Priced Out of Housing

While I recently published a post on housing, that was a more general look at the concept of holding a mortgage in the first place. This post will be more on the specifics of housing conditions in urban centers throughout the US. Namely, things have gotten increasingly unaffordable for middle class people in desirable cities.

Take this article, for example:

The median home value in San Francisco now stands at $765,700 – 10 times the city’s median household income, according to the census. As of March, the median rent for a one-bedroom apartment was $3,590 a month. With the median income in the city being $78,400 a year, this means the average household can end up spending as much as half its earnings on housing.

It’s gotten to the point where the city core will be filled with the wealthy, while the ordinary workers, teachers, nurses, and police officers have to commute in from miles away. That takes an incredible toll, both physically and financially.

Will things continue to trend this way? Central London has shown us that prices can remain out of reach for decades, if not generations, when houses become used as investment assets for the global wealthy rather than as places to live. Central banks by lowering interest rates drives hot money chasing returns into real estate. While mortages are lower, houses are not any more affordable given how much prices have risen.

New construction isn’t going to come galloping in like a white knight to rescue us. For one, since the last crash construction has shut down and is only starting to slowly return now, but not nearly at the pace needed to keep up with new household formation.

Currently, things maintain themselves at an equilibrium, albeit stretched at near breaking point. Ordinary adult workers shack up two or three to a house in order to live in the city.

What’s the solution? Cities have to look at becoming denser with better utilization of space, overriding objections of the NIMBY anti-density crowd. Simply raising wages without increasing construction won’t work – there will be more money chasing the same tight supply, which will result in even higher prices.

There are some nifty things that governments can do to alleviate the shortage by discouraging investors from buying and removing housing stock from the rental pool. This is more of a problem in the UK, where property taxes are low, as compared to the US, where it would be costly for a foreign magnate to let too many houses sit empty.

But these are all things out of our control that may or may not end up happening. What we can do as individuals is to vote with our feet and move to places that are still affordable, such as Salt Lake City, Dallas, and Atlanta. Envisioning life outside of the country can work as well, especially for those who have read my book on wealth and are interested in a mobile freelance life.


Save on a House with Seasonal Buying

Are you in the market for a house? If so, it’s important to be aware of seasonal variations. In my book on wealth, I discuss how time shifting purchases and activities outside of peak areas can lead to significant savings. In the case of buying a house, this means buying in wintertime.

Take a look at the following graph from Schwab:

seasonal fluctuation of house prices

If you look at the blue line, you’ll see that while the overall trend since 2012 is rising house prices, within each year there there are predictable ups and downs. House prices are highest during the summer months, and correspondingly hit a nadir in December-January. This makes sense. Fewer people are actively shopping for homes in the winter, given adverse weather.

Even though this trend is well-documented, a smart shopper can still use this as an opportunity to save on buying a house. The big downside is that sellers know about this trend as well and delay putting the houses on the market until summer. This means that the selection in winter may be suboptimal. You may not find your perfect dream house in the winter, but the sellers that do list in this time may be more desperate for a quick sale.


Should You Consider Uber (As a Gig)?

Of my group of childhood friends growing up in the Bay, all of us went into different careers. Some became bankers, some doctors, and others techies. However, there was one who dropped out of school and worked random retail jobs. That is, until he found Uber. He fell in love with it because it was easier work that paid more than his previous jobs. There’s also a degree of respectability and cachet that comes along with being an Uber driver that’s not there as a waiter or grocery store stocker.

So should you consider a job as an Uber driver? I would argue no. The most in-depth analysis of how much Uber drivers really take home was done here. I paste the kicker here:

Without including other real weekly expenses such as gas, car maintenance (or accounting for depreciation of the car), I found that the average net income per hour for the eight drivers was $21.90, roughly 10 dollars per hour less than the combined hourly wage from the raw Uber data.


However, if we assume an average weighted driver wage of $21.90 per hour, which factors in just a fraction of driver expenses, and assume drivers work 30 hours a week (again, not necessarily typical, but a middle range of the hours worked by the eight drivers we spoke to), we can assume a rough projected yearly driver salary of $34,164.

