference or upgrading your website, etc.

2. Set up a system for your taxes.

Be sure to get a good accountant, one who specializes in freelancers, and talk with her/him right away to find out what counts as a business expense and what receipts you need to keep. Then, sign up with a service like FreshBooks or Wave to stay organized. Find out here how freelancers should manage their taxes.

3. If you’re not earning money, be wary of debt.

“Based on calls I’ve done with other entrepreneurs, a lot of them have no problem going into debt with their business,” says Storjohann. “But be cautious — if taking on debt is part of your plan, then what’s your plan for paying it off?” A lot of entrepreneurs and freelancers find materials or coaches online promising to help them grow their business — but a lot of these services cost money, so beware. (If you do amass debt, here’s how to pay it off.)

Once You’ve Made The Leap: Everything Else

When you start freelancing, “you’re shifting from being an employee, which is really about landing the job and then being told what to do and doing it really well to building your own brand and building your own business of one and thinking like a business owner,” says Rosati. Here’s how to build your brand:

1. Market your services.

Just as you did before you quit, make sure to regularly devote time to marketing your services, which includes updating your online portfolio and website. Your online presence is a form of reputation, and keeping it fresh means that when people in your network forward it to others, you’ll be putting your best foot forward for every potential client.

2. Kick butt on every job.

Whenever you get a new client, do the best job you can for them to ensure their repeat business — and referrals. “ Recognize you’re now in the service business and deliver your services as efficiently as you can to delight those customers, and by delighting those customers, they’ll introduce you to other customers and keep you busy,” says Rosati.

3. Constantly analyze your productivity and figure out ways to improve.

Analyze how you spend your time (see how I track my time and other tips on time management) and see how you can cut inefficiencies or spend less time doing low-paying work and more time doing well-paid work.

4. Find support networks.

“What we see time and time again is, if you stay isolated or just see yourself as an individual, you really will not thrive,” says Horowitz. Find a coworking space or participate in online communities for other freelancers in your field. You may not see it yet, but these networks will get you through the dry spells. Your connections will help drum up more work for you, and when your cup runneth over, you’ll have good people to refer your clients to.

Storjohann has found a good network with a few “mastermind” groups of entrepreneurs with similar interests and goals to discuss what they’re working on, get advice on dealing with problems and challenge each other to get to the next level. As I discuss here, I’ve found several good groups of freelance journalists that I connect with online, through Skype and in person to help me think through issues. But I also find myself giving help in addition to getting it — and Horowitz says this is exactly why your networks will be key in your career.

“You have to be able to give and to get,” says Horowitz. “Karma really does work.”

Source: Forbes
September 2014

Editorial Note: Laura Shin is the author of the Forbes eBook, The Millennial Game Plan: Career And Money Secrets For Today’s World. Available for Apple iBooks, Amazon Kindle, Nook and Vook.

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Posted in Freelancer, Start-Up

Student Loan Debt Burdens More Than Just Young People

JANET LEE DUPREE, 72, was surprised when she received her first Social Security benefits seven years ago. About one-fifth of her monthly payment was being withheld and she called the federal government to find out why.

The woman, who is from Citra, Fla., discovered that the deduction from her benefits was to repay $3,000 in loans she took out in the early 1970s to pay for her undergraduate degree.

“I didn’t pay it back, and I’m not saying I shouldn’t,” she said. “I was an alcoholic, and later diagnosed with H.I.V., but I’ve turned my life around. I’ve been paying some of the loan back but that never seems to lower the amount, which is now $15,000 because of interest.

“I don’t know if I can ever pay it back.”

She is among an estimated two million Americans age 60 and older who are in debt from unpaid student loans, according to data from the Federal Reserve Bank of New York. Its August “Household Debt and Credit Report” said the number of aging Americans with outstanding student loans had almost tripled from about 700,000 in 2005, whether from long-ago loans for their own educations or more recent borrowing to pay for college degrees for family members.

The debt among older people is up substantially, to $43 billion from $8 billion in 2005, according to the report, which is based on data from Equifax, the credit reporting agency. As of July 31, money was being deducted from Social Security payments to almost 140,000 individuals to pay down their outstanding student loans, according to Treasury Department data. That is up from just under 38,000 people in 2004. Over the decade, the amounts withheld more than tripled, to nearly $101 million for the first seven months of this year from over $32 million in 2004.

