Recently I was discussing with my wife an idea she had for an online business.  One of her hobbies is genealogy, which is basically researching your family tree so she had the idea of offering a genealogy research service for money.  I don’t know if this business idea will ever get going or not, but I thought I would share some of my thoughts for researching and testing this idea.  Hopefully, some of you will have ideas or even experience at this sort of endeavor.

The basic business idea

Offer genealogy services over the internet for a fee.  For example someone who wants to learn more about their family tree but doesn’t have the knowledge or time to do the research might be interested in purchasing this service.

Reasons why she might be good at this business

• She is interested in the topic.
• Has quite a bit of experience and expertise.
• Has access to paid tools and databases. Most of the “free” genealogy databases are fairly limited and you have to pay to see the good stuff.

Potential downsides

• Can’t get clients.
• The profit might not be large enough to make it worthwhile.
• Might lose interest in her own family research.
• She finds that she hates researching other people’s family trees.

These are the action items I suggested to research the idea

Competitive research: Look around and see what services other people are offering.  If nobody else is offering that kind of service then it might be an underserved niche or more likely – there is no demand.    If you can find some similar services then try to figure out what exactly they offer and for how much.  You can see their rates on their website or you can email to get quotes from them. This might give you an idea of what kind of hourly rate you can expect.

Determine your services/products

Try to think of specific things you can offer/advertise.  Ie for $N you can do a listing of someone’s grandparents and their siblings.  Or do a family tree up to a certain level.  Or if requests end up being too variable then just advertise an hourly rate or quote for a project.  The competitive research from #1 might help with this.
The problem with genealogy is that it is never “finished” so you have to set boundaries.  It’s also hard to know what people want – will they ask for as much info as possible?  Do they want to know about 1 specific person?  Do they just want to know what countries their predecessors were from?
Pre-packaged “gift” ideas might be a good seller.

Determine rates

This one is easy – look at what others are offering and go from there.  Rates can be changed very easily so just start at a reasonable rate and increase with demand.

Website

In our case I can easily set up a website for her using my existing hosting.  I can also leverage off of 4P traffic to help advertise her services.

I find it interesting to note that this is the type of business which modern technology has enabled.  At one time it would take a huge amount of time to research one line of a family tree going back 200 years so nobody but the richest people could afford it.  Now, access to that info is much more accessible so it is a lot cheaper for someone to offer/buy a service of this type.

I know a lot of our readers have started businesses?  Do you have anything to add?  Have you ever started a business and then quickly stopped when you realized it wasn’t going to work?

This continues last week’s post on Working With Computer Nerds (if you haven’t already, read part 1 first – it has cartoons!).

Unknowables

With computer work there’s almost always big unknowns.

Whereas most people learn their jobs, get good at them and do the same thing over and over (I want a lawyer who has seen hundreds of contracts just like the one she’s preparing for me), computer work is different.  Software can be copied so inexpensively it’s basically free.  This makes it redundant to do something that has already been done.  For legal reasons, this happens (I can’t get Google to send me the software that runs their servers or Microsoft to send me the source code for Windows XP, so if I want to make software LIKE theirs, I have to write it again from scratch).  For many thing however, copies are available FAR less expensively than it would cost to build a new version.  Computer nerds are almost always working on new things, because if they already had software to solve a specific problem, they’d just copy it (or buy it then copy it) and be finished.  Often computer people also dive into projects that involve technologies that are new to them and part of the project is learning something totally new, then using it to do the work (which is also new to them) they were hired to do.  This causes most of work that we actually do to be new, and therefore will usually be far more challenging than most people’s work (which is why we like it). Yes, this can be as frightening as it sounds.  I came to realize that a moment of blind, absolute panic was required in most contracts I worked (“Oh my god!  I’m not going to figure this out, I’ll miss the deadline and the client is going to shoot me dead!”).

An example of this, I did a 6-week contract at a publishing company (I’d never worked for that company or in that industry), building a content management system (which I’d never done), using Django (a framework I’d never used before), based on python (a programming language I’d never used) using PostgreSQL (a database I’d never used before).  As near as I can tell from their website, the system I put in place is still chugging away fine for them (and they were happy enough with my work that they wanted to extend the contract after I was finished).

The big reason for avoiding the two problems in last week’s post is that there’s enough uncertainty in software development, so remove any extra uncertainty that you can.  When someone does computer work, part of what they’re offering is insurance that they’ll deal with the expected unexpecteds – they should be allowed to do what they can to contain the amount of risk they’re being asked to insure.

