What creates jobs?

There were a few recent financial crises. The subprime mortgage. Bailouts of large companies by (American) government. The sovereign debt in Europe.

I thought we were past the worst of things. The economy seems to be recovering, if not already recovering (I’m not an economist). Then I saw this wonderful ad.

Ideal job ad

Jobs are in short supply globally. I just thought Singapore would have weathered this gracefully. But then that advertisement came up recently, so perhaps Singapore had a delayed reaction.

Governments don’t create jobs

I respect every civil servant out there. You should also be aware that their salary comes from taxes. Where else would the government get their money from? (There are probably foreign investments and donations and whatnot, but I presume the majority would be from taxes).

By that logic, hiring more government staff generally means higher or more taxes. If I’m wrong, please leave a comment.

For the purposes of discussion, I would include military forces as part of the government. The military is what businesses call a “cost centre”, meaning it doesn’t bring in revenue directly but costs something to maintain. Well, ok, the military can sell weapons and security technology. But mainly, the military just eats up money.

I am probably offending politicians and military officers left and right here… Go read something else then.

IT departments are usually considered cost centres (well, they were in my previous company). Unless your company is a software company, then your software department making your software products becomes your main cash generating department.

Big companies don’t create jobs

The recent waves of financial downturns, together with globalisation, have kept big companies on their toes. Cost cutting can only go so far.

The reason big companies are big is not because they hire a lot of people (that might have been true in the past), but because they can scale up quickly. They have the infrastructure and people in place. However, that scaling ability comes at a cost. Maintaining the status quo requires money too.

To remain competitive in these current times, there have been mergers and acquisitions. If your company buys up an IT company, your company no longer really needs an internal IT department. Staff from the original internal IT department and the recently bought IT company will be combined, and as expected, people will be let go due to job/task redundancy.

So big companies are not going to be creating many jobs because they’re busy trying to get their costs and profit margins in order in this increasingly chaotic (relatively speaking) economic environment.

Small companies don’t create jobs

Small companies have their own problems too. I will include startups in this. The main problem, in direct contrast to big companies, is scale. Although that can be overcome with some creativity and especially with the Internet.

There was once I applied for a job at a small startup here in Singapore. I asked a friend who was already working there. I was willing to be an unpaid intern. I didn’t get a reply. Either my “friend” didn’t put it up to the founder for consideration, or my “friend” was afraid I’d steal jobs. In this case, small companies are small because they have a small number of staff.

So while existing small companies might not create enough jobs to make a difference, new small companies will still create jobs. Which brings us to the next point…

Entrepreneurs (might) not create jobs

Well, entrepreneurs create companies, right? They usually start small, so they create jobs. Right?

I guess.

My definition of “entrepreneur” comes from the dictionary, which is “one who takes on risks of a business or enterprise”. Based on that, I consider myself an entrepreneur. I run a business selling software that I wrote. I assume the risks of a business. By definition, I’m an entrepreneur.

But I don’t hire anybody. I outsource some of my tasks (usually design work), but the only job I’ve created is custom made for me. And I’m filling it right now.

And typically, for those pursuing “lifestyle businesses”, they don’t hire a lot of people too. They usually outsource, and even if they do hire staff, it’s probably 2 to 5 people.

Not quite the 50 to 500 staff for small companies, huh?

So, what does create jobs?

Customers create jobs

I can’t remember who said this. Basically, a job exists when someone is willing to pay for something, and then pays it. When you have customers, you create jobs.

A customer wants a latte. Someone has to grow, harvest, transport, and grind the coffee beans. Someone has to milk a cow. Someone has to brew that coffee. Someone has to take the money from the customer.

Your customer wants a monthly report on how much money he’s making. He doesn’t want to learn how to write SQL statements to grab information from his database. That’s what you’re for.

On the most basic level, it’s about cash flow. A job exists to facilitate the transfer of money from the customer to you. If you’re an employee, then the money goes to your company, who then pays you.

