When I lived in Minnesota, it was relatively uncommon to hear a foreign language being spoken. When you heard it, you noticed. Now I live in Florida, but not just anywhere; I live on 'Florida's Riviera'. It is officially, Sunny Isles Beach, but the true boundaries include Bal Harbor, Golden Beach and Aventura East of Biscayne Boulevard.
I was mentioning to a friend just the other day that I have stopped noticing that I am living in the middle of Babel. I speak Russian, some German and some Spanish. But that doesn't even begin to cover what we hear in this town. Portuguese, Hebrew, French, Bulgarian, Italian, Hungarian and many more languages are common enough to hear a couple of times per day.
Some of that is because we are a tourist destination. However, tourist season is over now and the proliferation of languages continues. These languages are coming from what I might call International itinerants. The Mansions at Acqualina just announced that they have sold two of their $16 million penthouses, one to a Russian family the other to a South American family, most likely either Argentinian or Brazilian. What is astonishing is that in neither case will these likely be their primary residence. These are second, third or even fourth residences.
A real estate agent I was speaking with told me that, with private jets and 'jet cards', families are going one place for a month, another place for two weeks, etc. The children have a nanny or tutor that travels with the family. They really are not permanent residents anywhere, but they, based upon arcane legal analyses, maintain the fiction of residence at one locale.
This is the future. In reality, Sunny Isles Beach is not part of America. It is a new kind of place. True, the legal jurisdiction is U.S., Florida, Miami-Dade, but the cultural, social and economic reality is that it is a EuroAmerican village. People are from Rio/Banf, Sunny Isles Beach or Moscow/Cern/Sunny Isles Beach or Toronto/Hamptons/Sunny Isles Beach.
The other day at the Starbucks, I heard two men talking. One said that they were next going to go to Rio. The other man asked what it was like there now. The first replied that it is very similar to Sunny Isles Beach in the winter. The second said that it sounded good and that he and his wife would meet them there. Where do they live? The short answer is, 'Where ever they want.'
While the great contemporary civilizations, EuroAmerica, China, India and Islam will likely persist for quite some time, we are seeing here the seeds of the destruction of the Nation State as the dominant expression of sovereignty. If you life in Omaha or Portland, you probably don't notice yet. However, it will be coming to your town, too.
An important aspect of this is how rapidly Sunny Isles Beach formed. In 1999 it was here as a EuroAmerican Village. by 2007 it existed in mature form. That is how quickly it can happen, no matter where you are.
Showing posts with label Polymath. Show all posts
Showing posts with label Polymath. Show all posts
Friday, May 25, 2012
Saturday, May 12, 2012
Equitopia Productions
In 2001 I appeared on a public access talk show. I told the host that within a decade he would be able to upload his show onto the Internet and that anyone, anywhere, could watch it. Rather than having viewers in his cable distribution area, he could have viewers in Hong Kong, Argentina, Greece, Russia, South Africa, Cambodia, India. I confess, I did not envision a youtube.com as the primary delivery channel and I still don't. I also do not envision cable networks becoming Internet networks. Finally, Netflix, Hulu, etc. are also not likely to be the final state of Internet television.
In The Future 1o1 premium service I have a 'maintained' white paper entitled 'The Age of Boutique Everything' where I explore in great detail the likely evolution of Internet television. Since I have been thinking about it for over a decade and a half, I do have a bit of a head start on most pundits.
I have a basic aversion to membership in the Chattering Class and consequently, whether you choose to become involved in The Polymathic Institute at the Membership level or the Fellowship level, talk is followed by a bias toward action. In other words, I may spend a whole lot of time exploring Internet television, but I will also provide venues for turning those ideas into projects and enterprises.
Last week, The Polymathic Institute and Wallace Rothman, a young Harvard MBA holder and Columbia PhD candidate, have agreed in principle to form Equitopia Productions, Inc. which will serve as general and managing partner to a series of LLPs that will fund and produce niche market, 'made-for-Internet' programming.
Equitopia Productions will package the created content and provide plug-in modules to niche websites that will allow them to gain income from traffic through streaming and downloading. This will provide blogs, targeted social media, niche marketing sites, etc. with the opportunity to improve monetization through high income and highly compatible product offerings. Polymathica will provide to its members programming of refinement and erudition.
Equitopia Productions will provide dozens, perhaps hundreds, of opportunities to Members and Fellows of the Polymathic Institute to create a career in Internet News and Entertainment. These may be in writing, punditry, production or, through the LLPs, passive investment.
This is just one of many large projects that will provide the opportunity for a Knowledge Class career and income.
The Polymathic Institute supports polymathic education, research, careers and lifestyles. One may become involved as a Member, Fellow or Senior Fellow. If you would like to learn more about becoming involved, please e-mail or message me.
In The Future 1o1 premium service I have a 'maintained' white paper entitled 'The Age of Boutique Everything' where I explore in great detail the likely evolution of Internet television. Since I have been thinking about it for over a decade and a half, I do have a bit of a head start on most pundits.
I have a basic aversion to membership in the Chattering Class and consequently, whether you choose to become involved in The Polymathic Institute at the Membership level or the Fellowship level, talk is followed by a bias toward action. In other words, I may spend a whole lot of time exploring Internet television, but I will also provide venues for turning those ideas into projects and enterprises.
Last week, The Polymathic Institute and Wallace Rothman, a young Harvard MBA holder and Columbia PhD candidate, have agreed in principle to form Equitopia Productions, Inc. which will serve as general and managing partner to a series of LLPs that will fund and produce niche market, 'made-for-Internet' programming.
Equitopia Productions will package the created content and provide plug-in modules to niche websites that will allow them to gain income from traffic through streaming and downloading. This will provide blogs, targeted social media, niche marketing sites, etc. with the opportunity to improve monetization through high income and highly compatible product offerings. Polymathica will provide to its members programming of refinement and erudition.
Equitopia Productions will provide dozens, perhaps hundreds, of opportunities to Members and Fellows of the Polymathic Institute to create a career in Internet News and Entertainment. These may be in writing, punditry, production or, through the LLPs, passive investment.
This is just one of many large projects that will provide the opportunity for a Knowledge Class career and income.
The Polymathic Institute supports polymathic education, research, careers and lifestyles. One may become involved as a Member, Fellow or Senior Fellow. If you would like to learn more about becoming involved, please e-mail or message me.
Sunday, February 5, 2012
A Quickly Approaching Cliff for the Accounting Field
If you are an Accounting Clerk, an Accountant, a Financial, Budget or Treasury Analyst or you train Accountants or you place Accountants, you, at most, have five years left of guaranteed career. That is about how long it will likely take for expert systems and artificial intelligence, currently in development, to reach the marketplace.
In the near future your accounting software will be able to talk directly with the accounting software of your vendors, your customers, your bank and the various government reporting agencies. Invoices will be e-mailed from your accounting software to those of your customers where they will be triple matched and entered automatically into Accounts Payable. When the invoice is to be paid, your vendor's accounting software will notify its bank's software to pay your bank. Your accounting software will apply the payment and automatically notify your customer's accounting software of their new balance.
Payroll information will be reported automatically, wages and deductions calculated, necessary tax reports prepared and e-mailed to the appropriate agencies and the net pay will be automatically deposited in employees' bank accounts. Your accounting software will automatically calculate sales tax and e-mail the reports to the various taxing authorities. Similar imbedded expert systems will take over the inventory control and purchasing functions. In other words, over the next five to ten years, all clerks will become virtual. The live ones will be laid off.
The above scenario is not a someday, gee whiz, event. It requires no new technology. The required documents already exist as files in your accounting software. Currently, they are being printed out, mailed, manually received, entered into the recipient's accounting software, etc.. All that is really required is a File Format Translator so that your accounting software can create a record that your vendors', customers', bank's and reporting agencies' software can interpret. Once this is accomplished, most clerical functions will go the way of chimney sweeps and elevator attendants.
This will likely be stealth automation. One of my premium subscribers talks about how, with every new release, more of his job is automated. In similar form, over the next five years, every new release of your accounting software will automate more of these functions until they are completely automated. Twenty clerk AP departments of today may be reduced to just one or two.
In February of 2011, IBM unveiled Watson, a computer that spectacularly demonstrated that it could beat virtually everyone at Jeopardy. It played and easily bested the two top past champions.
In order to do this the computer was required to hear a natural language answer, usually designed specifically to be ambiguous, interpret the answer, search through its database, often make conceptually remote connections, find the correct information and, lastly, formulate the question to which the answer was related. As this video concludes, Jeopardy is the beginning, not the end of what will be a profoundly transformative technology.