This all being said, it’s not outside the realm of possibility (it’s actually fairly likely) that once the nerd digs deep enough into the problem they’ll find that something that was originally planned for that won’t do what it was expected to (some part of the system is missing a feature or there’s some incompatibility).  Usually when a computer nerd comes to you with this, they’ll also have 2 or 3 alternatives to offer.  Hear them out and take one of the alternatives.  You may be within your rights to insist what was originally discussed be delivered (especially if a couple extensions you wanted were turned down as “feature creep”), but it’s going to poison the working relationship if you can’t at least give a good reason why you need the exact original (sometime substitutions are necessary).  It may also be possible at this point to strong-arm a discount, but this is the opportunity to be the cool client who will get top priority in the future or be the difficult client who gets dropped as soon as business is good enough.

Imprecise Deadlines

Because of the above mentioned uncertainty, computer projects ofter take longer than expected.  It’s probably reasonable to hold firm on the money element of a deal (although many a junior nerd has driven themselves below minimum wage levels by poor estimates), but it’s worthwhile to give a project a bit of wriggle room, and let the computer nerd deliver a bit late if they run into problems.  I’d recommend padding the schedule by 10 or 20% and if they come and start seriously talking about a schedule slip, you’ll be a hero when you give them a bit of extra time.

Vendor Lock In

One of the things some technology vendors (and some computer nerds) do that drive me NUTS is vendor lock in.  They do work for a client, doing a good job at a reasonable price.  They’re hired back and start a good business relationship.  One day the client realizes that the price has been steadily increasing, the delivered value has been steadily decreasing, but they’re now reliant on the vendor for core technical needs (systems have been set up such that the the vendor is the only one who can modify them) and are being held hostage.  I would often stress to customers that I won’t do this, and would leave their systems in a well-documented state such that someone else could take over for me when and if this was needed.  Customers never seemed to care about this, but I’ve heard enough horror stories of companies getting shaken down for thousands of dollars for trivial changes that I can’t believe this isn’t a bigger concern for people.

To avoid this, present your concern to the computer worker as “what will we do if you get run over by a bus?” or, if it’s a bigger development company, “what will we do if you go bankrupt?”  Don’t be deflected by them laughing this off.  Get them to document everything, and occasionally hire ANOTHER computer nerd to have a look at what’s in place and see if they could take over if needed.  Both of these will increase the cost of a project, but in my opinion, is some of the best money you can spend on risk management.

For software that is at the core of a business, I think it needs to be developed in-house (hire an employee).  Giving an outside developer this much control over your entire company is reckless.

For computer nerds and people who have worked with nerds, what advice would you have for the best ways to works productively together?

In a (surprisingly well-received) post a while back, Working With Computer Nerds, I provided a profile of the typical computer nerd, and some suggestions on general approaches to understanding my clan.  In this post I’m hoping to provide concrete examples of problems that typically arise when working with nerds, an explanation of the misunderstanding leading to the problem, and some idea of how to avoid them.  As with the previous “working with” posts, please consider this a rough sketch rather than a definitive guide.  The target audience is someone who might hire a technical person to do work for them, someone who regularly works with a nerd (or, heaven forbid, nerd*S*) or someone who is friends with a nerd and wants to understand their work better.

Pay by the Job, not by the Hour

As with many things, with computer work I feel you’re better to pay for what you need done rather than by the hour.  By-the-hour work has the inherent conflict of interest that if the person doing the work is less productive, they get paid more.  You won’t be able to get all work done this way (for example, no reputable computer shop is going to agree to fix your machine for a flat-rate, sight unseen), but for most things it’s possible.  If the person doing the work is efficient and gets things done quickly, good for them and let them earn a premium for their work.  Surprisingly, a number of computer nerds are highly-ethical and may give a partial refund (or discount the charge) if the job is easier than expected (I’ve done this).

For jobs, like computer repairs, where you must pay by the hour, I’d recommend trying a few different people then stick with the one you like the best.  Over time you’ll get a sense whether someone is being honest with you or not.

Feature Creep

Software is an unusual product in that it’s so versatile.  As soon as you see it doing something, it’s easy to think of extra things you’d like it to do.  Almost any software product that has a customer base will keep turning out new versions, each one inspiring customers with more things they’d like it to do.

This causes problems with custom jobs, as customers immediately think of new ways they’d like their website or software to work once they see it in operation (and usually convince themselves that their new idea should be included in the original project and delivered within the original budget and time line).  The customer wants better software for a lower price, and the nerd wants to be paid as much as possible for what they’ve produced.  This was one of the big things that got me out of contract programming – I got fed up arguing with customers whether something was in scope or not.  It’s possible that some people view this as a chance to re-open negotiations, but you’ll be driving the nerd you’re working with NUTS if you do this (you’ll be burning goodwill at an alarming rate).

