Phrenzie.com

Location, location, location.

Who hasn’t heard that saying.

As my wife and I are beginning our search, anew, for rental property, it occurred to me that this is not correct.

It’s value, value, value.

While it includes location, it’s not the only thing. Think about it…if you buy a rental property in the BEST location in the city, but overpay, you’ll never see a cash profit.

We’ve done very well as far as tenant acquisition, property management and tenant disposition. Our turnover has been remarkably low and no one has missed a payment in 8 years. Unheard of.

This is totally because tenants feel that they are receiving value (and careful screening on our part, of course), given their needs (this is a critical concept). They get a property in a good location, that’s well kept and have landlords who act reasonably fast in dealing with issues. We hope to implement some more ideas that’ll make it easier for tenants to rent from us as soon as we have more scale.

But we also make sure we “run” the numbers to ensure cash flow profit. This includes doing our own operating cost estimates (independent of the previous landlord’s estimates) and factoring in our own mortgage payments.   My wife says that you make your money when you buy a property, not when you sell it.  I think she’s right.

So value is apparent in every phase of real estate and it’s not all about location.

As a tutor for the better part of 20 years and a parent of a 20 month old son, I know the importance of parental involvement in all aspects of a child’s life, such as education. My parents were involved in mine, so I know how critical it was, especially when looking at my classmates/teammates whose parents weren’t. The evidence is overwhelming.

So when I read the following quote from DC Mayor Fenty, it made me think about this.

“While the increases in DC CAS scores are just one indication, it is powerful evidence of the incredible work being done by teachers, principals and most importantly our students –across the District.”

Mayor Fenty and Chancellor Rhee have taken a lot of heat to improve DC public schools. They can control the teachers and school administrators. But the X factor (besides the students) is the parents.

I think the primary reason why many students in DC don’t perform well in school (on average) is because many parents don’t expect excellence. There’s no expectation that their kids should get As and Bs, nor go to college….or maybe the expectation is there, but there’s no system at home to ensure that it happens.

I understand that some parents didn’t grow up in an environment of such expectations so it’s a little difficult to impart that onto their kids.

A little difficult, but not unrealistic.

Ben Carson, the reknown surgeon from Baltimore, had a mother who fits this exact mold. The thing is…she knew that it was right for her son to perform well in school and wrong for him to hang out all hours of the night. She knew that she could make her kids read to her, even though she couldn’t read at their level. She knew the difference between an A in math and a D in science.  In short, she knew she wanted better for her son.

And I think this is where the ball drops.

I’ve seen bright kids underperform because no one at home cares. As soon as someone begins to expect more from them and spend time with them, grades improve and they move from “I don’t know and don’t care” to “Oh, I get it.”

Sure, higher levels of math, like algebra and geometry, will escape most parents. But having their sons and daughters explain their homework will actually make the kids understand the topic better. My 10th grade English teacher told me that if I couldn’t define a word for someone, then I really didn’t know what it meant. That always stuck with me.

Ben Carson’s mother had the right technique. She didn’t know the topic, but having her son explain it to her, made sure that he knew it.

Barnes & Noble announced a competitor to Amazon’s Kindle. One of the most remarkable differences is that the eBooks bought from BN.com will be readable on multiple devices (not the Kindle, currently, but I’d strongly consider it, if I were Amazon).

But it made me think about publisher’s concerns about the impact of selling eBooks in lowering their margins (the de facto pricing of eBooks is about $9.99, akin to paperback pricing).

I don’t see this as a margin killer business. I see it as a net additional revenue stream and higher dollar volume business.

Think about what the Kindle and other moble devices do…they make it more convenient to do things. Many moble users will actually read more because it’s convenient or easier to search for, acquire and read content. This isn’t a lower margin issue. It’s a “how can sell more content, while remaining profitable” issue”. I’d look at music sold through Rhapsody and iTunes for an idea on how this could work.

If I were a book publisher, I’d go into this eyes wide open, but I’d still go it.

Over lunch last year, the CEO of Clearspring Technologies was telling me that whatever you do, you have to make it easy to do business with you.

That always stuck with me.

Allowing customers to interact with you in as easy way as possible is such a simple concept, that it’s amazing that businesses don’t do it more often.

It made me think about everything, from my credit cards to rental properties.

Speaking of the former, I have two cards, a Discover Card and MasterCard (by Citibank).  I only got the MasterCard because Discover isn’t taken by as many places.

However, among the two cards, Discover has superior customer service, superior website interface, and the more extensive use of points (please…getting a card without “cash back” benefits is sinful).

