Tag Archive for 'capitalism'

Billion dollar brainwaves

My Small Business | Tips & Advice For Small Business in Australia

David Wilson, a journalist for Fairfax, approached me the other month to give him my thoughts of Silicon Valley. The resulting interview appeared on Fairfax’s online mastheads (which include The Age, the Sydney Morning Herald, and the Brisbane Times). The article had more focus on me than I expected, but Wilson still captures some important lessons I’ve learned since moving here.

One that is mentioned is the importance of not planning. I’m a big believer that you can’t plan your life  (or your business). To put it simply, using yesterday’s information to make decisions about tomorrow is just not as effective as using the most recent information and reacting. Check out the very successful and intelligent Jason Fried of 37 Signals who says something similar:

So it’s not about the big plan, it’s about a day by day by day by day and seeing where things go and just kind of making decisions as we go.

And the main reason why I think this is important is because people often make decisions with the wrong information.  So they make decisions far into the future, based on information they have today.  You’re better off making decisions today based on information you have today because that’s when you make your best decisions.  You make your best decisions when you have the best information.  That’s always right now.

Another lesson I’m learning but which I didn’t mention, is that capitalism — effective capitalism — is brutal. It’s something I’ve observed with successful business people in Australia and America and I’m still trying to collect my thoughts about it. For example, employees and their termination — I’ve had several people explain to me the difficulty they’ve experienced doing it, which is for the better of the business.

To put this in context, loyalty and personality should not be confused as performance (which really, is the point of the employment). And if you’re not performing (or the broader function you are a part of), there’s the door. Brutal, I know — but what’s more brutal is a business collapsing and everyone losing their jobs. Effective capitalism isn’t about protecting an individuals ‘entitlement’ to a job; it’s about evolving the entitlement of an enterprise so that it can continue to sustain itself.

Capitalism, I protest thee

I’m well schooled in the world of business, both from an undergraduate and postgraduate point of view. I’m no professor, but I’m a thinker. And having worked for some of the biggest companies in the world whilst at PwC, I’ve developed an insight into how the world works. And to put it bluntly, I think capitalism sucks. The problem though, is that I can’t think of a better system to replace it, so as I grapple to understand how we can improve it, I’m forced to participate in this game that I think is not having society achieve its optimum.

However, every now and then, I come across interesting books, articles, and have discussions that make me go “yes!”. Most recently this happened the other day, when I read insight by someone I least expected to, on a thing I’ve been thinking for years and am glad its been articulated so succinctly.

Jack Dorsey, the programmer who created Twitter – a business criticised for its lack of a revenue model but which is also disrupting the world of communications – was recently quizzed on stage, having to say words in free-association relating to a concept.

To quote the Wall Street Journal:

What about monetization? He laughed, then said, “I think of our users”, clearly avoiding more obvious Twitter territory. “I think of how people are using it, and how, based on that usage, we can build something that will sustain the company.”

Mr. Dorsey kept free-associating. “How does the network itself generate value? And what can you put on top of that to extend the network and make it an even better network”, he added. “monetization to me is just a way to sustain, and that’s the first thing I think of.”

Money, you see is just a way to sustain something. It shouldn’t be the end-goal of business, and it’s that point that fundamentally irritates me about capitalism. That being the whole focus on it being about returns on capital – not returns on humanity.

Twitter’s other co-founder and the current CEO clearly drinks the same water. As Evan Williams said several months ago:
Twitter / Evan Williams: There are basically two types of businesspeople: Those who see money as the ends and those who see money as the means

The entire premise of economics is to study how peoples needs and wants can be catered for, in the context of scarcity in resources. The implication of this, is that by satisfying our wants and needs, we are happy and by happy we have better living standards. Economics is meant to be about increasing our living standards. Yet we are so caught up on the measures that simplify our world as “earn more money, spend more, get rich and therefore you get happier”. We’ve let the economists bastardise our world in order to make their paper models work. And it’s created a consumerist society where value is placed on material goods, which may boost GDP but not necessarily happiness.

