Money Is A Story And Money Flows

There is a river called the mighty Hudson River, and it is calm. But that’s a lie because it is a fjord (half fresh and half salt water).

Water flows in both directions depending upon the time. And it appears calm although it is moving most of the times.

Let’s try to learn about a movement of another kind – cash.

But first, remember that you need to understand the cash flow if you interact with money in any way.

Your Value

Thanks to capitalism from ages, money is everywhere. And everything has value in relation to money.

But it isn’t a measure of your value. The world’s richest person means they have more money than anyone else, and that’s all it means.

If you set out to make money and you fail – then it doesn’t mean you are a terrible person. You just were unable to make money.

But if you set out to make a difference, then the money isn’t the point.

Money Flows

Money always flows. If you put it in the right place, then it increases in its value. And if you put it in the wrong place, then it’s value decreases.

So even the money in your mattress is moving – it is decreasing in value.

The entire economy is based on the movement of money.

Understanding Cash Flow

If you are selling a product to big supermarket and you are getting to paid after two months, then you will not have cash for two months.

And if your supplier has to be paid two months before the product arrives, then you will not have the cash invested back for at least four months.

So you might get a profit, but your cash flow went in the wrong direction.

Another way to look at this: if you are Amazon then there are chances that in 5 days the product is sold and the inventory is filled again.

But the companies who put their product on Amazon they get paid only after 30 days.

Which means the more Amazon grew, their cash flow grew too which is interest-free money from suppliers.

Why Cash Flow Matters

Because if you are doing a project and you end up with zero, then you are out of the game.

Unless there is a bank to loan you money and they might charge you high-interest rate which might be all your profit. But companies do this so they can have enough cash flow to get the product going.

One thing to do is to organize your work, so you have positive cash flow.

For example, bootstrappers find customers who are in tremendous need, so they pay up upfront. For example, you buy a ticket for airlines for five months in advance.

So you need to approach clients who have a significant problem that pays up in advance.

Understanding Margins

Let’s say you are selling lemonade, so you price it to $2.50 because you got it made for $2.

But that’s not true – if you add up all the costs before making that sale, then you need to charge at least $8 to stay in business. This is different than some greedy profit maker.

You need to pay bills every month even if you didn’t make the sale consistently. So you need to account for that, so you stay in business. Not accounting for that means, you as a small business will fail.

Yes, you can scale and then profit from volume game. But it is unlikely you will become the next Starbucks.

So the alternative is to find clients who have burning pain, so they pay upfront and charge them a fair and good margin price, so you keep doing your projects.

Inventory Costs

Also, there is an inventory cost you need to pay for all the stuff you made in advance. And every day it doesn’t sell you need to pay for it.

One thing is to clear it off for discount, but then it will create a problem to sell later for a fair price.

But taking a lesson from the fashion industry – they clear out the stock. And use the cash to create the next fashion thing.

Four Types Of Services

Based on the Boston Consulting Group, all services can be classified as follows:

Stars: If something is growing and giving you money. Good on you if you get one.

Cash Cows: It doesn’t grow but gives good cash flow. Use them to pay your bills. And invest in problem children.

Problem Children:  Anything that can grow but needs money. Use your cash cows to invest in here.

Dogs: Low cash flow, and they aren’t growing, shut down them.

Either you are managing money or money is managing you.

On Debt

Banks are all over the place to give you credit cards so you can get money in advance.

And if you fail to pay in time, then there is a charge of 20 to 30 percent interest rates. No wonder the banks make billions.

Here is a pointer to use debt.

If you are investing in something that goes high in value compared to debt costing you then go for it. Maybe higher education or anything crucial to your business.

Also, don’t borrow money for anything that goes less in value. So don’t get a car loan.

If you calculate how much you save within interest over the years, then it would be upwards of $1000.

It is you who need to be disciplined to save for things to buy which you desire. So you break the cycle with the bank.