That $21.90 figure may even be undercounting the true cost of gas and maintenance. You see, sharing platforms like Uber are inherently exploitative. By counting all drivers as independent contractors and issuing them 1099s, Uber is not responsible for payroll tax, benefits, and other hard-won legal protection that apply to ordinary employees. By being self-employed, Uber drivers have to pay both the employer and employee sides of Social Security payroll tax. That’s a whopping 15.3% on the first $100k or so of income. Then factor in paying for health insurance out of pocket and you can see how the same $50k in gross income from Uber isn’t the same as $50k from a W-2 job, much less than $50k from qualified stock dividends.

Then there’s the unreliability of cash flow. As a business, the Uber driver can easily have days or months with low utilization and income that’s not enough to pay the bills.

We haven’t even gotten to the subject of tips, which Uber recently begrudgingly legitimized in a settlement with its drivers, in exchange for being able to keep them as independent contractors. Unfortunately, we don’t know how this change will turn out. Uber riders loved the hassle-free nature of payment, so adding the uncertainty of whether and how much to tip will definitely degrade that experience. As a driver, it’s an anxiety-inducing dilemma. Should you set a low rate and hope to rake in tips, at the cost of potentially bad reviews, or try to stand out by advertising yourself as a more expensive but hassle and tip-free experience? What’s worse is that Uber hasn’t taken an official stance on tips, preferring instead to slide it under the table by allowing it but still discouraging it as routine policy.

If driving for Uber really were an attractive gig, we should expect to find many workers flocking there, which would increase competition and drive down the wage for everyone. No wonder that Uber is aggressively promoting itself… as a place to work. This commentator from Naked Capitalism notes anecdotally:

There’s something very curious going on with Uber, apart from the obvious, well-publicized weirdness: they’re advertising like crazy on the radio, both national and locally here in San Francisco (I don’t know if they advertise in other local markets). That in itself is hardly remarkable. What is remarkable is what they’re advertising. They’re not advertising their service. They’re advertising for drivers. Think about it. When has a company ever paid to advertise in mass media for workers? I think the reason is obvious. If the gig was profitable to the drivers, and there was a reasonable retention rate, they would have no need to advertise in mass media. But as we know, the pay sucks, especially when vehicle costs are factored in, and the attrition rate is atrocious.

Rather than think about working for Uber as a contractor, we should strive to understand the fundamentals of its success and how we can apply the same lessons to our own business ventures. As I wrote in my book, a good modern business in the internet age is capital-light. Uber checks this box for sure. Part of its genius is that all it really is is a low-cost platform for the exchange of goods and services. It takes a small cut and provides nothing more than a matchmaking service and slick UI. It’s ingenious as a business plan – almost foolproof due to its simplicity and lack of capital expenditures.

Uber is also insanely scalable. That is, they don’t need to change their core business model or significantly increase expenses just because they’re growing larger. By leveraging contractors anywhere in the world, they just need to keep the central platform running and fresh-looking. Contractors will automatically do all the hard work and make business decisions appropriate for local markets, laws, and customs. It’s capitalism broken down to the microscopic level.

The dark side of Uber, which may very well be its downfall, is that it outsources safety standards and consumer protection/insurance requirements to its contracted drivers, most of whom do *not* comply with minimum regulations that apply to taxi drivers. Of course, actual enforcement of local state and county laws is impossible given how many small fry drivers there are. How can taxis compete trying to play by the rules?

Think about it this way. If Uber were subject to the same standards that apply to taxis, in terms of insurance and safety standards, they would probably be just as expensive. Otherwise, Uber is really not all that innovative. A large taxi company could just as easily put together an easy to use app for mobile devices and mimic the same function.

Sooner or later, the law will catch up and start regulating Uber. All it takes is a major accident leading to death or disability and a major lawsuit. Perhaps Uber’s true business model should be to rake in money and plan on cashing out and shutting the service down while the going is still good.


How to Deal with Recruiters

Over the years, I’ve had my share of interactions with recruiters. Just like with jobs and people, some have been pleasant and helpful, while others obstinate and persistent. In today’s tough job market, some people inevitably turn to using them. But will using a recruiter help you find a job or cut you out of the running completely? With this post, I’ll show you the inside baseball on job hunting with respect to headhunters/recruiters. Should you use them? Should you believe what they say? Can you realistically cut them out and deal directly with the company doing the hiring?