IBM is creating, from Watson, a Physician's Assistant, named Dr. Watson, that will most likely be able to diagnose and treat diseases better than the Physicians it is assisting. It will lower costs, streamline the diagnosis process, reduce unnecessary tests and improve outcomes. Many in the field, as this Washington Post article demonstrates, are amazed by the technology and optimistic about its potential. Very recently, Wellpoint, the largest health benefits company in the U.S. announced that it had reached an agreement with IBM to "put Watson to work in health care."
This is, however, the beginning, not the end of the process. Automated diagnostic systems are beginning to surface everywhere with the ability to outperform the best of their human counterparts. This has led the X Prize Foundation to create their 'Tricorder' X Prize. X Prize boldly states, " With the equivalent of a board of physicians in your pocket, wireless sensors and imaging, you will be able to assess health and determine health care needs with a device in the palm of your hand." Clearly, A.I. and expert systems are ready to completely transform the medical industry, not someday, but now and going forward.
The question naturally arises, 'How soon will IBM or one of its competitors announce that it is creating an A.I. accountant?' Surely, if Watson can beat almost everyone at Jeopardy and his child, Dr. Watson can out perform Physicians in medicine, accounting and finance professionals will not be able to compete in knowledge, cost or accuracy with a Mr. Watson, CMA, CPA, CFA. Dr. Watson is estimated to require 18 months to bring to market. It should not take longer to bring Mr. Watson CMA, CPA, CFA to market. In many ways, he will be easier. For the most part, he will be a 'plug-in' to a system that is well bounded and already residing on your computer.
He will come loaded with all GAAP, GAAS, the APB Bulletins, FASB Statements, IFRS Standards, Corporate Tax Law, local regulatory, reporting and tax requirements and will be programmed with all accounting procedures and standard financial analysis methodologies.
It will be able to do NPV and DCF in its 'head' and program and perform monte carlo simulations, and other what-if analyses in a blink of an eye. It will have all the company's financial history at its finger tips. It will be able to close the books, make standard and adjusting journal entries, reconcile all GL accounts and perform statistical reviews of subsidiary ledgers and do it all far more quickly and accurately than any human. Since it is equipped with natural language capability, it will be able to produce the comments and analysis of the financial statements.
It will be able to produce the various required government reports and e-mail them directly to the proper agency. Every one of the quickly decreasing members of management will be able to, with one click, access Mr. Watson, CMA, CPA, CFA and ask natural language questions. The company will still need a Polymathic CFO to acquire and use a deep understanding of the company's financial data in the management of the enterprise. However, all other Accountants and Analysts will be replaced by the software.
This, too, will likely be stealth automation. IBM in partnership with SAP, Oracle, PeopleSoft, etc. will imbed more Watson-like functions into each release of its software. On one release, it may announce 'The Reconciler'. On the next release, it may announce 'The Adjusting Journal Entry Generator'. The next, it may announce a 'Sales Tax Reporter.' In this way, over time, with each release, fewer of the non-management Accountants will be needed. Next, as the number of Staff Accountants decreases, the number of Accounting Managers will decrease. Smaller enterprises will have their finance operations completely automated and will rely upon a part-time CFO.
As the profession experiences this implosion, it will then move to reductions in required Accounting Instructors and Recruiters. I know many readers will want to reject this outcome. However, with all due respect to Accountants, I have been one, Accounting is easier than playing Jeopardy at the championship level. It is easier than medicine. Watson has conquered those activities. It will conquer Accounting. The question is only, 'When?'
Nobody can know that for sure. However, Dr. Watson was put on an 18 month development schedule. It is unlikely that Mr. Watson CMA, CPA, CFA will require more. If we guess 24 months for IBM or a competitor to 'get to it', an 18 month development time and another 18 months for the major Accounting Software companies to imbed it in their next release, we have, perhaps five years. After that, the whole profession is on borrowed time.
So, unless you are approaching retirement, sometime between 2017 and 2022, you will need to find something else to do. What this will entail cannot really be properly understood without understanding The Income Explosion and Technological Unemployment which I Abstract on this site and explore in great detail at my premium subscriber site. I strongly advise you to read them, if you have not already done so.
Basically, the Economics of the next thirty years is going to be driven by two countervailing forces. First, advanced robotics and A.I. will drive incomes up, perhaps ten fold, from current U.S. levels. Second, 90% of all job descriptions will be eliminated. In the end, the two counteract one another and all will be well. However, all will not be well on the way.
Some jobs and professions will be demand limited. In other words, if the productivity of the medical profession increases tenfold, it is unlikely that people will seek ten times more medical care. As Dr. Watson and similar technologies increase the productivity of Physicians, the number required will fall and it will fall permanently. However, some professions, such as the Polymathic CFO, the descendent of Accountants, Financial Analysts, etc. will grow as economic activity grows.
However, the current jobs will be eliminated today and the new jobs will begin to become significant much later. We see an emerging picture of a period of dramatic unemployment and underemployment in the profession, followed by a slow, but dramatic increase in demand over the subsequent ten to twenty years. However, it will not be a return to business as usual. There will be both an increase in the minimum competency required in the profession as A.I. has taken over all the easier, specialized activities and, parenthetically, a dramatic increase in compensation. While ultimately an optimistic outcome, for current practitioners, instructors and recruiters, this is not a rosy scenario.
As I told my subordinates when I was a Financial Manager, 'Come to me with a problem and you are a Professional. Come to me with a problem and a proposed solution and you are a future Financial Manager.' If I expected it of my subordinates, I clearly should expect it of myself. So, if you are an Accountant, Analyst, Instructor or Recruiter and you understand this site and specifically this article, what should you be doing? What is the proposed solution?
First, as you will come to understand in 'The Death of Capitalism', 'The Rise of the Knowledge Class' and 'The Enterprise Network', the large, hierarchical, usually publicly traded and multinational corporation will not survive the transformation to an Information Age global economy. It will be replaced by Enterprise Networks, operating not under a single, hierarchical and unified management, but rather through strategic partnerships, vendor, customer and consultative relationships. You will not be an employee, you will be an owner-operator of one of the enterprises within the Network.
If it is your goal to become a Polymathic CFO in the Information Age, you will need to either wait until the transformation to an Information Age civilization and economy unfolds and find something else to do until that happens, or you need to push the envelope yourself by immediately leaving the corporate world and becoming a CFO of an enterprise preferably imbedded within an Enterprise Network. If you do not already have competency in all areas of Accounting and Finance, you are probably not qualified to do this at this time.
As you will understand when you read 'The Death of Capitalism' and 'Building a Liberating Portfolio While Saving the World' the investment markets are undergoing profound change. Over the next decade, the emphasis will migrate away from secondary markets, capital appreciation and acquisition strategies toward primary markets, income streams and organic growth. The ability to analyze the performance and potential of an enterprise will take precedence over the ability to analyze markets and market statistics. This means that the jump from Accountant or, even better, Financial Analyst to Fund Manager is a rather easy one. As investment dollars leave the secondary markets and begin to seek start-up or early round private equity opportunities, the outlook for this productive activity is very, very good. This too, needs to be a polymathic profession with expertise that extends to marketing, operations, technology and future studies.
As the quantity of openings for Accountants and Financial Analysts plummet, the opportunities for executive and professional recruiters also will fall. There will, however, be an ever increasing demand for Organizational Developers who will assist in constructing the management teams of the enterprises within Enterprise Networks. When the Transformation is complete a typical 25 million USD enterprise will be comprised of only the "C' jobs. Those will most commonly be CEO, COO, CFO, CIO, CTO and CMO. The Practitioner will first bring qualified candidates into an appropriate Enterprise Network and then, working with an aspiring CEO and the fund manager(s), build the complete management team. When a management team member leaves, retires or dies, the Practitioner will also be retained by the enterprise to acquire a replacement.
There is much buzz being generated currently by M.I.T.'s decision to introduce a certification process for their free, online and automated courses. Stanford has been pushing the envelope on this, as well. What is becoming apparent is that 90% of all University Professors and Instructors will not be needed. Since the demand for Accountants and Analysts will be plummeting until it again reaches its current level some time in the 2030's, Accounting Professors and Instructors will be hit doubly hard.