Advice For Artist Doing Projects

When you are starting, you can decide to cut back as much as you can and not to borrow. This will create positive cash flow for your business.

So when a right opportunity comes, then you can invest it in, and if necessary you may take debt.

It’s Not Personal

Money management is a game. So when money is involved, you are playing a game. And it’s not personal.

As soon as you tie it with your value, then you will lose the game.

Because if you are checking your bank balance for your value, then others will push you down. The alternative is to play the game as it is.

And use the means to create something because you are capable of making an impact.


  • How does Moore’s law apply to writer/blogger?

Moore’s law and its principle apply to everything. Earlier, there were only physical book printing with many limitations. But because of technology advancement, it was natural that publishing will become easy and it will be cheap. And it did.

But the quality degraded. So you as a writer, need to give something more than words on paper because now everyone can write.

Similarly, in other jobs. Say in plumbing the tool to check on pipes have gone down by a Margin of 90 percent. So everyone has that device which is connected and cheaper.

So you need to upgrade yourself, and that’s how everything will follow.

That’s why there are Akimbo workshops now – that’s a leap forward because video conferencing is getting better, and community is scarce.

  • Since limited resources are on Earth so how to keep innovating?

As computers evolved- in the short run, they consume more power. But in the long run – they keep getting efficient. Example, LED lights or computers organizing supply chains efficient.

Or something like irrigation of plants. There is tough work ahead, but more efficient is waiting for us.

  • Having a kid of 10, as a culture thing, we give her smartphone. But is that an equivalent Of giving her pack of cigarettes – what to do?

As a parent, you need to encourage kids not to fit in.

You need to ask yourself what is the goal of your parenting.

Generally, giving your kids smartphones later than at least two years than others help them grow in other areas.

Ultimately you need to decide do you decide to fit in or you let her feel okay not to fit in.

Moore’s Law

It’s not just a good idea…

Law Vs Theory

The law defines how the world around you functions. The theory is the explanation of why it happens.

And people keep on explaining better things. Thus theories get better.

In 1968, Douglas gave demo – of a mouse, hypertext and many other things. But 10 years prior he predicted computers will become faster, shorter and cheaper.

About 5 years later, Gordin wrote a theory in a paper that based on innovation; computers will get cheaper and faster. In fact, you can buy 2 times for what you buy now in the next 2 years. One of this colleague turned it into Moore’s law – stating in 18 months, computers will get double in power and speed.

If it is applied to your house, you can buy your current house @30 dollar.

Practice Effect

Imagine a world in which things get better by practice. For example, if you used a wooden stick as a crutch and the more you used, the better crutch it became.

So, you could work for rich people so that your tools would simply get better by practicing.

But this isn’t true in real life. But Moore’s law is.

So many things computers are touching are getting better by Moore’s law:

  • LED watches were super expensive. So one company sold at a lower price to ramp up the volume and then effectively make a profit because of new production. So in effect, they made a huge profit by selling cheap. Because they got better at making more things.
  • Once you build one thing and make it efficient. You can make things better and cheaper next thing. Not true for all things though – for example, oil drilling.
  • The experience curve makes us efficient at scale
  • Computers can now make computers. As you get more powerful computers, they make more of them.
  • Big networks get more efficient. So a computer network is more powerful than just a computer.

The Future

Your smartphone didn’t exist 50 years back. So in the future, the smartphone or computer will get cheaper and more efficient. Hence, because of the network effect – a computer in your pocket will cost $8 instead of $800.

This will make it abundant at every place – in tyre, clothes and many other things.

Let’s take yahoo’s downfall – Yahoo was a directory so they hired hundreds of people – and judging which websites belong to which category.

Google turned that upside down – they based their search on PageRank which was dependent on computer chips. And those were getting cheaper and faster every 18 months.

More computer power tomorrow means everything you do will get affected by Moore’s law.

Onto You

Moore’s law isn’t going anywhere anytime soon. So the question is – are you behaving like Yahoo and focusing on now.

