Why you're a big sucker

I thought this is something to be observant about. I sometimes catch myself questioning sales tactics and TNSTAAFL. Yeah, other times, I'm a big sucker.

(WTS... article posted on April Fool's at 4:30am!!!)

Money
Why you're a big sucker
Tuesday April 1, 5:29 am ET
By Paul J. Lim, Money Magazine senior editor

Bet you think you spend money pretty sensibly. Well, Dan Ariely would bet you don't. A noted behavioral economist with current posts at MIT and Duke, Ariely has been proving for years that consumers often spend more when they plan to spend less.

Now he's put his findings into layman's terms in a new book, "Predictably Irrational: The Hidden Forces That Shape Our Decisions." In it, he explains how marketers exploit our blind spots of logic and how we can see them coming. Today's shaky economy, he argues, is no place to waste money being irrational.

Question: What's one of our biggest, most illogical weaknesses as consumers?

A. "Free" offers. When the price of something is said to be zero, it blinds us. We get so excited, we fail to realize that we'll end up paying in some way.

Question: For instance?

A. When I bought a car a few years ago, I debated between two choices. One was less practical but had a special deal going for it: free oil changes for three years. This sealed the decision for me. Later I realized that since I don't drive much, it was only $150 to $200 in savings. And in the end I was left with a less practical car.

Also, one Halloween I gave a bunch of trick-or-treaters two Hershey's Kisses, then told them they could have a small Snickers for free or a huge Snickers for the price of one chocolate kiss. The bigger bar was a better deal, an 8-to-1 return on chocolate. But most chose the smaller one; the idea of getting something for nothing was too tempting.

Question: How else do we act against our best interests?

A. By comparing prices on similar items.

Question: Wait, I thought that was smart to do.

A. It is, but only if you compare everything with everything. If you just compare items near one another, you open yourself up to being influenced. When you open a menu at a restaurant, you may not realize that the prices you see affect what you're willing to pay.

If the most expensive entrée is $45, you might decide $30 is an acceptable price. Should the restaurant add a $60 dish, you may be willing to pay $45. The same issue comes up when shopping for real estate. Letting a broker show you a house above the top of your range can be costly.

Question: So how do we overcome irrationality?

A. There's no cure-all. But when I see the word free, I now ask myself, "What's the seller trying to do here?" Also, it sounds strange, but try not to look at price, not at first. Decide what you want and what you're willing to pay without being influenced by outside factors.

stuff white people like

im sure you've all seen the site by now. after all, it was on npr.

its interesting to see what all the reactions have been to it so far and i've written one myself in my blog.

how is everyone doing? i miss puerto rico night. i played "pirates cove" recently. its not a great game. i miss board games.

Grappling with tough decisions

I've been grappling with one of the biggest possible opportunities in my life... but this has come at a huge cost: grappling with the dilemma of taking a leave (or dropping out) from school to pursue a web startup or stay in school and hope for a different opportunity.

I've been going through different possible upsides and downsides in the decision of whether to pursue the web startup and forgo a year of school. Since the downside is definitely tolerable (i.e. the worst that could happen is that it flops and I find another job and then resume school in the winter of 2009... also manage the annoying things of taking the leave), I factored that in. I also considered why I am interested in doing this and, in doing so, I realized that was it. I wanted to be part of something web/tech-ish and entrepreneurial. But when it came down to it, my passion for the idea just wasn't 100% and that's simply not enough.

It simply wasn't fair to me, my co-founder, nor for the investors. If they want to invest in the idea, I think they should move forward with my co-founder and team him with someone who is 100% passionate about the idea and can provide the appropriate level of business development. If they feel it's the team they want, then they need to know that I'm not at that stage and I'm not really the right person at the time. I also figure that I have a lot to learn in school and there are may be other opportunities that I simply don't see right now.

As a result, I've decided to not to commit to this and, instead, stay in school. Without question, this has been the hardest decision in my life -- harder than deciding whether to transfer from Berkeley.