How recruiters make their money

It depends. Most are employed by or own their own small companies. Many are niche are specialize in recruiting for hard-to-fill jobs, such as medicine where there is a shortage, or the C-suite, where the ramifications for a poor hire can be huge. Some firms charge a fixed price for the search, and then a percent of the contract signed if there is a successful hire. Others present a batch of candidates from their database for an open position and if one presented by the recruiter is hired, the recruiter takes a percentage cut from the contract signed. Sometimes, instead of a percentage cut the recruiter takes a fixed dollar sum per successful placement.

All humans operate based on incentives and penalties. Understanding what the compensation structure is for recruiters is important to determine whether they have our best interests in mind.


What value does a recruiter add to the business?

Businesses obviously specialize in their core function. Most aren’t good at HR or recruiting. Sometimes, the business is too small to have a large or dedicated HR department. They obviously don’t have the manpower to promote their company at trade fairs and university career forums. While it’s possible to put up an ad on Craigslist, Monster, or Linkedin, you may attract the dregs from the street. A poor hire can set the company back for years. Having a depot for resumes on the company’s website only works if the company is well-known and consumer-facing. For example, most lay people probably haven’t heard of Illinois Tool Works or Emerson Electric, large Fortune 500 companies that predominantly sell to corporate customers.

This is where employers can outsource the search for talent. Think of the search for good employees in terms of a subject most of us are more familiar with – dating. It’s possible to spend no money and cold-call at a bar, online, or through apps. On the other end of the spectrum are traditional matchmaker services, which keep a repository of the most wealthy, educated, beautiful, and eligible.

The analog for companies is headhunters/recruiters, who often have a database of their own. When they don’t or if they need to find a specific candidate that meets the company’s unique needs, they can do a talent search all across the world. This is how Stanford landed Jim Harbaugh as a football coach, for example, or how Sony settled on Howard Stringer as CEO.


Do you (as a candidate) really need a recruiter?

It all depends on how exclusive of a position you’re looking for. One situation that they can help is if you have a generic skill that’s universally applicable but not specific to any particular industry. An example of this is Russian language skill. Many companies may need one or two Russian speakers to deal with clients from that area, but very few companies will need that many of them. A recruiter who specializes in filling that need for companies generally has a reservoir of jobs already available and can send a resume to all of those places. It’s hard to find all of those openings on your own.

On the other end of the spectrum, a petroleum engineer has a very specialized skill and can generally apply to the big name companies in his or her field without needing a recruiter.

In other situations, like medicine, recruiters will come calling *you* because the supply/demand is so out of whack that companies pay generous bonuses if a recruiter is able to fill a position. This can get annoying at times, especially if you already have a job. C-suite headhunters are generally a bit more discreet with how they contact their potential hires.

One caveat that you should know is that if a company is faced with choosing between two otherwise identical resumes, one sent by a recruiter and the other from a cold-call applicant on their webpage, they’ll choose the one that doesn’t come with a separate fee to a recruiter.


Annoying things recruiters can do

Unfortunately, many people have experienced radio silence from recruiters after sending in a resume. This can be due to a multitude of reasons – sometimes the recruiter is simply swamped with too many applications. Other times, there aren’t enough jobs to go around. Suffice to say, if a generic low-level recruiter doesn’t get back to you, it’s because they had more attractive resumes to submit (higher chance of filling the job and earning a commission) or because they submitted but never heard back from HR. Remember, recruiters are middlemen themselves. Most of us have experienced the black hole that is HR – taking in hundreds of resumes and sending out notifications of rejection six months later to those who weren’t selected.

Generally, the higher up in the pecking order you go, the more personalized “service” you will receive from recruitment agencies. Recruiters lean obsequious and can work with nitpicky requirements from the candidate. Again, supply and demand. However, there is a downside to being sought after. Even after finding a job, you can get unsolicited emails and calls from other recruiters. Take for example my own field of medicine. As soon as I got my first state medical license, I was inundated with calls from recruiters from all across the country, asking if I was interested in “generic podunk job” in the boonies. Apparently, recruiters are so desperate to snare candidates that they troll the rolls of state medical boards and the NIH’s database of residents in training. As soon as someone shows up on the board list, recruiters can pounce on that information. Some information is posted in the public domain, and based on that they can contact the program administration for information on individual residents, or even show up at the hospital themselves.