Like the profession of Physician, employment levels will be demand constrained. As you read 'The Cultures of Affluence' you will understand that the demand for personal development through learning will increase. However, it will not increase tenfold and that increase will be in self-actualization and 'meaning of life' style courses, not Accounting and Finance. So, if you are a Professor or Instructor in these areas, you better start planning your new career and sooner is much better than later. It is very unlikely that there will be any significant rebound once the employment rolls begin to decrease.
Whatever your current situation within the fields and whatever your aspirations for the future, the most important first step is to assure that you are not flying blindly into that future. There are lots of 'Futurists' out there who want to tell you about what the future might hold. Most of them will bombard you with hundreds of potential new 'gee whiz' gizmos.
Many of them are all about the Singularity, a time projected to be around 2045, when computers surpass humans. Some go even further and tell you about a time when humans become machines. Of course, there are a whole lot of Futurists that opportunistically play into the common beliefs of Global Climate Change, Peak Oil, the BRIC age, etc. Some conflate Strategic Planning and Futurism in order to capitalize upon the corporate consulting market.
Really, only I look at the near future, say between now and 2040 or the likely career span for the 40 year old of today, with an unwavering eye toward personal relevance for my subscribers. I look at career, lifestyle, community, personal finance, etc. I do so from the vantage point of having been a Controller, a Manager of Financial Planning and Analysis, a Director of Strategic Planning and a CFO and a business owner. I do so with an imposing wealth of polymathic knowledge acquired over 40 years of intensive study. I am both competent and disposed to assisting you through the treacherous years before us.
You should read the Abstracts here. It should take you less than an hour. Then, you should subscribe to The Future 101. For $54.95 per year, I provide you with a graduate level, online course of study that will provide you with an understanding of the emerging, global Information Age civilization. It will not be 'pie in the sky' or designed to 'blow your mind.' It is designed to be personally relevant. It is designed to help you to identify your correct decisions, attitudes and actions now and over the next year or two.
Also, through The Polymathic Institute I will be building the infrastructure in the form of Enterprise Networks that you can use to begin to implement your Information Age action plan. If you are an Accountant, Analyst, Recruiter or Instructor this is most likely something you should be doing, at least part-time, as soon as possible.
In the near future your accounting software will be able to talk directly with the accounting software of your vendors, your customers, your bank and the various government reporting agencies. Invoices will be e-mailed from your accounting software to those of your customers where they will be triple matched and entered automatically into Accounts Payable. When the invoice is to be paid, your vendor's accounting software will notify its bank's software to pay your bank. Your accounting software will apply the payment and automatically notify your customer's accounting software of their new balance.
Payroll information will be reported automatically, wages and deductions calculated, necessary tax reports prepared and e-mailed to the appropriate agencies and the net pay will be automatically deposited in employees' bank accounts. Your accounting software will automatically calculate sales tax and e-mail the reports to the various taxing authorities. Similar imbedded expert systems will take over the inventory control and purchasing functions. In other words, over the next five to ten years, all clerks will become virtual. The live ones will be laid off.
The above scenario is not a someday, gee whiz, event. It requires no new technology. The required documents already exist as files in your accounting software. Currently, they are being printed out, mailed, manually received, entered into the recipient's accounting software, etc.. All that is really required is a File Format Translator so that your accounting software can create a record that your vendors', customers', bank's and reporting agencies' software can interpret. Once this is accomplished, most clerical functions will go the way of chimney sweeps and elevator attendants.
This will likely be stealth automation. One of my premium subscribers talks about how, with every new release, more of his job is automated. In similar form, over the next five years, every new release of your accounting software will automate more of these functions until they are completely automated. Twenty clerk AP departments of today may be reduced to just one or two.
In February of 2011, IBM unveiled Watson, a computer that spectacularly demonstrated that it could beat virtually everyone at Jeopardy. It played and easily bested the two top past champions.
In order to do this the computer was required to hear a natural language answer, usually designed specifically to be ambiguous, interpret the answer, search through its database, often make conceptually remote connections, find the correct information and, lastly, formulate the question to which the answer was related. As this video concludes, Jeopardy is the beginning, not the end of what will be a profoundly transformative technology.
IBM is creating, from Watson, a Physician's Assistant, named Dr. Watson, that will most likely be able to diagnose and treat diseases better than the Physicians it is assisting. It will lower costs, streamline the diagnosis process, reduce unnecessary tests and improve outcomes. Many in the field, as this Washington Post article demonstrates, are amazed by the technology and optimistic about its potential. Very recently, Wellpoint, the largest health benefits company in the U.S. announced that it had reached an agreement with IBM to "put Watson to work in health care."
This is, however, the beginning, not the end of the process. Automated diagnostic systems are beginning to surface everywhere with the ability to outperform the best of their human counterparts. This has led the X Prize Foundation to create their 'Tricorder' X Prize. X Prize boldly states, " With the equivalent of a board of physicians in your pocket, wireless sensors and imaging, you will be able to assess health and determine health care needs with a device in the palm of your hand." Clearly, A.I. and expert systems are ready to completely transform the medical industry, not someday, but now and going forward.
The question naturally arises, 'How soon will IBM or one of its competitors announce that it is creating an A.I. accountant?' Surely, if Watson can beat almost everyone at Jeopardy and his child, Dr. Watson can out perform Physicians in medicine, accounting and finance professionals will not be able to compete in knowledge, cost or accuracy with a Mr. Watson, CMA, CPA, CFA. Dr. Watson is estimated to require 18 months to bring to market. It should not take longer to bring Mr. Watson CMA, CPA, CFA to market. In many ways, he will be easier. For the most part, he will be a 'plug-in' to a system that is well bounded and already residing on your computer.
He will come loaded with all GAAP, GAAS, the APB Bulletins, FASB Statements, IFRS Standards, Corporate Tax Law, local regulatory, reporting and tax requirements and will be programmed with all accounting procedures and standard financial analysis methodologies.
It will be able to do NPV and DCF in its 'head' and program and perform monte carlo simulations, and other what-if analyses in a blink of an eye. It will have all the company's financial history at its finger tips. It will be able to close the books, make standard and adjusting journal entries, reconcile all GL accounts and perform statistical reviews of subsidiary ledgers and do it all far more quickly and accurately than any human. Since it is equipped with natural language capability, it will be able to produce the comments and analysis of the financial statements.
It will be able to produce the various required government reports and e-mail them directly to the proper agency. Every one of the quickly decreasing members of management will be able to, with one click, access Mr. Watson, CMA, CPA, CFA and ask natural language questions. The company will still need a Polymathic CFO to acquire and use a deep understanding of the company's financial data in the management of the enterprise. However, all other Accountants and Analysts will be replaced by the software.
This, too, will likely be stealth automation. IBM in partnership with SAP, Oracle, PeopleSoft, etc. will imbed more Watson-like functions into each release of its software. On one release, it may announce 'The Reconciler'. On the next release, it may announce 'The Adjusting Journal Entry Generator'. The next, it may announce a 'Sales Tax Reporter.' In this way, over time, with each release, fewer of the non-management Accountants will be needed. Next, as the number of Staff Accountants decreases, the number of Accounting Managers will decrease. Smaller enterprises will have their finance operations completely automated and will rely upon a part-time CFO.
As the profession experiences this implosion, it will then move to reductions in required Accounting Instructors and Recruiters. I know many readers will want to reject this outcome. However, with all due respect to Accountants, I have been one, Accounting is easier than playing Jeopardy at the championship level. It is easier than medicine. Watson has conquered those activities. It will conquer Accounting. The question is only, 'When?'
Nobody can know that for sure. However, Dr. Watson was put on an 18 month development schedule. It is unlikely that Mr. Watson CMA, CPA, CFA will require more. If we guess 24 months for IBM or a competitor to 'get to it', an 18 month development time and another 18 months for the major Accounting Software companies to imbed it in their next release, we have, perhaps five years. After that, the whole profession is on borrowed time.
So, unless you are approaching retirement, sometime between 2017 and 2022, you will need to find something else to do. What this will entail cannot really be properly understood without understanding The Income Explosion and Technological Unemployment which I Abstract on this site and explore in great detail at my premium subscriber site. I strongly advise you to read them, if you have not already done so.
Basically, the Economics of the next thirty years is going to be driven by two countervailing forces. First, advanced robotics and A.I. will drive incomes up, perhaps ten fold, from current U.S. levels. Second, 90% of all job descriptions will be eliminated. In the end, the two counteract one another and all will be well. However, all will not be well on the way.