MasterCard has horrible customer service (although, it’s gotten better), the user interface is okay, and the cash back is one dimensional (they’ll only cut me a check, while Discover’s cash back can be use to pay my Discover bill, increase buying power with its retail partners, and donate to charities).

Discover Card makes it easy for me.  I really wished it was taken more places.  My gut says that they might charge higher exchange fees and other charges to merchants, but it might also be due to limited demand.  My brother and his partner always tease me about the lack of acceptance, with an analogy to a Family Guy episode where, in the future, a merchant says that he hasn’t taken Visa or MasterCard in years, but he’s NEVER taken Discover.  It’s a shame they won’t let that joke die.

As far as rental properties, why not make it easy for applicants to review the apartment or house (via video), fill out an application and pay the application fee, all online?  In many cases, people are looking at multiple places in a day/week and may come back to our place.  Making it easy to come back, fill out an app and pay the app fee online sets us apart from 99% of our competitors.  Based on feedback, it’s one of the reasons why we’ve been able to rent as successfully as we have.

Other things that could be done are to allow monthly rental payments via auto debit or online and request minor maintenance repairs online.  The latter is when we have scale (like 10 units or more).

It’s a simple concept that can be very easy or difficult to implement, but has enormous ROI.

UPDATE:

I just noticed that when I tried to download a version of MasterCard’s virtual card number software, you can only do it if you have Netscape.  How many people use Netscape???  Neither Discover or MasterCard offer support for Firefox, though.

Also, I realized later that other issuing banks may have a better experience for customers for the MasterCard than Citibank.

I just noticed that I don’t watch the evening news anymore (and for that matter, any news on TV…and for that matter, TV as a whole).

9.853 times out of 10 (it’s an average), I’m on the Dell reading news and watching video. If I can’t get it on the net, then I just don’t get it…and it’s ALWAYS on the net, in a much deeper way.

TV just isn’t formatted for my needs (when, how I get it and how much of it I want).  Long are the days when I’d get home, crank on the TV to watch what’s going on in the world today.  Rather, I get it on my laptop or phone.

Thankfully, traditional TV has demonstrated clairvoyance by putting the same TV broadcasts on the net.  It makes total sense.  Internet advertising has reached that critical point where there’s enough advertisers paying enough money to reach enough of an audience to make the benefits > costs.

What I also noticed is that I don’t know what time any TV broadcasts come on.  Or in some cases, I know what time they come on, but I’m either busy or just don’t care because I can just go online and watch a replay, rewind if I miss a part, hit pause (almost TIVOesque) or read it and get more information from reading than a 1 minute TV blast.

ABC.com, NBC.com and CBS.com have done it well.  I’m still greatly unimpressed with Fox.com, especially for the Family Guy – Fox doesn’t house a lot of the past episodes (3 for Family guy), so it’s extremely crappy.  My favorite is NBC.com, not because of the bells and whistles, but because they have back episodes of Miami Vice (I’ve got this thing with the show, including all the bad acting that I can’t resist watching – ugh!).

But it just goes to show you how lifestyles have changed over the last decade.  In the late 90s, I remember being annoyed that I’d have to sit at my home desk to watch videos.  Now, it’s no problem and even more satisfying because I can multi-task without the guilt of having the laptop, TV and stereo on, burning up more coal and nuclear energy than several nations, including China.

Fred Wilson, over at AVC.com wrote about a company his firm invested in, Boxee, that’s going to help revolutionize internet TV.  To that end, I’m really surprised internet TV hasn’t taken off in a big way…I heard Sony and the rest said the demand wasn’t there.  I find that hard to believe at best, and at worst, my conspiracy/spidey sense begins to tingle and I wonder if there’s something more devious (cue spokey music here).

I was reading an article, “Confessions of a Wedding Planner: 5 Signs a Couple will Crash and Burn“.  One of the 5 signs was that the bride blows 1/2 of the wedding budget on the dress.  It made me think of my wedding

I wanted a big wedding…until I found out how much it costs.  So my wife and I decided to spend “a lot” on a few – quality over quantity (originally, her preference).  We wanted the people closest to us to be there.  For me, that meant my brothers, a few other family and friends.  VERY small.

The whole theory was that our wedding day was “1 day”.  So to blow $30,000 on one day seemed ludicrous.  The real fun and excitement was going to happen in the years after…and many of those days wouldn’t cost us anything, except time.

Nonetheless, my wife did a masterful job of containing costs (we wanted to pay for the wedding immediately; not finance it through debt).