Life at b-school... what's behind door #2?

School has been in full swing for about half a quarter already and I forget how quickly time flies. It's been a pretty exhilarating experience meeting so many motivated people from different backgrounds (many of them looking to change direction in their careers). I've found UCLA Anderson to be a good fit for me; the people are very supportive of each other both inside and outside of the classroom. In fact, I feel that the student body and what we do for each other seems to be bulk of the experience.

So far, I've gotten to take part in some pretty cool programs and experiences. I joined a program where I am teamed with 17 other first- and second-year MBA students with a successful entrepreneur/founder and we will be meeting with local entrepreneurs and CEOs to learn about how they built up their companies. A few weeks back, I also got a chance to sit in an angel investor meeting, hearing startups pitch to angels for capital -- a very cool experience to be that "fly on the wall."

Also a few weeks back, I happened to come across a cool web-based idea with a person I met quite randomly. The basic premise is this is a web site that helps people try to collect/input data more easily, allow people to draw conclusions, identify connections/trends, benchmark their data against averages (other people's data) and certain standards (e.g. market data), and even set thresholds to monitor data (e.g. whether they are reaching or exceeding a certain target). The web site could also suggest interesting and potentially useful correlations and maybe, given some information about certain variables or attributes, make some recommended actions or suggest that someone is no longer following their previous trend.

The idea is still work in progress, but the big news is this: we submitted the idea to a well-respected and fairly well-known seed investor called Y Combinator (www.ycombinator.com -- featured in Newsweek and BusinessWeek). We heard back from them two weeks ago and they were interested in our idea and want to talk to us this Saturday. So we'll be flying out to Boston to meet with them. While the amount of funding they'd provide might not be substantial, the connections they'd provide would be tremendous. They are connected with some of the top venture capitalists in Boston and Silicon Valley and also are plugged in with the "rock stars" of Silicon Valley like the creator of GMail, top level VPs at Yahoo!, etc.

One big challenge for me is that if we getting the green light from Y Combinator, they'd want us (my co-founder and I) to move up to Silicon Valley from January to March of next year. For me, this means at least taking off a quarter from business school (and most likely means I'd have to take the rest of the school year off because of the sequential nature of classes). I'm definitely at a crossroads here as the trade off is a very difficult decision to make.

Either way, I'm going to fly to Boston next weekend to meet with these seed investors and see what happens. Of course, if they pass on the idea, my dilemma goes away. Of course, one of the big reasons I've come to business school is to build connections in areas like tech entrepreneurship and also try and take risks (like starting up a business). Potentially cool opportunities just don't seem to arrive at the most convenient times.

Pick your candidate

Check out the "Select a Candidate" questionnaire from Minnesota Public Radio which helps you figure out which candidate best aligns with your position.

Pizza again? Get used to it

It's nearly been two "official" weeks of b-school and I don't think I've ever eaten so much pizza this same stretch of time. The thought of pizza is starting to scare me away from lunchtime club meetings or company information sessions! This is just one of a few observations I've noticed from my short time starting my MBA program.

The intimate MBA experience, the close-knit community feel has some unintended effects: namely, it is very conducive to the spreading of disease. Once one or two people in the class are sick (and couple the constant stream of pizza to lunch or corporate events), you can bet the whole section or entire class will be hacking the same cough.

Think back to elementary school when the teacher asked a question and there'd be the people in class who'd do one of those "Oooh! Oooh! Pick me! Pick me!" It's back -- only this time, instead of seeing one or two hands, you'd think someone was giving away money for free. With class participation factoring in grades for some classes, there are undoubtedly those who feel compelled to participate for that reason, but there are also those who really enjoy explaining why the lecture discussion is "totally like when I used to do [Job X]..." While it's interesting to hear about other people's experiences, it's no longer interesting after hearing it time and again.

I guess I still have some acclimating to do.