While older debtors account for a small fraction of student loan borrowers, who have accumulated nearly $1 trillion in such debt, the effect of owing a constantly ballooning amount of debt but having a fixed income can be onerous, said Senator Bill Nelson, Democrat of Florida, chairman of the Senate Special Committee on Aging.

“Those in default on their loans can see their Social Security checks garnished, leaving them with retirement income that leaves them well below the poverty line,” he said at a committee hearing this week to examine the issue.

“Some may think of student loan debt as a young person’s problem,” he said, “but, as it turns out, that is increasingly not the case.”

That is the problem that Rosemary Anderson, 57, described to the committee. The woman, who is from Watsonville, Calif., has a home mortgage that is under water, as well as health and other problems, and $64,000 in unpaid student loans. She borrowed the money in her 30s to fund her bachelor’s and master’s degrees, but fell behind on her student loan payments eight years ago.

As a result of compound interest, her debt has risen to $126,000. With her $526 monthly payment, at an 8.25 percent rate, she estimates that she “will be 81” by the time it is paid, and will have laid out $87,487 more than she originally borrowed.

Mrs. Dupree, in a telephone interview, said she, too, needed some relief. As a part-time substance abuse counselor for a nonprofit based in Ocala, she said she could barely afford the $50 each month that she negotiated with the federal government as payment for her growing debt.

She is supporting a measure introduced by Senator Elizabeth Warren, Democrat of Massachusetts, and a committee member, that would allow people who borrowed money for education before July 2013 to refinance at current, lower interest rates.

A person who took out an unsubsidized loan before July of last year “is locked into an interest rate of nearly 7 percent and older loans run 8 percent to 9 percent and even higher,” Ms. Warren said. The measure would lower the interest rate to 3.86 percent for undergraduate loans and a little higher for graduate and parent loans.

But the future of the bill is unclear. It was stalled in the Senate in June by Republican senators, like Lamar Alexander, of Tennessee, who said college students didn’t need a taxpayer subsidy to help pay off a student loan. “They need a good job.”

The measure would help 25 million people refinance their student loans, but impose a tax increase on people making over $1 million — which Senator Mitch McConnell, of Kentucky, the majority leader, labeled a “tax increase bill styled as a student loan bill.”

Adam Brandon, executive vice president of the conservative organization FreedomWorks, which opposed Senator Warren’s bill, said such legislation “only makes the current student loan bubble worse by continuing to encourage people to take out more loans than they can afford.

“The market needs to work out who can afford these loans. We shouldn’t be trying to game the market and have people end up with so much debt they can’t afford their car payments.”

Even though the number of retiree debtors is small, $1,000 deducted from their Social Security payments “can make a real difference for affected senior citizens or disabled adults surviving on Social Security,” said Sandy Baum, a professor at the George Washington University Graduate School of Education and Human Development, and a researcher at the Urban Institute.

For most beneficiaries, she said, “the average monthly payment of $1,200 is the primary source of income.” While the government should be holding student borrowers to account for their debt, “and there may be some who just decide not to pay,” she said “most are people who are not earning money so it doesn’t make sense to ask them to pay.”

As the ranks of retirees grow, more attention is being focused on the education debt incurred by the next group of people approaching retirement, those 50 to 64 years old. A 2013 AARP study of middle-class families found that aging households were carrying increasing amounts of debt.

While mortgages account for most of that debt, education debt levels have been rising for the preretiree group, noted Lori A. Trawinski, a director at the AARP Public Policy Institute.

“As of 2010, 11 percent of preretiree families had education debt with an average balance of $28,000. Growing debt burdens pose a threat to financial security of Americans approaching retirement, since increasing debt threatens their ability to save for retirement or to accumulate other assets, and may end up leading them to delay retirement,” she said.

The Government Accountability Office warned this week about the growth of educational debt among seniors. It released a report that relied on different data from that used by the Federal Reserve Bank of New York, but nonetheless painted an ominous picture of lingering debt burden.

“As the baby boomers continue to move into retirement, the number of older Americans with defaulted loans will only continue to increase,” Charles A. Jeszeck, the G.A.O. director of education, work force and income security, testified at the hearing. “This creates the potential for an unpleasant surprises for some, as their benefits are offset and they face the possibility of a less secure retirement.”