Or you are focused on the things you use will get better and cheaper. And are you ready for the upgrade. Don’t be too much focused on the convenience of today. Be ready to take the leap – because it will come.

And when it comes you need to be on the acceptance of Moore’s law. Thus making your life better and efficient.


  • How to connect with large groups efficiently, is it possible?

Groups are getting better, it is not possible to connect with 100s of people at a time.

You have no choice but to create a smaller group. You can choose based on random or semi-probability or based on some form of merit.

So you can say – there are only 100 spots and that’s it. Just make sure how you make the selection. Whatever you do – base your selection on how you want to be seen.

  • How to get rid of compliance?

If winning in a system helps you then you may pay the price of compliance. On the other side, if losing doesn’t matter to you, do lose but prepare for the consequences.

Most of the times you don’t choose the system. If you don’t choose metabolism and you don’t go to the gym, you can’t walk like Linda Hamilton.

As long as you chose this, you need to do what you have do because you have decided to pay the price of compliance.

Monopolies, Big companies and letting them charge what they want is a good thing. Why should they be not allowed to do that?

Yes, Walmart is an example of a big company working efficiently. Hard to say that about many countries in the world. But once it crosses a threshold, Monopolies come in place and it has major problems:

  1. The choice is a big thing. There can be consequences but at least you have a choice. Walmart has not crossed that threshold. So once it reaches a monopoly status, they will keep the innovation away.
  2. So they can charge what they want because consumers have no choice. And thus you are not happy. Taking away choice is a big problem of monopoly.
  3. When people who want to make a change, they find a new place where there is no monopoly. When AOL’s permission was needed to make a content site, there was less innovation. After internet, there came much great innovations.
  4. So a choice needs to be there as a consumer and as a creator.
  5. Of course, many big companies have made what is possible today as efficiently as possible.
  6. But if a monopoly would have been allowed, they would have cornered one market. And then went after another market.

False Merit, Appearing Real

On the race to get picked

In 1942, US had a problem. There wasn’t enough metal for airplanes to be made. So Howard made biggest airplane out of birchwood.

But it flew only once. You know the reason – it is a bad idea to make plane out of wood. Metal is better because of its merit.

Who Gets To Play Basketball at Stanford

Average NBA salary is 11 million dollars per year if you went to Illinois college while if you went to Stanford, it is 6 million dollars.

So if you are player seeking to maximize your earnings – it isn’t surprising that you will go to Illinois college.

The same is true for height and weight of NBA players. It is going up. So you might want to work early on your height and weight to match the successful NBA players.

Lesson From Billy Bean

Billy understood that people’s thought of key metric of success was flawed. By seeing what was really true – rather than guessing, he was able to beat the system.

Chosen was written by Jerome about who was going to get in high accredited college. Where you go to college will decide where you go in life.

Why is that so? Is it fair?

What happens there that it makes you more likely to contribute. Is it simply because external parties hire more from such colleges and therefore this illusion keeps on perpetuating.

Who gets to key to door first is a fascinating thing to learn about merit.


In 1900s, you need to have gone to school like Exeter – people of certain geographical, region. These schools were about perpetuating certain behaviors.

Then in 1920, waves of immigrants applied, particularly Jews. The schools had positioned themselves as someone who would admit when applicants who are intellectually better. And it turned out, new wave of applicant were better.

From 1900 to 1930 1200 jews entered Yales. But the soft skills inside the institution stayed the same.Because no Jews were elected to senior societies. Which were at the heart of the application of college.

The Change

Harvard started accepting applicants based on SAT scores which were some measure of success they wanted.

Some institutions admitted people of high SAT scores. The most elite institutions didn’t do that. They were seeking all rounded men. So they looked for sports.

50 percent of people in Harvard got admitted based on sports contribution they are going to make.

It was a search by elite institution to redefine merit.

