Saturday, November 23, 2019

ValueMachinesFund: The Perfect Business? Close, but no cigar.

My colleague Hendrik Oude Nijhuis sent out his weekly letter. The topic was "The Perfect Business" written by Russell wrote the letters starting in 1958. As of 2015, Dow Theory Letters was the longest-running service continuously written by one person in the business. 

Apparently: "Rich Man, Poor Man" was his most read letter:

( I haven't read it yet)

Is ValueMachinesFund the perfect business?

The more of these criteria that you can apply to your new business or new job, the better off you’ll be.
(1) The ideal business sells the world, rather than a single neighborhood or even a single city or state. In other words, it has an unlimited global market (and today this is more important than ever, since world markets have now opened up to an extent unparalleled in my lifetime). By the way, how many times have you seen a retail store that has been doing well for years – then another bigger and better retail store moves nearby, and it’s kaput for the first store.
>>Currently we only have Dutch documents. We are working on English documents. Current FAIL, but possible PASS
(2) The ideal business offers a product which enjoys an "inelastic" demand. Inelastic refers to a product that people need or desire – almost regardless of price
>>No. What we see is people are more concerned by the fees they see. 1% onboarding fee for example, then the fees they don't see. The lower the fee, the better the product: net return to investors. FAIL 
(4) The ideal business has minimal labor requirements (the fewer personnel, the better). Today’s example of this is the much-talked about "virtual corporation." The virtual corporation may consist of an office with three executives, where literally all manufacturing and services are farmed out to other companies.
(5) The ideal business enjoys low overhead. It does not need an expensive location; it does not need large amounts of electricity, advertising, legal advice, high-priced employees, large inventory, etc.
>>PASS. We do pay for legal advice.
(6) The ideal business does not require big cash outlays or major investments in equipment. In other words, it does not tie up your capital (incidentally, one of the major reasons for new-business failure is under-capitalization).
>>PASS. "OPM" Other People's Money business.
(7) The ideal business enjoys cash billings. In other words, it does not tie up your capital with lengthy or complex credit terms.
(8) The ideal business is relatively free of all kinds of government and industry regulations and strictures (and if you’re now in your own business, you most definitely know what I mean with this one).
(9) The ideal business is portable or easily moveable. This means that you can take your business (and yourself) anywhere you want – Nevada, Florida, Texas, Washington, S. Dakota (none have state income taxes) or hey, maybe even Monte Carlo or Switzerland or the south of France.
(10) Here’s a crucial one that’s often overlooked; the ideal business satisfies your intellectual (and often emotional) needs. There’s nothing like being fascinated with what you’re doing. When that happens, you’re not working, you’re having fun.
>>PASS. The business is my ideal job. When I was about 8 years old, I saw 3 Days of the Condor and thought Joe Turner has the best job in the world! "Joe Turner (Robert Redford) is a bookish CIA analyst, code named "Condor". He works at the American Literary Historical Society in New York City, which is actually a clandestine CIA office. The seven staff members read books, newspapers, and magazines from around the world, looking for hidden meanings and other useful information. Turner files a report to CIA headquarters on a thriller novel with some strange plot elements, noting the unusual assortment of languages it has been translated into (despite not selling well)...."
(11) The ideal business leaves you with free time. In other words, it doesn’t require your labor and attention 12, 16 or 18 hours a day (my lawyer wife, who leaves the house at 6:30 AM and comes home at 6:30 PM and often later, has been well aware of this one).
>>PASS. It does require developing strong habits, do get stuff done and read the right things.
(12) Super-important: the ideal business is one in which your income is not limited by your personal output (lawyers and doctors have this problem). No, in the ideal business you can sell 10,000 customers as easily as you sell one (publishing is an example).
>>PASS. Very scalable.
That’s it. If you use this list it may help you cut through a lot of nonsense and hypocrisy and wishes and dreams regarding what you are looking for in life and in your work. None of us own or work at the ideal business. But it’s helpful knowing what we’re looking for and dealing with. As a buddy of mine once put it, "I can’t lay an egg and I can’t cook, but I know what a great omelette looks like and tastes like."

Let us invest for you (min. EUR 100 000,-)

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