Prioritize big-ticket purchases

I've made several spending blunders. I get sick thinking about how much money I spent.

My financial mental model was poor back then.

Stoicism and mindfulness keep me from attaching to those feelings. It still hurts.

Until four or five years ago, I bought a new winter jacket every year.

Ten years ago, I spent twice as much. Now that I have a fantastic, warm winter parka, I don't even consider acquiring another one. No more spending. I'm not looking for jackets either.

Saving time and money by spending well is my thinking paradigm.

The philosophy is expressed in most languages. Cheap is expensive in the Netherlands. This applies beyond shopping.

In this essay, I will offer three examples of how this mental paradigm transformed my financial life.

Publishing books

In 2015, I presented and positioned my first book poorly.

I called the book Huge Life Success and made a funny Canva cover in 30 minutes. This:

That looks nothing like my present books. No logo or style. The book felt amateurish.

The book started bothering me a few weeks after publication. The advice was good, but it didn't appear professional. I studied the book business extensively.

I created a style for all my designs. Branding. Win Your Inner Wars was reissued a year later.

Title, cover, and description changed. Rearranging the chapters improved readability.

Seven years later, the book sells hundreds of copies a month. That taught me a lot.

Rushing to finish a project is enticing. Send it and move forward.

Avoid rushing everything. Relax. Develop your projects. Perform well. Perform the job well.

My first novel was underfunded and underworked. A bad book arrived. I then invested time and money in writing the greatest book I could.

That book still sells.

Traveling

I hate travel. Airports, flights, trains, and lines irritate me.

But, I enjoy traveling to beautiful areas.

I do it strangely. I make up travel rules. I never go to airports in summer. I hate being near airports on holidays. Unworthy.

No vacation packages for me. Those airline packages with a flight, shuttle, and hotel. I've had enough.

I try to avoid crowds and popular spots. July Paris? Nuts and bolts, please. Christmas in NYC? No, please keep me sane.

I fly business class behind. I accept upgrades upon check-in. I prefer driving. I drove from the Netherlands to southern Spain.

Thankfully, no lines. What if travel costs more? Thus? I enjoy it from the start. I start traveling then.

I rarely travel since I'm so difficult. One great excursion beats several average ones.

Personal effectiveness

New apps, tools, and strategies intrigue most productivity professionals.

No.

I researched years ago. I spent years investigating productivity in university.

I bought books, courses, applications, and tools. It was expensive and time-consuming.

Im finished. Productivity no longer costs me time or money. OK. I worked on it once and now follow my strategy.

I avoid new programs and systems. My stuff works. Why change winners?

Spending wisely saves time and money.

Spending wisely means spending once. Many people ignore productivity. It's understudied. No classes.

Some assume reading a few articles or a book is enough. Productivity is personal. You need a personal system.

Time invested is one-time. You can trust your system for life once you find it.

Concentrate on the expensive choices.

Life's short. Saving money quickly is enticing.

Spend less on groceries today. True. That won't fix your finances.

Adopt a lifestyle that makes you affluent over time. Consider major choices.

Are they causing long-term poverty? Are you richer?

Leasing cars comes to mind. The automobile costs a fortune today. The premium could accomplish a million nice things.

Focusing on important decisions makes life easier. Consider your future. You want to improve next year.

Sometimes doing everything correctly isn't enough.

In 2020, I could fix my life.

After failing to start a business, I owed $40,000 and had no work.

A $1.2 billion startup on the cusp of going public pulled me up.

Ironically, it was getting ready for an epic fall — with the world watching.

Life sometimes helps. Without a base, even the strongest fall. A corporation that did everything right failed 3 months after going public.

First-row view.

Apple is the creator of Adore.

Out of respect, I've altered the company and employees' names in this account, despite their failure.

Although being a publicly traded company, it may become obvious.

We’ll call it “Adore” — a revolutionary concept in retail shopping.

Two Apple execs established Adore in 2014 with a focus on people-first purchasing.

Jon and Tim:

• The concept for the stylish Apple retail locations you see today was developed by retail expert Jon Swanson, who collaborated closely with Steve Jobs.