My friend and former colleague Charlie Perry, a Chartered Accountant and philosophy major at university, thinks the same thing. He recently proposed abandoning profit as a measure going forward and wrote a manifesto that had me say “yes!”. I introduced him to a book that after years of thinking about these issues, was finally articulated in a brilliant book by Clive Hamilton called “Growth Fetish“. And he now blogs regularly, with his evolving thoughts. As he says in his new about page (version 2):

I’m interested in mutualism. I think it’s the fabled third way.

In September 2009 I thought I’d invented mutualism and wrote down all my thoughts here.

Subsequently I’ve found that there is a long history of thinking around mutualism.

I think the time’s come to champion this economic theory as an alternative to the pointless to-and-fro of left-right politics. It’s time to end the sham of the liberal capitalist democracy. There’s a better way, a happier way.

We don’t need to capitalise or socialise; we need to mutualise. Let’s work together.

Don’t get me wrong – winning at the game of capitalism is awesome – making money out of air is great for the minority that have done it. But it’s an uneven distribution of the world’s wealth and it distorts the operation of our society. The Global Financial Crisis just proved this system is a joke, though I don’t think anyone has the answers. But I’m not giving up on this – I want more “yes!” moments to the point where we can evolve our society to its potential. What I do know is that it’s a mistake to make it the main way to measure our society.

I’m not advocating we abolish capitalism: far from it actually. It has some very useful concepts that can be incorporated into a new model. But just like trade unionism, too much can be a bad thing for a society (as can too little as well). While I still have issue with the way companies measure progress, I think that’s a harder problem to fix. But where we can start, is by getting our governments to change the way they view society. Wealth is currently defined by the amount people spend every year. We’ve used that for a few centuries now, and although it was a good attempt, it’s not right. There is more to wealth than proving we have capacity to acquired goods and services. And in this 21st century, things have changed too much to frame the world in a lens that was created hundreds of years ago.

So if that’s not the right answer, what is? Well let’s work backwards and think deeper about this. Let’s start with the assumption that we want everyone to be happy within themselves, not rich in material goods where we assume that is what generates happiness. If we do that, then we will have made one giant leap forward.

People think like two-year-olds

A few thoughts:

1) Property ownership is one of the central tenets of capitalism.

2) At work, I am involved in a special assignment. Throughout the initiative, I’ve caused a lot of friction with various groups because it was perceived that I was infringing on their “territory”.

3) Myspace allows users to customise their profile however they want. And people do.

4) My two-year old niece is going though a stage where everything is “hers”.

5) Capitalism works better than any other economic system; my firm is very successful as an organisation; Myspace is a run-away hit; my niece is a happy baby.

Notice a trend? The only difference between you and a toddler is that you don’t say “mine” every time someone takes your toy. Want to get peoples’ support or to buy your product? Then remember this: property and giving people a sense of ownership is how us humans work. We take comfort in what we can control.

Albania

Benjamin Franklin once said: “Certainty? In this world nothing is certain but death and taxes”. Well, I have another two certainty’s to add to the list: Japanese tourists are everywhere, and cab drivers are scum bags worldwide. But rather than complain, I want to tell you the stories I heard for this enigmatic country.

I have just spent three days (and two nights) visiting Albania. Whilst I was only there for a short time, I was satisfied in what I learnt, and absolutely fascinated. I stayed in Saranda, which is a port-city at the south of the country, near the Greek border. It is opposite the Greek island of Corfu. I stayed in an area called “exsamilia” which means ‘six miles’ – the six mile stretch of land under Saranda, which ends where Corfu starts. Deep rural territory! The south of the country is very Greek influenced, and I had to rely on my Greek for the entire time of my trip. Not only has Greek always been popular in the South, but some one-million plus Albanians (and that is a conservative estimate) have lived in Greece for some period of time. The people I stayed with, fled the country when the Iron curtain finally fell in 1990, and like so many others, recently returned to begin a new life.