Here are some of the ways we saved money (in no particular order):

1)  Invited a few people (about 60 people in all).  Since it was a destination wedding, only the people who really wanted to be there, would (barring health issues).  For that matter, we kept the wedding state-side (Florida) so it would be easier/cheaper for people get there (no passport issues, many flights available, etc.).

2)  My wife, Cerece, let me dress down for the wedding.  I really wanted to be relaxed and I wanted a suit that could double as business attire.  I knew I’d save money – I’d wear a suit more than a tux, for sure.  Even if I rented a tux, I wouldn’t save as much money over the mid and long-term.  Besides, being in a tux, outdoors in Florida in the spring was NOT my idea of relaxing.

3)  Cerece and her best friend, Kamishia Lee, made wedding invitations.  Kamishia is an art teacher and she did an AMAZING job on these puppies.  Man!  I wish I could scan one and post on the web.  She’s on Facebook, so if you want something nice, look her up.

4) Cerece got her gown used or at a discount place (I forgot which).  She got the dress she liked for a FRACTION of the price.  Neither of us expected to remarry (“some” people don’t), so her thought was, “Why should I blow a lot on a dress I’m only going to wear once???”).

5) Cerece hunted for flowers, decorations, etc.  She actually went to other places besides the ones the wedding planner suggested, and got MUCH better deals and a better selection.  Apparently, this particular wedding planner, got a finder’s fee if we used her people (maybe they all do it; all I ask is just disclose it).  The planner eventually got pissed and made up some argument about how we owed her more in fees.  I would NOT use her ever again.  So unprofessional.

The wedding was beautiful and both the bride and groom were happy and relaxed – Cerece did all her work upfront and was going to relax come hell or high water, and we did the math, I knew we got a $30,000 wedding for $16,000 (thanks to Cerece!).  I LOVE a good deal!!!

My wife, Cerece, was told that over 70% of fathers really want to have a break from being a father on Father’s day (another way of saying this is that the last thing fathers want to be on Father’s Day is a father).

Sounds harsh, I know, but it also sounds about right.

If you do it right, being a Daddy is a LOT of work.  I mean a LOT.

My wife and I work hard in caring for, teaching and guiding our 19 month old, Aryeh.

Judging by his progress and people’s reaction to him, our hard work is paying off.  I love it.  Like most things, yo get out what you put in.

And honestly, I don’t know where the patience is coming from.  Well, kind of.  It helps to know that reinforcement is key (like saying “Don’t touch the outlet” for the 1,000th time), that he’s looking at me in knowing how to conduct himself and that my wife and I work VERY well as a team (thank God for our couples counselors, Wendell Cox and Kristen Quigley).

But all that said, anyone who loves what they do and works extremely hard at it wants a vacation day every now and then.

And for 70% of fathers, that day is Father’s Day.

I love seeing Aryeh’s face light up when he sees me.  I love to play with him, teach him things…and on Father’s Day, I love to give him back to Cerece for the heavy lifting.

It’s like being a Grandfather for a day.

So let’s call it Happy Almost Grandfather’s Father’s Day!  It’ll be like Festivus.

It’s amazing that in Web 2.0 (I would put the relevant years, as Robert Scoble would have it), going into Web 2010, that some companies haven’t even gotten their basic websites down pat.  Here is a quick review of one site that doesn’t get it and one that does.

CareFirst, the health insurance company, as an example, has a website where you can log in only during certain times a day.  So if you want to check policy info, you can’t do it when you get home really late or wake up really early in the morning and want to tackle some errands.

Also, some of the basic things I can’t do, like review detailed coverages, see whether I was given the correct price on medicine by the pharmacy (formulary), policy pricing if adding certain riders, request new healthcare cards, etc.  You can, however, review broad coverages, like co-pay amounts, who’s covered and  history, but that’s about it.

It’s completely ass backward.  I mean, who ever heard of a website being “open” only during office hours???

A site that’s got it together???

Progressive.  You can do almost everything on that site.  You can see how changes in your coverages change your premium, file claims, get policy docs, and so on.  It’s a robust user interface that is obviously well synced with Progressive’s other internal and external systems.

I love it.  I don’t have to call and be put on hold to get any of the basic information.  It’s really a model of efficiency and effectiveness.  Progressive personnel can spend their time handling more complicated issues.

Shame on CareFirst and hooray for Progressive!!!

A few days ago, Hansen Natural (HANS) took an 11% hit in the stock price. I was floored. I was hoping that the price would initially pull back a little, but it easily passed through my limit price and down another 9%. Ugh!

