October 25, 2012

Who could have known that the Terminator was a true entrepreneur?


Iv'e just finished the book Total Recall: My Unbelievably True Life Story which is a biography written by Arnold Schwarzenegger himself. I didn't really expect much from the book, but it turned out that it was really good, and it changed my thoughts about Schwarzenegger. One may have a preconceived conception about Schwarzenegger, possibly because of his accent in several movies, but it turned out that he was a real entrepreneur.

Schwarzenegger grew up in a smaller village in Austria, and the house where he grew didn't have running water. He has kept many of the habits developed when living in this house to save resources. In the current Schwarzenegger residence, the water is always saved and the family members are only allowed to shower for five minutes, and the lights are always turned off when they leave a room. He never wears anything expensive when skiing.
"And even though I can afford it, I would never wear cashmere to go skiing or play sports. It has to be cotton or wool or something cheaper, like a $10 sweatshirt, before I feel comfortable getting sweaty." 

Before Schwarzenegger began with recording movies, he was sponsored by a gym in the US, but the sponsor money wasn't quite enough, so he began to think about other opportunities to make more money. He realized that people wanted to know how he could be so strong, and what type of exercises he did, and what he ate to grow the muscles. So to respond to these demands, he began selling booklets that consisted of articles and photographs. As the business grew, he added more products such as the "Arnold Schwarzenegger weight-lifting belt."

As the mail-order business grew, he decided to found a construction company. He was strong, and knew many strong body builders, so why not use the strength to carry bricks? They lied a little bit when they said in the ad that they were "experienced" bricklayers, and were "experts" in marble and stone, but no-one noticed that they were not experienced. They also realized that American loved foreign names, such as Italian design, and Swedish massage, so they decided to measure everything in meters to pretend that they had been working in Europe. They did also, on purpose, argue in German in front of their clients about the price the client would have to pay, and it turned out that the client often paid a higher price because of this argument. Once they managed to break an antic window because they were so strong, so when they were going do demolish a wall, the stones flew all over the place, and in the end they didn't profit from the job thanks to the expensive window that had to be replaced.

But every investment decision was not a good one. Schwarzenegger once invested in a large part of a desert where someone had a plan to build a supersonic airport. This was at the times when the Concorde were flying across the Atlantic Ocean, and everyone believed that the Concorde would soon fly around other parts of the world as well. But it turned out that the Concorde never would, and the piece of desert would be worthless.   

But Schwarzenegger never gave up the plans to own real estate, and he decided to invest in houses.
"I wanted an investment that would earn money, so that I could cover the mortgage through rents instead of having to pay it myself." 
He made his research and each day he looked in the newspaper to get a feeling about the prices of the buildings, and he found a mentor, Olga Asat, and eventually he would knew every building in Los Angeles. Finally, he bought a six-unit apartment house, and he took one apartment for himself, and the rest of the apartments would be rented to actors. This way, he could build connections to the movie business. He would later sell this building, and buy more and larger buildings.

When Schwarzenegger began with the acting, his plan was to double his salary with each new movie. It didn't always work, but almost. The first movie he participated in was Hercules in New York, and it failed miserably, but the first successful movie was Conan the Barbarian, and he got $250,000 as a salary from that movie. And so it went on:
  • The Terminator: $750,000
  • Conan the Destroyer: $1 million
  • Commando: $1.5 million
  • Predator: $3 million
  • The Running Man: $5 million
  • Red Heat: $5 million
  • Total Recall: $10 million
  • Terminator 2: $14 million
  • True Lies: $15 million
Before he decided if he wanted to participate in a movie, he always thought about what the return on investment would be. To make more money, he wanted that his movies would go global, and he thought about every possible details.
"Is this movie appealing to an international audience? The Asian market is negative on facial hair, so why would I wear a beard in this role?" 
He wanted to go all over the world to promote the movies, while the movie folks thought that a couple of countries were enough.
"Whenever I finished a movie, I felt my job was half done. Every film had to be nurtured in the marketplace. You can have the greatest movie in the world, but if you don't get it out there, if people don't know about it, you have nothing. Picasso would go into a restaurant and do a drawing or paint a plate for a meal. Now you go to theses restaurants in Madrid, and the Picassos are hanging on the walls, worth millions of dollars. That wasn't going to happen to my movies. Same with bodybuilding, same with politics - no matter what I did in life, I was aware that you had to sell it."    
The lines in the movies were also important to Schwarzenegger. "I'll be back" is the most famous line from The Terminator, but he first argued with the director James Cameron that he didn't want to say the line because it sounded wrong, but Cameron didn't change his mind.