A good computer nerd will write up a specification for a project and carefully go over it with a customer (even if that “customer” is another employee within the same company).  It’s important to take this seriously, as this is what you’ll go back to to resolve whether something was part of the original project or not.  If something important isn’t in the original specification, admit that it’s something new that you want and add it on as an extension to the project (or be willing to allocate more resources to the project to have it included).  Let the specification act as the contract, and if something isn’t in it, then it’s extra work.  Avoid vague language in the specification, as this will just lead to arguments about definitions and meanings.

I knew I’d laid the ground work properly when one client wanted me to do extra, unpaid, work  and they began the discussion with “I don’t want to talk about the contract, don’t even mention it.”  Clearly, they understood that our agreement clearly supported what I was expected (and not expected) to do.

Poorly Defined Problem

Without a specification (or with a bad one), it becomes very difficult to figure out WHAT should be made (and even when something is working, feature creep becomes inevitable without a well defined problem).  Some people approach design work (and sadly software development) with a “I’ll know what I want when I see it” attitude, which is totally unreasonable with computer work.  I’m amazed that people accept this in other lines of work (it seems to be the norm with graphic design).

It’s possible (although inefficient) to work this way with a salaried employee, but when working with a contractor this is guaranteed to end in misery.  When you’ve done the same job repeatedly and it keeps getting rejected without a concrete reason, you’d need to have INSANELY high profit margins to keep going with a customer like that.  I (and many other computer nerds I suspect) prefer to offer people a good price, with the understanding they won’t pull this kind of thing on me.

With people who know what they’re doing and are good at their job, it’s often worthwhile to express your needs and be open to their suggestions.  Just because you’ve heard buzz about Ruby, if someone doing work for you can make a good case for using Java instead, it’s worth hearing them out.  Talk about the problem, listen to their proposed solutions, and hammer down exactly what you’re hiring them to do and what will be delivered.

If the reasons they give for using another technology AREN’T relevant to you (they hit you with techno-babble that doesn’t make any sense), and if they won’t clarify after repeated attempts to get them to put things in terms that are relevant to you, I’d recommend not working with that person.  If they won’t build things with your needs in mind, how could they possibly do good work for you, no matter how brilliant they are?

This post got a little over-sized, so the second half will appear on Tuesday.

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Years ago I read the book “Raving Fans” by Ken Blanchard and Sheldon Bowles. The idea behind it is techniques to go from satisfying customers to creating a consumer-cult of the style enjoyed by Apple, Tim Hortons or In-N-Out Burger.  It’s certainly a tall order for a book to give you a  blueprint of how to create this reaction to your business (and as a whole, I think the book failed by shooting too high).  It does have some interesting ideas, one in particular that I think is useful for possibly turning around a failing business or improving many businesses.

In the student plaza next to the University of Waterloo there’s one location that people joke is cursed after the last 4 restaurants that have opened there have each gone out of business after a couple of months.  The most recent restaurant to go out of business was a Tex-Mex place called “Casa Salsa“.  When it first opened, it was crazy busy, but right from the start I figured they were in trouble.

For starters, they advertised themselves as a Mexican restaurant.  One of the faculty members in the CS department said “They’re actually a Tex-Mex restaurant, which is good, because I like Tex-Mex better than Mexican”.  It’s not the end of the world, but incorrectly identifying your style of restaurant is going to be off-putting to customers who are knowledgeable about the style of food you’re offering.  I don’t think this is a huge deal in and off itself, but it became part of a pattern.

They had an incredibly complex ordering system where you had to take a form, and select various items off of it for your order.  I intended to get a burrito, but was served tostadas instead.  They were tasty, and when I looked at the ordering form again I saw where I’d went wrong, but it’s strange when they make it that difficult to order food (maybe once I’ve gotten my third degree I’ll be educated enough to navigate their menu – clearly a B.Sc. and M.Math aren’t enough).

Their prices were higher than the competitors, which in a student eatery is an important consideration.  After their business had declined, they eventually implemented a “student special” (with a student card) which made it more competitive.  By the point they’d done this, their early customers had already fixed the idea of “that place is more expensive” in their minds and they weren’t able to win students back.  Additionally, the sign they put out advertising the student special was small and quite hard to read.