Albania is one of the world’s most misunderstood countries – and I emphasis the mis-understanding of its people. Until 1990, it was a communist country run by the iron-fist of Hoxha (pronounced”Hodja”), as first-secretary (pronounced “dictator”). Access to the outside world was completely shut off, and Hoxha created a country that was so similar to George Orwell’s Nineteen Eighty-Four that it sent a shiver up my spine. His death in 1985, which is still being lamented, led to the country becoming the last domino to tumble in Eastern Europe’s communist downfall.

Under Hoxha’s rule, organised religion was banned. The entire population was spread out into small villages, with freedom of movement prohibited, even to the next town. Agriculture was collectivised. People were paid a daily wage of 200 Lekke, with no one in the country receiving more than 500. Young men served in the military, for I think three-years, and had to do nine-days annually again to retrain them with new weapons and methods. The country was turned literally into a military state, as there was a constant fear that Albania’s neighbours would invade. Cinema’s were available, but forget about love stories: the only movies shown were ones that where with the party line, namely being war. Television was first introduced in 1970, as an outlet for the governments propaganda. The 'bunkers', which served As entry points into the nations underground tunnel network
A tunnel Network connects the entire country, with small-domed bunkers dotting the country side for entry/exit into the tunnel networks. You would see these bunkers in the most remote, unpredictable areas.

If you criticised the regime, you were done for. If you forcefully pushed a woman in any sort of form, good-bye you. There was no crime, no criticism. Everyone lived like one big family. People felt safe; however they would wet their pants when I would ask about the Secret Police. It seems old habits die hard – such was the fear in the country.

Despite what people think, there was democracy. Polling booths opened at 6 and closed at 6.30. You could vote for anyone you wanted, as long as they were a legally recognised political party: which for all that time, was only the communist party. Election results for the communists always turned out to support it 99.98 per cent of the time. The other 0.02% were grandmothers who dropped their glasses. Although even if there were opposition candidates, I would not be surprised if, by their own free will, a majority would vote communist. They had been convinced to be happy with what they had.

As I said earlier, a daily wage consisted of 200 Leke. With 300 Lekke, you could buy 15 kg of bread, to give you an idea of the cost of living. To pay off your debt to the government for living in an apartment, you simply had to work one day a month. Theoretically people worked eight hours a day, starting at 7am, although most would doze off, clocking a few hours and spending the rest of the day chatting. They worked seven days a week. There were opportunities for entertainment, and there were no restrictions on procreation! But with such work hours, no one stayed out late. In fact, if you were seen out past 12am, you were in trouble. You would be criticised as being lazy and against the country, and you would be put in the prisons. To this day, no one knows what happened in those prisons.

When foreigners would come into the country, or Albanians studied abroad to help with a skill shortage, they had to get their story right before they came in. They were told to tell everyone that the outside world is a mess. There is no electricity, clean water, pure lawlessness. They were told to say Albania was one of the luckiest countries in the world. Given that Albanians had no contact with the outside world, is it any surprise Hoxha is treated like a god?

In 1990, the communists were ousted. The country basically turned into a barbaric society of lawlessness. In 1997, over 70 per cent of the population lost their savings in pyramid schemes, which resulted in nationwide uproar. Groups broke into the military barracks, and guns were stolen. There was open street warfare on the roads. People would shoot at someone, just for the sake of target practice. As such, in 1990 and 1997, you saw a large majority of the population spread to neighbouring countries. One guy I met left with his friends in the winter, and trekked through the mountains to get to Greece. It snows a lot in winter in Northern Greece. But they were desperate.

Having been to Greece several times since 1990, I grew up with the Greek racism. That they were cunning, thieves, and no-good people. I believed that to the day I got into Albania. Even though I don’t like to think of people as unequal, I just always had this perception that Albanians were scum. How wrong was I! And how wrong is racial tension in the rest of the Balkans, where Albanians are shunned. I have never in my life been treated with more respect and hospitality. Although I had a negative experience with a taxi driver when the bus dropped me off at the border, that was only because he over-charged me – but this was more a case of my inexperience as a first time traveller rather than him being a bad person.