Lifehacking Tips – Easy Way to Split PDFs

I’m a techie at heart, and people like us are generally lazy, always on the lookout for shortcuts to make work and life more efficient. This post is part of a series on various neat tricks that I’ve picked up along the way. Most of them have something to do with either technology or gadgets.

I had a quandary at work today. Over the years I’ve accumulated many sheets of paper. Some of them are napkin scribblings by senior doctors eager to teach a pertinent point regarding a patient on rounds. Others are snippets of magazines and journals. I have a smattering of tax forms mailed to me from years past. Yet others are rare printouts of algorithms and flowsheets so obscure that they are forever lost in the ether of the internet.

As I wrote in my book on wealth, part of my life goal is to minimize the number of possessions to the bare essential minimum. As a result, every so often I do a massive cleaning of my paper documents, digitizing and then trashing them. I could not have done this without technology and the cloud, which hosts digitized versions of my paper documents, keeping them secure and accessible from just about anywhere.

Previously, I would sometimes take a snapshot of the file with my phone camera and then work with the jpeg image. This is easy to do, but left much to be desired in terms of quality. Lighting, shadowing from the camera, and background objects frequently intruded. The resolution wasn’t that great, even with the latest camera models, and lugging around a DSLR just for this purpose is impractical.

Since I was at work, I chose to use the work scanner, which made high-resolution, high-fidelity copies of my files but saved them as separate pages of one large PDF format. Argh! I obviously didn’t want to save one massive mishmash of a file which contained tax information, journal articles, napkin scribble, and SI models. I was at work, so I couldn’t use free plugins from Foxit or other third party software to break apart the file. What to do?

Thankfully, Google Chrome came to the rescue. Long a favourite tool of hackers everywhere, Chrome has invaded office workplaces simply because it can be installed offline/standalone without needing administrator mode. It’s faster than IE and supports Netflix, PDFs, and Flash video straight out of the box. So pervasive was its reach that sysadmins at my hospital gave up and made it part of the default applications for every computer.

Ok, you’re eagerly waiting for the content of this post – how to use Chrome to split apart large PFDs. First, open the pdf with Chrome. You can right click on the pdf file and “open with” Chrome, or you can open (CTRL+O) directly from Chrome, or drag the pdf file onto the tab menu on top of Chrome.

Next select the print (CTRL+P) option. On the left hand side you’ll see a destinations section. Below there is a “Change” button. Click that and select Save as PDF.



Now you can enter which pages you want to create as your new pdf file. You can write “1-11”, “1,2,3”, or even skip certain pages like so: “1-3, 6-7, 11”.


Choose save/print and you’ll be prompted with where to save your new split pdf file. Repeat for the rest of the sections.






Voting With Your Feet

In time for tax season, many of us are probably grumbling about how much tax we have to pay. Sure, the headline rates for the US may not seem all that impressive, but when you add up state, local, payroll, and federal tax all together, the marginal rate can be in excess of 50%! That’s higher than the top rate in the UK. On top of that, we don’t even get free health care, efficient public transportation, or cheap schooling. Think of having to pay out of pocket for those mandatory things as an extra tax on the little guy.

Could it be then that the US is the most heavily taxed country in the world? Something to think about for sure.

One example from recent times is the St. Louis Rams moving from St. Louis to Los Angeles. While some employees will enjoy the weather, others may bemoan the pay cut that they’ve just received from the change in state tax systems. That’s not to mention the higher cost of living in California. Strangely enough, so many people try to live and work in California (high supply), compared to the cold and dreary Midwest, that salaries for comparable professions are higher in the Midwest even before cost of living adjustments.

It’s no surprise then that I’m planning to leave California as soon as I am able.