Lastly, the staff were fairly rude.  Early on I guess this can be faulted (they felt they had so many customers when they first opened they could be brusque and get away with it).  I ate there 1 week before it closed (I finally had broken down and decided to give the student special a chance).  I was the only one eating there and two young women came in who were OBVIOUSLY students, only one of them had a student card, and the person working the register forced the second one to pay full price.  Nice.

Gary Vaynerchuck has an interesting video on Profit.ca where he talks about customer expectations.   He talks specifically about engaging customers with social media, but the broader message is clear that as competitors offer something, it becomes increasingly vital to match them or you’ll start losing customers.

The technique mentioned in the title is to ask customers what’s wrong with your business.  In “Raving Fans” they give the example of diners who have had a bad experience at a restaurant, when asked “how was everything?” by a staff member on their way out mumbled “fine”.  Things WEREN’T fine, but the diners have had the experience where they mention a problem and the staff member got argumentative with them.  Instead of complaining, they just don’t go back and the company loses future dealings with them.  When the first Swiss Chalet came to my home town, my family went to it and it was VERY greasy.  None of us ate there again for over a decade (it turns out we just had a bad meal there, usually it’s better than it was that night).  It’s in everyone’s best interest to catch the problem and make it right with diners who have had a bad experience.

One way to get around people saying “fine” is to keep digging and make it clear you want to hear the feedback.  Instead of saying “I hope everything was ok tonight”, ask them “what was the worst part of your dining experience tonight?” or “if you were forced to complain about 1 thing in your purchasing experience today, what would it be?”.  If you get someone (like me), who is happy to detail a number of problems, be encouraging and thankful and listen to them all.  At the end of it, give them a coupon or a free sample or something to thank them for the valuable information they’ve given you (which they have).  If the owner can’t handle having people criticize his baby, have someone who can smile while listening to negative feedback do this.

I’m not at all saying the business has to do what every crank tells them to (and there will get some crazy feedback, the punchline to one Dilbert cartoon is that customers want a better product for free).  Ask enough people and a pattern should emerge with what customers view as the biggest problems.  They should do what they can to fix these.

As soon as the Casa Salsa’s business started dieing out they should have done this immediately.  Have a staff member stand by the door, and when someone is leaving ask them if they could answer a few questions.  Find out what the problems are (don’t accept “fine” as an answer) and thank them with a half-price coupon or something.  Then get people out front (or a big sign) and let people know you’ve made a change (and hopefully get back some of the people who weren’t planning to return).  If you’ve cut your prices, tell people that, if the staff are friendlier, tell people that, if you’ve streamlined and simplified your ordering process, tell people about it.

Scott Adams writes some of his business ideas on his blog, and he says people react in one of two ways, they tell him either: “it’ll never work dumbass” or “someone’s already doing it dumbass” (and they provide a link). Both are valid reactions to any of my business ideas .

Often a big part of home is the food you eat.  I’ve read that people from Thailand often don’t do well when they move to another country, in part because food is such an important part of Thai life and they really miss it.  Pad Thai is one of my favourite meals, so I can understand that you’d miss Thai food if you grew up on it (I miss it if I haven’t had it in a while, and I was well into my 20’s the first time I tried it).  It’s almost a cliché that many first year university students will be homesick, missing something that their mother would regularly make.

Years ago a friend of mine was really missing a dish that her mother made.  She mentioned this on the phone one time, and her mother said she was going to make a tray of it and send it overnight through FedEx.  Of course, the parcel got delayed and arrived 7 days later (and was inedible and pretty nasty once it was opened).

The basic idea for this wacky business idea is to provide worldwide express shipping for food (prepared dishes).  The target customer will be someone who wants to get a special meal to a loved one (this isn’t for standard catering) and is willing to pay a large premium to get the dish there.

When the food is shipped, the sender will have to provide details on what it is, and agree to a method of packaging (with options for keeping it at specific conditions, such as below freezing or vacuum sealed, during the trip).  There could be an optional add-on where the food would be delivered at a precise location at a precise time and would have some final preparation (such as heating) performed en route.  The sender and receiver would have to take full responsibility for spoiled food (since nothing would prevent someone from sending something that was already spoiled), but every reasonable precaution would be taken to prevent this from happening.

FedEx does do specialty shipping, but since this includes things like hazardous materials I suspect it’s VERY expensive.  This seems to imply that they have the facilities to do this, and perhaps a company could be set up re-selling their services (after getting a big discount based on the volume your business will do as a whole).  Dealing with the customers would be one of the biggest challenges (every shipment will be quite unique), which might be a reason why FedEx doesn’t get into this line of shipping (and someone specializing in it might be able to make it work).  Purolator also ships food, but they don’t offer a service guarantee, which is part of the value proposition of this business.

