Salary Research

One of my recent employers paid one of the best lawyers he could find to get a "study" on typical compensation structure for a company of his situation.


A later employer got the same information for companies of various sizes by making offers higher than his competition for me. As a contingency of the offer, they require that my entire employment history with full salary information is made available to them(Literally entire history including college internships...) One almost wonders if they chose me because the salaries of the companies and positions that I've held interest them instead of my skills at these companies and positions. :-(

Whether the intent is to gather information by distasteful and dishonest (err, or "smart" if you will) methods or not is not important, what is important is that they obtained the information that they want.

Very sharp!! Very cool!!


It would appear the Business Ninja strikes again! And the Business Ninja blog lives!

booyah!!

Retail Option

I want to sell derivatives on retail commodities:

I want to sell an European call option: For the price of $100 (paid now), I will give you the ability to purchase a brand new 17" macbook pro, 2.4gz i7-quadcore, 4g ram, 750gb for $2,000.00, expiring in 90 days. This macbook pro is listed to cost $2499.00 , so it would appear that you saved $399 by paying $100 now and $2000 later instead of $2499 later.

Except, I don't just want to do it for that one macbook pro, but for all products and services on earth. The option can be a little more exotic having a range of time in which it can be exercised. E.g. from day 91 and 95 I may choose to exercise it if it comes into money.

On the used product side, I can try to sell a put option. This laptop that I just bought for $2499, I want to have the ability to sell it (in good condition) in 3 years for $1700. And I would pay $300 today to ensure that this happens. Again, this option is not traditional in terms of when it can be exercised. Probably pay $300 to decide to sell it in a period of there month from months 37 through 39 inclusive.

With companies like Apple, Dell, Hp, Lenovo leading the pack in computer electronics making equipments that are more durable than previous, and with market having a lot of different people from consumers wanting latest and bestest to to consumers who are willing to buy an used iPad-1 for $200 when iPad-3 is on the market for $500. I feel that I ought to have bought a put option for my macbook pro that just had its battery explode from "normal operations".

Naked all the way, of course...

The price of the option may increase as the strike price decrease. For instance, in our original example, paying $2000 now means you can pickup the macbook pro in 3 months for just a single payment of $10.

Another consideration is that this kind of ordering of products is typically in practice anyways. Ordering a non-prebuilt configuration of laptops or cars usually means it will take anywhere from 2 weeks to a month (or more, for hot items like the Transformer Prime Tablet from ASUS) before it arrives. So, as a consumer, I'd like to actually get a discount for that delay.

My friend Waylen suggest that most normal consumers do not have the sophistication to participate in this kind of market. He thinks that only for larger purchases like yachts, private jets and other very high end consumer items would some one put so much energy into thinking about the future price of the item is. My own personal feeling is that that's not the case. There are lot of low/mid-class people, like me, who want expensive stuff and who would also like to be thrifty while at it. $100 here, $250 there, and quickly our pockets and lives are enriched at lowered money costs.

 

But he is probably right to some extent. Because the laptop is now considerably commoditized: a "Intel i7, 15" screen, 4grm, 750gb ram" laptop from Dell, HP, Acer, ASUS, Mitsubishi, Sony, Lenovo are virtually indistinguishable from each other. Instead of his individual buyers of single expensive item, I would think that a large computerized firm would probably be willing to participate in a market like this. By creating a market, we actually make the system much more efficient.

 

Additionally allowing individual buyers to participate in this market means I can get just as good a deal as my employer gets.

Autoerotoelectrostimulation For Rent

I've been single for a long time, and have been resorting to self stimulation to release sexual buildup.

I'm also exploring a little bit the various avenues of doing so and have come upon something called electro-stim. Well, officially it's not my first time, since i've had it before. But never had it, errrr, autoelectroerotostimulation.

Now, it stands to reason that I am not the last person to wonder about it. However, I do not want to risk my manhood on some device that cost less than $100. Nor do I want to risk spending $300 on a high quality device, and find out that I don't like it. Since this device is very personal, it is usually the case that return is not allowed.

Now, I need not perform a market study to know that there are plenty of people in this town that is willing to do the following:

* Pay $20 for a 30 minute session with a top-of-the-line product, buying only electricity, privacy, and some one-time items like pads, towel, etc.

* Pay $50 for a relatively attractive person to demonstrate this device and tutor him for an hour.