More than 80 percent of the outstanding balances are from seniors who financed their own education, the G.A.O. report concluded, and only 18 percent were attributed to loans used to finance the studies of a spouse, child or grandchild.

But the default rate for these loans is 31 percent — a rate that is double that of the default rate for loans taken out by borrowers between the ages of 25 and 49 years old, according to agency data.

“Such debt reduces net worth and income and can erode retirement security,” Mr. Jeszeck said. “The effect of rising debt can be more profound for those who have accumulated few or no financial assets.”

And such student loan debt “can be especially problematic because unlike other types of debt, it generally cannot be discharged in bankruptcy,” he added.

As a result of unpaid student debt, Social Security payments can be reduced to $750 a month, which is a floor Congress set in 1998. Senator Susan M. Collins, Republican of Maine, and a member of the committee on aging, said she was planning to introduce a measure to adjust the amount for inflation “to make sure garnishment does not force seniors into poverty.”

For people like Ms. Anderson, help cannot come too soon.

“I incurred this debt to improve my life,” she told the committee, “but the debt has become my undoing.”

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Posted in Baby Boomers, Social Security, Student Loans

Want To Upend An Entire Industry? Change Its Revenue Stream

By Ryan Baum

Imagine it’s 1997 and you’re sitting in a small room in Los Gatos, California. You’ve decided that you are going to get into the movie rental business. That’s right, you want to dethrone a huge entrenched competitor that has been dominating the industry for years, Blockbuster. How would you design the next big idea to disrupt the industry?

Most conventional wisdom tells you the next step should be one of three possibilities. You can either do some brainstorming and come up with 100 new ways to improve the movie rental experience, do some research to understand movie renters’ deepest needs, or do some accounting and find out how to build a business that operates at a lower cost than Blockbuster.

Ways for a company to reinvent its business can be found buried deep in its business plan.However, an oft-overlooked way for a company to reinvent its business can be found buried deep in its business plan–the revenue model. A company’s revenue model, very simply, is the way it makes money. Does the company charge a subscription to its customers like a local gym does, or does it make its money through advertising like a blog? When choosing a revenue model, most companies wait until the very end of development and simply look to what market leaders are doing, altering it slightly. But when considered carefully, the revenue model can be a very powerful tool. By changing the revenue model, a company will change its entire business.
Imagine what our movie rental business would look like if instead of charging for each rental, we charged a monthly subscription. If customers are monthly subscribers, they should be able to keep movies for as long as they want, so late fees no longer make sense. But that causes logistical challenges, because if people are holding on to movies indefinitely, how will the company manage inventory? Perhaps it could entice people to provide their preferences in advance via an online list. Then, if customers provide their preferences ahead of time, why make them come to a store at all? Why not mail them their movies?

And thus you have designed a highly profitable and wildly disruptive new video rental service, Netflix. To be fair, Reed Hastings and his team at Netflix didn’t go through these steps exactly as above, but it’s easy to see how thinking about the implications of a new revenue model has the potential to change the whole business. And revolutionize a market.

Eight Types of Revenue Models

Any business will benefit from rethinking the implications of changing their revenue model, and doing so early in the design process rather than as an afterthought. However, the task of doing so may seem daunting due to the enormity of ways that a company can make money. Professor Andy Hargadon at UC-Davis has come up with a useful framework for revenue models.

There may be an infinite number of variations a company can use to make money, but they really all boil down into eight types:

1. Unit sales: Sell a product or service to customers. GE uses this method when they sell microwaves.

2. Advertising fees: Sell others the opportunities to distribute their message on your space. Google uses this method with its search product.

3. Franchise fees: Sell the right for someone else to invest in, grow, and manage a version of your business. McDonald’s uses this method with its stores that are independently owned and operated as franchises.

4. Utility fees: Sell goods and services on a per-use or as-consumed basis. Most electric companies use this model when they charge customers only for the electricity they use.

5. Subscription fees: Charge a fixed price for access to services for a set period of time. Gold’s Gym charges a monthly or yearly subscription fee for people to access their gym.

6. Transaction fees: Charge a fee for referring, enabling, or executing a transaction between parties. Visa charges a transaction fee to retailers each time a customer purchases a product in their store.

7. Professional fees: Provide professional services on a time-and-materials contract. H&R Block makes money by charging customers for the time it takes to prepare their taxes.