Obviously this isn’t something you’d use regularly (only the very wealthy would send their kids every Sunday dinner through this service), but this would be for the odd time when it’s worth paying more than a decent restaurant meal to have a taste of home.

For this post, or any other of the wacky business ideas I post, obviously I’m releasing any ownership claims I may have over these ideas. If you like something I post and feel like you can make money from it, please feel free to do so! Let me know when you’re opening and we’ll do a post on it to give you some free advertising.

There are all sorts of good reasons to want to start a business. Often it’s also possible to start a business doing something that the owner personally enjoys: people who like creating artistic works might become graphic designers, those who enjoy writing might become ProBloggers, authors or copywriters, while those who like talking to people might start some business involving sales or consulting.

While it’s great to start a business doing something the owner loves, this in and of itself doesn’t make a business viable! There has to be a demand for what a business is producing or the endeavor will be for naught. As Thoreau writes (perhaps with racist overtones) in Walden:

Not long since, a strolling Indian went to sell baskets at the house of a well-known lawyer in my neighborhood. “Do you wish to buy any baskets?” he asked. “No, we do not want any,” was the reply. “What!” exclaimed the Indian as he went out the gate, “do you mean to starve us?” Having seen his industrious white neighbors so well off–that the lawyer had only to weave arguments, and, by some magic, wealth and standing followed–he had said to himself: I will go into business; I will weave baskets; it is a thing which I can do. Thinking that when he had made the baskets he would have done his part, and then it would be the white man’s to buy them. He had not discovered that it was necessary for him to make it worth the other’s while to buy them, or at least make him think that it was so, or to make something else which it would be worth his while to buy.

Unfortunately 150 years later people are still making this mistake: “I’ve done my part producing a good or service, now you should do your part and buy it”.

A friend told me about recently going to a craft show and feeling badly when she overheard one of the older women complaining that she’d only made 2 sales that day. My mother really enjoys crafts: she knits, weaves, sews and does all that stuff. Whenever she’s considered selling what she makes, once she factors in her time she knows she couldn’t sell it for anything close to what it cost her to make it. Instead she gives what she makes as gifts and hopes the recipients appreciate all the effort that went into them. The women at this craft fair probably enjoy crafting like my mother does, but they aren’t factoring in their time. After they’ve spent hours making the products, they then spend hours manning their booth to sell it (sometimes paying rent on the booth), and of course they lose money.

Two of my friends recently got married, and she’s planning an on-line crafty business which I predict will suffer the same fate. She may make some things, people may say they’re nice and buy them from her, but she’s never going to be able to make profitable use of her time. I’m *TOTALLY* ok with couples where one makes the money and the other pursues some endeavor that isn’t for monetary reasons (like an artist or writer), but it’s nice if the couple is at least honest with themselves that it’s a personal fulfillment activity, not an income generating activity.

One friend talked about starting a kitten farm, and I teased her that the first step will be developing a market for kitten meat (“The Kinder Alternative to Lamb!™ ” – yes, Mr. Cheap is evil). She wisely ignored my nonsense, but admitted that no one was going to pay her to raise kittens: she’d just be a crazy cat lady – not a business. This did prompt her to refine the idea as a cat rescue (as a non-profit) or a cat kennel. She even had the idea that MIGHT work of a cat spa where there would be cat-specific activities like hunting.

The solution to avoiding this mistake when brainstorming business ideas is fairly simple. Once an owner has thought of something he’d enjoy doing, he needs to honestly put himself in a customer’s shoes and ask “would I want to buy this at a price based on what it costs to produce?”  Friends and family will be blindly encouraging (a point made quite well by the Onion article: Ridiculous Small-Business Plan Encouraged By Friends), so he HAS to be honest with himself.  If he can’t do this (and keeps falling in love with an idea such that he INSISTS people will pay for it because he loves it so much) he’ll have a lot of wasted time, money and effort in his future.

If he is honest with himself and admits no one would buy what he wants to produce, he should keep it a hobby and do something else to earn money.

Eaton’s was a famous Canadian department store which was famous for it’s catalog, being a pioneer in having a “no haggling” policy and for its slogan “Goods Satisfactory or Money Refunded.”  Combined with the Eaton’s reputation, this provided a powerful guarantee to customers:  either they’d be satisfied with a purchase, or they would get their money back.  It showed great confidence, on the part of Eaton’s, that they could deliver goods as advertised (and allow the customer to be the judge).