In NBA, merit can be height or weight. But in baseball, merit can be base percentage. And in such elite institutions, definition of merit keeps changing.

What we know for sure is, it is extremely likely that you grew up in literate home, and you have a bunch of soft skills which aren’t tested by SAT.

Current Events

It is clear once an institution that can award merit, chooses an access of performance that can be gamed, people will cheat.

Now let’s compare to other badges of merit where gatekeeper isn’t obvious.

Consider top 25 TED talks of all time. One is done by Brit, ten from women, people of color, people who are professor and there is a kid.

Of course, there is a gatekeeper. There is still a bias. How were you raised, did you had breakfast everyday, what language did you spoke, did you had a place to sleep, did your community believed you.

Are people judging you? All of these happen long before you are given a chance to do TED talk.

Where is merit?

It might be in your head. Who brainwashed you that you could achieve something or you couldn’t.

The guardian reports. the blind auditions for orchestra so that judges can’t see who are performing increases the job to women by 50 percent.

But wait, they don’t.

A recent paper showed that by even elementary analysis that paper being quoted is wrong in six different ways.

In 1960, Kingman Brewster shifted the very definition of what merit was in YALE.

Another Sports Reference

Tour de france is apparently a race where your background doesn’t matter. Only time matters.It is little like SAT scores but there are problems. SAT doesn’t really measure your aptitude for anything. SAT is a measure on where did you grew up, how much your parents spent to prepare you.

And as we have seen with doping at Tour de france, winning is more about how close you can get with breaking the rules without getting caught.

Helicopter parenting about cheating, about pushing kids to famous college. It is rampant with country with biggest income inequality.

The sense that every decision is fraught, people aren’t going to judged on merit pushed parents to overdo it. Because the stakes are high so they think their act is justified.

So doping your kids might help them get better time. But it doesn’t open the door to true merit. The merit of actually making a contribution. There is long history of us misjudging what merit is.

Mostly trying to measure things so that your and your kids gets ahead. That institution has long history of making choices so it helps them and people like them.

A New Time

Now culture is shifting rapidly. It turns out how well did you do on SAT is less important.

What’s more important?

  1. The story we tell ourselves of possibility The story of grit and resilience, when to speak up.
  2. The idea of many many circles where you can contribute. There isn’t one line to get ahead. So many places to contribute. Earning merit by helping others. Rather than stealing merit. At any given time, system can be gamed because you have resources and others don’t.
  3. Picking Yourself. If you are going to seek merit from a corrupt system, you will become corrupt. Instead you can challenge yourself, showing up, solving interesting problem and leading.


  • Are there culturally rules, when companies lose focus. How to manage shareholders and manage customer expectations?

Working for public company is a choice. Mailchimp isn’t public company. Different choices get made.

It is easy to please people in the short run.

Apple earn billions of dollar every quarter. Amazon doesn’t make it every quarter. Each of them had a choice.

So you need to be clear on what’s on the offer. When things change, did you bargain for short run.

For example, Sears could have caught up and change things. But their internal culture didn’t allowed them to change. So you have to choose the culture which you want to be part of.

Entrepreneurs, Artists Need Open Access, Your Culture Needs It

Antonio Meucci invented the telephone. A poor guy who had barely enough to file a patent. It took years for him to save enough money so that he can send make his invention work with Western Union Telegraph Company.

But Graham Bell made all the profits who was his lab mate.

If Graham Bell didn’t invent Telephone then what was his contribution. Well, he invented the Bell Systems which made the connection possible. A sort of interoperability which makes connection happen.

After Bell patented the idea. Suddenly there was a problem. He alone couldn’t wire all of USA.

So he needed interoperability. Help and trust from many different telephone company.

Rockefeller Story

He was the richest men in history. He joined hands with big competitors so they become big in unison. And then they made a deal with railroads so they would get rebates for their oil shipments.

Then he went to all other competitors – to give an offer. Join us or go bankrupt. Because he will lower the price so that they can’t compete because the distribution was monopolized.