• Tim Cruiter is a graphic designer who produced the recognizable bouncing lamp video that appears at the start of every Pixar film.

The dynamic duo realized their vision.

“What if you could combine the convenience of online shopping with the confidence of the conventional brick-and-mortar store experience.”

Adore's mobile store concept combined traditional retail with online shopping.

Adore brought joy to 70+ cities and 4 countries over 7 years, including the US, Canada, and the UK.

Being employed on the ground floor, with world dominance and IPO on the horizon, was exciting.

I started as an Adore Expert.

I delivered cell phones, helped consumers set them up, and sold add-ons.

As the company grew, I became a Virtual Learning Facilitator and trained new employees across North America using Zoom.

In this capacity, I gained corporate insider knowledge. I worked with the creative team and Jon and Tim.

It's where I saw company foundation fissures. Despite appearances, investors were concerned.

The business strategy was ground-breaking.

Even after seeing my employee stocks fall from a home down payment to $0 (when Adore filed for bankruptcy), it's hard to pinpoint what went wrong.

Solid business model, well-executed.

Jon and Tim's chase for public funding ended in glory.

Here’s the business model in a nutshell:

Buying cell phones is cumbersome. You have two choices:

1. Online purchase: not knowing what plan you require or how to operate your device.

2. Enter a store, which can be troublesome and stressful.

Apple, AT&T, and Rogers offered Adore as a free delivery add-on. Customers could:

• Have their phone delivered by UPS or Canada Post in 1-2 weeks.

• Alternately, arrange for a person to visit them the same day (or sometimes even the same hour) to assist them set up their phone and demonstrate how to use it (transferring contacts, switching the SIM card, etc.).

Each Adore Expert brought a van with extra devices and accessories to customers.

Happy customers.

Here’s how Adore and its partners made money:

Adores partners appreciated sending Experts to consumers' homes since they improved customer satisfaction, average sale, and gadget returns.

**Telecom enterprises have low customer satisfaction. The average NPS is 30/100. Adore's global NPS was 80.

Adore made money by:

• a set cost for each delivery

• commission on sold warranties and extras

Consumer product applications seemed infinite.

A proprietary scheduling system (“The Adore App”), allowed for same-day, even same-hour deliveries.

It differentiates Adore.

They treated staff generously by:

• Options on stock

• health advantages

• sales enticements

• high rates per hour

Four-day workweeks were set by experts.

Being hired early felt like joining Uber, Netflix, or Tesla. We hoped the company's stocks would rise.

Exciting times.

I smiled as I greeted more than 1,000 new staff.

I spent a decade in retail before joining Adore. I needed a change.

After a leap of faith, I needed a lifeline. So, I applied for retail sales jobs in the spring of 2019.

The universe typically offers you what you want after you accept what you need. I needed a job to settle my debt and reach $0 again.

And the universe listened.

After being hired as an Adore Expert, I became a Virtual Learning Facilitator. Enough said.

After weeks of economic damage from the pandemic.

This employment let me work from home during the pandemic. It taught me excellent business skills.

I was active in brainstorming, onboarding new personnel, and expanding communication as we grew.

This job gave me vital skills and a regular paycheck during the pandemic.

It wasn’t until January of 2022 that I left on my own accord to try to work for myself again — this time, it’s going much better.

Adore was perfect. We valued:

• Connection

• Discovery

• Empathy

Everything we did centered on compassion, and we held frequent Justice Calls to discuss diversity and work culture.

The last day of onboarding typically ended in tears as employees felt like they'd found a home, as I had.

Like all nice things, the wonderful vibes ended.

First indication of distress

My first day at the workplace was great.

Fun, intuitive, and they wanted creative individuals, not salesman.

While sales were important, the company's vision was more important.

“To deliver joy through life-changing mobile retail experiences.”

Thorough, forward-thinking training. We had a module on intuition. It gave us role ownership.

We were flown cross-country for training, gave feedback, and felt like we made a difference. Multiple contacts responded immediately and enthusiastically.

The atmosphere was genuine.

Making money was secondary, though. Incredible service was a priority.

Jon and Tim answered new hires' questions during Zoom calls during onboarding. CEOs seldom meet new hires this way, but they seemed to enjoy it.