So I immediately checked the news for anything, anything at all. What I found was an analyst’s reaction to the shareholder meeting.

I was both confused and happy.  Confused that an analyst would drop estimates based on what appeared to be an incredible lack of substantive or, at least, quantifiable information (or maybe he did channel checks, got insider info, etc.).  Hansen’s CEO said that sales were disappointing in the last two weeks of May.  What the news services did not report was that sales were still ahead of last year.  Couple that with commentary that Hansen’s Monster brand is continuing to take market share away from competitors.  Add on that the energy category, when including all sub categories, is actually growing.  The offset is that it’s core customer, blue collar workers, are having a hard time in this economy.  But I think this is somewhat mitigated by: 1) a smaller, more affordable can that’s been selling very well, and 2) the potential from international expansion, which my wife says is a VERY smart move.

I was happy because it represented an opportunity to invest.  I revisited my cash flow models and realized that my growth assumptions were still lower than Wall Street’s.  Hansen’s stays on top of its distribution channel (its business) and the CEO is the one who fields most of the questions on the business (rather than the COO or CFO).  As an analyst, I love to see these (among other things, of course).

So I could be dead wrong.  Stock could go down another 10+%.  But I really believe that this company is solid for the mid-term, at least: tight balance sheet, dreamy cash flows and growing market share.  To this last point, I have some buddies in the extreme sports racket, who tell me that Monster is a well-respected brand among the fans and athletes.  That’s perfect for street cred.  Btw – I bought more of HANS after it flew through my limit price.

If it weren’t for my wife, Cerece, I wouldn’t have given the appreciation for Twilight that it’s due. The books have sold millions, easily making the NY Times Best Seller List. I’ve seen that before, no biggie. Twilight, the movie, grossed over $382 million in the US (I’m scared to see how little they actually spent), and ranked #115 all time (Summit Entertainment said that the DVD sold 3 million copies on the first day). The book series have sold millions (Wikipedia has it at 42 million, and while it’s Wikipedia, I don’t doubt a figure near this number; each of the four books and the 4-book saga collection are in Amazon’s top 10 sales rank as of June 7, 2009). But I’ve heard stories about big box books translating into big office smashes (like the Da Vinci Code: #27 all-time and $758 million at the box office worldwide; Wikipedia: 57 million).

What is amazing is is the rabidity of the fan base. Outside of the official websites for Stephenie Meyer and the movie, there are countless fan sites. Two of Cerece’s favorites are the Twilight Saga, a social network thanks to the geniuses at Ning and New Moon Movie.

The Twilight Saga has over 300,000 unique visitors US (almost 1 million total visitors US). What’s compelling is a group of fans who are into fan fiction. Fan fiction is when fans write chapters or complete books based on characters and themes from the source (book, movie, etc.). Cerece was up from 10pm to 6am Saturday morning reading a 36 chapter piece. Needless to say she said it was amazing. New Moon Movie generates about 400,000 uniques, but over 1.6 million people visit the site (so they’re coming back in a BIG way).

It’s absolutely incredible.

On the New Moon Movie site, fans are so talented that they’ve created and altered posters, professionally. And they’re really, really good.

Here are a few examples.

Original for New Movie, New Moon

Fan Created Examples:

My hope is that some of these creators are offered their own gigs.

What I like about Stephenie Meyer, Little, Brown Young Readers (publishers), Summit Entertainment (movie producers), is that they aren’t trying to control and monetize (i.e., squash) the creative buzz around her books and movies. As someone who loves business and finance, this might sound strange, but I believe that you can generate more revenue from allowing fans to do their own thing.

The movie Snakes on a Plane is my poster child for this. The movie was going straight to DVD to die a slow, but potentially profitable death. But there was so much buzz around the movie, the distributers figured that it should hit the theatres. It generated $62 million worldwide, but production was only $33 million. Assuming not a lot was put in for marketing (since there was already a lot of buzz), the movie produced maybe 50% returns for stakeholders, all in. Not too shabby.

Unfortunately, stifling buzz is common in media in an attempt to control the message. When I helped run an online tv network, I saw this all the time. Media companies (not ours) were always trying to limit media sharing. But they missed a key point…so much buzz was created around the media that it actually generated additional revenue (by the way, record companies used to…and still do…assume that if someone illegally downloads content, then it’s a lost sale…this is a fallacy because the same person may not have purchased the content if it weren’t available to them for free…I know a lot of people like this).

Nonetheless, Stephenie Meyers is a talent. I’m really happy for her and her team. Cerece certainly likes her.