8. License fees: Sell the rights to use intellectual property. Every time a customer buys a T-shirt or a hat with the logo of their favorite sports team on it, that team makes money from license fees.

Using Revenue Models to Design a Business

Any company leader can look at the eight revenue models and brainstorm new ways to reinvent their business. Doing so early on in the design of a new business concept will not only lead to different ways to make money, it will lead to different businesses. By bringing revenue model ideation into the design process, and thinking about the implications of those revenue model changes, a company can find their own versions of “no late-fees” and “online queue” to upend their industry.

Editorial Note: Ryan Baum applies his analytical mind and deep consulting experience to help clients develop growth strategy in a variety of industries, including healthcare and hi-tech. Ryan previously worked at both strategy and design firms, and spent several years consulting on sales and marketing strategy to the health care industry. He has also spent time helping technology and pharmaceutical startups develop the business rationale needed to raise additional rounds of venture capital funding. Ryan holds a B.A. in ethics, politics, and economics from Yale University, where he completed a thesis on urban education and tax policy.

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Posted in CEO, Economy, Freelancer, Inspirational, Leadership

Law School Students Fight to Make Internships More Fair

September 9, 2014

Joe Zeidner’s struggle to support his family while he finishes his law degree has been exacerbated by a rule that bans law students from using paid internships toward their degrees. He has fought to change the rule, but lawyers that defend it argue that getting paid can muddy the academic value of learning on the job.

“It is patently unfair to make law students choose between getting class credit and being able to be compensated and paying their rent,” Zeidner told a meeting of the American Bar Association in August.

Zeidner, who represented the 35,000-member law student division of the American Bar Association at the meeting, hoped to defeat the ban at the August meeting, but the ABA kept the rule in place. The association won’t revise the rules governing law schools for 10 further years.

The law student division says the provision adds to their financial stress at a time when they are more indebted than ever and have few job prospects. The average law student had $140,000 in debt in 2012, up from about $88,000 in 2004, according to the New America Foundation. In February, the employment rate for new law graduates reached its lowest point in six years, falling to 84.5 percent.

Zeidner’s situation illustrates how the rule can affect the lives of law students. The 35-year-old has $150,000 in student debt and has been receiving food stamps since enrolling at Drexel University School of Law in 2012. He supports his wife and their 3-year-old daughter, and the three live at the home of his wife’s parents in Philadelphia.

This summer, Zeidner says, he wrestled with the choice to take an unpaid internship for credit over a paying job as a line cook. The job promised a sorely needed paycheck, but the internship would provide the credit he needed to graduate six months early.

Opting for the job, Zeidner says, “would mean about six months more debt. It would also mean six months longer until I could find a job as an attorney and start paying off my student loan.” He chose the internship.

About half of the 1,900 law students polled by the ABA’s law student division last October said they “had to decide between taking a non-paying externship and a paying, law-related job/internship,” at some point, according to the ABA.

Monalisa Dugué, a 42-year-old student at Valparaiso University Law School, took an unpaid internship this summer at a charity providing legal services immigrants so she could earn 3 academic credits. But Dugué, who is the mother of a 9-year-old boy and a 15-year-old girl, says she had to cut the internship short “because it became too expensive” to work for free.

“I couldn’t even afford to put food in the refrigerator,” she says, “I have two school-age kids that I also had to provide for. For me it was a bigger burden.”

Dugué received a small stipend, but she says it didn’t cover most of her rent, transportation and food costs.

Law school is already out of reach for many low-income students, Dugué says. “To ask the students to, on top of that, do an internship and not get paid for it, I think that’s just ludicrous,” Dugué says. “The ABA should do better.”

The ABA did make some changes in its August meeting to lessen the burden for struggling students, like getting rid of a rule that limited students to working 20 hours of paid work per week. Over the next year, the group within the ABA that sets industry standards will consider law students’ demands to revise the paid externship rule, and could overturn it by the time the ABA has it’s next annual meeting in August 2015. But for now the ban remains in effect.

“No one is unsympathetic to the students who end up graduating from law school with a lot of debt,” says Barry Currier, managing director of accreditation and legal education at the ABA. But Currier says that some at the ABA questioned whether students would be able to reap the educational value of clinical experience if they were getting paid for it.

