Today is the 3rd anniversary of Skyview CFO. It’s been a while since I last posted… I’ve been busy!

A lot has happened since I last posted, so I wanted to share my recent experiences in an effort to show those who may be feeling challenged entering the workforce or finding the ‘right’ career path, that there are plenty of different ways to get your foot in the door.

In August 2022, I moved Skyview HQ out of my apartment and into a WeWork office in midtown Manhattan. While I was unpacking, one of my neighbors walked into my office and asked what I did. I told him that I provide CFO services to small businesses, and he nodded and said, “I could probably use that soon.”

Less than a month later, he became my biggest client. After more than 20 years in construction, he recently started his own general contracting firm and needed someone to help manage the financial operations. While I had experience in other industries, I knew nothing about construction. I can’t even hang up a picture frame, if I am being honest. Nonetheless, I had to teach myself all about the unique financial processes in the field, and luckily my new client was patient and saw that I was a quick learner.

At first, like most of my clients at the time, he only needed my services for a few hours per week. But over the next year, his business kept growing . It was growing so fast, I was faced with some tough decisions. In order to provide the level of service he needed, I would have to drop some of my other clients. I had tried hiring people to manage those relationships while I grew the business, but in the end it became tough for me to train and provide the same level of service my clients expected. After negotiating, my client agreed to a new rate that would allow me to part ways amicably with those other clients, while still allowing me to maintain some of my smaller accounts who only required my services for a few hours each month.

Fast forward a few more months and I am now managing the financial operations of a multi-million dollar company, in an industry I knew nothing about two years ago. I still have helped other clients on the side, including a start up I invested in after meeting the founder while I was judging a business plan competition at my alma mater, Syracuse University.

While the journey of Skyview CFO has many miles ahead, it has taken a major pivot from since I launched in May 2021. My original intention was to provide financial services within the summer camp industry, but I found that my business model did not really work best for them. Currently, I am no longer providing services, or taking on clients in the summer camp industry. Not until I decide to buy one, that is.

The point is that there is more than one way to get a job. I’m not saying you should make a consulting firm and take the route I did, but there are more ways than just applying to job posts behind a keyboard. You need to think outside the box. Don’t get me wrong, I’ve been far from perfect. I was losing money every month in my first year and made plenty of mistakes along the way. It was not easy, especially while earning my Master’s in Accounting, and dealing with my parent’s lengthy divorce at the same time, but I have finally found myself on a path I am proud of.

I see a lot of recent graduates trying to enter the workforce now, complaining that nobody is hiring, while expecting six figure salaries to work remotely in jobs they have zero experience in. No job is going to just jump out and get you. Sometimes they fall in your lap, but more often than not, you have to figure out alternate routes and prove yourself. You have to be okay not being a millionaire in your 20s. You have to be okay not making money, coming into an office, and learning. I have no idea where I’ll be in five years, if Skyview CFO will still exist, but what I will tell you is that I’m always trying to figure out how to increase my value while doing something I enjoy.

I intend to do more writing. I enjoy blogging about business topics and might consider putting out a new book in the future so stay tuned.

Lastly, I could not have done this all without my strong support system who has gotten me through the times of doubt, and to remind me that the people who are hating on my path and trying to bring me down are insignificant.

If you have any questions about my experience or want some advice, please email me at brandon@skyviewcfo.com .

-B

The world is freaking out over the developments of groundbreaking A.I. applications, most notably, Chat GPT.

What exactly is Chat GPT? Luckily instead of trying to explain it with my limited technology education, I just asked it. However, it originally spat out a five paragraph comprehensive explanation that was way too long. Since I don’t want to bore you, I clarified and asked it to explain it in three sentences. Here is what it said:

“Chat GPT is a natural language processing model designed to generate human-like responses to text-based conversational prompts. It is pre-trained on large datasets of conversational text and can be fine-tuned for specific use cases, such as customer service chatbots or personal assistants. Chat GPT has become increasingly popular in recent years as businesses seek to automate customer service and support operations and improve engagement on social media platforms.”

While it said it is designed to generate human-like responses, this response seemed pretty robotic to me, but you get the point.

It’s pretty insane to think about how far we’ve come. I’m jealous that the younger generations will be able to use technology like this instead of asking Gieves.

Nonetheless, instead of being terrified by the fact the it’s only a matter of time before computers start taking over the world, I decided to use it to my advantage in the mean time and write me an article about the benefits of Fractional CFO survives, like Skyview CFO. Here’s what it said:

“Fractional CFO (Chief Financial Officer) services are becoming increasingly popular among businesses of all sizes. A fractional CFO is a financial professional who provides part-time CFO services to multiple companies on a contract basis. This allows businesses to access high-level financial expertise without the cost of a full-time CFO.

Fractional CFOs are typically experienced financial executives who have held senior positions in larger companies or have worked in a CFO capacity for smaller businesses. They provide a range of services, including financial planning and analysis, budgeting and forecasting, cash flow management, financial reporting, and strategic planning.

One of the primary benefits of hiring a fractional CFO is cost savings. A full-time CFO can be expensive, with salaries ranging from $150,000 to $500,000 per year, depending on the size and complexity of the business. In contrast, a fractional CFO can provide the same level of expertise at a fraction of the cost. Businesses can hire a fractional CFO for a few hours a week or a few days a month, depending on their needs and budget.

Another benefit of hiring a fractional CFO is flexibility. Businesses can adjust the level of service they receive based on their changing needs. For example, a business may only need a fractional CFO for financial planning and analysis during a period of growth or restructuring. Once the project is complete, the business can scale back or end the engagement.

