Alex Bain's Blog

How limits make me better

I love taking on creative projects, but it's a little depressing when they don't turn out well. I've "produced" a number of songs on my Mac, and they make me chuckle, but I won't let anyone else hear them.

Well, I think of Twitter, Vimeo, Flickr, and my two blogs (TypePad and Tumblr) as ongoing, public creative projects. I'm proud when I put up fun or insightful content, and I get down on myself when I haven't posted in a while.

Here's where limits come in: I rarely fall behind on my Twitter or Tumblr posting, because, the way those sights have built their technology, the most you can possibly hope to do with a single post is still pretty simple. It's hard to imagine spending more than 90 seconds updating either.

This is great, because I don't put mounting pressure on myself to do an increasingly better job with those projects. My TypePad blog (this site that you're reading), however, feels a bit daunting at times. I feel like posts here should be longer, contain original content, and frequent.

Lately, I'm finding that I don't enjoy this form of expression as much as Twitter and Tumblr, because of the pressure that comes with it. My response will be the following: instead of posting roughly weekly, as I have been since October of 2004 (even though my archives are incomplete), I'll be posting closer to monthly, going forward. I recommend you subscribe to the site via RSS, through something like Google Reader or NetNewsWire, which are both excellent, free tools that prevent the problem of frequently checking sites, usually blogs, that may or may not have new content since your last visit.

I'm looking for a way to integrate all of the above listed projects into a single site, so that you'll be able to see my pictures, videos, links and commentary all in a single place. I'd even settle for something like what Zach Klein did, where he has a single page that links to everything. AlexBain.com is supposed to serve that purpose, but it's sorely in need of an update.

In the meantime, I'm going to have my Twitter posts streaming into my other blog, MaximumAlexBain.com, so that you can get 95% of what I'm doing all in one place. If you have this site bookmarked, I'd probably replace it with a bookmark to that site. I'll make sure to mention there when anything worthwhile shows up here.

You'll find that site is more about what I'm doing than what I'm thinking, and the updates are real time, coming from my phone, but the pictures are often blurry. If you like that site, you may also like my cat's site, FurioBain.com. He's pretty clever, for a creature without an opposable grip :-)

My real estate investing beliefs that get me in trouble

How many times have you heard someone say:

"Owning real estate is better than renting because, when you rent, you're throwing money away."

It's such a common sentiment, it can actually be awkward if you try to offer a dissenting view point. The problem is, the conversation quickly gets heated in many cases, because the person with whom you disagree has usually made a significant financial investment in real estate, and they want to defend that investment. Because I'm relatively young, and haven't invested in real estate, I'm quickly labeled as naïve.

Well, I have reasons for the way I feel, and here they are.

There are 6 situations where I think a real estate investment makes sense, and none of them involve avoiding "throwing money away". There's some overlap, or, as we would say in consulting, this list is not M.E.C.E. (mutually exclusive and collectively exhaustive):

1. The home you want to live in, has no equivalent that can be rented. For example, there aren't many $10M homes that can be rented. If that's where you want to live and you can afford it, buy it. If you want to live in the building right next to your office to have a walking commute, and that building only has condos for sale, it may make sense to own.
2. Your investment portfolio can absorb the down payment without being overwhelmed. If the $40K down payment on an urban condo is a reasonable % of your portfolio, it can be a great form of diversification, as real estate and securities are somewhat uncorrelated (+0.24 r-squared between US REIT's and the S&P, according to Investopedia). You can get a lot of the benefits of exposure to real estate through financial engineering without actually owning a home (e.g. buying into a REIT), but home ownership preferred by many.
3. You have a unique opportunity that looks HIGHLY likely to prosper. If you have a friend with a lengthy track record of success, who offers you the opportunity to join him in a project, perhaps that deserves a disproportionate allocation in your portfolio. The key is, anytime you're buying real estate, someone else is selling. What do you know that they don't? If your friend is letting you in on his project, is it because he needs capital, or because he sees this as riskier than previous projects? If someone needs to move in a hurry, perhaps because of their career, you may find yourself with a unique, below-market investment opportunity.
4. You live in Florida, and you're at risk of going bankrupt. Not even necessarily imminent Chapter 11 danger, but if it's a possibility worth considering, buy property :-)
5. You lack the financial acumen/discipline to put together a diversified investment portfolio. It's nothing to be ashamed of. Buying a house usually requires the tenant to lock up a large amount of capital for a long time, and continue to pay down their debt over time. Many of these same tenants may have ended up consuming, rather than investing, a good amount of the capital were it not placed in an illiquid real estate investment.
6. The stigma associated with renting. This is the worst reason to invest, but it is a fact that your friends and family may consider you a failure if you are still renting beyond at a certain age. Perhaps this is because they assume you should have saved enough $ by that age to be able to allocate a reasonable % of your savings to cover a down payment on your home.

