In my previous post I touched on the idea of running a small simple online business that was profitable enough to support leisurely living abroad.  It’s a tempting combination of lifestyle and career.

I should have disclosed that I’m not the first person to have this idea or to write about it. There is actually a book I loathe, written by an author I hate, on this very subject!

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The book is the Four Hour Workweek by author Timothy Ferriss. It was a NYT non-fiction bestseller for a little while. One reviewer on amazon.com elegantly described it as being the “8 minute abs” of business books. Not that self help style business books are often very good. My hostility toward this one is at least partially based on the fact that the book is essentially a commercially successful version of this blog.

In the book, when the author (pictured right) isn’t talking about how he became a championship judo warrior or spectacular salsa dancer, he’s explaining how you can easily lead a life of relaxation and adventure just by having a small simple online business and running it efficiently by outsourcing everything.

In his case the online business was some sort of sleazy website selling health supplements through a drop shipping company. About half a step up on the totem pole from the people that spam your email inbox with creative misspellings of Viagra.

He also shares that the key to success in business situations is to “practice picking up girls in order to build your confidence – even if you’re married”. He’s like a mix between Donald Trump and Mystery.

Living the easy life while your online business rakes in the cash is a fun fantasy, but it’s not a very realistic one.

In the real world, and the virtual one, being a reseller of a common product without adding any unique value is a tough business. Primarily because there’s already a bunch of people doing it, and they’ve been doing it for longer than you.

This situation reminds me a lot of day trading. Many of people fantasize about day trading. It seems like making money out of nothing, and the sky’s the limit. I know one day trader well and I’ve met several others. As far as I can gather day traders spend about  ten hours every day staring at financial models and performing all manner of novel analysis and voodoo on them in order to guide their trades. They all seem to be making enough money to continue day trading, but not enough to stop.

According to financial theory, making money day trading is impossible.

The theory that explains this is called the “efficient market hypothesis”. It basically states that you can’t make any money doing things like day trading because everybody else is already doing it, therefore the market prices are all essentially “correct” given all the information available, and there is no way to estimate what prices will do next, so you might as well not bother.

There’s a famous joke (amongst nerds) about this: A student and his finance professor are walking across campus together. The student sees a $20 bill on the ground and reaches to pick it up. The professor stops him and then explains that if there were really a $20 bill there someone else would have already picked it up.

This shows the obvious flaw in the efficient market explanation. If you couldn’t make any money day trading, then no one else would be trying either. If no one else were trying, the prices would no longer be “correct”, and then you would again be able to make money by day trading.

Back to the real world again: Every day large institutional investors make big trades on the stock market. Their trades leave tiny “inefficiencies” everywhere. These inefficiencies are slight differences in what the stock prices are, and what they should be if someone calculated all the available information.

The big firms don’t really bother to get these details perfect as they have high costs, a slow decision making process, and prefer to make trades in large volumes. This leaves the opportunity for the day traders. They scoop up all the inefficiencies and make money doing so.

For example a day trader might have a program checking to see if two very similar stocks are trading at abnormally different relative prices. They would then buy the low one, short the high one, and wait for the prices to converge. Alternately some day traders buy huge archives of old trade data and try to find obscure trends and relationships in it. Other day traders work on certain theories about how price movements tend to flow over time, in which patterns they go up and down. And many day traders simply wait for second fresh news comes out  so they can be the first to trade on it.

All these different strategies working together to set market prices does end up making them pretty “accurate”, most of the time.

So day trading isn’t impossible, but it’s certainly not a life of ease and luxury while your computer magically makes money for you.

I think these types of situations that I’m illustrating with online resellers and day traders can be better explained by economics.

Subjected to economic analysis, jobs like day trading or online reselling aren’t impossible; you just won’t on average make any more money doing them than you would performing any other equally difficult job. This is because you are in “perfect competition” with everyone else.

