> Say Hello To The Lean-Hedge Model

People think starting a business requires significant debt and investment. Like Shark Tank, you need a world-changing idea. I'm not saying to avoid investors or brilliant ideas.

Investing is essential to build a genuinely profitable company. Think Apple or Starbucks.

Entrepreneurship is risky because many people go bankrupt from debt. As starters, we shouldn't do it. Instead, use lean-hedge.

Simply defined, you construct a cash-flow business to hedge against long-term investment-heavy business expenses.

What the “fx!$rench-toast” is the lean-hedge model?

When you start a business, your money should move down, down, down, then up when it becomes profitable.

Many people don't survive the business's initial losses and debt. What if, we created a cash-flow business BEFORE we started our Starbucks to hedge against its initial expenses?

Lean-hedge has two sections. Start a cash-flow business. A cash-flow business takes minimal investment and usually involves sweat and time.

Let’s take a look at some examples:

A Translation company

Personal portfolio website (you make a site then you do cold e-mail marketing)

FREELANCE (UpWork, Fiverr).

Educational business.

Infomarketing. (You design a knowledge-based product. You sell the info).

Online fitness/diet/health coaching ($50-$300/month, calls, training plan)

Amazon e-book publishing. (Medium writers do this)

YouTube, cash-flow channel

A web development agency (I'm a dev, but if you're not, a graphic design agency, etc.) (Sell your time.)

Digital Marketing

Online paralegal (A million lawyers work in the U.S).

Some dropshipping (Organic Tik Tok dropshipping, where you create content to drive traffic to your shopify store instead of spend money on ads).

(Disclaimer: My first two cash-flow enterprises, which were language teaching, failed terribly. My translation firm is now booming because B2B e-mail marketing is easy.)

Crossover occurs. Your long-term business starts earning more money than your cash flow business.

My cash-flow business (freelancing, translation) makes $7k+/month.

I’ve decided to start a slightly more investment-heavy digital marketing agency

Here are the anticipated business's time- and money-intensive investments:

1. ($$$) Top Front-End designer's Figma/UI-UX design (in negotiation)

2. (Time): A little copywriting (I will do this myself)

3. ($$) Creating an animated webpage with HTML (in negotiation)

4. Backend Development (Duration) (I'll carry out this myself using Laravel.)

5. Logo Design ($$)

6. Logo Intro Video for $

7. Video Intro (I’ll edit this myself with Premiere Pro)

etc.

Then evaluate product, place, price, and promotion. Consider promotion and pricing.

The lean-hedge model's point is:

Don't gamble. Avoid debt. First create a cash-flow project, then grow it steadily.

Check read my previous posts on “Nightmare Mode” (which teaches you how to make work as interesting as video games) and Why most people can't escape a 9-5 to learn how to develop a cash-flow business.

The comeback tour continues…

First, he founded a $47 billion co-working company (sorry, a “tech company”).

He established WeLive to disrupt apartment life.

Then he created WeGrow, a school that tossed aside the usual curriculum to feed children's souls and release their potential.

He raised the world’s consciousness.

Then he blew it all up (without raising the world’s consciousness). (He bought a wave pool.)

Adam Neumann's WeWork business burned investors' money. The founder sailed off with unimaginable riches, leaving long-time employees with worthless stocks and the company bleeding money. His track record, which includes a failing baby clothing company, should have stopped investors cold.

Once the dust settled, folks went on. We forgot about the Neumanns! We forgot about the private jets, company retreats, many houses, and WeWork's crippling. In that moment, the prodigal son of entrepreneurship returned, choosing the blockchain as his industry. His homecoming tour began with Flowcarbon, which sold Goddess Nature Tokens to lessen companies' carbon footprints.

Did it work?

Of course not.

Despite receiving $70 million from Andreessen Horowitz's a16z, the project has been halted just two months after its announcement.

This triumph should lower his grade.

Neumann seems to have moved on and has another revolutionary idea for the future of living. Flow (not Flowcarbon) aims to help people live in flow and will launch in 2023. It's the classic Neumann pitch: lofty goals, yogababble, and charisma to attract investors.

It's a winning formula for one investment fund. a16z has backed the project with its largest single check, $350 million. It has a splash page and 3,000 rental units, but is valued at over $1 billion. The blog post praised Neumann for reimagining the office and leading a paradigm-shifting global company.

Flow's mission is to solve the nation's housing crisis. How? Idk. It involves offering community-centric services in apartment properties to the same remote workforce he once wooed with free beer and a pingpong table. Revolutionary! It seems the goal is to apply WeWork's goals of transforming physical spaces and building community to apartments to solve many of today's housing problems.

The elevator pitch probably sounded great.