Schwarzenegger always believed that the most important thing was not how much you would make - but how much you would keep of that sum of money. The list of famous entertainers and athletes who have been wiped out financially is long. He recalls how he saw the actor Burt Reynolds and his manager showing up in a Rolls-Royce before the money were all gone.
"My goal was to get rich and stay rich. I never wanted to have the phone call where the manager says 'Something went wrong with the investment. We can't pay our taxes.' I wanted to know the details."
The idea was to always "Take one dollar and turn it into two." He wanted big investments that were interesting, creative, and different, and he could tolerate big risks in exchange for big returns - not the kind that would generate 4 percent a year. He also disliked trendy investments such as hotels and clubs - but he did co-found the restaurant chain Planet Hollywood. Schwarzenegger was also proud to pay taxes on the money he earned, so he didn't like offshore corporations and other "gimmicks" designed to minimize the taxes paid.

In the end of the book, Schwarzenegger explains some of the rules he has in his life, including:
  • Turn your liabilities into assets
  • When someone tells you no, you should hear yes
  • Never follow the crowd. Go where it's empty
  • No matter what you do in life, selling is part of it
  • The day has 24 hours
  • Stay hungry 

October 23, 2012

What can zebras and lions teach us about the stock market?

Investors or zebras? Source: Wikipedia

Zebras have the same problem as those who are interested in the stock market:
  • Both seek profits. Investors want to beat the market - Zebras want to eat fresh grass
  • Both dislike risk. Investors can lose all of their money - Zebras can be eaten by lions
  • Both move in herds. Investors tend to buy when everyone else is buying, and thus a bubble is created. Many investors also tend to look like zebras in their black-and-white suits. 
If you are a zebra living in a herd, you have to make a decision. The less risky option is to stay in the middle of the herd and eat the grass which is half-eaten and has been trampled by the rest of the herd. The more risky alternative is to stay outside of the herd, where the grass is fresh. If a lion approaches the herd, the fat zebras who have eaten the fresh grass will end up as lion dinner, while the skinny zebras in the center of the herd will be safe.
Investors have the same option. Stay in the middle of the herd and buy boring stocks and you will probably only end up with small profits, or stay outside of the herd where the large opportunities can be found, but where you can end up as lion dinner.
The best option is to be the fat zebra which can also run away from the lions, and the best stock to buy is a risky stock that also can outrun a lion.

Source: Money Masters of Our Time

October 22, 2012

One may have a worse view from a work window

A Day in the Life of a Fire Lookout. from Gary Yost on Vimeo.

This beautiful video features Gary Yost who is working as a volunteer fire lookout at Mount Tamalpais, California. It seems like one may have a worse view from a work window.
I've been a Marin County Fire Department volunteer lookout for two years and deeply love the mountain and the peace it brings to us here in the Bay Area. Perhaps this 6-minute video will convey some of the emotions I feel when sitting (and sleeping) on her peak.
Here's another video from the same mountain and photographer:

Mt. Tamalpais Fog Timelapse Tests from Gary Yost on Vimeo.

October 19, 2012

Creative ways to clear landmines

One often forgotten threat to humans around the world is landmines. Nearly 20,000 people are being killed by them each year, and many more are being crippled. One can currently find 110 million landmines across 70 countries. To make a landmine, you have to pay $3, but its is 50 times more expensive to clear one. Here are some creative ways to clear landmines:

Mine Kafon
The Mine Kafon is a new way to clear landmines, and has been designed by Massoud Hassani. He was born in Afghanistan so one can clearly understand why he wants to solve the threat of minefields. Roughly 10 million landmines have been buried throughout Afghanistan. So to solve the problem, Massoud Hassani designed the Mine Kafon which is a device that you roll out on a mine field. The device will now roll though the minefield as it is powered by the wind, and when it hits a mine, it will simply explode. But the entire device will not be destroyed, some parts can be used again to build another device. It features a GPS navigator so you can see where it has been rolling around before. One problem is that it will not clear the entire minefield since you can control it, but it will clear maybe 50 percent of the landmines, and that will save lives - or you can clear the rest of the field with another more dangerous method.

The Mine Kafon (teaser) from Callum Cooper on Vimeo.

The Danish company Aresa made a genetically modified flower that was supposed to detect mines in a minefield. To clear a minefield, you planted plants on the minefield, and when one of the plants came in contact with nitrogen dioxide (a compound released by decaying chemicals used in explosives), the plant would change its color to red. The company has now been given up the idea to continue with this project, but I believe that it was a good idea, and someone else could perhaps continue with it.

The HeroRat is a trained Gambian pouched rat, and the rat is not a kamikaze rat, the rat will probably survive the process since the rodent is using its excellent smell to find landmines. They are being trained by the company Apopo, and one rat will cost €6,000 to train, and the training will take 6 months.