Some jobs and professions will be demand limited. In other words, if the productivity of the medical profession increases tenfold, it is unlikely that people will seek ten times more medical care. As Dr. Watson and similar technologies increase the productivity of Physicians, the number required will fall and it will fall permanently. However, some professions, such as the Polymathic CFO, the descendent of Accountants, Financial Analysts, etc. will grow as economic activity grows.
However, the current jobs will be eliminated today and the new jobs will begin to become significant much later. We see an emerging picture of a period of dramatic unemployment and underemployment in the profession, followed by a slow, but dramatic increase in demand over the subsequent ten to twenty years. However, it will not be a return to business as usual. There will be both an increase in the minimum competency required in the profession as A.I. has taken over all the easier, specialized activities and, parenthetically, a dramatic increase in compensation. While ultimately an optimistic outcome, for current practitioners, instructors and recruiters, this is not a rosy scenario.
As I told my subordinates when I was a Financial Manager, 'Come to me with a problem and you are a Professional. Come to me with a problem and a proposed solution and you are a future Financial Manager.' If I expected it of my subordinates, I clearly should expect it of myself. So, if you are an Accountant, Analyst, Instructor or Recruiter and you understand this site and specifically this article, what should you be doing? What is the proposed solution?
First, as you will come to understand in 'The Death of Capitalism', 'The Rise of the Knowledge Class' and 'The Enterprise Network', the large, hierarchical, usually publicly traded and multinational corporation will not survive the transformation to an Information Age global economy. It will be replaced by Enterprise Networks, operating not under a single, hierarchical and unified management, but rather through strategic partnerships, vendor, customer and consultative relationships. You will not be an employee, you will be an owner-operator of one of the enterprises within the Network.
If it is your goal to become a Polymathic CFO in the Information Age, you will need to either wait until the transformation to an Information Age civilization and economy unfolds and find something else to do until that happens, or you need to push the envelope yourself by immediately leaving the corporate world and becoming a CFO of an enterprise preferably imbedded within an Enterprise Network. If you do not already have competency in all areas of Accounting and Finance, you are probably not qualified to do this at this time.
As you will understand when you read 'The Death of Capitalism' and 'Building a Liberating Portfolio While Saving the World' the investment markets are undergoing profound change. Over the next decade, the emphasis will migrate away from secondary markets, capital appreciation and acquisition strategies toward primary markets, income streams and organic growth. The ability to analyze the performance and potential of an enterprise will take precedence over the ability to analyze markets and market statistics. This means that the jump from Accountant or, even better, Financial Analyst to Fund Manager is a rather easy one. As investment dollars leave the secondary markets and begin to seek start-up or early round private equity opportunities, the outlook for this productive activity is very, very good. This too, needs to be a polymathic profession with expertise that extends to marketing, operations, technology and future studies.
As the quantity of openings for Accountants and Financial Analysts plummet, the opportunities for executive and professional recruiters also will fall. There will, however, be an ever increasing demand for Organizational Developers who will assist in constructing the management teams of the enterprises within Enterprise Networks. When the Transformation is complete a typical 25 million USD enterprise will be comprised of only the "C' jobs. Those will most commonly be CEO, COO, CFO, CIO, CTO and CMO. The Practitioner will first bring qualified candidates into an appropriate Enterprise Network and then, working with an aspiring CEO and the fund manager(s), build the complete management team. When a management team member leaves, retires or dies, the Practitioner will also be retained by the enterprise to acquire a replacement.
There is much buzz being generated currently by M.I.T.'s decision to introduce a certification process for their free, online and automated courses. Stanford has been pushing the envelope on this, as well. What is becoming apparent is that 90% of all University Professors and Instructors will not be needed. Since the demand for Accountants and Analysts will be plummeting until it again reaches its current level some time in the 2030's, Accounting Professors and Instructors will be hit doubly hard.
Like the profession of Physician, employment levels will be demand constrained. As you read 'The Cultures of Affluence' you will understand that the demand for personal development through learning will increase. However, it will not increase tenfold and that increase will be in self-actualization and 'meaning of life' style courses, not Accounting and Finance. So, if you are a Professor or Instructor in these areas, you better start planning your new career and sooner is much better than later. It is very unlikely that there will be any significant rebound once the employment rolls begin to decrease.
Whatever your current situation within the fields and whatever your aspirations for the future, the most important first step is to assure that you are not flying blindly into that future. There are lots of 'Futurists' out there who want to tell you about what the future might hold. Most of them will bombard you with hundreds of potential new 'gee whiz' gizmos.
Many of them are all about the Singularity, a time projected to be around 2045, when computers surpass humans. Some go even further and tell you about a time when humans become machines. Of course, there are a whole lot of Futurists that opportunistically play into the common beliefs of Global Climate Change, Peak Oil, the BRIC age, etc. Some conflate Strategic Planning and Futurism in order to capitalize upon the corporate consulting market.
Really, only I look at the near future, say between now and 2040 or the likely career span for the 40 year old of today, with an unwavering eye toward personal relevance for my subscribers. I look at career, lifestyle, community, personal finance, etc. I do so from the vantage point of having been a Controller, a Manager of Financial Planning and Analysis, a Director of Strategic Planning and a CFO and a business owner. I do so with an imposing wealth of polymathic knowledge acquired over 40 years of intensive study. I am both competent and disposed to assisting you through the treacherous years before us.
You should read the Abstracts here. It should take you less than an hour. Then, you should subscribe to The Future 101. For $54.95 per year, I provide you with a graduate level, online course of study that will provide you with an understanding of the emerging, global Information Age civilization. It will not be 'pie in the sky' or designed to 'blow your mind.' It is designed to be personally relevant. It is designed to help you to identify your correct decisions, attitudes and actions now and over the next year or two.
Also, through The Polymathic Institute I will be building the infrastructure in the form of Enterprise Networks that you can use to begin to implement your Information Age action plan. If you are an Accountant, Analyst, Recruiter or Instructor this is most likely something you should be doing, at least part-time, as soon as possible.
Thursday, February 2, 2012
Building a Liberating Portfolio While Saving the World
Lately, I have been reading ever more frequently that 'nobody wants a job'. That, of course, is ludicrous. What is really meant is that most people don't want the job they have. They spend 40 hours a week at a job and another 3.5 hours commuting to engage in an activity that they really would rather not do. The problem is, everyone wanted to be a rock star. The vast majority were not good enough to get one of the limited gigs, so,instead, they are changing brake pads at the local garage. All day long they engage in the same dull and repetitive activity.
Within ten, perhaps twenty, years we will all have 'smart garages'. We will drive in every evening and every morning the garage will have done the necessary maintenance, washed and detailed our car and we will be ready to go without ever thinking about the details. No more changing brake pads for anyone.
But for now, the rock star is an auto mechanic and he is selling five of his days per week to an economy that needs the work done. In return, he is allowed to live two days per week. If you ask him if he wants his job, of course he'll say no. However, if you tell him he can be a rock star after all, he will be in line, taking one of the gigs, before you can blink.
Almost everyone has productive urges. They really don't want to be completely indolent. They simply want to do the productive things that they want to do without concern for how much money they will or will not earn from it. They want to do it as much as they want to do it, not how much they need to do it in order to have enough money. It is from this frustration over inappropriate work rather than a desire to avoid work, that the attractiveness of The Venus Project and The Zeitgeist Movement originates.
One of the most extraordinary opportunities to work 'how you wish rather than how you must' arises from the dramatic changes that are taking place in the investment markets. If you read the Abstract, The Death of Capitalism, you will, actually, have all the information you need to understand what it is. However, I will summarize it here, as well.
In the Abstract I show you that Industrial Age companies had equity constrained growth of about 23% per year and typically had Market to Book Value Ratios around 2.5. Information Age companies have equity constrained growth rates of 67% and Market to Book Value Ratios in the range of 12. Because of this fundamental and dramatic change in the structure of Financial Markets, nearly everyone actually has their thinking about investing exactly backward.
Because the value of an Industrial Age company was so concentrated in the financial capital, both contributed and retained, people have thought about how much portfolio value they can have in Y years with an initial investment of X. For example, suppose a 35 year old has a $10,000 portfolio that they might like to roll over into an IRA and pursue higher risk, higher return investment opportunities.
If they set their return expectations at, say, 18% (historically the S&P 500 returns about 11%) they will expect a portfolio valuation of $1,996,292.77 thirty two later when they retire at the age of 67. However, they understand that inflation will have devalued their portfolio and it will likely be, in today's dollars, valued at about $900,000. They will need to lower their return expectations in order to prudently lower their risk, after retirement, likely to about 7% after inflation. That means that they will have about $63,000 of retirement income in addition to their Social Security and/or pension income.