At least a16z knows it's a near-impossible task, calling it a seismic shift. Marc Andreessen opposes affordable housing in his wealthy Silicon Valley town. As details of the project emerge, more investors will likely throw ethics and morals out the window to go with the flow, throwing money at a man known for burning through it while building toxic companies, hoping he can bank another fantasy valuation before it all crashes.

Insanity is repeating the same action and expecting a different result. Everyone on the Neumann hype train needs to sober up.

Like WeWork, this venture Won’tWork.

Like before, it'll cause a shitstorm.

Or the “lie to me” method.

I can predict a startup's success in minutes.

Just interview its founder.

Ask "why?"

I question "why" till I sense him.

I need to feel the person I have in front of me. I need to know if he or she can deliver. Startups aren't easy. Without abilities, a brilliant idea will fail.

Good entrepreneurs have these qualities: He's a leader, determined, and resilient.

For me, they can be split in two categories.

The first entrepreneur aspires to live meaningfully. The second wants to get rich. The second is communicative. He wants to wow the crowd. He's motivated by the thought of one day sailing a boat past palm trees and sunny beaches.

What drives the first entrepreneur is evident in his speech, face, and voice. He will not speak about his product. He's (nearly) uninterested. He's not selling anything. He's not a salesman. He wants to succeed. The product is his fuel.

He'll explain his decision. He'll share his motivations. His desire. And he'll use meaningful words.

Paul Ekman has shown that face expressions aren't cultural. His study influenced the American TV series "lie to me" about body language and speech.

Passionate entrepreneurs are obvious. It's palpable. Faking passion is tough. Someone who wants your favor and money will expose his actual motives through his expressions and language.

The good liar will be able to fool you for a while, but not for long if you pay attention to his body language and how he expresses himself.

And also, if you look at his business plan.

His business plan reveals his goals. Read between the lines.

Entrepreneur 1 will focus on his "why", whereas Entrepreneur 2 will focus on the "how".

Entrepreneur 1 will develop a vision-driven culture.

The second, on the other hand, will focus on his EBITDA.

Why is the culture so critical? Because it will allow entrepreneur 1 to develop a solid team that can tackle his problems and trials. His team's "why" will keep them together in tough times.

"Give me a terrific start-up team with a mediocre idea over a weak one any day." Because a great team knows when to pivot and trusts each other. Weak teams fail.” — Bernhard Schroeder

Closings thoughts

Every VC must ask Why. Entrepreneur's motivations. This "why" will create the team's culture. This culture will help the team adjust to any setback.

Product management wizardry.

Early adopters buy a product even if it hasn't hit the market or has flaws.

Who are the early adopters?

Early adopters try a new technology or product first. Early adopters are interested in trying or buying new technologies and products before others. They're risk-tolerant and can provide initial cash flow and product reviews. They help a company's new product or technology gain social proof.

Early adopters are most common in the technology industry, but they're in every industry. They don't follow the crowd. They seek innovation and report product flaws before mass production. If the product works well, the first users become loyal customers, and colleagues value their opinion.

What to do with early adopters?

They can be used to collect feedback and initial product promotion, first sales, and product value validation.

How to find early followers?

Start with your immediate environment and target audience. Communicate with them to see if they're interested in your value proposition.

1) Innovators (2.5% of the population) are risk-takers seeking novelty. These people are the first to buy new and trendy items and drive social innovation. However, these people are usually elite;

Early adopters (13.5%) are inclined to accept innovations but are more cautious than innovators; they start using novelties when innovators or famous people do;

3) The early majority (34%) is conservative; they start using new products when many people have mastered them. When the early majority accepted the innovation, it became ingrained in people's minds.

4) Attracting 34% of the population later means the novelty has become a mass-market product. Innovators are using newer products;

5) Laggards (16%) are the most conservative, usually elderly people who use the same products.

Stages of new information acceptance

1. The information is strange and rejected by most. Accepted only by innovators;

2. When early adopters join, more people believe it's not so bad; when a critical mass is reached, the novelty becomes fashionable and most people use it.

3. Fascination with a novelty peaks, then declines; the majority and laggards start using it later; novelty becomes obsolete; innovators master something new.

Problems with early implementation

Early adopter sales have disadvantages.

Higher risk of defects

Selling to first-time users increases the risk of defects. Early adopters are often influential, so this can affect the brand's and its products' long-term perception.

Not what was expected

First-time buyers may be disappointed by the product. Marketing messages can mislead consumers, and if the first users believe the company misrepresented the product, this will affect future sales.

Compatibility issues

Some technological advances cause compatibility issues. Consumers may be disappointed if new technology is incompatible with their electronics.

Method 5 WHY

Let's talk about 5 why, a good tool for finding project problems' root causes. This method is also known as the five why rule, method, or questions.