“Some people would say there are conflicts that are difficult to resolve if a student is both working for the employer, and also under some requirements from the school,” says Currier. “No one pays you to go to class. You pay for the educational experience, and maybe its just best to leave it that way.”

Source: Bloomberg Businessweek

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Posted in ABA, Debt, Department of Education, Ethics, Jobs, Student Loans

Leaked Uber Numbers, Which We’ve Confirmed, Point To Over $1B Gross, $213M Revenue

by Matthew Panzarino (@panzer)

Today, Valleywag got its hands on leaked screenshots of Uber’s dashboard, along with a series of numbers from two weeks ago that show raw revenue, signups, active clients and ride request/completion ratios. TechCrunch has verified with a source that this is Uber’s official dashboard.

TechCrunch also contacted Uber, who said that they would ‘take action’ against the leaker. They did not deny the authenticity of the screenshots and numbers.

The numbers span a period of between mid-October and mid-November of 2013 and allow us to form a picture, though incomplete, of Uber’s income and user statistics over the period. According to our calculations based on the information laid out in the dashboard screenshots — and assuming some similarity in numbers for the rest of the year — the car service should be pulling in over $1B a year in gross bookings. At a rough 20% cut, a figure Valleywag notes Kalanick has alluded to, that would place Uber’s slice of the revenue around $213M a year.

The five week period also showed over 11% in revenue growth, with over 398,000 new signups in aggregate at just under 80k each week. Uber is also clocking around 1M requests every week and completing around 800k each week. The data points to a healthy business which maintains a strong ratio of continuing users to new signups and big ‘conversion’ rates between people who look at the app and people who actually use it.

A recent filing uncovered by Kara Swisher at All Things D put Uber’s valuation at $3.5B, and sources had pegged revenue for 2013 at around $125M. Going by that, Uber is doing significantly better than estimated.

We contacted Uber CEO Travis Kalanick about the leak, and he did not deny that the numbers were accurate. He also had a few things to say about how the story was reported by Valleywag.

“The surprising part is that Valleywag knowingly outed their own source. Valleywag actually knew the screenshot had identifying information of the individual leaker prior to them publishing this story,” Kalanick told TechCrunch in a statement. “We told Nitasha Tiku from Valleywag that we would protect her source from legal ramifications if they did not publish the document. Nitasha and Valleywag decided to publish anyways. We obviously take the dissemination of our proprietary information seriously and we will be looking to take action against the individual leaker and Valleywag source in short order.”

TechCrunch then reached out to Gawker about the details of how the piece was reported. Editor John Cook told us that the screenshots did not, in fact, have any identifying information.

“We didn’t publish any identifying information about the source of the screengrab,” Cook says. “We don’t know who sent us that shot, and neither does Uber. As you know from reading the piece, the person who sent us the information got it after an unidentified Uber employee logged into an Uber administrative console from a computer that our source had access to,” Cook wrote.

“When we reached out to Uber last night, CEO Travis Kalanick helpfully confirmed the veracity of the information by threatening to claim we “outed” our source by failing to redact the timestamp information displayed in the screengrab. What he fails to understand–or is lying about in an effort to smear a critical reporter–is the fact that the person who provided us that screengrab is not the person who logged into Uber’s administrative console. If Kalanick retaliates against that employee, he will be not be punishing our source.”

Regardless of the details of how they were leaked, it seems clear that these are indeed screenshots of Uber’s internal dashboard. And the vehemence of the response by Uber also appears to indicate that the information on the dashboard is revealing.

Note, of course, that the interpretation of the data is not confirmed, and we’re only working off of leaked information here. The math is rough, to say the least and whatever this is, it’s likely not a complete snapshot of Uber as a company. If the readings by Valleywag, and our own crunching, are correct though, Uber is in fantastic shape.

Source: Business Insider (Dec 2013)

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Posted in Creative, Economics, Innovation, Marketing, Statistics, Technology, Y Combinator

When Success is Born Out of Serendipity

by Frans Johansson
October 19, 2012

Eight years ago I published a book, The Medici Effect, that examines how and why groundbreaking ideas occur at the intersection of different cultures, industries, and disciplines. The book did quite well — it has been translated into 18 languages at this point, become part of the ongoing innovation dialogue, allowed me to present ideas to executives across the world, and to build a unique consulting firm with clients on six continents. So, not surprisingly, I frequently get asked just how I did it.