In “The Four Hour Work Week” Tim Ferriss discusses how he finds it hard to market with a “money-back guarantee” (saying that customers have become too used to it) and instead offers a “Lose-Win Guarantee” which is that not only will he refund money, but he’ll give a 10% bonus if someone requests a refund.  He explains the money-back guarantee being dead as people don’t want to have to spend an afternoon at the post office and that risk elimination isn’t enough.

I don’t think this is the reason money back guarantees don’t work.

It seems like EVERY infomercial offered on television, EVERY over-priced seminar or “boot camp” and EVERY scam posted in the classifieds, on a lamp post or bulletin boards offers a money back guarantee.  They can easily offer this guarantee:  if they’re prepared to lie about their product, why not lie about a fake guarantee?  Ripoff Report has 8,430 hits (as of writing) on the term “money back guarantee“.  I feel for some of the posts, where they say “they have a money back guarantee, I asked for my money back, and they WOULDN’T GIVE IT TO ME!!!”  Sadly, for people willing to mislead consumers about their products or services, lying about a guarantee is pretty easy.  They’re also experts at making sure you can’t cancel credit card transactions (one trick is to get you to sign a contract, even for a product, then the credit card company can’t do a chargeback).  A guarantee is only as good as the person or company offering it.

This wacky business idea is fairly straightforward, you set up a business that sells its reputation to honest small vendors who actually want to offer a money-back guarantee (or any variant on it).  For a flat-rate (or portion of the transaction), you provide the ordering services (phone, website or whatever) for the vendor, collect the money and hold it for a set “money back guarantee” period.  At the end of that period, if the customer hasn’t complained, you pass the funds on to the merchant.  If the customer complains during that period, you give the money back to them.  It’s like a very easy to use escrow service.

In order to gain (and build) consumer confidence, the company would require vendors to conform to set structures.  For example, the vendor couldn’t create complex return procedures to prevent return of goods, or very short return periods so customers would be out of the return period before the received the goods.  If the company found a vendor was getting an unusual number of complaints or returns, they would suspend selling for them until the problems were investigated and remedied.

Customers would use a single point of contact (one website and one phone number) so they’d always know they were dealing with the real escrow company.  Orders would always be recorded (including audio recording of all calls), and this transaction history could be made available, with the consent of the customer, in cases of dispute.  If someone was complaining about the escrow company mishandling things, they could say “do we have your permission to post details of the transaction and show that you were told about limitations or time limits?”.

Vendors would have their “terms of sale” vetted, and made to conform to a standard, straightforward agreement (that would always be presented to the customer at time of purchase).  Any terms that tended to be confusing to large numbers of customers would be removed from current agreements and not used in future agreements.  For example, if customers would be required to package and ship items back to the company for a refund, the escrow company would tell them this (and provide an estimate on shipping costs) at time of purchase

The escrow company could also be hired by the customer, so they could go to a company and say “I want to order your goods and pay through this escrow company, I’ll pay the extra fee”.  If the vendor consented, the buyer would then get the standard protections (and the vendor would be paid after the set period).  Vendors could also offer goods with and without the escrow protection (with different prices).

I’m aware of E*Bay’s trusted partner Escrow.com, and this would be something along the same lines, but not just for online purchases.  You could use it for mail order, for phone orders, or for face-to-face transactions (like hiring a contractor to redo your kitchen).  Amazon does something half-way along these lines where they force customers to directly deal with vendors who sell through Amazon, rather than with Amazon themselves.  However, they say “You should be able to reach an amicable agreement with one another“, which I HOPE implies they’ve evaluated all vendors.

Obviously, once you’d done a few transactions with a company / person you could drop the escrow intermediary and deal directly.  The escrow company would just be there for transactions that you don’t know person or company (and would let customers deal with the escrow company, a company they WOULD know well, instead).

The trickiest part of this would be growing to be a well-known standard that people have heard of and trust (this would be very challenging at the beginning).  The company is selling its reputation, so building this would be the core of what they do.  Partnering with (or growing out of) established large companies like E*Bay, Amazon or Paypal would probably be a worthwhile way to “jump start” such an enterprise.

When I start writing up a wacky business idea, one of the things I do is a quick search to see if someone has already done something similar.  I don’t spend hours on it, but I’ll look for 5 or 10 minutes.  In many ways it’s surprisingly rare to find someone is already doing what I’d thought of (I gues word spreads fast these days).

Presented, for your consideration, are three ideas that I had which turned out had already been thought up by other people when I went looking for them.

