How you know you've made it:

You get to stop doing business with assholes.

No asshole clients.

No asshole partners.

No asshole investors.

Think slow, work fast.

A thread on entrepreneurship and what folks don't understand about opportunity.

It comes in waves.

Long periods of time are spent blocking and tackling and going through the motions.

Short periods of time can change your life.

Don't get me wrong, successful folks are consistent. They show up. They stay focused for years.

But...

Ask them to point to a time period where they made most of their money and they'll direct you to a time span between 6 months and 2 years.

When the opportunity arose and they seized it.

They built something that continues to create value. They built an asset that continues to create cash.

They seized an opportunity and did work over a short period of time and they harvest the fruit for years or generations.

If you're new to real estate twitter this is a must-read.

A thread on how most real estate folks structure deals with outside investors.

Most GPs utilize the "preferred equity" structure when they raise money from outside investors. They "syndicate" deals.

Here's the basics:

The person (or team of people) putting the deal together is the "sponsor". Also called general parter. Referred to on twitter as the GP.

They find the property, do all the work, hire the management company and take fees. They often co-sign debt and always secure the financing.

The investor is generally passive, doing no work and putting in cash. This is the "limited partner". Referred to on twitter as the LP.

They don't co-sign debt. They simply read reports and ask the sponsors questions and cash checks every month (if the deal is going well).

There are two equity classes.

"Preferred equity" belongs to the LPs. Cash talks, so this is a higher class of shares. They are first in the "capital stack" behind the debt (bank loan).

"Common equity" belongs to the sponsor. They are generally last in the capital stack.

Sponsors generally co-invest. That means they hold both equity classes. A 10% co-invest is standard.

That means the GP has skin in the game. His 10% co-invest makes him both an LP and a GP.

Too many folks set the bar way too high with entrepreneurship. The next million dollar company. The next sexy startup.

Forget all that.

Why isn’t the goal to build something that pays you good $ every year and requires only a few hours of your time per week to make it happen?

When you start a business your goal shouldn't be to get an article in TechCrunch or raise VC $.

It should be to make $1,000 as quickly as possible with as little risk as possible.

Trade your time for money to test an idea.

Speaking of ideas.....

Business ideas are OVERRATED.

The only thing a brand new, world-changing idea will get you is an interesting Twitter bio and very shitty odds of success.

We only hear about the unicorns like Jobs and Musk.

The successful entrepreneurs in your town all have something in common...

They did common things uncommonly well.

They did something that someone else was already doing and they just did it a little bit better.

Young entrepreneurs hear the same advice over and over again...

Change the world. Do something you're passionate about. Thing BIGGER.

That advice is BULLSHIT.

Shoot for the stars and the odds you'll end up with a JOB.

Customer friction is a huge part of running a biz.

How hard is it to engage a company to work with you?

Data-driven companies obsess over reducing this friction.

Mom-and-pop operators SUCK at this and it’s costing them millions.

Here’s what I’ve learned 👇👇👇

1985 companies have a lot of friction.

Call them. Leave message. Wait. Guy may or may not call you back. Quote by phone or email. Scan signed contract.

A self storage facility we purchased recently had a lot of this.

Drive across town M-F 9-5. Spend 20 mins. Sign paper lease.

Get a physical key and lock. Drive back. Get your unit. Mail a check each month or stop by office with cash.

Owner charged $52 a month for a 10x10. Completely full.

We instantly setup software for online rental.

No phone call necessary. Rent a unit in 4 mins from your browser.

Sign lease online. Pay online. Upload photo of DL on phone.

Go straight to your unit 24/7. Type in gate key that was sent to you by text. Lock and key waiting in unit.

We can now charge $77 a mo for the same unit. $25 more. And we rent MORE units faster.

How significant is this?

That $25 increase per unit across the board turns out to be a 35% increase in revenue.

That takes revenue from $14k a month when I buy it to $18.9k a few months later.