So if you want to find a job, find out how to create customers for the company you’re interested in.

On military, startups and entrepreneurship

Do you know why there are so few entrepreneurs around? Because it’s uncomfortable to be one. Keep this notion of “comfortability” as you continue to read, since it’s going to be a running theme.

On surviving enormous weights

I slept late last night. Or more accurately, I slept in the early morning today. I do that a lot. One, because I work long hours. Two, because it’s really quiet between 11pm and 2am. I also went to bed hungry.

I lie on my bed, and my last thoughts before I drift off to sleep are typically a combination of the following:

  • What can I do to improve my products/services?
  • “I can work on that piece of code for the product first.”
  • “Wonder what functions do Excel users use? Or what development teams do to support their users? I want to work on practical aspects for the guide, but where and how can I get that information? Nobody’s willing to tell me anything.”
  • What else can I do to create some cashflow?
  • What else can I do to make my customers’ lives easier?
  • What wording should I use for my Google ads?
  • What should I write for the next issue of my magazine?
  • What can I do to improve the copy on the sales page?
  • What can I do to market my products/services without being pushy?
  • Who should I interview for the next issue of my magazine?
  • What videos should I create? How can I do them better?
  • I’m hungry

Last night, faced with the enormity and weight of the tasks ahead of me, a new thought came to the fore. I’m damned lonely. Running an IttyBiz is lonely business, because no one around you understands what the **** you’re doing. (There’ll be some swearing, because it’s the only appropriate response. And that hunger can drain your will and self-control like nothing can.)

So the “I’m damned lonely” and the “I’m hungry” thoughts met one another, and decided to wreak havoc on me. I started sobbing. Silently of course. After a few minutes of self-pity, I reined in my thoughts and emotions and calmed down. (Some might say I shouldn’t “air my failures“, so to speak, but I’m just telling you the truth of what I’m going through. I’m not really failing, I’m just not succeeding enough. Now there’s positive thinking for you!) A new thought came up. “Let’s go to the library!” I don’t know where that came from.

I woke up the next day, hungry of course, and decided to just freakin’ go to the library. Maybe it’ll improve my mood. I just published the April issue of my magazine, and for the 1 or 2 days just after publishing an issue, I would usually feel completely drained. Have you ever launched a product? There’ll be a lot of marketing, blog posts to publish, emails to sent, people to inform, processes to check, and so on. Now imagine doing that every single month.

On military

Anyway, if I’m going to the library, I might as well read some business books or something. So I found this book, Start-Up Nation, by Dan Senor and Saul Singer. Generally, it’s about how the culture and history and geography of Israel made the Israeli military a force to be reckoned with. And subsequently, also made Israel a country of entrepreneurs.

Did you know that the Israel Defense Forces (IDF) helped with the design of rules for Singapore’s own military forces? I didn’t know that, and I’m a Singaporean. The authors wrote that the 3 countries, Israel, Singapore and South Korea are similar in that they’re close to hostile or larger countries. All 3 countries share a strong sense of “self-preservation”, of independence, and thus built a strong military force. However, only Israel created a strong entrepreneurial spirit in her people as well.

Although Singapore’s military is modeled after the IDF – the testing ground for many of Israel’s entrepreneurs – the “Asian Tiger” has failed to incubate start-ups. Why?

Further on, the authors wrote

Singapore’s leaders have failed to keep up in a world that puts a high premium on a trio of attributes historically alien to Singapore’s culture: initiative, risk-taking, and agility.

And all three attributes require a person to be comfortable with being uncomfortable (as paradoxical as it may sound).

Today the alarm bells are being sounded even by Singapore’s founding father, Lee Kuan Yew, who served as prime minister for three decades. “It’s time for a new burst of creativity in business,” he says. “We need many new tries, many start-ups.”