Once this was in place and you have a system where new entrants can’t go solo. Competition become practically non-existent.

Beer Story

5 years ago, the beer tie system in the UK was outlawed. The gist is if you want to open a pub, you either had to take all the risk and open up the bar. Or you can do a deal with one giant brewery and they will set you up.

But in exchange, you will pay 60 cents more in each beer you buy from them. And you have to buy from them. Over time, you will be making less than minimum wage.

And if you were a new brewer, you can’t sell to those pubs. So the dominant breweries stayed dominant.

Movie Industry

If a few movie studios owned all the theatres. Then it is impossible for an artist to show up if they don’t connect with those movie studios.

Basically, if the market is owned by monopolized people or company then there will be a bad impact.

Net Neutrality

It sounds complicated because those who are against it want to make it complicated.

Consider this, if you are the owner of a pipe. Then you need to consider all the traffic (cities who need pipe) the same. Because if you don’t then we will go back to the old age of Rockefeller impacting distribution.

If someone is forbidden to distribute then they can’t scale.

Most of them wouldn’t happen if the government was perfect. But they aren’t. Because there are lobbies supporting a government who have money and not many competitors.

Case in point, AT&T and Verizon are spending hundreds of dollars to stop net neutrality so that they stay at the top and/or earn huge loads of money.

TLDR: Scale that comes from lack of interoperability, scale that comes from forbidding others means established competitors can use government to stop others from scaling. Basically insulating them from new innovations.

BAR exam & Game

Earlier you could go and take the BAR exam and become a lawyer. Then they changed the rules. So if you get the BAR passing certificate from some accredited institute only then you are a lawyer.

That makes it hard for innovators who can help people pass this exam in 6 months.

Earlier Nintendo games had patent. So if you are an innovator who has a cool game idea, you can’t make games for Nintendo without their permission.

Do you think innovation will happen more here? NO, right.

AOL story

Once AOL ruled the internet. If you want your site to be seen by the world then you need to have it on AOL.

Now, you can build a site and it is open for the world to see. This is a massive change. Open access to everyone compared with restricted access.

Established players want to control distribution, technology, access to users, labour and government regulations to keep innovation away.

While consumers want innovators to do as they please without any hindrance.


As citizens, you have to support Open source, API so that the system is open and there becomes no monopoly.

And as entrepreneurs, we need to be aware that you might have the same instincts to become a monopoly.

Someone out there is another Antonio Meucci, one who doesn’t have enough money. Someone who doesn’t have the patience to get over the hurdle created by monopolies.

Your job is to help that person, make them found and help them so they can change things for better.

Every healthy community of any kind is based on innovation which encourages playing, new ideas are encouraged. So you need to fight every day who are trying to restrict the play.

You can’t say – you can’t play.


  • Do you recommend any books one should read before graduating from college?

Books can make a great impact if read at the right time.

The beginning of infinity by David Deutsch

Just Kids by Patti Smith

Secrets of closing the sale, see you at the top by Zig Ziglar

  • Insights on consultants who work on a one-to-one

You can become a coach. But there are many coaches. Hence, getting clients is hard. People who have a coach aren’t looking for coach. And people who don’t have a coach aren’t looking for coach either.

Having a coach is a private thing. Because we don’t talk about it. Seth’s advice for coaches is to go for group coaching. Group works better because other people help.

And if you do a good job, it spreads. Slowly you will get more clients which will help you keep doing work that matters.

People Like Us Do Things Like This

Seth Godin explores the ‘Culture and our Memetic DNA’. And how you can look at it and take the leap.

Do the hard work of showing up, creating a ruckus. Because someone is going to do that. Why not you?

Monkey experiment

5 monkeys in a cage and there is a ladder. As soon as one climbs up, there is a water spray. After some time, everyone pulls down anyone who tries to climb up.