The 5 why technique came from Toyota's lean manufacturing and helps quickly determine a problem's root cause.

On one, two, and three, you simply do this:

1. We identify and frame the issue for which a solution is sought.

2. We frequently ponder this question. The first 2-3 responses are frequently very dull, making you want to give up on this pointless exercise. However, after that, things get interesting. And occasionally it's so fascinating that you question whether you really needed to know.

3. We consider the final response, ponder it, and choose a course of action.

Always do the 5 whys with the customer or team to have a reasonable discussion and better understand what's happening.

And the “five whys” is a wonderful and simplest tool for introspection. With the accumulated practice, it is used almost automatically in any situation like “I can’t force myself to work, the mood is bad in the morning” or “why did I decide that I have no life without this food processor for 20,000 rubles, which will take half of my rather big kitchen.”

An illustration of the five whys

A simple, but real example from my work practice that I think is very indicative, given the participants' low IT skills.  Anonymized, of course.

Users spend too long looking for tender documents.

Why? Because they must search through many company tender documents.

Why? Because the system can't filter department-specific bids.

Why? Because our contract management system requirements didn't include a department-tender link. That's it, right? We'll add a filter and be happy. but still…

why? Because we based the system's requirements on regulations for working with paper tender documents (when they still had envelopes and autopsies), not electronic ones, and there was no search mechanism.

Why? We didn't consider how our work would change when switching from paper to electronic tenders when drafting the requirements.

Now I know what to do in the future. We add a filter, enter department data, and teach users to use it. This is tactical, but strategically we review the same forgotten requirements to make all the necessary changes in a package, plus we include it in the checklist for the acceptance of final requirements for the future.

Errors when using 5 why

Five whys seems simple, but it can be misused.

Popular ones:

1. The accusation of everyone and everything is then introduced. After all, the 5 why method focuses on identifying the underlying causes rather than criticizing others. As a result, at the third step, it is not a good idea to conclude that the system is ineffective because users are stupid and that we can therefore do nothing about it.

2. to fight with all my might so that the outcome would be exactly 5 reasons, neither more nor less. 5 questions is a typical number (it sounds nice, yes), but there could be 3 or 7 in actuality.

3. Do not capture in-between responses. It is difficult to overestimate the power of the written or printed word, so the result is so-so when the focus is lost. That's it, I suppose. Simple, quick, and brilliant, like other project management tools.

Conclusion

Today we analyzed important study elements:

Early adopters and 5 WHY We've analyzed cases and live examples of how these methods help with product research and growth point identification. Next, consider the HADI cycle.

Restructuring and layoffs cause career reevaluation. Your career can benefit.

Once you become institutionalized, the corporate ladder is all you know.

You're bubbled. Extremists term it the corporate Matrix. I'm not so severe because the business world brainwashed me, too.

This boosted my corporate career.

Until I hit bottom.

15 months later, I view my corporate life differently. You may wish to advance professionally. Read this before you do.

Your happiness in the workplace may be deceptive.

I've been fortunate to spend time with corporate aces.

Working for 2.5 years in banking social media gave me some of these experiences. Earlier in my career, I recorded interviews with business leaders.

These people have titles like Chief General Manager and Head Of. New titles brought life-changing salaries.

They seemed happy.

I’d pass them in the hallway and they’d smile or shake my hand. I dreamt of having their life.

The ominous pattern

Unfiltered talks with some of them revealed a different world.

They acted well. They were skilled at smiling and saying the correct things. All had the same dark pattern, though.

Something felt off.

I found my conversations with them were generally for their benefit. They hoped my online antics as a writer/coach would shed light on their dilemma.

They'd tell me they wanted more. When you're one position away from CEO, it's hard not to wonder if this next move will matter.

What really displeased corporate ladder chasers

Before ascending further, consider these.

Zero autonomy

As you rise in a company, your days get busier.

Many people and initiatives need supervision. Everyone expects you to know business details. Weak when you don't. A poor leader is fired during the next restructuring and left to pursue their corporate ambition.

Full calendars leave no time for reflection. You can't have a coffee with a friend or waste a day.

You’re always on call. It’s a roll call kinda life.

Unable to express oneself freely

My 8 years of LinkedIn writing helped me meet these leaders.

I didn't think they'd care. Mistake.

Corporate leaders envied me because they wanted to talk freely again without corporate comms or a PR firm directing them what to say.

They couldn't share their flaws or inspiring experiences.

They wanted to.

Every day they were muzzled eroded by their business dream.

Limited family time

Top leaders had families.

They've climbed the corporate ladder. Nothing excellent happens overnight.

Corporate dreamers rarely saw their families.

Late meetings, customer functions, expos, training, leadership days, team days, town halls, and product demos regularly occurred after work.