All appeared well.

But in late 2021, things started changing.

Adore's leadership changed after its IPO. From basic values to sales maximization. We lost communication and were forced to fend for ourselves.

Removed the training wheels.

It got tougher to gain instructions from those above me, and new employees told me their roles weren't as advertised.

External money-focused managers were hired.

Instead of creative types, we hired salespeople.

With a new focus on numbers, Adore's uniqueness began to crumble.

Via Zoom, hundreds of workers were let go.

So.

Early in 2022, mass Zoom firings were trending. A CEO firing 900 workers over Zoom went viral.

Adore was special to me, but it became a headline.

30 June 2022, Vice Motherboard published Watch as Adore's CEO Fires Hundreds.

It described a leaked video of Jon Swanson laying off all staff in Canada and the UK.

They called it a “notice of redundancy”.

The corporation couldn't pay its employees.

I loved Adore's underlying ideals, among other things. We called clients Adorers and sold solutions, not add-ons.

But, like anything, a company is only as strong as its weakest link. And obviously, the people-first focus wasn’t making enough money.

There were signs. The expansion was presumably a race against time and money.

Adore finally declared bankruptcy.

Adore declared bankruptcy 3 months after going public. It happened in waves, like any large-scale fall.

• Initial key players to leave were

• Then, communication deteriorated.

• Lastly, the corporate culture disintegrated.

6 months after leaving Adore, I received a letter in the mail from a Law firm — it was about my stocks.

Adore filed Chapter 11. I had to sue to collect my worthless investments.

I hoped those stocks will be valuable someday. Nope. Nope.

Sad, I sighed.

$1.2 billion firm gone.

I left the workplace 3 months before starting a writing business. Despite being mediocre, I'm doing fine.

I got up as Adore fell.

Finally, can we scale kindness?

I trust my gut. Changes at Adore made me leave before it sank.

Adores' unceremonious slide from a top startup to bankruptcy is astonishing to me.

The company did everything perfectly, in my opinion.

• first to market,

• provided excellent service

• paid their staff handsomely.

• was responsible and attentive to criticism

The company wasn't led by an egotistical eccentric. The crew had centuries of cumulative space experience.

I'm optimistic about the future of work culture, but is compassion scalable?

> 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.

Higher startup valuations are often favorable for all parties. High valuations show a business's potential. New customers and talent are attracted. They earn respect.

Everyone benefits if a company's valuation rises.

Founders and investors have always been incentivized to overestimate a company's value.

Post-money valuations were inflated by 2021 market expectations and the valuation model's mechanisms.

Founders must understand both levers to handle a normalizing market.

2021, the year of miracles

2021 must've seemed miraculous to entrepreneurs, employees, and VCs. Valuations rose, and funding resumed after the first Covid-19 epidemic caution.

In 2021, VC investments increased from $335B to $643B. 518 new worldwide unicorns vs. 134 in 2020; 951 US IPOs vs. 431.

Things can change quickly, as 2020-21 showed.

Rising interest rates, geopolitical developments, and normalizing technology conditions drive down share prices and tech company market caps in 2022. Zoom, the poster-child of early lockdown success, is down 37% since 1st Jan.

Once-inflated valuations can become a problem in a normalizing market, especially for founders, employees, and early investors.

the reason why startups are always overvalued

To see why inflated valuations are a problem, consider one of its causes.

Private company values only fluctuate following a new investment round, unlike publicly-traded corporations. The startup's new value is calculated simply:

(Latest round share price) x (total number of company shares)

This is the industry standard Post-Money Valuation model.

Let’s illustrate how it works with an example. If a VC invests $10M for 1M shares (at $10/share), and the company has 10M shares after the round, its Post-Money Valuation is $100M (10/share x 10M shares).

This approach might seem like the most natural way to assess a business, but the model often unintentionally overstates the underlying value of the company even if the share price paid by the investor is fair. All shares aren't equal.

New investors in a corporation will always try to minimize their downside risk, or the amount they lose if things go wrong. New investors will try to negotiate better terms and pay a premium.