In any case, while we could stay and try to fight the man through lobbying or voting, it’s hard for a single person to make a difference. That’s where we can vote with our feet. Just like Tiger Woods did and what Phil Mickelson pondered about doing, we can leave high tax locales and move to low (or no) tax ones. The name of this game is geographic arbitrage, which I go into detail in my book on wealth.



Save on College in the EU


Have you looked at the cost of school these days? Tuition for American universities keeps on rising. According to Collegedata, in 2015-2016, total costs are projected to hit $24,061 per year for in-state schools and $47,831 for year in a private school. For the price of four years of schooling, we could get a Ferrari or be a nomad traveling around the world for a decade!

What are some ways to get around being saddled with student loans into our adult lives or even retirement? One option is to win merit scholarships by being selective and judicious about which schools we apply to. Of course, not everyone can win these scholarships. This is where we need to think outside of the box.

In my book, I describe how much more affordable college is in other countries. Take Germany for example, which has waived all tuition fees at its universities.

More than 4,600 US students are fully enrolled at Germany universities, an increase of 20% over three years. At the same time, the total student debt in the US has reached $1.3 trillion (£850 billion).

Each semester, Hunter pays a fee of €111 ($120) to the Technical University of Munich (TUM), one of the most highly regarded universities in Europe, to get his degree in physics.

Included in that fee is a public transportation ticket that enables Hunter to travel freely around Munich.

Health insurance for students in Germany is €80 ($87) a month, much less than what Amy would have had to pay in the US to add him to her plan.

“The healthcare gives her peace of mind,” says Hunter. “Saving money of course is fantastic for her because she can actually afford this without any loans.”

To cover rent, mandatory health insurance and other expenses, Hunter’s mother sends him between $6,000-7,000 each year.

At his nearest school back home, the University of South Carolina, that amount would not have covered the tuition fees. Even with scholarships, that would have totalled about $10,000 a year. Housing, books and living expenses would make that number much higher.

Even outside of tuition-free Germany, EU schools are quite cheap in comparison to American ones. Don’t worry about competitiveness. So few American students actually apply, and the schools enjoy increased diversity so much that they reserve spots for foreign students.

Other options exist in Asia, such as the Monbukagakusho in Japan and a variety of options in China. In fact, I just recently read about the Schwarzman scholarship, which is new (just admitted their inaugural class) but gives awardees a full ride to arguably the most prestigious university in China – Tsinghua.

All in all, the American higher education system currently doesn’t serve its students well. Yes, the education is world-class, but the costs are such that they impose severe burdens on graduates for years after. For comparison, Switzerland has an elegant system of vocational training even for white collar professions like banking. Having graduates with work experience, contacts in industry, and the skills that businesses need has led to an astounding 3% youth unemployment rate.


Is Buying a Home Overrated?

Famed economist Alex Tabarrok certainly seems to think so. He cites a few reasons for why housing may not pay off as an investment:

  1. Significant concentration of wealth in a single asset
  2. Locking one in place geographically
  3. Sentimental attachment (preventing more rational choices regarding when and how much to sell)
  4. Historically appreciating less than the stock market

These are generally true, and I cite in my book all of these factors as caveats for any buyer to be aware of when considering a house. Indeed, a house is more than a place to live – it’s a complex investment at the same time, even after the mortgage has been paid. Choosing to buy poorly can lead to being underwater, unable to sell, and unable to move.

What Tabarrok neglects to mention is that the quirk of leverage allows us to dramatically increase our profit in the first few years. The government also subsidizes housing by making mortgage interest payments deductible from one’s taxes.

In terms of comparing housing to stocks purely in terms of financial payoff, let’s crunch the numbers with a bunch of assumptions. In general, a house rises slower but with less volatility and less significant drops in price as compared to stocks. So we can assume that our property value increases by 10% each year, while our rental yield is 6% of the total property price. Reserve 2% of the house value for expenses that arise (interest payment, property tax, advertising, maintenance). Here’s what it would look like, assuming a base $200,000 starting price and 20% down payment:

Year House Value Yearly Rent Yearly Expenses Total Equity % Equity Yield on Equity
1 $200,000 $12,000 $4,000 $40,000 20.0% 30.0%
2 $220,000 $13,200 $4,400 $56,000 25.5% 23.6%
3 $242,000 $14,520 $4,840 $73,600 30.4% 19.7%
4 $266,200 $15,972 $5,324 $92,960 34.9% 17.2%
5 $292,820 $17,569 $5,856 $114,256 39.0% 15.4%
6 $322,102 $19,326 $6,442 $137,682 42.7% 14.0%
7 $354,312 $21,259 $7,086 $163,450 46.1% 13.0%
8 $389,743 $23,385 $7,795 $191,795 49.2% 12.2%
9 $428,718 $25,723 $8,574 $222,974 52.0% 11.5%
10 $471,590 $28,295 $9,432 $257,272 54.6% 11.0%
11 $518,748 $31,125 $10,375 $294,999 56.9% 10.6%
12 $570,623 $34,237 $11,412 $336,499 59.0% 10.2%
13 $627,686 $37,661 $12,554 $382,149 60.9% 9.9%
14 $690,454 $41,427 $13,809 $432,363 62.6% 9.6%
15 $759,500 $45,570 $15,190 $487,600 64.2% 9.3%
16 $835,450 $50,127 $16,709 $548,360 65.6% 9.1%
17 $918,995 $55,140 $18,380 $615,196 66.9% 9.0%
18 $1,010,894 $60,654 $20,218 $688,715 68.1% 8.8%
19 $1,111,983 $66,719 $22,240 $769,587 69.2% 8.7%
20 $1,223,182 $73,391 $24,464 $858,545 70.2% 8.5%
21 $1,345,500 $80,730 $26,910 $956,400 71.1% 8.4%
22 $1,480,050 $88,803 $29,601 $1,064,040 71.9% 8.3%
23 $1,628,055 $97,683 $32,561 $1,182,444 72.6% 8.3%
24 $1,790,860 $107,452 $35,817 $1,312,688 73.3% 8.2%
25 $1,969,947 $118,197 $39,399 $1,455,957 73.9% 8.1%
26 $2,166,941 $130,016 $43,339 $1,613,553 74.5% 8.1%
27 $2,383,635 $143,018 $47,673 $1,786,908 75.0% 8.0%
28 $2,621,999 $157,320 $52,440 $1,977,599 75.4% 8.0%
29 $2,884,199 $173,052 $57,684 $2,187,359 75.8% 7.9%
30 $3,172,619 $190,357 $63,452 $2,418,095 76.2% 7.9%


Most of the data, if plotted, would look linear, as we’d expect given our fixed assumptions. However, I’d like to draw your attention to the last column – yield on equity – which is the annual rental income divided by our total equity. This is where leverage comes in and amplifies our gains. Normally a business generating $12,000 per year in gross yearly income (or $8,000 net) would cost more than $40,000 to buy, but we were able to finance it with a mortgage. As we plow our profits back into paying off the mortgage, we build our equity. This happens very rapidly in the first few years, and tapers off over time approaching the 6% yield, as our equity approaches 100%.

Visually, we can plot the exponential rise in equity in the first few years:

equity over time

This is why some house flippers sell the house after a few years, when the bulk of the equity accumulation has happened. They then take the profits and split that into buying 2-3 houses, starting the leverage process all over again from the beginning and benefiting from a 20-30% yearly increase in wealth into perpetuity. This rate just about doubles stocks’ average yearly gains.

Banking on leveraged gains like this can pay off handsomely, but it can backfire if prices drop rapidly. This is why this strategy can only be used on a (mostly) stable income generating asset like housing, where prices and rents rise slowly but surely.


Inspiring Business Ideas – Etiquette Classes

This post is part of a series of business ideas that come to me in the course of everyday life. Some of them are in areas I have experience and expertise in, while others will be more off-the-wall. I will comment briefly on the skeleton structure, how to get started, overall viability, and projected payoff. If you like it, feel free to take it and run with it.

It’s been said that a good entrepreneur meets needs, but a great one anticipates them. Indeed, being the first to exploit (or perhaps start) a trend is a great way to get a jump on becoming the big fish in a new market. Such was the approach of a certain Sara Jane Ho.