* Pay $15/day to rent the device for a minimum of 6 days.

* Offer discount sales for customers who end up renting it long enough. Offer Rent-to-own program.

The cost of this device is about $1,000 for a relatively fully featured product. Let's suppose that such a device have an average life time of 5 years of continuous use, at $15/day, $15*365*5 = $27,375 to be made during the lifetime of this device, that is a 2700% return on investment per device.

Conservatively, perhaps we will spend $10k during the 5 years to service the device, and that is still a 1700% profit.

I guess the only real question is, do these devices work? Will I be able to attract repeat visitors? Can I keep it legal? and how do I stay competitive.

Unfortunately, the price of finding out is a hefty $1,000 purchase price.

Plus legal fees when we are sued for causing ED, STD, or marriage problems for a customer... Mmmmm.

Fantasy Politics

I've been watching TrueBlood on HBO recently. The concept of a realistic vampire integration into America is an allegory for the multitude of peoples who has traveled to US to seek freedom, equal rights, and liberty.

The news footages, and very realistic looking political campaign coverage, and on-air debate brings my mind to a new realization. Fiction is more exciting when you really really think about it like if it was real.

I mean, okay, it's not so hard to picture my boss as a blood sucking vampire... I mean he acts weirdly enough already. But, no really! think of it. All those people that I only see at night. What if they started political campaigns..

Ahh,  and that brings me to my main point. So there are a lot of fantasy foot ball leagues, and baseball, etc., etc. Why don't we start a fantasy politics? Where we establish rules and regulations and policies and political parties, and....

Hmmm, this needs a little more time in the oven...

cloning

Multiplicity is on Hulu today... And here's a great idea.

First, invent the cloning process that completes cloning of an adult human with memory copying in 15 minutes.
Then sell it for $1,000,000 premium above the cost to make it happen.
 Now, use this pitch:


"Think of all the free money you'll make if you just cloned your self, you'll make it back in a coupla years."



Then, back it up with numbers:

Say your annual salary is barely 6 digits ($100,000), after tax, it should be something around $65k/annum, now, say he eats and plays $15k/year, he'll be making $50k/year. $1 million will be made in 20 years, that's quicker than your 30 year mortgage!! And then from then on, it's free money!!

Fusebox Alarm

Okay, so, some single houses have fusebox on the outside. For obvious reasons, these boxes are not allowed to be locked. But I don't want, some night, for some one to turn the electricity off, and then enter my home with night vision goggles and harm me.

So, here's an idea: Make an alarm system that makes big flashy light and big noise when someone opens it without entering a secret password on a keypad located on the latch to open the box.

If it is a true emergency, I will open it and shut down electricity--even at pain of hearing the alarm. The police and the firemen will understand.

If it is not an emergency, I will have time to enter the code, and open the box without setting off the alarm.

Lastly, if it is a thief, then he will set off the alarm, and alert me, neighbors, and the police that an intrusion has happened.


And the device should have a battery that charges from the fusebox. (and optionally from solar) so that if the theif ignores the warning and opens it to turn electricity off, the alarm will still function.
Searching for it on google reveals no prior art.

Such a simple idea, but very useful to people living in bad neighborhood and to suspicious people who don't live in bad neighborhood.

Olfactory Tip for Realtors

Recently I accidentally went to the same open house by accident. The house is in an expensive part of the bay area and beyond my means to buy. The first time I accidentally visited it, I was overwhelmed by the smell. It can only be described as a mix of mold and cat and dog shit aged over maybe 20 years.

I left before I can complete my conversation with the realtor.

Today, I accidentally visited it again, having researched the area for the first time, the price actually doesn't seem so bad.


This time, there was a man at the house. He has a Crockpot slow cooker cooking a beautifully golden chicken with a rosemary at the top.

That is such a great touch!

Previously, when visiting houses that smelled bad, the approach was to use scented candles, which can mask decades of smoking very effectively.


But that is too obvious as compared to a cooking chicken. It gives the visitor a sense that people actually live in this house, and enjoys their lives. And it serves to mask that horrible smell. (The aroma of cooked chicken permeates the whole house, so I actually walked all the way through)


Very good!

Executive Leadership Rewards Program

I recently saw an article somebody sent to me from Jan-Feb issue of HBR entitled "The age of customer capitalism" by Roger Martin.