How the value of a struggling SpaceX increased

SpaceX's 2008 Series D is an example. Despite the financial crisis and unsuccessful rocket launches, the company's Post-Money Valuation was 36% higher after the investment round. Why?

Series D SpaceX shares were protected. In case of liquidation, Series D investors were guaranteed a 2x return before other shareholders.

Due to downside protection, investors were willing to pay a higher price for this new share class.

The Post-Money Valuation model overpriced SpaceX because it viewed all the shares as equal (they weren't).

Why entrepreneurs, workers, and early investors stand to lose the most

Post-Money Valuation is an effective and sufficient method for assessing a startup's valuation, despite not taking share class disparities into consideration.

In a robust market, where the firm valuation will certainly expand with the next fundraising round or exit, the inflated value is of little significance.

Fairness endures. If a corporation leaves at a greater valuation, each stakeholder will receive a proportional distribution. (i.e., 5% of a $100M corporation yields $5M).

SpaceX's inherent overvaluation was never a problem. Had it been sold for less than its Post-Money Valuation, some shareholders, including founders, staff, and early investors, would have seen their ownership drop.

The unforgiving world of 2022

In 2022, founders, employees, and investors who benefited from inflated values will face below-valuation exits and down-rounds.

For them, 2021 will be a curse, not a blessing.

Some tech giants are worried. Klarna's valuation fell from $45B (Oct 21) to $30B (Jun 22), Canvas from $40B to $27B, and GoPuffs from $17B to $8.3B.

Shazam and Blue Apron have to exit or IPO at a cheaper price. Premium share classes are protected, while others receive less. The same goes for bankrupts.

Those who continue at lower valuations will lose reputation and talent. When their value declines by half, generous employee stock options become less enticing, and their ability to return anything is questioned.

What can we infer about the present situation?

Such techniques to enhance your company's value or stop a normalizing market are fiction.

The current situation is a painful reminder for entrepreneurs and a crucial lesson for future firms.

The devastating market fall of the previous six months has taught us one thing:

1. Keep in mind that any valuation is speculative. Money Post A startup's valuation is a highly simplified approximation of its true value, particularly in the early phases when it lacks significant income or a cutting-edge product. It is merely a projection of the future and a hypothetical meter. Until it is achieved by an exit, a valuation is nothing more than a number on paper.
   

2. Assume the value of your company is lower than it was in the past. Your previous valuation might not be accurate now due to substantial changes in the startup financing markets. There is little reason to think that your company's value will remain the same given the 50%+ decline in many newly listed IT companies. Recognize how the market situation is changing and use caution.
   

3. Recognize the importance of the stake you hold. Each share class has a unique value that varies. Know the sort of share class you own and how additional contractual provisions affect the market value of your security. Frameworks have been provided by Metrick and Yasuda (Yale & UC) and Gornall and Strebulaev (Stanford) for comprehending the terms that affect investors' cash-flow rights upon withdrawal. As a result, you will be able to more accurately evaluate your firm and determine the worth of each share class.
   

4. Be wary of approving excessively protective share terms.
   The trade-offs should be considered while negotiating subsequent rounds. Accepting punitive contractual terms could first seem like a smart option in order to uphold your inflated worth, but you should proceed with caution. Such provisions ALWAYS result in misaligned shareholders, with common shareholders (such as you and your staff) at the bottom of the list.

Recent investigations have shown that generative AI can boost hackers and misinformation spreaders.

Since its inception in late November 2022, OpenAI's ChatGPT has entertained and assisted many online users in writing, coding, task automation, and linguistic translation. Given this versatility, it is maybe unsurprising but nonetheless regrettable that fraudsters and mis-, dis-, and malinformation (MDM) spreaders are also considering ChatGPT and related AI models to streamline and improve their operations.

Malign actors may benefit from ChatGPT, according to a WithSecure research. ChatGPT promises to elevate unlawful operations across many attack channels. ChatGPT can automate spear phishing attacks that deceive corporate victims into reading emails from trusted parties. Malware, extortion, and illicit fund transfers can result from such access.

ChatGPT's ability to simulate a desired writing style makes spear phishing emails look more genuine, especially for international actors who don't speak English (or other languages like Spanish and French).