Electric Hookahs

Hookahs are pipes for smoking tobacco (a special variety called “shisha”) which involves filtering the smoke through water:  remember the caterpillar in Alice in Wonderland?  It’s really bad for you (smoking a hookah for 1 hour is about the equivalent of smoking a pack of cigarettes), but it’s also quite nice .  When you set up a hookah, you typically use charchol to heat the tobacco.  There’s a whole ritual to it, where you load a special bowl with the shisha, cover it with foil (with as small as possible holes placed it in), and put the burning coals on top of the foil.  By inhaling on the pipe, you pull air in, past the tabocco being burned by the coal, and into the pipe (through the water and into your lungs).

The idea for this is to remove the charcoal by adding a fine element that rests above the shisha and burns it in the same way the coal does (but without getting ash everywhere and having to deal with hot coals).  Some may argue that this isn’t proper, while others may say this is taking the hookah into the 20th century.

Either way, it’s been done.  I even found a student at my university who has designed one.

An Academic Proofreading Marketplace

English is the language of academic discourse.  In the past, French and Latin have been used, but now it’s English.  If you want to have your ideas noticed, the top venues (conferences and journals) operate in English.  Increasingly, strong universities will teach in English, even if it isn’t the native language of the country the school is located in.

This obviously puts non-native English speakers at a disadvantage.  I’ve read a number of papers (published and unpublished) where the ideas were hidden by the awkward choices of spelling and grammar.

There are student “proof reading” services, which either help students who aren’t native English speakers or do the homework for lazy students everywhere, but this idea is to focus on academics, and provide a writing service catering to professors.  They’d be connected with native speakers working in the same area as them (so they can accurately express the ideas).  I did this (face-to-face) when I was abroad for computer science professors and found there was a lot of interest in it.

It’s already being done in the way I envisioned (at places like this) .  I still think extensions on this idea are possible (like a site that places a premium on reliability and the pedigree of it’s proofreaders or a service that would send an in-person proof-reader to a foreign department on an on-going basis).

Zero Calorie Foods

It always seemed weird to me that there’s SO many choices for diet beverages, but no options for “diet food” (e.g. 0 calorie food).  I get that food has to be made out of SOMETHING, and typically this something has calories.  I’m not talking about so-called “negative calorie foods” (which are incorrectly believed to require more calories to digest than they possess) but instead something like diet soda, with ZERO calories.  It may not be the most appetizing idea, but imagine taking some diet drink, then thickening it with an inorganic agent like melamine (the ingredient that Chinese company added to the baby milk that killed a bunch of infants).  Except, you know, make sure whatever you use doesn’t kill people…

Even if the first version was basically zero-calorie Jello people would eat it.  Over time more appetizing versions could be developed.  There are people who would worry about the long term health consequences (just like some people worry about with diet drinks) and there are people who would refuse to eat something so unnatural (just as there are people who refuse to drink diet drinks), but I think there’d be a massive market that would be willing to give it a try.

A friend told me they saw “zero calorie jam” at the grocery store which intrigued me.  I went looking, but didn’t find it (in any grocery stores or on-line).  I’m assuming they saw “no sugar added” jam and misremembered.  Unfortunately (for me), even if there isn’t zero-calorie jam on our shelves  it already exists in Japan and some Kansas state researchers were working on it 7 years ago (so I’m sure if there’s any way to do it they’ve figured it out by now).

I was talking to a friend recently and used the term “ramen profitable”, which she found incredibly amusing.  I realized that I had never used the term on the blog or posted about it, even though it’s a very useful perspective on starting a business.

The term was coined by Paul Graham, and he discusses it in the context of technology startups and fundraising (venture capital, not professional begging).  It basically refers to a business that makes enough to cover all its costs, plus provide a meager lifestyle for its founders / operators.

When a company is spending more than it makes, the monthly deficit is sometimes known as the burn rate.  By dividing the company’s working capital by its monthly burn rate, it can be determined how long until the company will go out of business (unless it can raise more money or something changes).  This is clearly a very stressful situation to be in, and investors will be delighted to take unconscionable terms from the founders if they realize the company desperately needs the cash to stay alive.

It’s standard for companies to have their highest burn rate at the beginning.  Imagine a professional opening an office (perhaps a lawyer, accountant, dentist or therapist).  She has to pay: rent on the office space, liability insurance, salaries (for receptionists or assistants), advertising, furniture, decorations, office supplies and all the other necessary expenses before she earns a dime from a customer.  In such a situation, it would be hard to imagine that there WOULDN’T be a high burn rate for the first few months as the company grows towards profitability.  The reason why people start businesses that are losing money on the first day is they expect it to grow to the point where it becomes profitable (then hopefully earn them more per hour of labour than they would have made working for someone else).