In response, I usually tell the following story. Once the book had been written, I had to market it. The obvious targets were people in the field of innovation — those working in strategy, R&D, business development, and entrepreneurship. But there are a lot of thought-leaders competing for the attention of that audience. Around the same time that my book came out, so did at least another 15 new books on innovation. My own publisher, HBS Press, published two the very same month as my book — one of them co-authored by heavyweight Clay Christensen. Just getting noticed in this avalanche of concepts and personalities was a challenge. How could a first-time author — not to mention one only two years out of business school — stand out?

One evening, my fiancée (now wife!) came home from her job as a diversity consultant at JP Morgan Chase. We talked frequently about both my book and her work, but had never really made a connection between them. On this day, though, she had just been asked to describe the “business-case for diversity” for her firm. What, they asked her, was the most powerful argument for promoting diversity — outside of ethical and legal ones? As we talked, she realized that the ideas in my book were exactly what she was looking for.

“You say that diverse perspectives drive innovation — whether those diverse perspectives come from different industries, cultures, fields or gender and so on,” my fiancée told me. That, she suggested, was pretty much the most compelling business case for diversity. “I honestly think people would want to hear about it.” She was right. Before I knew it I was presenting the ideas in my book to Steve Black, who at the time headed up investment banking at JP Morgan Chase.

That single conversation changed everything for me. Suddenly, chief diversity officers in corporations around the US started inviting me to speak to their CEOs on how to drive innovation through diversity. In many cases it dramatically changed how a company thought about both diversity and innovation. And, since innovation was on everyone‘s mind, I was soon also working with chief innovation officers and heads of strategy, business development, and emerging markets — anything that required innovation. The demand for my ideas surged and soon went global. The interest took me completely by surprise.

Then one evening, at a client dinner, a strategy executive sitting next to me leaned over and said, “Your side-door strategy has been nothing short of brilliant.” I honestly had no idea what he was talking about and had to ask him what he meant. “Well,” he said, “instead of going directly to chief innovation officers, heads of strategy or R&D folks, you targeted chief diversity officers,” he told me. “And through them you got to people like me.” He was dead serious. “Your strategy,” he said, “was to knock on the one door that other innovation thinkers did not.”

A side-door strategy, I thought. It even had a name. To an outsider this must, indeed, have seemed like a brilliant approach. I knew better, of course. I would be hard-pressed to call my side-door strategy anything but plain luck. Without the moment of realization between my fiancée and myself I might still be fighting hard to connect with innovation officers through the usual channels — along with hundreds of other authors and thinkers. What had seemed like a brilliant strategy was actually a moment of serendipity.

This realization soon led to another question. What if this was the case everywhere? What if all of the well-planned and well-executed “strategies” people have told us about are really the result of unplanned meetings and encounters, random moments and events, serendipity and plain luck? What if the stories behind companies such as Microsoft or Nokia or Starbucks or the stories behind world-famous authors, index-destroying investors and breakthrough scientists had a lot more to do with randomness than we think? What if success or failure is just one unexpected moment away?

Sure enough, serendipity often is the story. By the end of the ’80s, Bill Gates and Steve Ballmer had realized, through rigorous analysis, that Microsoft needed to abandon its still-struggling new operation system, Windows, because of a memory flaw. They partnered up with IBM to develop OS/2, and decimated the Windows team. But a serendipitous, seemingly insignificant, meeting at a party on the Redmond campus between two people, David Weise and Murray Sargent (a non-employee stopping over en route to Germany) led to a teasing joke. That joke suggested a solution to Windows’ problem, and within the hour Weise and Sargent were sitting down to solve the flaw and fundamentally alter Microsoft’s future. Roughly nine months into Google’s existence, Sergei Brin and Larry Page realized they needed to choose between their company and their PhD work at Stanford. They decided to pursue their doctorates, and offered their search engine to Yahoo for $1 million. Yahoo declined (as did others). Lucky thing, that. And in 2004 Paolo Pellegrini, a VP at the investment bank Lazard Freres, was fired — then took on a low-level position at a hedge fund after a lucky phone call. The desperate-to-prove-himself banker found a chart that showed how the housing market was overpriced. His boss, John Paulson, bet large and made $15 billion in a year. “I love that chart,” Paulson would keep saying — but has proved unable to find more of them.