What role does and will "traditional" media play

As more and more people find their news and gossip through blogs, YouTube videos, Wikipedia (to some extent), and other user-created media, a question arises: what role will "traditional" play in informing and influencing the public. Publishing an idea online requires little effort which makes it easy to share your creation with millions of people in a short amount of time. Online media further challenges print media to be more relevant and more succinct, yet print media faces several challenges. One of these challenges was outlined in a recent article Economist article entitled "The Future of Books" which sparked my attention.

With non-fiction the situation is more nuanced. Many non-fiction books express an intellectual idea. Traditionally, the only way to deliver such an idea profitably involved binding it into a 300-page book, says Seth Godin, a blogger and author of eight books on marketing. “If you had a 50-page idea, you couldn't make any money from it,” he says, so a lot of non-fiction books end up on shelves with 250 unread pages. Freedom from such rigidities may save a lot of authorial time.

This might suggest print media may have to become more flexible and allow "shorthand" publications and move more towards a hybrid of books, magazines, and blogs. Perhaps print media may also move towards encouraging an increased volume of such shorter "50-page ideas" and use on-demand printing technologies. Users can then choose to view a synopsis or sample of the "publication" and make a buy decision based on that. The publication could then be printed on demand or delivered to the user electronically. Based on a rolling 8-week (arbitrarily selected) average, book stores might order quantities of these "shorthand" publications to stock in their brick and mortar stores.

Just an idea.

Free at last

The weak sauce's rein is over!

A swift kick to the ass

As you probably know, my life has been completely absorbed with one thing: applications. Anytime someone asks me, "What are you up to?" I reply, "Essays." The person sighs and answers, "Still?" I reluctantly nod. Yes, I've been dragging my feet with these essays for over five months, but I am finally seeing the light at the end of the tunnel.

Fear not, with some motivation I will be able to finish up these torturous essays. You can expect to see me back to normal starting January 11.

Do we really need another bitch?

The infamous Korean scientist who previously claimed to have cloned a dog is now reporting that he and his team have cloned a female dog. This, of course, leads many to suspect whether this announcement is credible and the bigger issue of how can a person regain credibility after being accused of lying (on top of ethical questions around cloning).

When I first saw the headline, I naturally scoffed at it and questioned the validity, but then I took a moment and thought about how much "truth" capital such a scientist will need to obtain in order to be seen as a credible scientist. This leads me to consider, what does it take to regain trust?

This is literally the funniest shit I've read...

Check it

Obama's announcement

Must Big Brother dictate our diets?

As you may have heard, the city of New York will be introducing a ban on the use of trans-fats at all restaurants.

NEW YORK (AP) -- New York on Tuesday became the first city in the nation to ban artery-clogging artificial trans fats at restaurants, leading the charge to limit consumption of an ingredient linked to heart disease and used in everything from french fries to pizza dough to pancake mix.

In a city where eating out is a major form of activity -- either for fun or out of hectic necessity -- many New Yorkers were all for the ban, saying that health concerns were more important than fears of Big Brother supervising their stomachs.

"I don't care about what might be politically correct and what's not," said Murray Bader, nursing a cup of coffee at Dunkin' Donuts on Tuesday morning. "I want to live longer!"

While this may provide some health benefits to many New Yorkers who are oblivious of what they are eating, this also begs the question, "Do we really need the government telling us what we can and can't eat?"

Perhaps the market can dictate if this makes sense: restaurants could encourage consumers to frequent their establishment by letting customers know they do not use trans fats, does Big Brother need to force all restaurants to do so? What about the mom and pop shops that make smaller margins? Using trans-fat free oils may increase their costs and put them at a greater disadvantage to larger establishments. Besides the economic argument, there is also the argument that it is not the job of the government to dictate what ingredients restauranteurs can and cannot use, assuming these ingredients do not directly harm patrons. We as consumers have a responsibility for our own health; we do, of course, expect that restaurants are not poisoning us. We do also have a choice -- we can choose to visit the restaurants that are health conscious versus the grease barrel down the road.