Source: BBC, WorldChanging

October 15, 2012

The fall and rise of the electric car

I've been doing some research about electric cars, and it seems like they are on their way to come back. A part of the research consisted of watching the movies Who killed the electric car? from 2006, and Revenge of the electric car from 2011.

The first movie is mostly about the EV1 which was an electric car developed by General Motors. The first electric car was produced in the 1800s, but the EV1 was the first mass produced electric car, and a total of 1117 were built between 1996 and 1999. The EV1 was a two-seat car and had the similar shape as a Citroen DS where the back wheels are almost covered, and it was developed in California. Several celebrities liked the car, and the actor Mel Gibson said that he felt like he was driving the same car as the superhero Batman, because of the good performance.

But the EV1 failed, and many of the cars were crushed because GM didn't believe that the cars would bring a profit to the company. GM didn't sell the car, you had to lease it for $250 to $500 per month. When GM wanted to pull back the EV1's they simply told the owners that they had to turn them in, or they would face the legal consequences. Some owners fought back, and had to beg to not get their leased cars crushed by GM as well, but in the end all cars were crushed except for a few which were donated to museums and schools. This is one of the reasons to why GM never tried to build another electric car, until they learned about the Roadster developed by Tesla Motors. Here's a video showing one of their models - Model S:

The next movie is mostly about Tesla Motors ($TSLA) and how GM tries to catch up with their own electric car, the Volt. Tesla Motors was founded in 2003, and by now they have three electric cars: The Roadster, Model X, and Model S. What they have done to increase the performance of their cars is to replace the old car batteries, with the same battery as in your laptop. The Roadster has a total of almost 7000 batteries, but the car is faster and has a longer range than any other electric car.

Everyone were blaming General Motors during the financial crisis in 2008, that they were producing the wrong type of cars, and that the Japanese were the smart one who produced the correct environmental friendly cars. But that's not true, GM were producing the exact type of cars the world wanted until the gas prices went up. So now when everyone have begun to produce electric cars, then the car makers will need a high gas price if these models are going to sell, or the electric car may die once again. Most people will care more about their wallet, than the environment, and the current price of gas - not what the price of gas may be at tomorrow.

So in the end what we need to replace the gasoline cars with electric cars is:
  • A higher gas price - people follow their wallet.
  • The ability to charge the electric cars. I myself live in an apartment and can't have an electric car simply because I can't charge it. You currently need to own your own garage if you want to own an electric car, or be able to charge the car where you are working. But more and more charging stations are being build - there's a total of one million of them today around the world.
  • We need to charge the electric cars with clean energy - not with coal power plants. If you buy a car from Tesla Motors, you will at the same time have the option to purchase a solar panel that you can attach to your house. This solar panel is enough to cover all your electricity you need for your electric car. 

October 11, 2012

How to hack the air

In 1989, NASA released a report with the name "Interior landscape plants for indoor air pollution abatement." The goal of the report was to research different indoor plants to see if they could be used as a tool to solve indoor air pollution problems on Earth. The indoor air pollution has its own name and it's "sick building syndrome." The report estimated that 30 percent of all the buildings are suffering from this sick building syndrome.

The background to this problem is as follows. In the 1970s, a series of energy crises occurred. The worst crises of this period were the oil embargo of 1973 when several countries in the middle east didn't want to supply the US with oil because the US supported Israel during the Yom Kippur War, and the 1979 crisis caused by the Iranian revolution. The result was that the price of oil increased with several hundred percent.

Because of these high energy prices, everyone decided to reduce the fresh air exchange to improve the energy efficiency of the buildings. The workers in these new buildings began to complain on various health problems, such as itchy eyes, and headaches. What contributed to these problems were a combination of the airtight sealing of the buildings, and the design and manufacturing of the equipment and furnishings used in the buildings.

The best solution to these problems is to use indoor plants. The Indian researcher Kamal Meattle gave a Ted talk in 2009 with the subject "How to grow fresh air." He began his research when he became allergic to the pollution from the air in New Delhi. You can measure air pollution with AQI, where 0 is no pollution and 500 is then highest level of pollution. An AQI below 50 is considered to be good, and above 200 is considered to be very unhealthy. The AQI in New Delhi is between 320 and 380, or hazardous on the AQI scale. Do you think this sounds bad? Then visit Shanghai, China, where the AQI could be 600.

Kamal Meattle came to the conclusion that he needed three types of different plants to clean the air in his indoor environment. In total, he would need about 12 plants to be able to live in a sealed bottle without any ventilation. This was per person, so if you are three persons living in the house, you will need 36 plants. But if your city AQI is lower than the AQI in New Delhi, and if you don't live in a sealed bottle, you will not need that many plants. A common rule is to use one plant per 100 feet^2 (9 m^2) of house. Kamal Meattle also installed 1200 plants in an office building, and the result was that the number of headaches decreased with 24 percent.