There is one more, very important aspect that most people don't know or don't think about. As a mass market investor, when you buy stock, it is almost always from the secondary market. What that means is that you are not investing in a company. The company gets none of your money. Rather, you are making a wager. You are betting that the prospects for return on investment are more than supported by the purchase price. With the fullness of time, if you are correct, you win and the seller loses. If not, it is the other way around. You lose and the seller wins.
It isn't quite a zero sum game because the value of stocks do tend to increase over time and most, though not all, dividend a portion of their earnings to the owner of record. However, it has nothing to do with investing in the future economy or in the businesses themselves. Wall Street, in this manifestation, which is by far its largest one, is essentially a huge casino where the house take, effectively, is negative. If you win, you may be saving yourself, but you are doing nothing to save the world. Also, above the growth in market valuation, it is a zero sum game and your win is someone's loss.
However, there is a primary market for securities, as well. It is totally different from the casinos such as the New York, NASDAQ, London, Tokyo, Euronext, Deutsche Borse, Borsa Italiana, et al stock exchanges. It is private. Your purchase funds the business itself. This has been primarily a playground for the wealthy, either through Venture Capital partnerships or individually as 'Investment Angels'. It is a very significant component of the phenomenon of 'the rich getting richer' and the resultant income and wealth inequalities. The only significant exceptions are the IPOs where individual investors do get to invest in the company directly, at least in part. Most IPO's also cash out early round investors and as such are secondary market purchases.
The risks in the private, primary markets are, indeed, higher, but the rewards are also higher. When the Industrial Age companies could not grow faster than 23% per year without additional equity infusions, for the small investor, the risk was not justified by the potential return. However, with the 67% equity constrained returns of Information Age companies, the dynamic is totally different.
In the wonderful SAP panel discussion on the future of business, X Prize Chairman, Peter Diamandis introduced the idea of an Age of Abundance. He said that billion dollar companies will go bankrupt overnight to be replaced almost as quickly by new billion dollar companies. In this, he is absolutely correct. In fact, during the Transformation, Real Gross World Product (GWP) will likely grow 70 fold. Not only will new billion dollar companies emerge, there will be seventy of them for every one that goes under. In other words, during the Transformation, new billion dollar companies will arise everywhere. So, let's think about how much it will cost to get into one.
In The Death of Capitalism Abstract, I show that Industrial Age companies typically will have an equity constrained growth rate of about 23% and a Market to Book Value Ratio of 2.5:1.0. On the other hand, Information Age companies typically will have a equity constrained growth rate of 67% and a Market to Book Value Ratio of 12:1.0. You will know whether you properly appreciate the difference based upon whether it stuns you or not. If it doesn't, you need to think about it more. If it does, then you understand that the world of business and investment markets is undergoing its greatest upheaval in history. It will enable a democritization of wealth.
An Industrial Age company with a billion dollar Market Value will likely have a 400 million USD Book Value. Suppose that the company had been started ten years earlier and the first round of investors got 50% of the company for 100% of the equity contribution. A simple calculation tells us that the investors must have put in 400 million USD / (1.23^10) =50,467,161.90 USD. Their current market value is 500 million USD which translates to a respectable 25.77% annual return. In order to buy a $1,000,000 portfolio ten years hence, the cost would be 50,467.16 USD today. Most of us don't have that amount of risk capital available to us.
Now let's consider the billion dollar Information Age company. Its book value will be 83,333,333 USD. At a 67% annual equity constrained growth rate, the contributed capital ten years prior would have been 83,333,333.33 / (1.67^10) =493,917.08 USD. However, because of the high competition for the very high ROIs that will typify Information Age companies, the initial investors only received 20% of the company for a Market Value of 200,000,000. The annual return is 82.28%. More importantly, you can buy $1,000,000 of portfolio ten years hence for just 2,469.59 USD today! Many, probably most, of us do have that amount available for risk capital.
As we discuss in The Future 101, it is also very significant that in the Information Age scenario, the entrepreneur kept 80% of the company versus keeping 50% of the company in the Industrial Age scenario. It not only enables entrepreneurship in the Information Age, it makes it much more attractive.
So that is the light switch that needs to be flipped in your world view. Don't think, 'I've got X to invest. What return can I realistically expect?' That is thinking Industrial Age. Rather think, 'I want a X million USD portfolio in Y years. How much is it going to cost me?' Because Information Age companies have Market to Book Value Ratios of 10:1.0 or above, the invested financial capital is actually less than 10% of the value of the company. In order to get in, you will need to contribute a nominal amount of money, but that is minor compared to the knowledge capital you are bringing to the table.
Now, let's get back to that 35 year old with a $10,000 IRA and a desire to get high returns while accepting higher risks. The numbers we have been using are overly simplistic. There will be losses. However, one does not hold the same position indefinitely. The increase in Market to Book Value from an initial 5:1 to 12:1, increases your return every time you change positions from a mature investment to a new one. Taking everything into account, a realistic Industrial Age return is about 18%. In other words, the return for pre-IPO investments in the Industrial Age were not much different than for the more liquid and generally lower risk publicly traded investment strategies.
However, with the Information Age percentages and ratios, a realistic return is in the 65% range. So $10,000 X 1.65^32 = $91,093,253,745. Of course, you are not likely to actually achieve such a result. While GWP will grow dramatically over the next 30 years, it will not support everyone achieving such results. In fact, because that isn't possible, the Investment Markets are going to have truly profound shocks as they adjust to the new economic realities of the Information Age. We explore these shocks and the new points of equalibria in The Future 101. For now, however, look at the following chart:
What will happen in reality is that sometime prior to the age of 50, the investor will decide that the portfolio is large enough, there is no reason to continue to work at their current productive activity that is not optimal and they will choose to 'retire' with a seven figure income and an eight figure net worth. Retire, of course, means to work how one wishes, not how one must. Additionally, the amount that needs to be reinvested each year keeps increasing and, at some point, the investor will have neither the time nor the opportunities to continue the exponential growth in portfolio valuation. However, many will choose to continue to allocate a portion of their income to new opportunities, thereby assuring, albeit at a lower rate, continued growth in portfolio value and income.
This is a fundamental and profound change in how investments affect personal finance. Rather than preparing for retirement, which will actually be closer to 80 than 67 for the 35 year old of today, the person will be earning their liberation. Long before reaching the end of their productive years, most people will be liberated from the need to consider personal finances when considering their preferred productive activity.
Of course, the sooner you begin your investment program, the sooner you will reach your point of liberation. In the example above, it takes 15 years. In order to start, you will need three things.
The first two can be easily acquired by subscribing to The Future 101. You are at an Abstract site and this is an Abstract. In The Future 101 we will discuss all aspects of building a liberating portfolio. You will gain knowledge that will directly improve the quality of your investment decisions.
Additionally, our alumni will have the opportunity to collaborate with entrepreneurs, investors, strategic partners and advisers through Fellowship in The Polymathic Institute. It is specifically designed to be the opportunity rich and success prone environment that you will need. It will not only provide you with a steady stream of investment opportunities, it will also provide you with the network and infrastructure you need to successfully enter a Knowledge Class career.
Parenthetical to this article, it will also provide you with an intellectually rich social environment. Unlike high IQ societies, there is no test score required for Fellowship although the median IQ of Fellows will undoubtedly be very high. Rather, it will be a community characterized by extraordinary intelligence, unrelenting drive, well tempered vision and a bias toward excellence.
The information presented here is in complete conformity with the 'save the world by saving ourselves' strategy that I discuss often here and at the premium service. As you build your portfolio, you will be enabling Information Age enterprises that will move people out of the Industrial Age economy, thereby indemnifying them against the worst of the 'train wreck.' Simultaneously, by reducing the supply of Industrial Age job seekers, you will be putting downward pressure on Technological Unemployment and putting upward pressure on Industrial Age wages.
If you are a 'look before you leap' sort of person, I suggest that you read the Abstracts here and then subscribe to The Future 101. It is a nominal risk for the opportunity to place yourself on a far superior career, wealth and life track. Some of those of great vision and a high level of self confidence may wish to move directly to Fellowship. If you wish to consider this option, contact me at Michael.W.Ferguson@hotmail.com.
I look forward to your continuing involvement in this, a great personal and societal cause and adventure.