Americans cannot depend on the government to be told how to be healthy; it should be an individual lifestyle choice and individuals should have to take responsibility of their individual choices. Admittedly, if I have a choice, I'd rather eat at a restaurant serving food without transfats, but I like having the choice. I don't see why the government needs to decide for us.

Corporate Ethics

Find more relations at: http://indexed.blogspot.com/

In 500 words or less...

As I've been working on my b-school essays, I keep wondering, "Why is it so hard to write about yourself?" I've come up with a few theories.

1. Avoid being perceived as arrogant - As I'm writing, I do want to stress the my strengths and acknowledge my shortcomings, but I don't want to come off sounding like I'm a total 'hot shot' nor do I want my accomplishments completely dismissed. I have a hard time striking this balance.
2. Share something interesting - I recently asked a good friend to review one of my early drafts and he truthfully commented, "This whole section is boring." As I write, I need to reflect on accomplishments that really matter and ask myself why they matter and what impact they've had on me or an organization. On the other hand, it's possible that I'm just not that interesting.
   
3. Find relevance - Something I find interesting probably won't appeal to another reader. For instance, I can talk about the CRM systems I've helped build at work, but at the end of the day, who's really interested in that? I've also challenged myself to not dwell in the details and talking about a situation, but trying to focus on why a situation mattered or why I decided to take on a challenge.

Any other thoughts? I can't wait to be done with my essays!

How do you find balance...

How do you seek out the answers you need without seeming overly demanding?

How do you deliver bad news when your audience is already upset?

Does "getting to the top" mean stepping on a lot of toes on the way?

FORTUNE Magazine did an interesting interview with one of the youngest CFOs of Citigroup (the largest bank in the world) Sallie Krawcheck and how she managed her way to the #2 spot. [link]

She makes a few interesting comments :

It is much easier to deliver good news to the Street rather than bad news. As a CFO one has to have the strength of character, the thickness of skin, to be able to deliver bad news as easy as good news.

We've taken a lot of steps to remove as much of the temptation as we can. A lot of decisions have to be made by the CFO and the CEO. Things like our loss reserves, our incentive compensation accruals, our legal accruals [have been] pulled back from the end of the fourth quarter. So even if I think, "Boy, I'm fine missing consensus," we've pulled those decisions back before we know what those numbers are going to be, so we make the right decision for the company.

I think a lot of it has to be done at the top. I have to let my CEO know every step of the way when I talk to him that it's okay to deliver bad news. We want bad news. Numbers don't lie. See what the numbers tell you, and you have to be just as comfortable delivering bad news as good.

Which is why I'm glad I was an analyst. I always knew that if my stock tips were going to work...I should be uncomfortable. It was probably not the right place to be if everybody said, "Way to go, good recommendation." As an analyst, I was very comfortable being uncomfortable, and as a CFO I have to be comfortable being uncomfortable. I have to be fine with delivering bad news.

The paradoxical idea of "comfortable being uncomfortable" seems like something that takes experience but, perhaps, more importantly, certainty of why the audience is/will be angry and what, if anything, the bearer of 'bad news' can do about it.

I have to give credit to Businesspundit for the source of the original reference to the article posting [link]

Billy's Political Compass

Economic Left/Right: -0.63
Social Libertarian/Authoritarian: -2.62

Have you ever noticed...

The idea of online shopping is supposed to make life more convenient, yet if you end up buying something online, you'll find yourself constantly checking online package tracking (like FedEx, UPS, etc.).

When small change can make a big difference

What is microfinance/microloaning? [Wikipedia entry]

The Wall Street Journal reports that "[p]oor households in India have borrowed $1.8 billion from microlenders in the past five years. But they could borrow more than 20 times that amount if they had institutions that could bring easy and affordable lending to each village..."

While it makes great sense to make small loans in many developing countries, how can we work to help expedite this process?

Stop the spam

There you go. Here's a blog for you guys with nothing else better to do but to spam my mailbox.