A new monkey is replaced with an old one. The naive monkey tries to climb but the rest pulls them down. One by one new monkeys are added until only new monkeys are remaining. But none have experienced water spray. Still, they will pull down anyone who tries to climb the ladder.


None of this is true. This was written in a book called ‘Competing for future’ in 1996. The authors made up this story based on another experiment.

The takeaway is your culture is how you do things. It is way stickier and subtle than you can imagine.

DNA is permanent. So giraffe’s height won’t increase if they stretch their neck. Similarly, your eyes will stay the same color no matter how hard you try.

In humans, DNA isn’t the drive, culture is. And culture is way harder to shift because it is invisible and powerful.

The Blockbuster Story

They had the chance to demolish Netflix who has just launched a subscription service for DVD with no late fees.

Blockbuster had a chance to do the same with their business. But their board of members didn’t approve the change because they made $800 million in late fees. So they developed as a company which strives on late fees.

Similarly, the ongoing conversation between print and digital books. Many people claim digital isn’t growing much.

The question is why do they care. By doing so they are establishing themselves as if they are in the business of chopping down trees. They are not.

In Pennsylvania, the coal mining industry is going to go away. So there exists a training program for the workers. But many people don’t show up. And all of this training is free. It begs a question of why they would do so.

Let’s consider Encyclopedia Britannica isn’t being printed. The point of their business matters. If their goal was to have many volumes in the audience home then it failed. But if their business is to make the audience know more stuff then they have succeeded.

Changing Is Difficult

Yahoo could have bought Google but they didn’t because then they had to acknowledge their directory method was not good. Also, AOL could have bought Yahoo but they didn’t because then they need to acknowledge their business was failing.

Prodigy could have bought AOL but they didn’t because then they need to acknowledge their infrastructure investment was for nothing.

The point is business – small or large forget their first principle of culture. They think their job is to collect late fees, cut down trees and so on.

So you need to ask some basic question to move forward:

  1. Who do you serve?
  2. What do they need?
  3. What does your business own?
  4. What do you know?

The key thing is to serve. Be clear on who you are serving. It doesn’t matter if the path changes as long as you are serving. Don’t get caught up in the wrong notion of your business.

Book publishers shouldn’t be upset if their audience buys a Kindle to read ebooks. Because you aren’t in a business of cutting down trees. You are in a business of sharing knowledge. Shift your offering with the time.

The Netflix Story

Netflix didn’t fall in love with late fees. They would send the DVD in an envelope. Once the internet came up, they started streaming movies.

So they are still offering entertainment – the platform or path has changed. They didn’t get hung up like Blockbuster in old things.

After 10 years, now they make their own movies, documentaries. So they have positioned themselves as a movie production company. They did this by obtaining more knowledge and they understood their audience, core values, and their offerings.

They changed with the new demand still offering entertainment.

If you put bananas on top of the ladder then something will find a way to climb that ladder despite many pulling you down. Someone is going to figure out with time, it better be you.


  • There is so much content. Does it cheapen the art?

There is always been abundant of ‘cheap’ content. Radio stations, movies, comics, and many others. Making ‘cheap’ content is easy because it is safe.

More and more people are going to have content. For you, the important stuff will land for you.

  • What is the role of curators?

Curators have a reputation at stake, unlike gatekeepers. So going forward, curation keeps going on value.

Often taxonomy is decided by people in power. For example, men are often labeled as leaders in book business and women as self-help in the miscellaneous category. What’s your take?

Yes, that is the point of Big sort episode. Often many creators have been punished by sorting. It happens so often that is unfair to creators and audience alike. One of the thing you will see at the airport, ‘famous authors’. They get the benefit of the doubt. It ain’t fair.

But there is an opportunity to find the curator. So that you can get the benefit of a doubt. Which is hard work you need to do.

Something To Make You Think

A work from Beethoven music which made Seth think. I guess you can listen to this charming notes and calm your nerves. Or use it as a background to keep making your ruckus.