Our mind abhors these serendipitous explanations, and searches for convenient patterns instead. Ask for the keys to career success and you’ll get logical explanations, recommendations, pathways and approaches. Then ask someone how he or she became successful and suddenly it becomes a story of serendipitous encounters, unexpected changes in plans, and random consequences. It does not make sense to ignore this basic fact about success any longer.

We like to think that success comes from predicting trends, analyzing data, gaming out strategies — from using some sort of logical approach. But if it was that simple we should have solved the mystery of success long time ago — and we haven’t. Instead serendipity is what sets us apart — since that is the only way we can discover an approach that is not obvious or logical.

So be open to serendipity, in your organization and in your life. You can take steps to increase the chances of it, too. For instance, bring together people from outside your organization, or between siloed departments or between different countries or cultures. These interactions will help you find unexpected insights and opportunities — those that others might not have logically figured out. Take statistical advantage of these random moments by placing as many purposeful bets you can afford while not becoming distracted. Angry Birds was the game-maker Rovio’s 52nd game. You have probably not heard of their 51 earlier ones. If you tried 52 times at anything you would probably have a decent chance at finding something that helped you stand apart, too!

Your organization, career, even life can change in a single moment. Make sure to seize it.

(Editor’s note: For more on Frans Johansson’s new book, The Click Moment, see “Unleash Your Inner Odysseus” in the October 2012 HBR.)

Posted in Books, CEO, Diversity, Freelancer, Innovation, Inspirational, Marketing, Motivational, Start-Up

Why Starting Justin.tv Was A Really Bad Idea, But I’m Glad We Did It Anyway

by Justin Kan (founder of Justin.tv)

Right now I’m neck deep in product launch mode, putting the finishing touches on our new mobile video application—Socialcam. Of course, I’ve been here before . . .

Years ago when we launched the Justin.tv show we had no idea what we were doing. This much was obvious to anyone who watched. Outsiders attribute far more strategic thought to the venture than we gave it. Some think that we planned all along to start a live platform, and that the Justin.tv show itself was a way of promoting that platform. While this ended up happening, none of it had crossed our minds at the time.

Emmett Shear and I had been working on Kiko, the first Javascript web calendaring application in the Microsoft Outlook style. We prototyped the application in our final year at Yale, went on to raise money from Y Combinator, then continued working on it for over a year.

Then Google Calendar was released—boom—absorbing most of our nascent user base and capturing most of the early adopter mindshare. But to be perfectly honest, Kiko would have failed regardless. We were too easily distracted and hadn’t really thought through the strategic implications of owning a standalone calendaring property (hint: no one wants a calendar without email). A short time later we were burned out and spending most of our time playing Xbox with the Reddit guys in Davis Square—hardly a startup success story.

Emmett and I started thinking about possible ways to get out of the calendar business. At the same time, I was startup fatigued. We had spent over a year paying ourselves nothing. The seed and angel investment market conditions were the polar opposite of what they are today. It had been a struggle to even raise a paltry $70,000, and we had failed to build a product with real traction. I was starting to think about moving back to Seattle to try something new, maybe in a different industry.

Still, we learned a ton and it was fun to be part of the early Y Combinator startup community (then largely in Boston). We became friends with Matt Brezina and Adam Smith (of Xobni), Trip Adler, Tikhon Bernstam and Jared Friedman (of Scribd), and many others. It’s amazing to see how many of those friendships persist today, and even more amazing how well many of those companies are doing.

Coming back from one particular YC dinner, Emmett and I were discussing strategic ideas for Kiko, and I remember telling Emmett an idea that popped into my head: what if you could hear an audio feed on the web of our discussion? Wouldn’t that be interesting to other like-minded entrepreneurial types? We kept going, and eventually the idea morphed into a video feed. Then it became a live video feed. Then it became a continuous live video feed that followed someone around 24/7. Then it had chat, and a community built around watching this live show, which was now a new form of entertainment. I was hooked.

I couldn’t stop talking about the idea. I mentioned it at YC dinners and to other friends. I even came up with a perfect name for it: Justin.tv. On one trip to DC, I told my Dad and my college friend Michael Seibel what I was thinking. Eventually, in-between drinking sessions, we thought of a brilliant idea for divesting ourselves of Kiko, which is a story for another day. After that, Emmett and I were coming up with other startup ideas (I guess we got excited about staying in the industry after all). One particular favorite was the idea of a web app that would ingest your blog’s RSS feed and then allow you to layout and print physical magazines from it. Excitedly, we drove one afternoon to Paul Graham’s house to pitch it.