Within ten, perhaps twenty, years we will all have 'smart garages'. We will drive in every evening and every morning the garage will have done the necessary maintenance, washed and detailed our car and we will be ready to go without ever thinking about the details. No more changing brake pads for anyone.
But for now, the rock star is an auto mechanic and he is selling five of his days per week to an economy that needs the work done. In return, he is allowed to live two days per week. If you ask him if he wants his job, of course he'll say no. However, if you tell him he can be a rock star after all, he will be in line, taking one of the gigs, before you can blink.
Almost everyone has productive urges. They really don't want to be completely indolent. They simply want to do the productive things that they want to do without concern for how much money they will or will not earn from it. They want to do it as much as they want to do it, not how much they need to do it in order to have enough money. It is from this frustration over inappropriate work rather than a desire to avoid work, that the attractiveness of The Venus Project and The Zeitgeist Movement originates.
One of the most extraordinary opportunities to work 'how you wish rather than how you must' arises from the dramatic changes that are taking place in the investment markets. If you read the Abstract, The Death of Capitalism, you will, actually, have all the information you need to understand what it is. However, I will summarize it here, as well.
In the Abstract I show you that Industrial Age companies had equity constrained growth of about 23% per year and typically had Market to Book Value Ratios around 2.5. Information Age companies have equity constrained growth rates of 67% and Market to Book Value Ratios in the range of 12. Because of this fundamental and dramatic change in the structure of Financial Markets, nearly everyone actually has their thinking about investing exactly backward.
Because the value of an Industrial Age company was so concentrated in the financial capital, both contributed and retained, people have thought about how much portfolio value they can have in Y years with an initial investment of X. For example, suppose a 35 year old has a $10,000 portfolio that they might like to roll over into an IRA and pursue higher risk, higher return investment opportunities.
If they set their return expectations at, say, 18% (historically the S&P 500 returns about 11%) they will expect a portfolio valuation of $1,996,292.77 thirty two later when they retire at the age of 67. However, they understand that inflation will have devalued their portfolio and it will likely be, in today's dollars, valued at about $900,000. They will need to lower their return expectations in order to prudently lower their risk, after retirement, likely to about 7% after inflation. That means that they will have about $63,000 of retirement income in addition to their Social Security and/or pension income.
There is one more, very important aspect that most people don't know or don't think about. As a mass market investor, when you buy stock, it is almost always from the secondary market. What that means is that you are not investing in a company. The company gets none of your money. Rather, you are making a wager. You are betting that the prospects for return on investment are more than supported by the purchase price. With the fullness of time, if you are correct, you win and the seller loses. If not, it is the other way around. You lose and the seller wins.
It isn't quite a zero sum game because the value of stocks do tend to increase over time and most, though not all, dividend a portion of their earnings to the owner of record. However, it has nothing to do with investing in the future economy or in the businesses themselves. Wall Street, in this manifestation, which is by far its largest one, is essentially a huge casino where the house take, effectively, is negative. If you win, you may be saving yourself, but you are doing nothing to save the world. Also, above the growth in market valuation, it is a zero sum game and your win is someone's loss.
However, there is a primary market for securities, as well. It is totally different from the casinos such as the New York, NASDAQ, London, Tokyo, Euronext, Deutsche Borse, Borsa Italiana, et al stock exchanges. It is private. Your purchase funds the business itself. This has been primarily a playground for the wealthy, either through Venture Capital partnerships or individually as 'Investment Angels'. It is a very significant component of the phenomenon of 'the rich getting richer' and the resultant income and wealth inequalities. The only significant exceptions are the IPOs where individual investors do get to invest in the company directly, at least in part. Most IPO's also cash out early round investors and as such are secondary market purchases.
The risks in the private, primary markets are, indeed, higher, but the rewards are also higher. When the Industrial Age companies could not grow faster than 23% per year without additional equity infusions, for the small investor, the risk was not justified by the potential return. However, with the 67% equity constrained returns of Information Age companies, the dynamic is totally different.
In The Death of Capitalism Abstract, I show that Industrial Age companies typically will have an equity constrained growth rate of about 23% and a Market to Book Value Ratio of 2.5:1.0. On the other hand, Information Age companies typically will have a equity constrained growth rate of 67% and a Market to Book Value Ratio of 12:1.0. You will know whether you properly appreciate the difference based upon whether it stuns you or not. If it doesn't, you need to think about it more. If it does, then you understand that the world of business and investment markets is undergoing its greatest upheaval in history. It will enable a democritization of wealth.
An Industrial Age company with a billion dollar Market Value will likely have a 400 million USD Book Value. Suppose that the company had been started ten years earlier and the first round of investors got 50% of the company for 100% of the equity contribution. A simple calculation tells us that the investors must have put in 400 million USD / (1.23^10) =50,467,161.90 USD. Their current market value is 500 million USD which translates to a respectable 25.77% annual return. In order to buy a $1,000,000 portfolio ten years hence, the cost would be 50,467.16 USD today. Most of us don't have that amount of risk capital available to us.
Now let's consider the billion dollar Information Age company. Its book value will be 83,333,333 USD. At a 67% annual equity constrained growth rate, the contributed capital ten years prior would have been 83,333,333.33 / (1.67^10) =493,917.08 USD. However, because of the high competition for the very high ROIs that will typify Information Age companies, the initial investors only received 20% of the company for a Market Value of 200,000,000. The annual return is 82.28%. More importantly, you can buy $1,000,000 of portfolio ten years hence for just 2,469.59 USD today! Many, probably most, of us do have that amount available for risk capital.
As we discuss in The Future 101, it is also very significant that in the Information Age scenario, the entrepreneur kept 80% of the company versus keeping 50% of the company in the Industrial Age scenario. It not only enables entrepreneurship in the Information Age, it makes it much more attractive.
So that is the light switch that needs to be flipped in your world view. Don't think, 'I've got X to invest. What return can I realistically expect?' That is thinking Industrial Age. Rather think, 'I want a X million USD portfolio in Y years. How much is it going to cost me?' Because Information Age companies have Market to Book Value Ratios of 10:1.0 or above, the invested financial capital is actually less than 10% of the value of the company. In order to get in, you will need to contribute a nominal amount of money, but that is minor compared to the knowledge capital you are bringing to the table.
Now, let's get back to that 35 year old with a $10,000 IRA and a desire to get high returns while accepting higher risks. The numbers we have been using are overly simplistic. There will be losses. However, one does not hold the same position indefinitely. The increase in Market to Book Value from an initial 5:1 to 12:1, increases your return every time you change positions from a mature investment to a new one. Taking everything into account, a realistic Industrial Age return is about 18%. In other words, the return for pre-IPO investments in the Industrial Age were not much different than for the more liquid and generally lower risk publicly traded investment strategies.
However, with the Information Age percentages and ratios, a realistic return is in the 65% range. So $10,000 X 1.65^32 = $91,093,253,745. Of course, you are not likely to actually achieve such a result. While GWP will grow dramatically over the next 30 years, it will not support everyone achieving such results. In fact, because that isn't possible, the Investment Markets are going to have truly profound shocks as they adjust to the new economic realities of the Information Age. We explore these shocks and the new points of equalibria in The Future 101. For now, however, look at the following chart:
| Age | Beginning | Income | Ending |
| 36 | 10,000 | 6,500 | 16,500 |
| 37 | 16,500 | 10,725 | 27,225 |
| 38 | 27,225 | 17,696 | 44,921 |
| 39 | 44,921 | 29,199 | 74,120 |
| 40 | 74,120 | 48,178 | 122,298 |
| 41 | 122,298 | 79,494 | 201,792 |
| 42 | 201,792 | 131,165 | 332,957 |
| 43 | 332,957 | 216,422 | 549,378 |
| 44 | 549,378 | 357,096 | 906,474 |
| 45 | 906,474 | 589,208 | 1,495,683 |
| 46 | 1,495,683 | 972,194 | 2,467,876 |
| 47 | 2,467,876 | 1,604,120 | 4,071,996 |
| 48 | 4,071,996 | 2,646,797 | 6,718,793 |
| 49 | 6,718,793 | 4,367,216 | 11,086,009 |
| 50 | 11,086,009 | 7,205,906 | 18,291,915 |
This is a fundamental and profound change in how investments affect personal finance. Rather than preparing for retirement, which will actually be closer to 80 than 67 for the 35 year old of today, the person will be earning their liberation. Long before reaching the end of their productive years, most people will be liberated from the need to consider personal finances when considering their preferred productive activity.
