Frontier Lane

Book Review – Riches Among the Ruins by Robert P. Smith

// November 24th, 2009 // No Comments » // Review

Read this book if:

• You long for adventure
• You love the thought of travel
• You like things with an international flair
• You like money/finance

Amazon Page

My review:

This morning over my bowl of oatmeal I finished reading Riches Among the Ruins by Richard P. Smith. The book is non-fiction, but reads like a story and is about the Indiana Jones esque adventures of bond broker Richard Smith. I’ll come right out and say it from the beginning, I’m a huge fan of this book. I found it both highly entertaining and educational. Each chapter focuses on a specific country and Mr. Smith’s dealings within. For example, the first chapter is entitled El Salvador: Bullets, Bombs, and Bonds. A great chapter heading if I have ever read one!

One of the reasons I am so wildly attracted to this book, apart from its fabulous stories of daring financial madness, is that Richard Smith comes from a background very similar to my own. He was born to an upper middle class family who raised him to more or less follow in their upper middle class ways, but instead of following his family he decided to travel the world in seek of adventure and money. His pursuits took him to Vietnam, El Salvador, Turkey, Brazil, Iraq, Russia, and more. Mr. Smith, who is now in his 70′s, has the seasoned age to look back at his youth and describe the thought processes he used to break free of the life that he felt had been planned for him. Each chapter is full of details of not only how he made his fortunes in the far corners of the world, but also what he was thinking when he was there. In the book he tells you when he was making good decisions and also bad. He wasn’t afraid to be a good bit self-depricating at times.

In the end I highly recommend this book to anyone who is interested in finance, travel, or adventure. I got the book at Barnes and Noble because I had a gift card there, but you can get it from Amazon for $11 used or $16 new. Click the book image to go to the Amazon page for more details. I wish I could say go to your library, but it just came out in March and I don’t think many libraries have it sadly.

Seriously, read this book and tell me what you think. I know I can’t rave enough about it. I think it is my number one book of 2009.

Jason

DATA: My 2009 Net Worth

// November 16th, 2009 // 2 Comments » // Data

Click here for my 2009 Net Worth

What is my net worth? I’ve been fascinated by this question since a young age. Sometime around the age of 13 my dad introduced me to the concept that money makes money. He took me to see a financial planner who then introduced my naive little brain to mutual funds. From that day forward I invested a portion of every paycheck I ever received. I’d be lying if I said the paychecks were big, but I’m a classic example of the phrase “A penny saved is a penny earned.”

This year in late May I had the chance to meet with an extremely successful and wealthy gentleman who imparted some wisdom upon me. He said something to the effect that you can only expect great financial growth when you can track and measure your progress. That advice triggered the thought that I should experiment and see if I could track my net worth on a daily basis. And with that I began tracking my net worth on a Google docs spreadsheet.

My finances were relatively small so I figured it wouldn’t be that hard. It turns out that it really wasn’t. My intent was to track daily, but in the end I updated the spreadsheet closer to semi-daily.

If you are curious how you compare to my finances here are some quick facts about me. I’m around the age of 25, am a Graduate Student at Purdue University, and work as a server at night as my sole form of income. I also included the liquid assets tab for you to use as a reference if you want to create your own spreadsheet. Enjoy!

Jason

PS. Earlier in the year I posted data on my car. You can find that here.

Chris Responds

// November 6th, 2009 // No Comments » // Uncategorized

Many of you downloaded Chris’s interview and some of you even asked questions. As promised, I passed the questions on to Chris and lucky for all of you he took time to answer them. A huge thank you goes out to Chris for being so supportive of this project. None of this would have been possible without him. And now without further ado here are the questions and answers!

***

How does one find an angel investor?

Chris: Treat this as a true networking challenge. People who call themselves angel investors rarely are; they are making themselves feel important. True angel investors are people who will “get” your idea and want to see it succeed. Therefore, you have to figure out who is most likely to be interested in your idea and start talking to them. Ideally, this should start with your market research when you are having informational interviews (not selling anything, truly interested in the person’s expertise and advice). Also, in such an interview, do two things: ask for permission to contact them at a later time when the idea is more fully developed to get their input, and ask who else they know that you should be talking to. The first question gives you ongoing exposure to someone who, once the idea gels, might be interested in investing. The second expands your network. Networking is a totally random thing: you never know which seeds you scatter are going to germinate and reseed. One this is certain: if no seeds are being scattered nothing can germinate.

What sort of revisions did you need to make to your original business plan?

Chris: Our original business plan had us becoming facilities managers (staffing and running the IT departments of clients). We got into developing insurance software by recognizing an opportunity and acting upon it. We completely changed the direction of our company.

Did you leverage any part of the business to increase liquidity?

Chris: To a degree: by licensing software, once the software was saleable, selling the next copy cost us no further investment in the software. And, we got out clients to pay for any modifications we made for them, which were often folded into the “base” system. We also initiated a maintenance and enhancements program that all clients were eager to subscribe to. This provided them with our enhancements to the base system over time.

How did you find people to sell to? Networking / cold calls?

Chris: Our most prolific marketing successes came from a handful of national/international trade shows. We also advertised in trade journals. This was before networking was discovered as the powerful marketing tool that it is. In a way, our appearances at trade shows were a form of networking. It exposed us to potential clients over and over again.

What tactics did you use for short term revenue recognition when had no business from anchor clients?

Chris: Revenue recognition was never as important to us as cash. While we were developing our software, we did consulting and other side jobs to keep cash flowing.

How do you as an entrepreneur evaluate whether you want to do a new venture as a co-investment with equal equity or a joint venture with exclusivity clauses or grow the business to a point before getting acquired? What is the entrepreneurs mindset?

Chris: Generally you should not go into business with the idea of “flipping” it (selling it quickly). You should be pursuing an idea that is a passion for you. This doesn’t mean you don’t make yourself attractive to an investor with “silly money” (defined as someone who will pay more than the business is worth in the hands of the current owners because the buyer has a way to leverage the company that the owner lacks).

I’m not a fan of 50-50 deals: they can hamstring a company if the parties have a major disagreement. I never was able to make a joint venture work because of the differences in the underlying motives and interests of the two parties.