She certainly has an impeccable resume, having graduated from Harvard Business School and working a few years as an investment banker (one of the featured “good jobs” in my book). But suppose that she realized along the way that working for someone else would never make her rich, and that the long hours would ruin her health and sanity before long. Thus, she looked inwards trying to think of what she could do with her skills.

Mainland Chinese, thanks the the conditioning after the Cultural Revolution, have two distinct traits. Having lost their distinct culture, they came to worship money, especially after the country opened up to foreign investment and started adopting capitalist ways. They also have an inferiority complex, having been under the thumb of foreign oppressors for the past 400 years in recent history (until after WWII). It’s no wonder that they are aspirational, trying to adopt the ways and mannerisms of their previous overlords.

Taking advantage of this yearning, Sara Jane Ho started a business teaching culture and class to the nouveau riche of China. This includes social graces, table manners, and being a consummate host.

Let’s count the number of reasons why this is a great business idea, using principles from my book.

  1. The business combines her unique skills. She’s fluent in Chinese, understands Chinese needs, but has also grown up and gone to school in America. She’s therefore the perfect credible intermediary to bring western mores to Chinese.
  2. Startup costs are low. It doesn’t cost much to run a series of seminars and workshops. Most of her costs are probably related to advertising, and even those will recede as her business becomes more popular through word of mouth.
  3. She can charge premium dollars to a captive audience. This is one of the big advantages of creating a business that caters to the rich.



Jobs That Pay – Dog Walking

Hey, not all traditional jobs are poorly-paid and overworked. As I mentioned in my book on wealth, there are under-exploited niches where one can be successful as an entrepreneur. Marketwatch today ran an interesting article on a dog walker(!!!) who is raking in 6 figures working the equivalent of part-time.

Stewart says he could have grown his business into “a dog walking empire.” But he says “there’s a tipping point — where you manage people more and dogs less — and that’s not what I signed up for.”

He now has three employees who walk dogs for him, and he doesn’t plan to hire any more. He pays them a salary instead of an hourly wage and often works with them.

He charges customers $15 per walk — the going rate in Long Island City — and walks between 40 and 50 dogs every Monday through Friday, mostly between 11:30 a.m. and 3:30 p.m.

He knows a solo dog walker in his neighborhood who makes $2,000 a week by working 35 to 40 hours a week. And he knows a dog walker with employees who makes $150,000 after paying his employees.

And Stewart says he makes about $110,000 a year — after paying his expenses and employees — while working 25 hours a week. “It’s full-time time pay for part-time work. I think everyone would want that,” he says, adding, “I’m doing something that I love and I have time to go to school at night.”

I’ve bolded key points of emphasis. This guy has done a great job following the rules in my book for starting up successful businesses.

  1. He understood the market. NYC folks are busy and are willing to hire nannies, dog walkers, etc. to take care of their personal lives.
  2. This is a small enough market (not a lot of prestige for dog-walkers) that someone can easily become super specialized and command top dollar (big fish in a small pond).
  3. He figured out how to stand out as elite, by promoting his expertise and experience with dogs of all kinds.
  4. His work was still paid on an hourly basis, but he removed part of those constraints by hiring others for some jobs and moving to more of a higher level coordinating, marketing, and managing role.
  5. He had limited ambitions. He kept his business small-scale enough to be adequately profitable, rather than investing tons of money to become a commercial empire, with a higher chance of losing money and even failing.
  6. He worked on what he knew and loved.
  7. At least initially, he didn’t depend on his job for money (he worked as a bartender and waiter for a while).
  8. He knew himself and had an endgame plan. He had an income level in mind at which he would be satisfied and spend extra hours on other pursuits.

One natural wacky extension of this principle that comes to mind is being a niche nanny-tutor combo to the very wealthy. Someone can bill himself as an Aristotle-like individual able to give kids the extra boost needed to get into the most elite schools, become well-rounded, and achieve success in life. For a high retainer of course! If you’re gunning for this position from early on in life, you can build a sample CV with a PhD in early childhood development, a bachelors or masters in education, empathy and skill with children (being female helps in this regard, for perception if nothing else), aptitude in art and music, and a track record of success (by babysitting and caring for family friends’ kids).

You can read about of other successful entrepreneurs and more tips on how to identify your strengths and build your own business with my book on wealth.