Investing Journal: Business

Eye Patches for kids

Tue, 11 Mar 2008 06:47:45 GMT

While I sometimes say that I'd like to start my own business, sometimes it's pretty clear that if I am, I'm not going about it the right way. After all, Hewlett and Packard started an electronics company without an idea of what products they would create. I guess I think I could manage a fairly successful small business well, I'm just waiting for the right product to come along. A successful business needs to fill a specific need in society, not necessarily create a new product, which is what I typically think about when starting a business. Sometimes I think it'd be fun to own a small paper store, or laundry mat, to see if I really have business management skills.

Another great idea is to take an ok product, with a mediocre process around it, and improve the product and the process. My friends just created a business around eye patches for kids. They're making higher quality and more attractive patches, and selling them online and in doctor's offices. Since they're relatively easy to make, once they really start selling, they'll be able to enlist the help of local teenagers in creating the simple product. A business that scales at the rate of teenage labor is pretty good. Not quite the margins of software, but without all the pesky disruptiveness.

Internet Video Business

Fri, 20 Oct 2006 19:45:07 GMT

Robert Scoble has a good blog post about the economics of video on the internet.

He says that site owners get about $10 per 1,000 visitors from advertising today, but their costs are as follows:

$28 per 1,000 downloads for a 200 MB file. ($.14 per GB for bandwidth)
$210 Labor (7 hours of work @ $30 / hour)
Extra for camera equipment and computer, etc.

The cost of bandwidth for YouTube surely must be less than $.14 per GB, and now that Google's involved, they'll surely have some of the brightest minds working on shrinking that number. Looks like user contributed videos could be feasible, but I can't imagine how these sites make their money. I wonder how much money Red vs Blue makes on their site, or if the majority comes from their store. Of course, their low-res videos are less than 20 MB, which would make the cost reasonable.

In any case, I can't wait for IPTV to bring the long tail of content on demand to my TV, even if I have to pay for it.

Manufacturing in China

Wed, 13 Sep 2006 15:20:33 GMT

The Sept 18th issue of Fortune magazine has an interesting article contrasting manufacturing in US and China. (I couldn't find the article online.)

Tenneco, a maker of auto parts has 2 factories, one in Shanghai, and one in Litchfield, Mich. that are relatively similar and produce the same product. The table below highlights some of the differences between the factories.

(2005 data)	Shanghai	Litchfield
Employees (hourly/salaried)	225/50	296/28
Wages (% of total cost)	1	12
Production (number of units)	400,000	1.4 million
Revenue (millions)	$53.2	$171
Capacity (2005/2006)	85%/100%	65%/85%
Employee turnover (hourly/salaried)	5%/13%	< 1%
Absenteeism	1%	10%
Average Age	29	40

Notice that the US factory has 11% higher costs, but over 200% more output, a tradeoff I'd make any day. Complications of the Chinese factory include the fact that the company relies on 51 suppliers who don't understand the importance of following the specifications given, and potentially resell a proprietary part without authorization. Wages in China are rising at 10% a year, which certainly doesn't help the turnover rate.

"For now, except for labor-intensive industries like textiles and toys, China isn't that efficient a manufacturer." The conclusion is that the US Manufacturing industry doesn't need to worry too much about China too much in the short term. The article states that it's children of today's workers that may have to worry. So yes, the Chinese will start taking more of our jobs, and become more effective and produce more goods, but at the same time they will become bigger consumers (creating more jobs), and more importantly start producing innovations that will raise the standard of living for everyone. And at the end of the day, isn't that what we as individuals really care about?

Millionaire stories on MSN

Fri, 21 Jan 2005 04:21:06 GMT

http://moneycentral.msn.com/content/Savinganddebt/Savemoney/P103041.asp

This is an interesting article showing how 9 different people went about becoming a millionaire in many different ways. Most of them started a little later in life, most starting a business, but ALL through taking risks and following a dream and a plan.

Business Ideas

Thu, 16 Dec 2004 02:06:37 GMT

So, I'm always interested in starting my own business, once the right business comes along. Hopefully something that I could do at night and keep my current job. These are just some thoughts I had on a system idea I had.

Co-branded calculators on the web.

For example, say your bank has a terrible calculator, so you go to them, and tell them to link to your website where they’ll have access to all of your calculators, with their (insert-your-logo-here) logos on each one. If you could sell the service for $300 / year (seems reasonable, as that’s <1 day of employment for a contractor) and get 50 websites to do it (think of how many banks there are) that’d be $15K per year. If you made more and better calculators, you could charge more AND get more websites. You could even have a cheaper subscription (or limited free?) with ads on each calculator. (I'm making up the money here, it may be way off)

Oh, and this business exists and looks a bit better than I remember:

http://www.leadfusion.com/products/tools/calculators.asp (fool.com uses their old service)

In any case, a similar business to this would be great. Make some product, and sell it over and over.

Another example of a good system:

http://www.dotphoto.com/Support.asp

Type in a question, and notice you go to custhelp.com. They have a support service set up that they sell to websites. If we can think of a mundane tool that many websites need, and sell custom-looking versions I think that’d be a great business.

Amazon has a similar model, in that they recruit other stores to just use their online store… Toys R Us, Borders and others all just use Amazon.

So, what can I come up with to implement a similar system....... any comments?