Am I missing something? Let me know in the comments.

Giving the perfect wedding gift

When it comes to giving weddings, I have a gifting strategy that I feel very strongly about.

First of all, I stick to the registry. I've heard a number of people say that off-registry gifts are a major risk, and that they register for things because they WANT them.

Secondly, you can't "win" the registry. Even if you bought every single item, your cash outlay would not impress the couple that just spent their life savings on a big party with ~100 of their closest friends and family.

So, what do you do? Well, the only thing you can control is the thank you note you're going to receive in a few weeks, so maximize that. The couple will have to write a few sentences about how they love what you got them, so have some fun.

Decide how much you're going to spend, and pick the items on the list that you think it would be hardest to thank someone for if they gave them to you. I like cheese graters, ladels, spatulas, napkin rings, specilty cutlery, etc.

Believe me, it's all worth it when you get a note that says: "We've already had a blast using the lovely oven mitt you bought us."

The problem is, I've shared this philosophy of mine with some friends, one got married, and he called out my hyjinx. Here's an excerpt from the thank you note I received [it ends mid-sentence to protect his identity]...

Please rate the brilliance of this idea:

Bins & Batch Processing

This summer I read two books that helped me to get organized, The 4-Hour Work Week and It's All Too Much. Both of the books touched on the topic of Batch Processing. Originally coined as a computing term, I'd like to quickly demonstrate how I use the concept at home to simplify my life.

Let's start with one important assumption: any 2 minute task takes longer than 2 minutes because you can't immediately reengage in any other activity. As a result, if you want to efficiently perform household chores, you should let them build up a little, and perform them all at once.

Examples...

• Don't wash a single glass in the sink. Wait until you have a sink full, then wash them.
  
• Don't fold a single shirt, fold a laundry basket full of them.
• Don't process a single piece of mail (especially if you shred personally identifying junk mail, like you should). Shred them by the dozen.

There are tons more ways to employ this principle, and they're all effective.

Here's some advice if you want to give it a shot, and I'll include some pics below too.

For laundry:

1. Everyone has a laundry hamper for dirty laundry. Look around your apartment and gauge how many items of clothing are clean, but unfolded or un-hung. If it's more than 1, you need a bin for clean laundry.
2. Buy something clear and vertical from The Container Store or Amazon.
3. At the end of the night, when you're taking off your sweater and getting ready for bed, don't toss the sweater on the closest couch (or other flat surface), toss it in the clean clothes bin.
4. When the bin gets full, fold or hang all the clothes and put them away.

For mail:

1. Get a few folder filing bins from Staples or Amazon. Ideally you'll have one more bin than people in the home who regularly get mail. Get some that are relatively translucent, so you can tell when they're getting full.
2. Place them as close to the front door of your place as possible.
3. Label them with the name of everyone in the home. Label the extra bin "obvious trash" (this is not an excuse for men to put the US Weekly in that bin when it arrives).
4. Don't EVER let anything come to rest on top of the bins. Even for a minute. As Peter Walsh likes to say, "the first casualty in the war on clutter is always the flat surfaces." Refuse to give them up, and you just might win.
5. When you enter your house with new mail, immediately sort it into the appropriate bins.
6. Go through your own bin before it fills up. If there's personally identifying junk mail in there, you should shed it.

For pet related items (toys, treats, leashes, etc.):

1. Everyone with a pet probably already has a place for the pet-related products, but ask yourself if all the toys and cleaning items and stuff are making it back to their appropriate place. If not, you need more bins.
2. Just as schools often wait to pave walkways until they see where the paths are forming in the grass, let your pets' stuff collect for a day or two and see where it batches. For Lisa and me, it was the downstairs hallway and staircase
3. Get the most discrete bin you can that matches the decor of your home, and place it as close to the danger zone as possible.
4. Force yourself for the next day or two to place something in this bin each time you walk by, until it becomes a reflexive habit.

I hope these examples made sense. Consider which kind of tasks you perform more than once a day and whether or not they can be batched or helped by the addition of a bin in your life :-)

The Risotto Principle

I was told when I was young that one can make a bad impression on fellow diners if he takes too long to choose his meal from a menu. I took this advice to heart, and always try to make my decision in about 5-10 seconds. One advantage I have is that I'm allergic to both nuts and shell fish, so half of the menu is usually eliminated for me from the start.