Or they had to travel interstate or internationally for work events. They used bags and motel showers.

Initially, they said business class flights and hotels were nice. They'd get bored. 5-star hotels become monotonous.

No hotel beats home.

One leader said he hadn't seen his daughter much. They used to Facetime, but now that he's been gone so long, she rarely wants to talk to him.

So they iPad-parented.

You're miserable without your family.

Held captive by other job titles

Going up the business ladder seems like a battle.

Leaders compete for business gains and corporate advancement.

I saw shocking filthy tricks. Leaders would lie to seem nice.

Captives included top officials.

A different section every week. If they ran technology, the Head of Sales would argue their CRM cost millions. Or an Operations chief would battle a product team over support requests.

After one conflict, another began.

Corporate echelons are antagonistic. Huge pay and bonuses guarantee bad behavior.

Overly centered on revenue

As you rise, revenue becomes more prevalent. Most days, you'd believe revenue was everything. Here’s the problem…

Numbers drain us.

Unless you're a closet math nerd, contemplating and talking about numbers drains your creativity.

Revenue will never substitute impact.

Incapable of taking risks

Corporate success requires taking fewer risks.

Risks can cause dismissal. Risks can interrupt business. Keep things moving so you may keep getting paid your enormous salary and bonus.

Restructuring or layoffs are inevitable. All corporate climbers experience it.

On this fateful day, a small few realize the game they’ve been trapped in and escape. Most return to play for a new company, but it takes time.

Addiction keeps them trapped. You know nothing else. The rest is strange.

You start to think “I’m getting old” or “it’s nearly retirement.” So you settle yet again for the trappings of the corporate ladder game to nowhere.

Should you climb the corporate ladder?

Let me end on a surprising note.

Young people should ascend the corporate ladder. It teaches you business skills and helps support your side gig and (potential) online business.

Don't get trapped, shackled, or muzzled.

Your ideas and creativity become stifled after too much gaming play.

Corporate success won't bring happiness.

Find fulfilling employment that matters. That's it.

I was entering tens of millions of records per hour when I first published Slonik PostgreSQL client for Node.js. The data being entered was usually flat, making it straightforward to use INSERT INTO ... SELECT * FROM unnset() pattern. I advocated the unnest approach for inserting rows in groups (that was part I).

However, today I’ve found a better way: jsonb_to_recordset.

jsonb_to_recordset expands the top-level JSON array of objects to a set of rows having the composite type defined by an AS clause.

jsonb_to_recordset allows us to query and insert records from arbitrary JSON, like unnest. Since we're giving JSON to PostgreSQL instead of unnest, the final format is more expressive and powerful.

SELECT *
FROM json_to_recordset('[{"name":"John","tags":["foo","bar"]},{"name":"Jane","tags":["baz"]}]')
AS t1(name text, tags text[]);
 name |   tags
------+-----------
 John | {foo,bar}
 Jane | {baz}
(2 rows)

Let’s demonstrate how you would use it to insert data.

Inserting data using json_to_recordset

Say you need to insert a list of people with attributes into the database.

const persons = [
  {
    name: 'John',
    tags: ['foo', 'bar']
  },
  {
    name: 'Jane',
    tags: ['baz']
  }
];

You may be tempted to traverse through the array and insert each record separately, e.g.

for (const person of persons) {
  await pool.query(sql`
    INSERT INTO person (name, tags)
    VALUES (
      ${person.name},
      ${sql.array(person.tags, 'text[]')}
    )
  `);
}

It's easier to read and grasp when working with a few records. If you're like me and troubleshoot a 2M+ insert query per day, batching inserts may be beneficial.

What prompted the search for better alternatives.

Inserting using unnest pattern might look like this:

await pool.query(sql`
  INSERT INTO public.person (name, tags)
  SELECT t1.name, t1.tags::text[]
  FROM unnest(
    ${sql.array(['John', 'Jane'], 'text')},
    ${sql.array(['{foo,bar}', '{baz}'], 'text')}
  ) AS t1.(name, tags);
`);

You must convert arrays into PostgreSQL array strings and provide them as text arguments, which is unsightly. Iterating the array to create slices for each column is likewise unattractive.

However, with jsonb_to_recordset, we can:

await pool.query(sql`
  INSERT INTO person (name, tags)
  SELECT *
  FROM jsonb_to_recordset(${sql.jsonb(persons)}) AS t(name text, tags text[])
`);

In contrast to the unnest approach, using jsonb_to_recordset we can easily insert complex nested data structures, and we can pass the original JSON document to the query without needing to manipulate it.

In terms of performance they are also exactly the same. As such, my current recommendation is to prefer jsonb_to_recordset whenever inserting lots of rows or nested data structures.