Of course, the sooner you begin your investment program, the sooner you will reach your point of liberation. In the example above, it takes 15 years. In order to start, you will need three things.
- You will need a more complete understanding of the Information Age investment markets.
- You will need a superior knowledge of futurity so that you can make superior investment decisions.
- You will need an opportunity rich and success prone productive environment that can bring you a steady stream of superior Information Age investment opportunities.
The first two can be easily acquired by subscribing to The Future 101. You are at an Abstract site and this is an Abstract. In The Future 101 we will discuss all aspects of building a liberating portfolio. You will gain knowledge that will directly improve the quality of your investment decisions.
Additionally, our alumni will have the opportunity to collaborate with entrepreneurs, investors, strategic partners and advisers through Fellowship in The Polymathic Institute. It is specifically designed to be the opportunity rich and success prone environment that you will need. It will not only provide you with a steady stream of investment opportunities, it will also provide you with the network and infrastructure you need to successfully enter a Knowledge Class career.
Parenthetical to this article, it will also provide you with an intellectually rich social environment. Unlike high IQ societies, there is no test score required for Fellowship although the median IQ of Fellows will undoubtedly be very high. Rather, it will be a community characterized by extraordinary intelligence, unrelenting drive, well tempered vision and a bias toward excellence.
The information presented here is in complete conformity with the 'save the world by saving ourselves' strategy that I discuss often here and at the premium service. As you build your portfolio, you will be enabling Information Age enterprises that will move people out of the Industrial Age economy, thereby indemnifying them against the worst of the 'train wreck.' Simultaneously, by reducing the supply of Industrial Age job seekers, you will be putting downward pressure on Technological Unemployment and putting upward pressure on Industrial Age wages.
If you are a 'look before you leap' sort of person, I suggest that you read the Abstracts here and then subscribe to The Future 101. It is a nominal risk for the opportunity to place yourself on a far superior career, wealth and life track. Some of those of great vision and a high level of self confidence may wish to move directly to Fellowship. If you wish to consider this option, contact me at Michael.W.Ferguson@hotmail.com.
I look forward to your continuing involvement in this, a great personal and societal cause and adventure.
Monday, December 19, 2011
More on 1,000 True Fans
Creatives come in all sorts of stripes. There are composers, authors, painters, sculptors, fashion designers, architects, inventors, pundits, floral arrangers, interior decorators, television producers, to name a few. In fact, in the article, "What will you be doing in the Information Age?" the first two categories I discuss are Designer and Content Creator, both 'Creatives'.
Whether producing video content or costume jewelry, all Creatives have one thing in common; they must find sufficient fans to pay the bills. The sad fact is that, today, few of them are succeeding. Most are putting forth enormous effort frequently with little or no tangible financial results. In some cases, such as the ad supported blog, the business model, itself, is broken beyond repair.
In many cases, it actually boils down to the simple problem of traffic acquisition. In other words, assuming that you have demonstrated that there is a market for your wares, it then becomes a matter of finding that market for less cost than the resulting revenue generated.
To this end, Technium discussed the idea of 1,000 True Fans. It suggests that the future may be characterized by countless creators who have found 1,000 enthusiasts who will provide them with $100 per year each in revenue. As the author, Kevin Kelly, states, $100 X 1,000 = $100,000 less some expenses is a living for most people.
While true and on the surface 1,000 doesn't sound that difficult, in practice, it is proving just short of impossible. There are exceptions, of course, and Technium discusses Amanda Hocking, a dramatic example. She actually is earning six figures per month. Yes, per month. However, she is notable precisely because she is one of just a handful of examples of a success. Also, she has not found 1,000 True Fans. She has found hundreds of thousands, perhaps millions, of them.
John Scalzi wrote a wonderful article entitled, "The Problem with 1,000 True Fans" that goes a long way in explaining why we have so few success stories. Key among these is a consideration of price elasticity. In other words, if my goal is to obtain $100,000 per year, I can, as Technium suggests, find 1,000 True Fans who support me with $100 per year. Or I could find 10,000 at $10. Or, on the other hand, 100 at $1,000. The Creative is faced with a dilemma. The market research required to determine where on the elasticity curve the optimum profit may be found is too expensive. Consequently, the Creative must guess and they usually guess wrong. Furthermore, for most Creatives, even if they guess correctly, it still won't be easy.
I emphasize again that this is important because Creatives will likely constitute the largest career category in the Information Age. Many of my readers who, presently, don't think they are likely to be one of them are going to turn out to be wrong. The imagination you are demonstrating by reading The Future 101 suggests that over time and over the Transformation, you will discover that it is your home. It is for me, despite spending nearly my whole career in Finance. The Transformation will be forcing many career changes.
However, this needs to be viable and, currently, save for the few notable exceptions, it is not. I have been personally going through this. Some of my readers have been as well. We all have discovered that there are two primary problems.
Suppose a Creative has a business model that requires finding 10,000@$10. Again, assume that the market is English speakers on the Internet, which is about 600 million people. That means that if the Creative searches randomly, one would find a True Fan in every 60,000 people contacted. If you need to talk to 60,000 people to get $10, there just is no way to do it cost effectively. You are doomed before you start.
Of course, we don't really search randomly. We make an effort to find places that distill the general population down to a much greater concentration of True Fan candidates. Even if we do find a place with a hundred times greater concentration, we still need to sort through 600 people to find one True Fan. While finding such a place can be exhilarating, in the final analysis, few of our True Fans are actually hanging out in these kinds of locations. Consequently, we may add a few hundred by this method, but, after that, we have no additional marketing options.
We are, I know I have been, attracted to the notion of WOM. In theory, for those familiar with the concept of Six Degrees of Separation, you can reach every one of your True Fans, simply by asking for some help from those sympathetic readers.
The second problem is that, when it comes to True Fans, rarely is it love at first sight. Most often, one becomes a True Fan through multiple exposures over time. This actually suggests that the middle pricing model, Technium's 1,000@$100 may be the most difficult price point to make work. What I mean by that, is that it is probably far easier to woo a few, say 100@$1,000, if the product output is amenable or to find a large number of candidates, say 10,000@$10, who aren't in love yet, but are willing to part with a little money to continue the process.
The upshot of these two factors is that, in the absence of a more effective aggregators, success will remain elusive. So, the first order of business is to stop quixotically charging off as a lone wolf, attempting to find your 1,000 or 10,000 or 100 True Fans and start working together with other Creatives who are searching for a similar audience or market. This is one of the ideas behind the Enterprise Network. In many cases, traffic is its most important asset.
In many cases, it actually boils down to the simple problem of traffic acquisition. In other words, assuming that you have demonstrated that there is a market for your wares, it then becomes a matter of finding that market for less cost than the resulting revenue generated.
To this end, Technium discussed the idea of 1,000 True Fans. It suggests that the future may be characterized by countless creators who have found 1,000 enthusiasts who will provide them with $100 per year each in revenue. As the author, Kevin Kelly, states, $100 X 1,000 = $100,000 less some expenses is a living for most people.
While true and on the surface 1,000 doesn't sound that difficult, in practice, it is proving just short of impossible. There are exceptions, of course, and Technium discusses Amanda Hocking, a dramatic example. She actually is earning six figures per month. Yes, per month. However, she is notable precisely because she is one of just a handful of examples of a success. Also, she has not found 1,000 True Fans. She has found hundreds of thousands, perhaps millions, of them.
John Scalzi wrote a wonderful article entitled, "The Problem with 1,000 True Fans" that goes a long way in explaining why we have so few success stories. Key among these is a consideration of price elasticity. In other words, if my goal is to obtain $100,000 per year, I can, as Technium suggests, find 1,000 True Fans who support me with $100 per year. Or I could find 10,000 at $10. Or, on the other hand, 100 at $1,000. The Creative is faced with a dilemma. The market research required to determine where on the elasticity curve the optimum profit may be found is too expensive. Consequently, the Creative must guess and they usually guess wrong. Furthermore, for most Creatives, even if they guess correctly, it still won't be easy.
I emphasize again that this is important because Creatives will likely constitute the largest career category in the Information Age. Many of my readers who, presently, don't think they are likely to be one of them are going to turn out to be wrong. The imagination you are demonstrating by reading The Future 101 suggests that over time and over the Transformation, you will discover that it is your home. It is for me, despite spending nearly my whole career in Finance. The Transformation will be forcing many career changes.