When you have realized that you need to use indoor plants to clean the air, you need to choose which plants to use since some are better than others. You also need to check if the plant is dangerous to your kids and your cats, how often you need to water them, and if they can survive in darkness or if they need sun light. You can find a complete list here: List of air-filtering plants. Remember that a plant may be considered to be non-toxic to your cat, but your cat may still get sick if the beast eats all of your plants.

A plant that is considered to be easy to take care of is the Snake plant (mother-in-law's tongue), it cleans everything except ammonia, but it is poisonous to your cat. It was also on the list used by Kamal Meattle in his experiment.

Snake plant. Source: Wikipedia

Another plant that is easy to take care of is the Spider plant, but it is less good at cleaning the air, but it is non-toxic to your cat.

Spider plant. Source: Wikipedia

The best air-cleaner is the Peace lily, but the plant needs water regularly, and it is poisonous to your cat.

Peace lily. Source: Wikipedia

So the task to choose an optimum plant is clearly not an easy one. I myself bought a Spider plant last week (the price of the plant was like $10 so an healthy environment is clearly not expensive), and I'm currently trying to hunt down a Snake plant. The apartment is small, and the AQI is within reasonable levels, so two tough plants will hopefully be enough.
Source: The New York Times, ASPCA, Using houseplants to clean indoor air

October 7, 2012

Slow and steady wins the race

A new book by the author Jim Collins is out, and it's called Great by Choice - Uncertainty, chaos, and luck - why some companies thrive despite them all. The book is basically part 4 in a series of books on why some companies are different from other less good companies. I've used two of his earlier books: Good to great and The fall of the might, when I analyzed the rise and fall of the company Digg. The new book analyzes why some companies are surviving a state of chaos, such as the credit crunch of 2008, and spikes in the price of oil, while other companies perish under the same conditions. One thing we know for sure is that the chaos in the world will continue, as it always has, but how can you prepare yourself and company when the next chaotic event occurs?

One example of a company that has endured misery in the period 1972 to 2002 is Southwest Airlines. The company began with three airplanes, and if you had invested $10,000 in the company in 1972, you would have had $12 million by the end of 2002. The return of the stock was 63 times better compared with the stock market. How did Southwest Airlines survive despite all the events that occurred during the period, including fuel shocks, strikes, recessions, terrorist attacks, when so many other airlines have struggled for their survival?

To find out why, one can travel back in time to 1911, and visit the explorers who was about to make a race towards the South Pole in the Terra Nova Expedition. The race would be of equivalent length as if you would have traveled from New York to Chicago, and back again. One would make it, and the other would make it to the South Pole, but didn't make it back home again. The one who would make it was the Norwegian Roald Amundsen who said:
"Victory awaits him who has everything in order - luck people call it. Defeat is certain for him who has neglected to take the necessary precautions in time - this is called bad luck."
Amundsen arrived in December 1911, 34 days before his competitor the Brit Robert Falcon Scott. They were both of the same age, and had roughly the same experience, so why did Amundsen make it?

The first big difference between the two was that Amundsen was better prepared. Amundsen took the bicycle from Norway to Spain just to practice how to survive, he lived like a shipwrecked even though he wasn't, he studied the maps and stories from previous expeditions, and he lived with Eskimos who knew how to survive in a  rough environment. Scott on the other hand was a Royal Navy Officer and didn't practice in the same way. He decided to choose horses instead of dogs, he brought with him motor sledges that were untested. The result was that the horses died, and the motor sledges stopped working in the cold, so Scott had to drag his equipment by himself. Meanwhile, Amundsen's dogs were traveling at high speed toward the South Pole. Thanks to his studies of the maps and previous expeditions, Amundsen could find a more efficient way to the South Pole.

Foreseeing unexpected events. Before the race had begun, both team built supply depots on the way to the South Pole. Amundsen decided to place black flags in a wide array around his supply depot, so he was sure that he wouldn't miss it if there was a storm. Scott on the other hand placed only one flag at his depot. Amundsen stored three tons of supplies for his five men and could survive if he missed a supply depot, while Scott stored one ton of supplies for his seventeen men and couldn't miss one of his supply depots. Amundsen brought four thermometers, while Scott brought only one and that one thermometer would eventually break.

The 20 mile march. Each day, the goal of Amundsen was to travel a distance of between 15 and 20 miles (24-32 km). If the weather was bad, he tried to travel 20 miles, and if the weather was good, he traveled 20 miles and rested the rest of the day to regain his energy. Scott didn't have any goals at all. If the weather was good, he would go as far as possible until he was exhausted, and if the weather was bad, he would sit in his tent and wait for the good weather to come back.

Amundsen at the South Pole. Source: Wikipedia