In micro-economics it is mathematically modeled that when you have a perfectly competitive product or profession that no one involved should be making much money. When suppliers are making excessive profits in the short term more competition will move in and bring profits down to “normal” in the long term. In this case “normal” means how much you would make doing anything else that required the same amount of investment, skill, and risk. And by the time there’s a best selling book written about how to do something, you can safely assume you’ve reached the long term part of the model.

If any of my professors were reading this they would be very upset with me for not drawing a bunch of graphs and using the word equilibrium. It is more complex than I’m making it out to be, but still less than economics professors like to pretend.

I think economics is still missing part of the story. These aren’t equivalent to average jobs, most of the time they’re worse and they pay worse.

You need to think about the psychology at play. These jobs are very tempting. The thought of being able to provide for yourself without even having to change out of your pajamas, and to have your whole little world right there on your screen, easy to control, is a tempting one.

It’s easy for people to picture doing these jobs. Visually you imagine that all you have to do is sit in front of your computer once in a while. So on a base level it seems like you could easily succeed at doing it. It’s the same reason why people are more worried about dying in a shark attack than from diabetes. Things that are easy to imagine seem much more likely.

There are various cognitive biases happening too. In their minds, people apply too much weight to the few success stories they hear. They also forget that old stories of success, from books written in the beginning of a new industry, are no longer applicable to the current state of the market. Again, those opportunities were scooped up by people who came before there were best selling books written about how to do it.

There are so many psychological factors that draw people to these sorts of fantasy get-rich-quick, working from home, be your own boss, sort of schemes that the labor pool is way too big, and average profits are below what you would make doing equivalent jobs.

Of course none of that applies to my small online business. Well, except it being a lot harder than I originally imagined. Oh, and the not making any money part.

(special thanks to Bryan and Ian for lecturing me in psychology every night in my living room completely against my will)

Not sure what to do with your life?

You could easily be an English teacher in a foreign country.

This is for anyone reading who is in the same situation as me; having just graduated from college and unsure what to do with yourself, but without the creepy business fetish.

I’ve mentioned it a few times already in this blog, but in case you didn’t get it; it’s REALLY easy to be an English teacher abroad.

If you can speak English, put on pants, and afford a plane ticket, you could be an English teacher in Hanoi next week.

Researching it online makes it seems like you need to go through a long an expensive process of certification. Which is to say that English teaching certification companies spend a lot more time making websites than uncertified English teachers do.

While it helps to have a certification it’s certainly not necessary. Many of the English teachers I’ve spoken to here just showed up and got a teaching job without a certificate, though sometimes their schools can be a bit unprofessional. A friend got his for $200 online at teflonline.net, but he said he never actually had to show it to anyone to get his job.

All you have to do is fly over, and start hanging out at the most popular Irish pub themed bar in town. In Hanoi you would end up at Finnegan’s. Most of the people there will be English teachers and most of them tell you that their schools are desperately hiring.

There are simply way more classes worth of kids with parents willing to pay for English lessons than there are people who bother to come over and teach.

English teachers in Hanoi make between $1500 and $2000 a month, depending on their experience, qualifications, type of school they teach at, and luck. Basic living expenses in Hanoi are about $750 a month. You can work at some schools for as little as two months at a time.

This is actually more than you would expect to make doing almost any other sort of entry level work. I have friends here who graduated from top universities and are now working at a finance firm making less than most English teachers.

Of course they get to put on their resume that they worked at a finance firm, and they don’t have to grade homework.

Still, it can be a lot of fun.

I was briefly a paid English teacher once for a small class of university students in China as part of a study abroad program. I made good friends, and I still keep in touch with a few of them.

One night, around the end of our program, I took them out and bought them a bunch of beers. Many of them had never drank before and they got completely smashed.

It was awesome

Running a business is about more than just making money.

This is an especially important thing to remind yourself when you’re not making any money.

My friend Ian and I have been running a small independent art licensing and online poster retailing business out of our garage for the last 3 years (for more info follow the “projects” link on the right). Lately we’ve been working on the annual task of sending our artists their accrued royalties from the previous year.