When it comes down to a tough decision, I use two guiding principles. The first is obvious, and the second is less so. Here they are:

1. Order what the restaurant is known for - Don't get salmon at a steak place. Don't get chicken at a pizza place. If you wanted those foods, you should have gone somewhere else. The only time to violate this rule, is when you're at a restaurant to appease a significant other. If your partner really likes sushi, and you don't, it's fine to order cooked fish at a sushi place.
2. Order the dish that's harder to prepare at home - I call this, "The Risotto Principle" (not to be confused with the Bain Principle of Parking), because I always choose risotto on a menu when I'm deciding between that and anything else, since risotto is such an attention intensive dish to prepare. Additionally, while I never cook swordfish, my father is an absolute sansei when it comes to grilling the stuff, so I would never get that at a restaurant either. This is a good, quick heuristic to employ when you're down to two or three tasty options, and you need to finalize the selection.

My Cell Phone Usage: a detailed analysis in preparation for the iPhone

The iPhone comes out on Friday. I'm pretty excited to get one.
I'm currently using a Treo 650, and I'm pleased, but not elated, with it's performance.

Today Apple published a number of different plans for the iPhone, and I decided to do a little analysis to determine which would be the right one for me.

With the Treo, I paid a great deal of money each month for flexibility. I got the contract when I was commuting to Apple, driving about 45 miles each way. I wanted to be able to speak freely to my friends and family while driving, so I splurged on a big plan that allowed 2K minutes per month.

I no longer have such a commute, but now I use my phone both for personal and business use. I don't want a restrictive plan, but I don't want to waste money either. So I set about to evaluate my past cell phone usage to see what was the right plan. I pulled my minutes (the red line) and my text messaging (the blue line) from Sprint's website, and I've charted them here (click the chart to expand).

A few things pop off the page:

• My texting has gone way up lately. I assumed this because my b-school friends use texting a lot, but clearly this started before school did, and it's begun to level off. I guess I don't have enough time in my day to send more than 400 SMS in a month. Maybe this will change with the new phone though :-)
• My voice minutes have always varied greatly (333 minutes standard deviations on a 1279 average over 26 bills), but they have begun to taper off (the average monthly minutes is down to 1071 in the last 12 months).
• Texting and minutes are negatively correlated (-0.44). Perhaps I text more these days in place of using the phone. This has to be saving me tons of time.
• I started using Twitter in January of 2007, and my texting has spiked ever since. This is due to my little habit of posting to Twitter via SMS during downtime.

OK, so really I have three choices:

1. a 900 minute plan for $80
2. a 1350 minute plan for $100
3. or a 2000 minute plan for $120

Assuming that I don't want my lifestyle to change (i.e. I don't want to cease making cell phone calls to save $20 month), which plan makes the most sense?

I looked at the Total Cost of Ownership (the cost of the plan each month, plus whatever fees I would incur for running over my allotted minutes). [You can tell that I was starving for some kind of analysis today]

It turns out that the analysis depends on which time frame I include. If I look at my entire history with Sprint (26 months), than the penalty per minute for going over the allotment would have to be $0.07 or less to justify the 900-minute plan, and $0.22-$0.07 to justify the 1350-minute plan. If the penalty were greater than $0.22 for going over, I'd be safest with the 2000 minute plan.

This all changes if you only look at the last 12 bills. I've been talking a lot less lately, so now the penalty would have to be less than $0.11 to justify the 900-minute plan, and there's no scenario where the 2000-minute plan makes sense, because I haven't once gone over 1350 minutes in the last year.

I don't know what AT&T's penalty will be for going over, but I'll use Sprint's as a proxy. At Sprint, the penalty for going over your allotment started at $0.10, and scaled up from there depending on how egregiously you violated the contract. This makes the math a little tricky (doable, but not in the amount of time I feel like spending on it). I'll suffice it to say that the average would work out to at least an $0.11 penalty, and that the 1350 plan would be the one for me.

I read that the AT&T plans include 200 text messages per month, but that you can buy the right to more. I should probably do a similar analysis on how many SMS to buy, but I don't have the numbers to do it now.

The Bain Principle of Parking

Lisa and I wanted to go to Newbury Street in Boston yesterday to get a nice lunch and do a little necessary shopping. The problem with Newbury is that it's wicked hard to get a decent parking spot. We get there and start circling around a few blocks, and finally spot a spot :-)

As we pull slightly past the spot so we can parallel backing-in, someone throws his car into the space from behind us. He can't finish parking, but he can wait there, blocking us, until we leave and he can straighten his car out.

I had one of those "Serenity Now" moments where I realized that the only interaction I could possibly have with this jerk was to get out of the car and scream at him and swear. He wasn't a small man, and I could probably win a fist fight, but I'm (mostly) beyond that phase in my life, and don't want a criminal record.