However, this needs to be viable and, currently, save for the few notable exceptions, it is not. I have been personally going through this. Some of my readers have been as well. We all have discovered that there are two primary problems.
Suppose a Creative has a business model that requires finding 10,000@$10. Again, assume that the market is English speakers on the Internet, which is about 600 million people. That means that if the Creative searches randomly, one would find a True Fan in every 60,000 people contacted. If you need to talk to 60,000 people to get $10, there just is no way to do it cost effectively. You are doomed before you start.
Of course, we don't really search randomly. We make an effort to find places that distill the general population down to a much greater concentration of True Fan candidates. Even if we do find a place with a hundred times greater concentration, we still need to sort through 600 people to find one True Fan. While finding such a place can be exhilarating, in the final analysis, few of our True Fans are actually hanging out in these kinds of locations. Consequently, we may add a few hundred by this method, but, after that, we have no additional marketing options.
We are, I know I have been, attracted to the notion of WOM. In theory, for those familiar with the concept of Six Degrees of Separation, you can reach every one of your True Fans, simply by asking for some help from those sympathetic readers.
The second problem is that, when it comes to True Fans, rarely is it love at first sight. Most often, one becomes a True Fan through multiple exposures over time. This actually suggests that the middle pricing model, Technium's 1,000@$100 may be the most difficult price point to make work. What I mean by that, is that it is probably far easier to woo a few, say 100@$1,000, if the product output is amenable or to find a large number of candidates, say 10,000@$10, who aren't in love yet, but are willing to part with a little money to continue the process.
The upshot of these two factors is that, in the absence of a more effective aggregators, success will remain elusive. So, the first order of business is to stop quixotically charging off as a lone wolf, attempting to find your 1,000 or 10,000 or 100 True Fans and start working together with other Creatives who are searching for a similar audience or market. This is one of the ideas behind the Enterprise Network. In many cases, traffic is its most important asset.
Friday, December 16, 2011
The Live Anywhere Option: Boutique Villages
In the late 1990's I became fascinated with the Cultural Calculus that I had developed and the resultant expectation of the emergence of numerous intertwined global cultures. At the time I imagined, quite correctly, that a kind of 'cultural quantum' would be necessary. Christopher Alexander, et al. in 'A Pattern Language' argued that the quantum would be 'The Village of 7,000'.
This was based almost entirely upon considerations of political and civic interaction. When I began to consider other aspects, economically viable catch basins, community infrastructure, etc. I concluded that the quantum, if it was to be a true manifestation of a global culture, would likely need to be at least 20,000 and often as high as 60,000 in population.
This also happens to be the general community size preference for most Americans. They want their smaller community to be within easy reach of a large metropolitan area. However, these same expectations can be met through an aggregation of 'boutique villages.' In other words, a properly constructed web of boutique villages with a total population of a million or more and with proper traffic flows can function like a large metropolitan area while preserving the small town feel for all of its residents.
I have expected that two separate tracks will lead to boutique villages and the global intertwined cultures. The first has been moving slowly, but steadily. This is the growing tendency within developed nations for communities that are more culturally homogenous than the nation as a whole to establish local laws that fly in the face of the national laws. Examples are 'sanctuary cities' that refuse to enforce national immigration laws and cities that 'de facto' disallow abortions. On the other side we have localities that enforce immigration laws when the Federal government demands that they do not.
This is a kind of 'slow and steady' march toward the separation of cultural and geographic sovereignty. It is cultivating the soil for the more overt, intentional community that provides an enabling environment for a particular cultural perspective. I was rather hoping that we would build the first of these for Polymathicans. However, it appears Future Cities Development, Inc. may build the first such city in Honduras. The people behind FCD are the same people who have been trying to build a sea based Libertarian city. So, while cultural identity is not overtly expressed on their website, there does appear to be an underlying current of one.
In the end this will be a fascinating 'proof of concept' on boutique villages and, most likely, far from its ultimate expression. Within Polymathica and The InfoAge Enterprise Networks, our Polymathican Villages still have the best chance to be the first to express the concept fully. Polymathica is at odds with the ambient cultures. It celebrates erudition over specialization. It is dedicated to the expression of refinement in a crass and vulgar world. It is intellectual in an almost anti-intellectual contemporary milieu. While a product of the Western civilization, it is clearly distinct from any other current manifestation.
It is also, despite the difficulty I have experienced corralling Polymathicans, a population that will likely enter the Information Age Knowledge Class well ahead of the rest of society. They will express the paradigm of a Culture of Affluence and will, by virtue of Knowledge Class membership, be among the first to enjoy the 'Live Anywhere Option.' We are prime candidates to supplant Future Cities Development, Inc. as the leading force of Information Age community development.
If you are interested in pursuing this as an investor or as a participant, you should first subscribe to The Future 101. It is not possible to understand boutique villages without understanding the The Transformation in its entirety. Next, you should join the InfoAge Enterprise Networks. Once a member, you should join Polymathica Enterprises and from there you will join Polymathica Village Development. Parenthetically, I am also searching for founders of the InfoAge Enterprise Networks, which could provide you with your 'live anywhere Knowledge Class career.'
This is a very large undertaking that eventually will create hundreds of thousands of Knowledge Class career opportunities. While it will create many wealthy people, of far greater importance to most of us, we will also have created a sense of place and a cultural identity for Polymaths. This weekend I will discuss this in much greater detail within The Future 101. I hope to see you there.
Regards,
Michael Ferguson
This was based almost entirely upon considerations of political and civic interaction. When I began to consider other aspects, economically viable catch basins, community infrastructure, etc. I concluded that the quantum, if it was to be a true manifestation of a global culture, would likely need to be at least 20,000 and often as high as 60,000 in population.
This also happens to be the general community size preference for most Americans. They want their smaller community to be within easy reach of a large metropolitan area. However, these same expectations can be met through an aggregation of 'boutique villages.' In other words, a properly constructed web of boutique villages with a total population of a million or more and with proper traffic flows can function like a large metropolitan area while preserving the small town feel for all of its residents.
I have expected that two separate tracks will lead to boutique villages and the global intertwined cultures. The first has been moving slowly, but steadily. This is the growing tendency within developed nations for communities that are more culturally homogenous than the nation as a whole to establish local laws that fly in the face of the national laws. Examples are 'sanctuary cities' that refuse to enforce national immigration laws and cities that 'de facto' disallow abortions. On the other side we have localities that enforce immigration laws when the Federal government demands that they do not.
This is a kind of 'slow and steady' march toward the separation of cultural and geographic sovereignty. It is cultivating the soil for the more overt, intentional community that provides an enabling environment for a particular cultural perspective. I was rather hoping that we would build the first of these for Polymathicans. However, it appears Future Cities Development, Inc. may build the first such city in Honduras. The people behind FCD are the same people who have been trying to build a sea based Libertarian city. So, while cultural identity is not overtly expressed on their website, there does appear to be an underlying current of one.
In the end this will be a fascinating 'proof of concept' on boutique villages and, most likely, far from its ultimate expression. Within Polymathica and The InfoAge Enterprise Networks, our Polymathican Villages still have the best chance to be the first to express the concept fully. Polymathica is at odds with the ambient cultures. It celebrates erudition over specialization. It is dedicated to the expression of refinement in a crass and vulgar world. It is intellectual in an almost anti-intellectual contemporary milieu. While a product of the Western civilization, it is clearly distinct from any other current manifestation.
It is also, despite the difficulty I have experienced corralling Polymathicans, a population that will likely enter the Information Age Knowledge Class well ahead of the rest of society. They will express the paradigm of a Culture of Affluence and will, by virtue of Knowledge Class membership, be among the first to enjoy the 'Live Anywhere Option.' We are prime candidates to supplant Future Cities Development, Inc. as the leading force of Information Age community development.
If you are interested in pursuing this as an investor or as a participant, you should first subscribe to The Future 101. It is not possible to understand boutique villages without understanding the The Transformation in its entirety. Next, you should join the InfoAge Enterprise Networks. Once a member, you should join Polymathica Enterprises and from there you will join Polymathica Village Development. Parenthetically, I am also searching for founders of the InfoAge Enterprise Networks, which could provide you with your 'live anywhere Knowledge Class career.'
This is a very large undertaking that eventually will create hundreds of thousands of Knowledge Class career opportunities. While it will create many wealthy people, of far greater importance to most of us, we will also have created a sense of place and a cultural identity for Polymaths. This weekend I will discuss this in much greater detail within The Future 101. I hope to see you there.
Regards,
Michael Ferguson
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