Our agreement with the artists is that they make a royalty of 50% of the profit from the sales and licensing of their art. As the business isn’t exactly profitable yet, their royalties this year were rather meager. So along with the check we sent out a letter thoughtfully explaining the progress made and challenges faced by the business in the last year.

We were expecting some serious grumpiness in return.

Instead we got nothing but incredible support and understanding feedback from the artists.

“I just wanted to say thanks, and I really appreciate you sharing all that with us and keeping us informed. That said, I still believe in you guys, and will continue to pass on your URL to all my friends as I’ve already been doing all this time and telling them about your mission statement. “

“i love what you guys do, whether you’re making money or not. anything I can do to help? no charge, total volunteer work.”

“You guys are saints. It’s been a real pleasure working with you”

Many of them also offered to license new art to us and one even offered to give up their royalty payment so that we could keep it to support the business.

This has really renewed our enthusiasm for the project.

What’s exciting about this business is that if we ever actually get licensing contracts with major publishers we can run the business from anywhere in the world with just a laptop and an internet connection, so long as we still have our accountant and someone to check our p.o. box for us back at home.

That was the dream all along; to have a fully digital business. We would scout out independent artists, in person and online, maintain a portfolio of high quality print ready scans and renders of their art, we would then market that portfolio to publishers, while periodically collecting the royalties from sales, and in turn sending our artists their share. Of course a key part of the plan was also that the business would make money.

What happened in reality is that publishers weren’t initially interested in licensing our art from us. So we went down a long and hard road of creating and retailing the products ourselves to prove their market viability. This involved a lot of really unpleasant work for Ian and I; dealing with printing, inventory, storage, shipping, credit card processing, sales tax, returns, website maintenance, marketing, vending, etc. The small scale we were operating at kept us always just below break-even. The whole experience was rather draining.

Now we’re preparing to make our last marketing push to the publishers. We will send them physical samples of the posters we’ve been selling along with some of our sales data to show that people actually buy the things.

I honestly don’t have very high hopes. Risk and innovation are rare in this industry, and the economic situation has further compounded the publishers’ conservative nature.

In retrospect if I could do it all over again I would have included in the team someone who actually knew something about art, and someone who had some experience in the industry.

Still, it would be a shame to have come this far and not give it one last shot. The incredible support from our artists is really the inspiration we needed to get back on track.

Wish us luck.

I’ve always been a snob

When I was younger I proudly displayed my Stanley Kubrick box set and insisted that I watched “films”, not “movies”. I made an effort to seek out local underground artists in my quest to become a connoisseur of “Hip Hop” while snubbing my peers for listening to “Rap”. In college I loved to take my friends to a particular restaurant in Santa Barbara that I was convinced made “traditional” Japanese food, and forbid them from ordering sushi. In short, I practice a level of snobbery that borders on just simply being a jerk.

In this same infantile spirit, I have during my trips abroad developed a conceptual distinction between “tourists” and “travelers”.

Oh how I loathe tourists! Loud fat sunburned families pouring out of air conditioned busses, with their fanny packs and money belts, clutching their video cameras, frantically waving their guidebooks and yelling at people in English about their free buffet.

Travelers are a different species entirely. To be a traveler is to calmly walk the earth, lightly packed, living off of a few dollars a day, blending in, easily befriending locals, playing with children, petting puppies, and finding remote hilltops to watch the sunset.

This distinction is of course completely absurd.

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I learned an important lesson a few years ago on a trip to Venezuela. A friend and I took an overnight bus to a town called Mérida up in the Andes Mountains, and spent about a week just sort of walking around. Our experience of the place was limited to sidewalks, bars, cafes, restaurants, and small parks. Our interaction with other people rarely went beyond ordering our food. Still, we were proud of ourselves for being “travelers”.

Eventually we got bored and our willpower wavered. We gave in and signed up for a white water rafting tour. It was tons of fun and we finally had people to talk to besides each other. Ironically it was also a more “authentic” experience. We got to stay at their camp way outside of the city, they had a local cook that made fantastic home style Venezuelan food, and the staff was able to clear up a lot of questions that had been confusing us about Venezuela.