This technique could let Russian, North Korean, and Iranian state-backed hackers conduct more convincing social engineering and election intervention in the US. ChatGPT can also create several campaigns and various phony online personas to promote them, making such attacks successful through volume or variation. Additionally, image-generating AI algorithms and other developing techniques can help these efforts deceive potential victims.

Hackers are discussing using ChatGPT to install malware and steal data, according to a Check Point research. Though ChatGPT's scripts are well-known in the cyber security business, they can assist amateur actors with little technical understanding into the field and possibly develop their hacking and social engineering skills through repeated use.

Additionally, ChatGPT's hacking suggestions may change. As a writer recently indicated, ChatGPT's ability to blend textual and code-based writing might be a game-changer, allowing the injection of innocent content that would subsequently turn out to be a malicious script into targeted systems. These new AI-powered writing- and code-generation abilities allow for unique cyber attacks, regardless of viability.

OpenAI fears ChatGPT usage. OpenAI, Georgetown University's Center for Security and Emerging Technology, and Stanford's Internet Observatory wrote a paper on how AI language models could enhance nation state-backed influence operations. As a last resort, the authors consider polluting the internet with radioactive or misleading data to ensure that AI language models produce outputs that other language models can identify as AI-generated. However, the authors of this paper seem unaware that their "solution" might cause much worse MDM difficulties.

Literally False News

The public argument about ChatGPTs content-generation has focused on originality, bias, and academic honesty, but broader global issues are at stake. ChatGPT can influence public opinion, troll individuals, and interfere in local and national elections by creating and automating enormous amounts of social media material for specified audiences.

ChatGPT's capacity to generate textual and code output is crucial. ChatGPT can write Python scripts for social media bots and give diverse content for repeated posts. The tool's sophistication makes it irrelevant to one's language skills, especially English, when writing MDM propaganda.

I ordered ChatGPT to write a news piece in the style of big US publications declaring that Ukraine is on the verge of defeat in its fight against Russia due to corruption, desertion, and exhaustion in its army. I also gave it a fake reporter's byline and an unidentified NATO source's remark. The outcome appears convincing:

Worse, terrible performers can modify this piece to make it more credible. They can edit the general's name or add facts about current wars. Furthermore, such actors can create many versions of this report in different forms and distribute them separately, boosting its impact.

In this example, ChatGPT produced a news story regarding (fictional) greater moviegoer fatality rates:

Editing this example makes it more plausible. Dr. Jane Smith, the putative author of the medical report, might be replaced with a real-life medical person or a real victim of this supposed medical hazard.

Can deceptive texts be found? Detecting AI text is behind AI advancements. Minor AI-generated text alterations can upset these technologies.

Some OpenAI individuals have proposed covert methods to watermark AI-generated literature to prevent its abuse. AI models would create information that appears normal to humans but would follow a cryptographic formula that would warn other machines that it was AI-made. However, security experts are cautious since manually altering the content interrupts machine and human detection of AI-generated material.

How to Prepare

Cyber security and IT workers can research and use generative AI models to fight spear fishing and extortion. Governments may also launch MDM-defence projects.

In election cycles and global crises, regular people may be the most vulnerable to AI-produced deceit. Until regulation or subsequent technical advances, individuals must recognize exposure to AI-generated fraud, dating scams, other MDM activities.

A three-step verification method of new material in suspicious emails or social media posts can help identify AI content and manipulation. This three-step approach asks about the information's distribution platform (is it reliable? ), author (is the reader familiar with them? ), and plausibility given one's prior knowledge of the topic.

Consider a report by a trusted journalist that makes shocking statements in their typical manner. AI-powered fake news may be released on an unexpected platform, such as a newly created Facebook profile. However, if it links to a known media source, it is more likely to be real.

Though hard and subjective, this verification method may be the only barrier against manipulation for now.

AI language models:

How to Recognize an AI-Generated Article ChatGPT, the popular AI-powered chatbot, can and likely does generate medium.com-style articles.

AI-Generated Text Detectors Fail. Do This. Online tools claim to detect ChatGPT output. Even with superior programming, I tested some of these tools. pub

Why Original Writers Matter Despite AI Language Models Creative writers may never be threatened by AI language models.