We explained the idea to Paul and Robert Morris, who just happened to be at the house visiting. I vaguely recall there also being a “this will kill academic publishing” angle, although I can’t figure out how that sensibly fits in now. Paul didn’t particularly like the idea: he didn’t think people would use it. “Well,” he said, “what else do you have?”

I said the only thing I could think of: “Justin.tv.”

Because it was something I was clearly passionate about, and because creating a new form of entertainment was clearly a big market (if you could invent one!), Paul was actually into it. Robert’s addition to the conversation was “I’ll fund that just to see you make a fool of yourself.” Emmett and I walked out of there with a check for $50,000.

Six months later, we’d recruited two other cofounders (Kyle Vogt, our hardware hacker, who we convinced to drop out of MIT on a temporary leave of absence, and Michael Seibel, my college friend from DC, who became our “producer”). We built a site with a video player and chat and two prototype cameras that captured, encoded and streamed live video over cell data networks, negotiated with a CDN to carry our live video traffic, and raised an additional couple hundred thousand dollars. Our plan? Launch the show and see what happens.

Now, let me just tell you why this was a bad idea:

We didn’t have a plan. We loosely figured if the show became popular we could sell sponsorships or advertising, but we didn’t have a plan to scale the number of shows, nor did we understand what our marginal costs on streaming, customer acquisition, or actually selling ads were.
We didn’t understand the industry. We didn’t know what kinds of content advertisers would pay for. We didn’t have good insight into what kind of content people wanted to watch, either.
We relied on proprietary hardware that we were going to mass-produce ourselves. Smart angels told us to drop the hardware and figure out how to do it with commodity equipment, but we wouldn’t listen because we thought hardware would be easy (or at least, doable). Ironically, months after we were told this we switched to using a laptop.
We were trying to build a “hits” based business without any experience making hits. We knew a lot about websites, but little about content creation. Smart VCs (who took our calls because Paul referred us) told us as much: nobody really likes investing in hits based businesses, because it requires the continual generation of new hits to be successful (instead of, say, building a platform like eBay or Google whose success is built on masses of regular users).
How did we get as far as we did?

We were passionate. We honestly believed we could create a new form of reality entertainment. Put to the side that we had no experience with creating video (or any kind of content), by God, we were going to make this work.
Early stage investing is often about the people, not the idea. Paul has said as much about what he looks for. As two-time YC founders he knew that we worked well together and even if we were working on something totally inane we were going to stick it out with the company and iterate until we found a business model.
We sold the shit out of it. Everyone we knew was excited for Justin.tv. Why? Because our excitement was infectious. That’s how we got Kyle to drop out of school. That’s how we got Michael to quit his job and move across the country.
Ultimately, the show failed. But all told, I’m thankful every day that things went the way they did. Why?

We built a strong team. The four of us started, and the four of us all still have leadership roles in the company. Along the way we recruited the smartest engineers and best product designers we could find.
We were willing to learn, and to pivot. After quickly realizing the initial show wasn’t a sustainable model, we decided to go the platform route, and built the world’s largest live video platform (both on the web and in our mobile apps, which have millions of downloads).
It got us started. Some people wait until the stars are aligned before they jump in. Maybe that’s the right move, but plenty of businesses get started with something that seems implausible, stupid, or not-a-real-business but turn into something of value (think Groupon). If we hadn’t started then, would we have later?
Today, I’m more excited about Justin.tv than I’ve been at any time since we launched the initial platform. Why? We’re taking everything we’ve gathered and learned over the past four and half years building the largest live video platform on the Web (17 million monthly unique visitors in Dec according to comScore’s MediaMetrix), and applying it to tackle a new generation of problems in mobile video. Our world class web and mobile engineering team, all of our product development knowledge, our substantial, scaled video infrastructure, and everything we’ve learned about building engineering teams has all been put to work on a new app that we think is going to change everything.

Our new app is called Socialcam, but that’s another story.

Editor’s note: The following post was written by Justin Kan, founder of Justin.tv.

Source: Techcrunch

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Posted in CEO, Creative, Freelancer, Innovation, Inspirational, Marketing, Motivational, Start-Up, Technology, Y Combinator
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