For example everywhere we went we saw “Si” and “No” spray painted on trees, walls, rocks, mailboxes, everything. We couldn’t figure out for the life of us why some trees would be yes and others would be no. They explained to us that this was how political activism worked in Venezuela and there had recently been another Chavez election. The “Si”s and “No”s were saying yes or no to re-electing Chavez, the local equivalent of lawn signs and bumper stickers. It would have been a thorn in my mind to leave Venezuela without knowing why, and the people in the tourism company could tell us a lot more about the place than we would ever learn by just walking around.

Being back in Vietnam I’m again faced with the challenge of not being a tourist, except with a twist. I’ve discovered a new level, above traveler, in the hierarchy. Now the struggle is to be respected as an expat. An expat, short for expatriate, simply means someone that has left their home country and moved somewhere else. A human export.

In Hanoi the term is used to refer to the community of English teachers, business folk, NGO workers, volunteers, and other whities. There is a distinct expat scene and the expats make great effort to distinguish themselves from the tourists. You will never see an expat walking around in short cargo pants, tiger beer shirt, and diagonal strapped backpack, taking a picture of a street vendor. They make a point of dressing up when they go out, constantly checking their cell phones, and always being “a regular” at the places they eat, drink, and shop. This is my peer group now here in Vietnam.

Unlike the other expats though I’m not yet working full time, and by their standards I’ve only very recently arrived. I’m not ready to resign myself to the life of work, errands, and happy hour that I came to Vietnam to escape. I still want to go adventuring.

The challenge is how to adventure without being a tourist.

My solution when I start to get sick of the city has been to get one my regular motorbike drivers to take me on a…. uh… tour outside Hanoi. I have a map of the Hanoi area that has pagodas and temples marked on it, so what I’ve been doing is just pointing at a pagoda or temple and heading off for the day. I have no particular interest in Vietnamese religious sites but I figure that they tend to be situated either in the old parts of their towns or in interesting natural areas. Besides, I can’t easily communicate any other destinations.

So I’ve gone on four trips in this manner so far. Three around Hanoi and one on Phu Quoc, an island in the south of Vietnam off of the coast of Cambodia that I visited for the holidays. These are some of the photos from around Hanoi with my motorbike guy Da:

As you can see I mostly visited a bunch of temples. I was hoping to see more countryside and little old towns. The area around Hanoi is pretty bleak. largely it’s just industrial with tons of new freeway construction. The towns were primarily just simple homes and rickety little businesses built in the same concrete block style as everything else. Also all the fields were destroyed in a recent wave of massive flooding.

An unexpected bonus was that the temples are often built on craggy rocks that have natural caves that you can explore. They build little shrines inside the caves and light incense which makes for a surreal atmosphere.

In Phu Quoc my experience was a bit different.

The island is a big tourist destination, mostly for Germans and Russians. So I never really got the feeling that I was “off the beaten path”. The upside was that being on an island, or perhaps just because of the whims of my motorbike guy, we saw a much greater variation of stuff than I had around Hanoi. The drive itself was also much more scenic.

Again we went to a temple on a hilltop (this one was covered in swastikas which is always feels a bit weird to me). We also had lunch on a beach with very fine white sand which was almost like baking soda, saw a weird park with an alligator pond, visited a little fishing village, and had some overpriced beers at a creepy karaoke bar.

Then something really cool happened.

There is a “Holy Grail” in the version of reality that exists in the minds of tourists, and I found it. It is being invited to a local home for a traditional dinner. For whatever reason it is considered to be the most “authentic” experience one can have.

There are tour companies that offer this as part of their trips, but it’s just not the same to have dinner in a house that gets paid to host a van load of tourists every other day of the week. My motorbike guy liked me enough though to invite me to join him for some dinner and meet his wife and kids.