That’s “tries”, not “guarantees”. It implies being uncomfortable, at least for a while. And most people only want to be comfortable.

On foreigners

Israel welcomes immigrants, especially those who are Jewish. Singapore has, well, Singaporeans actually, have issues with immigrants, or what is termed “Foreign Talent” (yes, capital F and T). From what I’ve heard, many Americans have issues with immigrants to America too. One of the reasons is fear. “They will take our jobs! They will feed off our welfare system!”

Singapore and America require immigrants to stay for a while (about 2 years?) before being considered for citizenship. Israel issues citizenship on arrival.

Maids (hired from countries such as Philippines or Indonesian) are fairly common in Singapore. I’ve also heard of a story where a girl was so “comfortable”, that at a buffet spread, she simply points to the food she wants, and the trailing maid behind her would get the food for the girl. Spoilt child, or privileged times? Recently, there’s also a wildly spreading photograph of a Singaporean man in military uniform walking in front of his maid. The maid was carrying the man’s military backpack. I’m ashamed I have to give this as an example of how Singaporeans are too comfortable in their lives. (UPDATE: I’m not sure about the maid carrying the military backpack part. Might be a stunt. But the “comfortable Singaporean” point stands.)

Being a startup founder or entrepreneur is uncomfortable

You’re probably a programmer, or a person working in the technology department. You might be considering becoming a founder of a web startup that will then make millions of dollars. I’m here to tell you it’s going to be uncomfortable. Can you stand being uncomfortable?

You will need to think about making money. From Day One. Not about how cool the application is, or how many users you will get, or how much people will be talking about you. Make money, or sink.

Venture capital or angel funding is not going to save you if you can’t make money. If your startup or business cannot sustain itself, you’re screwed, because it will fail eventually. Because no one’s willing to pay you to sustain it.

On ramen profitability

There were a few times when I tried to explain my plan to a friend or family member. The short-term plan is to reach ramen profitability. After I explained it, the friend or family member would say “That’s not enough! What about savings, health insurance, [insert reason]?”.

Do you know what “ramen profitable” means to you? It means you no longer have to worry about living expenses. Given some margin, it means you can eat whatever you want (oh foooood… uh, sorry.), buy whatever necessities you need, and basically go about your life without worrying too much. In some sense, it’s like financial independence.

But what it really does is give you something that no man can give you, no amount of money can buy: time. You can then make the startup/business better, which generally means more profit without much more work. Or you can create another startup or business if you so wish. Or you can work on that novel (which, let’s face it, is probably not going to make you a lot of money, but gives you much satisfaction). Or that painting. Or volunteering at a shelter. It gives you freedom.

And nobody around me understands that. Of course, the long-term plan is still to make sure I get all the savings and health insurance and whatever finances in order. People see a fixed monthly income, that might possibly increase every year. They see the ramping up of income as “unsafe”, “insecure” and “uncomfortable”, especially since it starts at zero (then to ramen profitable, then to, well however high you want as long you’re willing to work on it).

I had to change my lifestyle so I can work on my business. I’m willing to be uncomfortable, at least for the short-term. I walk whenever I can to save on transport costs. My body aches, either because I’m sitting for too long, or walking for too long. I have this lingering ache right now on my back between the left shoulder blade and the spinal cord. I am frickin’ uncomfortable! I have bread and peanut butter for dinner. Every day. For the past few months. Sometimes, I throw my hands up and just get a proper meal of rice, vegetables and meat. I have lost friends because of the decisions I made. I’m serious about this.

How much are you willing to fight for your dreams? How much are you willing to give up for your goals? How much are you prepared to be uncomfortable?

P.S. I’m working on the “bread and peanut butter” dinner thing. I’m sick and tired of being continually hungry…

Working for myself

From today 15 March 2010 onwards, I will be working for myself. (Today’s article won’t have any math or programming stuff, so you might want to skip this if you’re not interested in entrepreneurship, online businesses, or personal journey kind of thing.)