Some companies intentionally accept a large burn rate in order to dominate their industry.  Webvan tried to do this and went out of business when they ran out of money before they became profitable (apparently they were too ambitious and analysts have speculated they might have survived if they’d expanded a little slower).  Amazon.com lost money every year from 1995 to 2001.  These years of losses were part of their original business plan, a strategy that they have effective executed.

There are a number of benefits, for people starting a company, from focusing on becoming ramen profitable as soon as possible:

• Most founders aren’t pursuing a “billion dollar company or bust” strategy.  They’re happy to earn a comfortable living running a successful business and don’t need to take the extra risk necessary for explosive growth.
• It gives a clear and attainable first milestone for the company to reach.  By constantly tracking the company burn rate (and working to get it to zero), it keep a young enterprise’s priorities straight:  increase revenue while keeping expenses low to become profitable.
• There are all sorts of risks that can kill a business, but becoming ramen profitable decreases the chance of one big one (running out of money, which technically is probably always the official cause of death).

Thicken My Wallet has written a number of excellent posts on entrepreneurship.  One of the running themes in his posts is the importance of keeping costs down when starting a company.  This is clearly 1/2 the equation of getting to ramen profitability (the other half is getting people to pay you for your product or service).

Ramen profitability isn’t an ends to itself.  If someone is working hard for a student lifestyle, they’d be better off going to get a job instead of taking all the risks of running a company.  However, reaching this stage gives you breathing room to figure out how to grow your business to a level where it is more lucrative than working a 9-5 job.

Scott Adams writes some of his business ideas on his blog, and he says people react in one of two ways, they tell him either: it’ll never work dumbass or someone’s already doing it dumbass (and they provide a link). Both are valid reactions to any of my business ideas .

A few years ago MBA programs were all the rage (they’re still popular today, but the market has been flooded with MBAs).  They’ve introduced a variety of flavours (executive MBA, part-time MBA, etc)  to cater to the needs / desires of various workers.  In every case the value proposition is the same:  this program will improve your business skills (and from this improvement, make it easier to find work and move up the ranks at a company).  Businesses were convinced of the value enough that they have sometimes paid to send top employees.

One problem, for the school, is that students take the course and leave (no repeat business).  You hope that students are happy enough with what they’ve learned that they recommend the program to others (and evangelize it in their workplace), but a school is unlikely to get the same student a second time.

This idea would be a program, put together at a school offering an MBA, that runs for a pool of employees for a short period (perhaps for one week) annually.  The school would put together a variety of classes and events, designed for employees at a specific level in an organization.  Each year would have SOME tailoring to the current business climate, challenges facing the companies industry and company specific problems, but would also focus on fundamental business skills (it wouldn’t be a week of learning how to attach cover pages to TPS reports).  Kinda like summer camp for business people (with catered lunches replacing hot dogs, and lectures on how the subprime meltdown or stimulus payments will affect their industry replacing canoeing).

The value to the employee should be obvious that they’ll learn some specific skills, make them better at their current job, and potentially get some “bullet points” to add to their resume

The value to the company is, in part, that they’re strengthening their work force without losing employees for months like they would to a standard MBA (it also “protects” them from meeting people who will work at other organizations and may try to hire them away).  The other value is that a group within the organization will all be exposed to the same ideas, and ideally would then be able to reinforce each other if they tried to enact change within the company based on what they’d learned.

The real (hidden) value would be employee retention.  Such a program would be useful for identifying the future leaders within a company and making it clear who they are (the ones sent to this every year).  This would be useful for the employees themselves (to show them the company recognizes their future potential and is investing in them and grooming them for greater responsibility), for their co-workers (to learn who they might be working with after future promotions and start getting to know them) and for these people’s supervisors (the company is signalling that they’re an important resource and not to mess with them).

For a large organization, multiple groups at different levels could be sent at different times.  For a smaller company (that wouldn’t have enough employees to fill out this sort of program), they’d probably be better focusing on this type of thing in-house.

For the school itself the clear benefit would be that the programs would continue indefinitely, with potentially multiple groups going through every year if the school could convince the company of its value.  The school should be able to reuse its faculty, facilities and resources to pull together a curriculum cheaper and faster than the organization itself could do in house.

For this post, or any other of the wacky business ideas I post, obviously I’m releasing any ownership claims I may have over these ideas. If you like something I post and feel like you can make money from it, please feel free to do so! Let me know when you’re opening and we’ll do a post on it to give you some free advertising.