As we left the scene, we fantasized about returning later to key the jerk's car. I originally thought it'd be funny to write "you know what you did". Lisa liked writing "I steal spots from little girls". Then I thought, maybe we should write "Yankees fan" so that other people will also want to trash his car, and Lisa added, "What about 'I [heart] Jeter'?" I love her.

So we continued to circle, and continued to find zero available spaces. Lisa was growing increasingly anxious, while the situation didn't affect me quite as much. I pointed this out to her, and she reminded me of how mad I've become in the past when I was driving and couldn't find a spot.

And that's how The Bain Principle of Parking was born. The principle works like this:

The frustration associated with searching for parking grows, for the driver, geometrically as a function of the time spent looking, but for the passenger(s), it grows only arithmetically. As a result, the longer two or more people look for a spot, the less rational a decision they will be able to make as a group.

With this principle in mind, the next time you look for a spot in a crowded urban areas with 2 or more people in the car, remember that the anxiety and frustration are not distributed equally, and that the driver must be treated with extreme compassion.

Hopefully, my eponymous principle will soon join the ranks of Pareto, Pythagoras, and Ockham.

Wheat Penny

I got a penny, among other coins, the other day as part of my change for a cash transaction. I noticed something funny about the coin, it had wheat on the back. I haven't seen a wheat penny in years.

When I was a kid I used to collect them. I had one from 1909 that I found on the street, and I got a 1945 steel penny as change once too. It's a funny thing to pay attention to, but some of them are surprisingly valuable:

• The 1909-S I had was worth $70.
• The steel one, which looked really cool, was only worth $0.10.
• The 1958 that I just got is actually worth about a quarter. Pretty cool.

Done with exams!!!

Yesterday, I finished my 6th 5-hour test. These things crushed me. They all begin with my having to read a 12-page case, which doesn't sound hard, but I'm a wicked slow reader, and you need to soak in every sentence of these detail-rich case studies. I think the reading part takes most of my friends ~1 hour, but it takes me 2.

My brain had swollen by the time the test was done, as you can clearly see in the picture below:

I can't believe I'm done with my first year of business school. This flew by. I'd do it again in a heart beat.

The trusted system

One of the big things in Getting Things Done (GTD) is that you trust whatever organizational system you put in place. He doesn't insist that you use a Palm or a notebook or anything, just that you feel that you can rely on your system. I wouldn't use a notebook, or instance, because I wouldn't carry it around with me and I can't read my own handwriting.

I started thinking about trusted systems, and I realized that I already have a few in place. The nice thing about such systems, is that they reduce stress. I'll list some examples to show you what I mean:

1. I call my mom every Monday night. For a while, we disagreed as to how often we were talking. Since I knew we were probably talking, on average, once a week, I had no problem committing to such an arrangement, and I knew that it would make her happy to know she could count on a weekly call. Now I never need to worry about how long it's been since I spoke with her, and she never needs to worry about when she'll hear from me next.
2. I review my class notes each night before doing the next day's homework. Part of my filing system for my class notes requires me to handle each page and put them away one at a time. I don't ever start my homework until I have filed the notes I took that day, and I force myself to review these notes, so that they have a better chance of being remembered. If I didn't do this, I wouldn't see notes at all between the class I in which I took them and the final exam, and I'd forget which classes yielded critical ideas. With this system, my class memories become more solidified.
3. I call or send an email to an old friend each Wednesday. I've only been doing this since 1/1/07, but I already feel great about it. Part of the problem with HBS is that's it's easy to get caught up in the moment, and lose track of longer-term priorities. I found in the Fall that I didn't keep up with people that I didn't see on a daily basis, and I started to feel like a bad friend. I have to be realistic about the amount of time I have to chat with people, but a weekly call or email to the important people in my life is doable. Now I don't have to worry about losing touch with my friends due to avoidable negligence.
4. I stretch in the shower. I know it's important to stretch my muscles on a regular basis, particularly my quads and hammies. Even though it's important, I rarely do it. I added it to my shower routine about a year ago, and it's worked out well. Shampoo, quads, conditioner, hammies. Easy to remember :-)
5. I write the initials of my old friend, Mike Mallette, on the top of a page when I take notes in class. Mike passed away the summer before 9th grade, and the fear when you lose a friend is that you'll forget him over time. I got in the habit when I was 14 of writing his initials at the top of my page along with the date and name of the class every time I take notes, and in the more boring lectures, this triggers some pleasant reminiscing. Honestly, I don't do this for literally every class anymore (because I'm often scrambling at the bell to prepare for a possible cold call), but I get it right about 80% of the time, and that's enough to trust the system.

The point of GTD is to consolidate these systems, so that you don't have to reinvent the wheel anytime something's important to you. I hope to get to the point where I can have one system that I trust that helps me remember all of the above and more. We'll see if that works out.