The article argues that American Capitalism needs to progress from "professional management" innovation of the 1930's (CEO is not the owner, as opposed to rockerfellow, morgan, carnegie, mellon), to maximizing the share holders' wealth (recent decades) toward one of maximizing customer satisfaction.


The article is a little bit extreme in this argument citing P&G's
CEO lafley who's compensation had a vesting schedule extending
to 10 years AFTER his retirement. His restricted stock incentives have a vesting schedule of 5 years, and the non-restricted stocks will vest 10 years after his retirement. The article states that these two types of stocks will account for 90% of his compensation. Under this system, he, and the CEO of P&G has sustained a growth rate averaged at around 15% a year as compared to those of GE and Coke which averaged at around 12%. (Apparently Coke and GE are two who "pioneered the pursuit of shareholder value")


I guess this needn't be said. I mean of course a company is made to do
what it's supposed to do (as measured by customer satisfaction),
otherwise it would have no value. But having said that, I must point
out that I do not believe that there's a business person out there who
can manage a company for success in 10 years. Especially in today's
world where a small innovation can easily tip the scale and suddenly
what you built in the previous 8 years of 10 become completely
useless. (And I might add, often, most of the efforts are spent painstakingly preventing others in the company and other companies from making progress so that the little known room for improvement is in reserve for a raining day... And then some startup comes a long and rain on your parade. Com'on admit this is standard practice!!)


And being of relatively sound mind, I would not believe a CEO if he
says to me he is going into a company with 90% of his compensation
depending on the company's performance 5 years from now and onward. I
would more likely call him crazy than professional. or masochist than
responsible.


The standard timeline quoted in the "research" field is this: Academic
research aims to work on development of technology and learning knowledge that has the potential to benefit us 10 or 20 years from now (or further out), but industrial research tend to aim to pay for itself in about 2 years.


So, if that is an approach that is available, then certainly one could structure the vesting arbitrarily. For instance, If the CEO and executives' options vest monthly, and they must sell within 1 month after vesting(as opposed to a rule that they must hold it for 1 year, or hold it beyond a certain lock down period)... And assume for argument sake that there is accompanying tax laws that give this special executive reward a tax break to make it equivalent of long term caps gain.


So, this executive reward program is still a "optimize for current shareholder wealth" style reward program, but it explicitly encourages the CEO to bring the average stock price to his desired compensation level (i.e. as high as possible, but sustained instead of all at the end)


But that could still be bad. If the employees have a 2-year vesting or a 4-year vesting ISO's, then the CEO could still screw everybody by crashing the stocks at the end (having collected most of it through the years).


So, a next best solution might be to try to still encourage him to grow the company through his expected tenure. And, let's be realistic, and set that tenure to the average CEO's employment length. And what we can do is to progressively increase the amount vested (but still do monthly vesting and sell within 1 month of vesting):

year past: percentage of all options vested and sold

year 1: 0.1995262%

year 2: 0.3981070%

year 3: 0.7943279%

year 4: 1.5848922%

year 5: 3.1622752%

year 6: 6.3095675%

year 7: 12.5892402%

year 8: 25%

year 9: 50%

year 10: 100% 

This way, everybody is incentivized to keep the value up, but to create longer term stock growth.


But this has a problem, which is that the company has to survive. It can't run on fumes waiting for year 8 and year 9 to come around. So yet another alternative is to create a U structured incentive program where the executives will make more if there is immediate growth, and then be rewarded for long term growth.

year past: percentage of all options vested and sold

year 1: 5%

year 2: 20%

year 3: 40%

year 4: 43%

year 5: 46%

year 6: 49%

year 7: 52%

year 8: 55%

year 9: 75%

year 10: 100%

Obviously, the goal is to achieve enduring success by participating in the ecology of corporations(read to sustain long term customer satisfaction.)


If only we can come up with a reward scale that is a surrogate for
customer satisfaction... That would be the ultimate social reward
system.


I mean, why don't we pay CEO's based on a fixed dividend program where he get's some percentage of this year's earnings? This seems obvious, but it not being implemented directly in most companies seem to indicate it has some negative side effects that prevents its use. Again, here the money earned is used as the surrogate for customer satisfaction.


I guess an obvious extension is to penalize the previous year's bonus with a negative bonus the next year if the earnings is too low. But that would be unfair to the CEO's and other executives under this program.


In any case, this matter deserves more study. I would be curious to find out what others have tried or proposed in this respect.