He lived in a ramshackle little dwelling. It consisted of three rooms and a tiny outside area nestled in with a bunch of other similar buildings. It had one dinky little power cord strung in from the street that powered a fluorescent tube in the entry/living room.

We had picked up two kilos of scallops from a street vendor and grilled them on top of a coal fire in a bucket. On each one we plopped a spoonful of sauce made out of oil, green onions, garlic, salt, and then we heaped on some ground up peanuts.

Having had some time to reflect on it I think the key to good tourism, traveling, whatever, is to mix it up. Tour companies are often run by local expats with a real love of the place. They are an easy way to see the sites and make some friends. Going off on your own can be lonely and confusing, but you’re a lot more likely to have a unique experience. Plus you get to feel like a “traveler”.

I recently used up the last of my batch of 100 business cards.

People here love trading business cards, especially at these conferences. I’ve been handing the things to everyone I meet. (I could say that I’ve been handing them out like hotcakes, but when’s the last time someone handed you a hot cake?)

So far I’ve gotten three work opportunities.

For those of you keeping score at home that’s a hit rate of 3%.

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The one I’m most excited about is a possible position at a French architecture firm as a “green building project manager”.

For all the businessy events I’ve gone to lately I actually ended up with this just by chatting with one of the regulars at Derry’s, the bar nearest to where I’m staying, after popping in for a late meal on a Sunday night.

He’s working as an architect here in Hanoi so we started talking about the green building conference I had recently been to. I also mentioned that I briefly studied in an architecture program at Cal Poly and have kept up on news relating to green and modular building ever since.

When I told him that I was looking for work here in Hanoi he said there might have an opening for me at his firm. My job would be to research different methods of green building and put together presentations for clients on why they should bother.

Right now I’m holding my breath waiting for the boss to come back from vacation to have a real interview.

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Another recipient of one of the three lucky cards was a partner in a new hotel management company. I arranged to meet with him and the company’s founder. They asked me about my experience with marketing and I told them about my various marketing classes and my marketing experience in my previous businesses and jobs. They said they might want to hire me, starting at $1000 a month full time, to do various marketing projects for them.

To test me out they gave me a bunch of convoluted fact sheets, brochures, and other copy about their hotels that needed to be translated from nonsense English into regular English. They also accepted my offer to make a quick simple website for them, as they don’t have one yet. All free of charge.

So I spent a few long nights re-engineering passages like this:

“Tan Da Resort is created by the peaceful atmospheres & harmony, that you find similarities between Human & Nature. The green air outside is created from bamboo & natures breath, while setting is simple furniture but modelled with the combination of wood & Vietnamese bamboo to refresh your life and get away from the work pressure.”

I also put together this simple website entirely out of content I pulled from a PowerPoint stack they forwarded me.

They responded by saying they were very dissatisfied with the website and without thanking me for the copy editing. They can keep their stupid $1000 a month job. I don’t want to do marketing anyway.

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The third opportunity came as a follow-up from the bike trip photography I did. One of the participants I spoke with works in a local NGO that specializes in health communications. I had told him about my experience with business plans. It turns out his organization is in the process of finishing a business plan to present to their primary donor for their next round of funding. They didn’t have any experience with business plans and needed some help.

I finally got to put on my new suit and meet with them to discuss their progress. They decided to pay me a consulting fee to help get the plan presentation ready. This is actually something I am very qualified to do. We studied business plans extensively in my Technology Management Program at UCSB and I co-authored the business plan for my previous company, Nitride Solutions, through countless versions and revisions and presented it to investors.

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This project is a huge milestone for me. For starters I am thrilled that someone is taking the title of “Business Development Consulting” displayed on my business card seriously (especially considering that I sort of just made it up on the spot).

More importantly though is that I am getting paid for work that I literally did on my laptop while sitting on the beach watching the sunset. I’m charging $25 an hour consulting fee x 10 hours of work, so while this doesn’t get me much closer to financial sustainability, it does somewhat justify my fantasy about earning money by applying my business skills abroad.