Everywhere I went, people would shout me drinks. Even my taxi drivers! On my way out of the country, I had to catch a bus for Corca to Progradec. During that one hour or so, I sat next to a middle aged Albanian man. He did not speak English or Greek; I did not speak Albanian. So we had a conversation purely with sign language. He knew ten words in English which helped, however four of those consisted of “I don’t speak English”. Once we got off the bus, he insisted I go to his house for a coffee. There his son, who spoke English, could translate. They then told me, after ten minutes in the house, that they would drive me to the Macedonian border in the wife’s brother?¢‚Ǩ‚Ñ¢s taxi, free of charge!! I saved about 10 Euros, as well as the hassle of trying to find transport to the border. Who would do that in Sydney?

At no stage, did I ever feel unsafe, or disrespected. In fact, everyone took a genuine interest in looking after me. The people I stayed with literally treated me like their son. The people I met along the way, were extremely worried about the next stage of my journey without their help. They would go out of their way to help me. The only thing I was worried about, was trying to work out the right-fare for a cab fare, but I only had to worry about that once, at the beginning. The cost of living is incredibly cheap there – I was told I was ‘ripped off’ by this restaurant at Saranda: I paid the equivalent to five euros, and was absolutely stuffed!

A lot of the young hate communism. But the old, or rather people 35+, think of the old days with nostalgia. There are two reasons for this: poverty, and security.

For people born in the communist state, that knew of a country with complete security, harmony, and equality. When capitalism and democracy came in, they saw lawlessness and inequality. Young girls who previously could walk around the country in perfect security, have been poached for prostitution around the Balkans. People are living in extreme poverty, and are being forced to fend for themselves. We may find it absurd how people like them prefer communism and totalitarianism over capitalism and democracy, and yet we need to see it though their eyes: their experience in being ‘free’ has turned their country in an anarchy. What so free about not being able to feed and protect your family?
The inland landscape during my bus trip

Albania has got the cleanest water I have ever swum in. It also has the most beautiful inland landscape I have ever seen. My bus trip took me along roads I didn’t think roads could go, along mountains. Imagine two mountain ranges, separated by a valley 100 metres wide. And in that valley, a stream and sometimes river would run, with the ground completely covered in farm land. Unfortunately, I wasn’t able to take great pictures because the bus was moving, and when I realised I should take a picture, we had already passed the best bits. It really was breathtaking.

I think Albania has got massive potential. Not just as a tourist destination however. During communism, religion was banned. Organised religion is one of the biggest set backs of modern society, because it was a form of control imposed by empires 2000 years ago. The traditions, hatred and history constrain us to this day. As an Orthodox Christian, if I was to marry a Catholic Christian, my family would despair. In Albania however, if you are a Muslim, and you find a person you are happy with who is Christian, you have the full blessings of everyone. Whilst spirituality is an important part of the human dimension, organised religion should not be separating us. Despite Albanian’s economic problems, and inexperience in democracy, I think they are an advanced society, whereby all citizens are genuinely equal. In fifty years time, we will be seeing them as a model.
A mosque and Church, recently built as they were all demolished during communist days, standing near each other in perfect harmony

The elections next month are on everyone?¢‚Ǩ‚Ñ¢s minds. Whoever wins, people are predicting that it will be a hung parliament. The feeling with people is that the centre-right New Democracy party needs to win, to give the country stop steps forward, rather than backwards, as the communist party is doing. These elections will be the crucial thing to see whether it take 5 or 50 years for Albania to get itself together.

I am currently in Ohrid in (the Former Yugoslav Republic of) Macedonia, the tourist Mecca of the country. It really is beautiful here, and I am still experiencing, so I better get off this computer and find some English speaking locals. And as they would say in Macedonian, “ayde ciao!”.