It was a tough decision, but I realised that the decision was made a long time ago when I started writing this blog. Nearly 3 years ago, I started writing, in part because I needed an outlet to put my thoughts down, and in part to see what this “blogging” thing was all about. On the way, I learned what I could of online businesses; what they are and how to set them up.

Nearly 3 years later, I still don’t have something compelling to offer. I’ve looked at probably every way to earn something through this blog. Blog advertising, paid posts, affiliate products and the variants of each method. I don’t like them (or they don’t work), and they don’t fit with the blog. They “uglify” the site, and don’t add value to you.

So I took everything out and just continued to write. Once, I was asked why I continue to write when there’s clearly no benefit. I don’t get paid. My blog’s not popular. There are hardly any comments, let alone other bloggers linking to me.

That would be disheartening if not for the fact that I installed FeedBurner and Google Analytics. They tell me how many people subscribe to my blog RSS feed, and how many people visit my blog. The statistics aren’t even close to what a mid-range blog have. Yet they are consistently growing, albeit slowly.

So why do I continue to write? Because of you. Because you continue to read what I write, even if you choose to remain silent (which is totally ok). Which makes the few times where I get to hear from you all the more worthwhile.

Anyway, back to that working for myself thing. Since there’s little I could do to monetise this blog, I started Honeybeech where I write about games and RPGs and Dungeons and Dragons. That blog gave me a glimmer of chance to start an online business.

All this had been done part-time. I write software, design user interfaces, handle user queries, and generally solve problems in my day job. And I write about math and programming at night. And learn all those things about online businesses at night too. The goal had always been to set up a part-time business, and grow it enough so it can feed me and support my family. And then I’ll quit my day job, and be free to do whatever I want. Which is most probably that business, and write math and programming articles here.

I actually didn’t consider my (old) day job to be a “day job”. “Day job” has a negative connotation that it’s just a way to earn money. Mine wasn’t like that to me. At least it wasn’t when I started out. I got to learn new things and the people I worked with were great. Everyone worked hard, little (if any) office politics (backstabbing was unheard of), and they were professional in their work.

Now, consider job satisfaction. The key point of distinction between places to work is rarely the work you’ll be asking the employee to do. It’s the perceived connection between the employee and the people she works with. – Linchpin, Seth Godin

As time went by, my colleagues left one by one, either due to personal reasons or company rule (downsizing). What used to be a vibrant garden for me became a lonely graveyard. Sure, no one wanted to discuss C pointers with me, but at least I had company.

The work I was tasked to do wasn’t interesting any more. I started to stagnate. My programming skills plateaued. There weren’t any projects for me to apply new skills.

Think of all the reasons why you’re doing whatever it is you do during the day. Because the work is interesting? Because it’s challenging? Because you get to meet and talk to cool people? Because you get to impart knowledge? Because you get to learn? Because the work you do makes a difference in someone’s life? Because you get to make the world a little better? Because you get paid?

I won’t go into the reasons why I quit my job. Suffice to say, near the end, the only reason I continue to do that job was to earn a paycheck. And that’s a lousy reason to keep doing whatever I had to do.

I do not recommend this to you. I’ve decided to explore setting up an online business instead of looking for another programming job. Your mileage may vary.

I will continue to write math and programming articles here. Now that I’m freer (relatively speaking), some hobbyist math research and dabbling with programming techniques will be possible. First, I have to concentrate on feeding myself…

Oh yes, in case you’re interested, I’ll create some game products for sale, and offer writing services at Honeybeech. I haven’t had this planned out to the last detail. At this point, I’ve managed to sell a few copies of my Math Wizard (by being displayed at DriveThruRPG). Not quite be-able-to-eat-3-meals-a-day state, but better than nothing…

I’ll probably write on my adventures in how I manage to feed myself through whatever means here. Maybe tutoring. Let’s see if academic students are what I remember when I was their age…