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Other People's Money

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The Laws of Other People's Money

What Lens - Nearsighted or Farsighted 

I started wearing glasses at the age of 18. Not that I read a lot but because I enjoyed watching TV at close distance. This is known as nearsightedness. Now at 43,  I needed another type of glasses - for farsightedness. So I've learned that in life, like it or not, we need 2 types of lenses - to be able to see far ahead and yet appreciating what is near. With this LENS, I hope we could now see what we did not see, do what we could not do and go where we would not go normally. This is My Vision. 

The Secrets of OPM

What are the secrets of using Other People's Money, or OPM in short? Or are there such secrets at all? I believe that there are no secrets that we do not already know. In my opinion that there are 3 parts to learn about OPM - namely (1) The Science (2) The Art and (3) The Wisdom of using OPM. So let's first of all take this lens to zoom into the Science of OPM. 

Science of OPM

Since I'm not a very good writer, and one who have a terrible command of grammar, I'll keep the discussion short and to the point. The science part of OPM is the easy part, yet the most misunderstood part of all. It's easy because once you've got the formulas you'll always get it right. It's like math. As long as you know the steps you'll never get the wrong answers. And even if you got the formulas wrong initially, Professor Utonium still got the Powerpuff Girls.

Science of OPM lesson no. 1

what is money, really!

Money is the medium of exchange for something of value. Let's say you I need a pair of sports shoes and you needed a business shirt. And assuming that you have many pairs of brand new sports shoes and I've many brand new, clean, 100% cotton business shirts. If we meet, and when we meet, we could barter trade so that you get your value (the business shirt) and I got mine too (the sports shoes). That's what people used to do in the stone age. However in the today's world and unless we meet on ebay, it's really difficult for us to know each other's needs and to barter trade. Furthermore it's difficult to match the values of 2 different product - the sports shoes vs the the business shirt. That's the reason why someone with a smart mind invented something called " money". Now with money I can exchange for the things I need at the values I think is fair. With this in mind let's proceed to lesson no. 2.

Science of OPM lesson no. 2 :

the value of money

Thus money per se, i.e. the piece of printed paper, or nuggets of sliver or copper have no value until it can be exchange for something of value. Now let's assume that you have with you a bag full of money, cash of $1 million dollars. You'll on your way to buy yourself a beautiful house in some far away place and you choose to go there by ship. And let's assume that by some freak accident, some acts of God that you met with the storm of the century and your ship sank. You'll lucky to swim to shore, with your bag of $1 million dollars to an isolated island inhibited by a bunch of uncivilized tribes. You'll hungry and tried and needed a place to sleep. Now do you think your $1 million dollars have any values to the tribal people? Of course not. I think the only thing that is of value to them is probably your head, if they are head hunters. Therefore if money per se cannot be exchange for anything of value, than money itself have no values. With this in mind let's look at lesson no. 3.

Science of OPM lesson no. 3 :

is it real or perceived?

There are always 2 types of values - first is the real value (a.k.a. intrinsic value) and second the perceived value. Squidoo for example offered both a real and perceived value for their users. Among many other values, one real value is that users can write and publish their own blog (or lens as it is known here) with ease and it's free. This is the real value because it is something we get right now, something we can feel, touch and see. The Squidoo's team developed the playground so that we can design the games. We are also encourage or invite more friends to either play the games we've written or to design their own, or to join a community etc. The perceived value is that once we have enough people on our games, we could earn money with the Google ads or the Amazon links etc. Now this is the perceived value because the value can either turn into lot's of money or it may not. Nevertheless it's still a value by joining the playground because there are some who indeed make lot's of money with squidoo. I hope I would be one of them for the benefit of the Save the Children fund. With this in mind let's proceed to lesson no. 4.

Science of OPM lesson no. 4 :

any money trees around?

Therefore we can conclude that "Money" by itself, have no real values until you could exchange it for something of values. However money do have a perceived value. And it reality the perceived value of money will always depreciate over time. By itself, money will never ever appreciate in value. Sometimes this is known as the Time Value of Money. This means that money will never increase in value even if it sits in a bank. In order words money can only shrink and never grow by itself. With this in mind let's proceed to lesson no. 5.

Science of OPM lesson no. 5 :

how to grow money trees

The only way money can appreciate and grow is when it is put to use. When someone used money to exchange for another perceived value which is higher than the current perceived value of money, and if used correctly, over time money could compound. This is why venture capitalist and investors have no other choice except to put money into use. They know that they have to "give away" money so as to exchange printed paper for a much higher perceived values. When that happen investors would exchange the higher perceived values for printed paper again, so that they can start the cycle all over again. Over time their money grows. In-short rich people never keep money idle. Rich people always find ways and means to put money into good use. So if you could understand this lesson, you know that it's easy to get money from rich people who knows about this Science of OPM. With this in mind let's look at lesson no. 6

Science of OPM lesson no. 6 :

turning over and over again

The rate of growth of money or cash is determined by the "Turnover". As we know money sitting by itself cannot turn into more money. For example, if you start a company with $10,000, by putting all your capital in the bank guarantee just one thing - going broke. Because you have to pay yourself , your employees, pay the office, electrical etc. Thus a smart person would, say exchange part of the money into products. A smarter person would use part of the capital to "value-add" on the products further so that he could exchange the now value-added products into more money, and the smartest person would repeat this process again and again. The process from money to product, to value-added product and back into money is called the Turnover Cycle. So in simple terms, if every turnover increase the value of money by $1000, than 10 turnover cycle would naturally increase the value of money to $10,000 at the end of a certain period, if everything remain equal. By reducing the cycle time, and increasing the turnover times, we can increase the value of money faster. With this in mind let's proceed to lesson no. 7.