An extra $58k to the bottom line over the course of 12 months.

What successful people understood before they were successful.

A short thread.

Mentorship isn’t about finding a great mentor.

It’s about becoming a person great mentors WANT to help.

Hiring isn’t about finding good people.

It’s about becoming a person good people want to work for.

Wealth isn’t about extracting value from others.

It’s about adding 10x as much value as you want to receive.

Winning doesn’t mean others lose.

The real winners help 1000 others win with them.

The payments wars in Japan are heating up and one of the battlegrounds is convenience store coffee.

“Coffee? What does that have to do with payments?” I’m glad you asked.

Convenience stores are low net margin businesses, which sell some high gross margin goods/services but a lot of low ones, and have high fixed costs and a low ticket size. The typical transaction is under 500 yen ($5) and many are about $1.

They need repeat custom.

A few years ago, all of the chains had a good idea for increasing frequency of use: make a minor capital investment in automatic coffee machines. Sell access to them for the price of a cup / ice; customers self-serve with the machine.

The price point is $1 to about $2.

Coffee quickly became one of the most frequently repurchased items at convenience stores, in no small part because it’s the one thing they can sell which is phameceutically habit forming but totally unregulated. (Just telling it like it is.)

But the coffee is not very defensible

The problem, such that it is, is that competing chains are everywhere and *all* of them serve Thoroughly Adequate Coffee at similar prices, so you’re back into the brutal economics of “Who is 3 meters closer to 40 customers at 1 office?”

Enter payment apps.

A simple thread to understand the meaning of investment cycle (Gross Fixed Capital Formation) in the economy and why it is important?
Which sectors can benefit in such cycle and why?

Do share if you find it useful.

1/n

What is Gross Fixed Capital Formation?

There are essentially 2 methods to calculate GDP of a country. Both methods ultimately tries to measure the total value of goods and services produced in the country during a particular period.

2/n

1. Income Method of GDP calculation adds up INCOME EARNED from all goods and services produced in the country.

2. Expenditure method of GDP calculation takes into account all purchases of goods and services in the country.

3/n

Expenditure method adds up all
consumer spending(C), government spending (G),
business investment spending (I), and net exports (x-m)

Formula:
GDP = C + I + G + (X − M) is the formula for EXPENDITURE method of GDP.

4/n

The “I” (investment) component in the above includes, business investments in creating new assets and spending by households (not government) on new houses also gets included in Investment.

This is known as "Gross Fixed Capital Formation"

5/n

Mega Thread on Personal Finance 101

👇👇👇

Rule of 72 (Double Your Money)
Rule of 114 (Triple)
Rule of 144 (Quadruple)
Rule of 70 (Inflation)
4% Withdrawal Rule
100 - Minus Age Rule
10, 5, 3 Rule
50-30-20 Rule
3X Emergency Rule
40℅ EMI Rule
Life Insurance Rule

♻ Rule of 72

No. of yrs required to double your money at a given rate, U just divide 72 by interest rate
Eg, if U want to know how long it will take to double your money at 8% interest, divide 72 by 8 and get 9 yrs

At 6% rate, it will take 12 yrs
At 9% rate, it will take 8 yrs

📋Rule of 114

No. of years required to triple your money at a given rate, U just divide 114 by interest rate.

For example, if you want to know how long it will take to triple your money at 12% interest, divide 114 by 12 and get 9.5 years

At 6% interest rate, it will take 19yrs

🗒️ Rule of 144

No. of years required to, quadruple your money at a given rate, U just divide 144 by interest rate.

For eg, if U want to know how long it will take to quadruple your money at 12% interest, divide 144 by 12 and get 12 yrs

At a 6% interest rate, it will take 24yrs

🗒️ Rule of 70

Divide 70 by the current inflation rate to know how fast the value of your investment will get reduced to half its present value.

The inflation rate of 7% will reduce the value of your money to half in 10 years.