Science of OPM lesson no. 7 :

rich people don't like money

People with money dislike money. Sometimes it cost them money just to keep whatever printed paper safe. Therefore people with money are always on the look out for people with higher perceived values (current or future) so that they can give away printed paper for such higher values. Rich people get rich because they knows about the Science of OPM. They long for you to use their money. They are out there in the dark corners of the alley, always looking out for the right person to strike, waiting for the right deal, seeking for the best bargain, throwing money away to the person with the best values. Rich people are out there to make poor people rich. But you have to have the right deal, the best bargain and the highest values (perceived or real), thus with this in mind let's proceed to lesson no. 8.

Science of OPM lesson no.8 :

everyone is a millionaire

Everyone of us have tons of "money" which we are not aware of. The differences is that our "money" are not printed paper or nuggets of sliver or copper (well for me, I've lots of nuggets but not paper). I call this unconscious riches and for some unconscious millionaires. By now we should be able to comprehend the fact that "money" is not the piece of printed paper, but rather perceived or real values regardless of whatever form it takes. It could be an idea, an innovation or a skill. And if that form have a real or perceived values higher than "money", be prepared to expect lot's of rich man visiting your house to exchange that values for money. I encourage you to read the book "Everyone's an expert (about something)" written by Seth Godin. Get your free ebook from Squidoo.  Well with this in mind, lets look at the final lesson no. 9.

Science of OPM lesson no. 9 :

however...not everyone is created equal

All values are not created equal. Some are "more valuable" while others are "less valuable". Beauty is in the eyes of the beholder. The judge is the one with the money and never the one without. But like all types of products all values can be packaged, promoted, marketed and sold at higher values than the actual values. As mentioned in lesson no. 6, this process is called "value-add". Putting on cosmetics - regardless of real or perceived. Secondly it's about target marketing - showing the right values to the right person who can appreciate it. 

So we've come to the end of the Science of OPM. Next week (or later) we'll talk about The Art of OPM. Until then I hope everyone will enjoy the movie clip below "Other People Money" where you'll find Danny Devito speaking like Warren Buffet. Enjoy !

Other People Money

As if Warren Buffet Spoken

Before we can use Other People's Money we must know the value of money, the reasons why we are in business. I've meet with many entrepreneurs who did many things just for passion. But is passion only enough? What good is passion if the business go broke? How can we change the world if we ourselves do not make enough money to change simple things around us? Danny Divito put's it perfectly, that when we go broke really,"Who Cares"! I've always like to use this analogy - The Bully & the Bullied. Well we always start anything as a bullied, and along the way we learned, get stronger, smarter and thus became a bully in due time. Now only when we became a bully that we have the power to choose - should we bully others or should we help others . This is the point about making money. As Danny Devito says "Take the Money" and only then you can put it to good use, maybe create jobs and in the process change the world, enrich others and ourselves.
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The Power to Change

my lens, I mean.....

What is Power?

Have you ever hear of the phrase "Knowledge is Power". Well that might be true 10 or 15 years ago, before the Internet. Today knowledge is so freely and abundantly available, knowledge is everywhere. With the click of the mouse, anyone anywhere can have access to tons of information and knowledge.

In the past a Britannica Encyclopedia Set cost more than US$1500 in Asia, now anyone can get free access to Wikipedia.

So in today's context, "Knowledge" per se is no longer power. In my opinion, it is "Applied Knowledge is Power". There are more people with MBAs, if not PhD than 15 years ago. The real difference thus is in the application of Knowledge.

How can I help?

Frankly I can't. The best way, and the only way I can is that hopefully through this Lens, through sharing and through encouragement that we can all have the courage, wisdom and will to APPLY what we already know - turning that into our Power to Change. For the application of what one have learned, solely is the responsibility of the one who have learned.

Other People's Perspectives (OPP)

If you can't get OPM at least read OPP

These are feeds from my non-commercial blog site called CCN (Certified Consultants Network), a "open source" forum for entrepreneurs and consultants with focus on Asia. Hope you'll enjoy.
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Reader's Talk Show

nothing is right or wrong, only good or bad

This is your talk show, say anything you like, and we'll published all opinions, comments, arguments, good or bad, right or wrong, agreed or disagreed, all without exceptions.

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TimothyChan

Hi, I'm from Singapore and my name is Timothy Chan. Visit my blog, an "open source" forum for entrepreneurs with focus on business in Asia - Certified... more »

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