Fractional CFOs can also provide objective insights and strategic guidance. Because they work with multiple clients, they have a broad perspective on industry trends, best practices, and potential risks. They can provide valuable advice on financial strategy, risk management, and capital allocation.

Finally, hiring a fractional CFO can free up time for business owners and executives to focus on other areas of the business. CFOs are critical to the success of any business, but they also require a significant amount of time and resources. By outsourcing CFO services, businesses can offload these responsibilities and focus on core business functions such as sales, marketing, and product development.

In conclusion, fractional CFO services are an excellent option for businesses of all sizes that need high-level financial expertise but don’t require a full-time CFO. Fractional CFOs provide cost savings, flexibility, objective insights, strategic guidance, and time savings. If you’re considering hiring a fractional CFO, be sure to choose a reputable provider with a track record of success and experience working with businesses in your industry.”

Not too bad. Thanks for saving me the time, chat GPT! Please spare me in the revolution!

Today, Fox News and Dominion Voting Systems have reached a historic settlement in the defamation case stemming from Fox’s coverage of Dominion’s role in the outcome of the 2020 US Presidential election.

The case was originally filed by Dominion Voting Systems in March 2021 for $1.6 Billion. Dominion claimed that numerous Fox News personalities knowingly spread false statements that their voting machines were used to manipulate the 2020 election against former president Donald Trump.

Details of the settlement are still unknown to the public, but this serves as a historic precedent for news outlets and the potential repercussions they may face when it comes to journalistic integrity. While Fox tried to defend themselves by citing the first amendment, their words had a direct impact on Dominion’s business.

This is an important reminder that while our constitution does provide us with free speech, if you are going to knowingly spread false information about a person or entity that stands to suffer financial damages from such actions, there is a price to pay. In fact, the settlement amount is more than Dominion Voting Systems is even worth, but damages can be attributed to potential lost earnings.

If you are going to defame, diminish, or attack a person’s character, you better make sure there are facts to back it up.

Inflation. Ever heard of it?

Well, if you’ve put on the news in the last 6 months I’m sure you have, as the US is continuously fighting rising inflation which is largely due in part to the lingering effects of the pandemic.

But let’s take a trip back to the Global Financial Crisis of 2008. Shortly after the US housing bubble burst, the entire world experienced the largest financial recission of all-time and the biggest crisis since the Great Depression. Even though it was caused by the US, the effects were felt around the world…hence why it is referred to as the global financial crisis. Duh.

Different countries respond to economic problems in different ways, especially if they are run by a corrupt regime. One of those countries, Zimbabwe, ended up causing their citizens to experience hyper-inflation. If you think the current inflation rate of roughly 6% is bad, in 2008 Zimbabwe’s peak month of inflation was estimated at 79.6 BILLION percent month-on-month, and 89.7 SEXTILLION percent year-on-year in mid-November 2008. In case you’re wondering how much one sextillion is, it’s a 1 followed by 27 zeroes… or in other words one billion trillion.

In the U.S., the Federal Reserve tries to maintain a “healthy” inflation rate of around 2%. When inflation surpasses 2%, as it does today, it is considered high. Hyperinflation is an extreme case of inflation, to say the least. This occurs when prices have risen by more than 50% per month. Safe to say they should have invented a new word for what Zimbabwe was experiencing, they had the 50% covered by about 79.1 Billion%.

Imagine you always buy the same items at the grocery store. If the economy were experiencing a rising inflation rate of 5% per day, your grocery bill might rise from $500 per week to $675 the next week, to $911 per week the following week, and so on. In Zimbabwe people literally had to carry money in barrels just to pay for items, which eventually led to the creation of the One Hundred Trillion Dollar Bill, the largest denomination for a bank note in the history of the world.

How could inflation like this possibly have occurred? The corrupt government of Zimbabwe couldn’t afford to pay their debts, let alone the paper they were printing these dollars with, so they just kept printing more money. Parlayed with their struggling economy, and failure to do trade with other countries, their inflation quickly spun out of control resulting in this absurd hyper-inflation and need for larger bank notes.

As a result, Zimbabwe reverted to allowing the use of the US Dollar and South African Rand as acceptable currencies in their country which eventually led to stabilization, and in turn, completely abandoning the ZWD.

But now that the infamous mega bills are obsolete and becoming a rare novelty, they are being bought for upwards of $250 on sites like eBay by collectors.

Google is being sued by the Justice Department and eight states, accusing the company of using its dominance in the digital advertising market to crush competitors and force ad buyers and sellers to use its products unfavorable terms.

According to the DOJ, advertisers receive far less revenue from those ads than they otherwise would, this leads to money to fund their offerings. They ascertain that those advertisers are being forced to pay more than they should, and those costs get passed onto the customer.

The DOJ is seeking to force Google to sell or spin off parts of its digital ad arm so it will no longer have control over every side of the digital ad buying process: the buyer side, seller side, and the exchange.

The fed is also claiming to be a victim themselves too, asking for monetary damages for the government. They say that Google’s inflated ad prices cost the government money through ads it’s bought since 2019 to promote various agencies and services.

Google’s Defense

Dan Taylor, Global ads vice president for Google, claimed the lawsuit would harm the advertising industry and innovation, not help it. “Today’s lawsuit from the DOJ attempts to pick winners and losers in the highly competitive advertising technology sector,” Google said in a statement. Taylor furthered his point by warning that the government should not be able to force companies to unwind 15-year-old acquisitions that were once approved by regulators.

Google also pointed out that the digital ad market is a crowded and competitive space, as Facebook (Meta), and  Amazon also have huge shares of the digital advertising market in the US, (Google has the largest). The other antitrust enforcement agency, the Federal Trade Commission, has sued Meta and Microsoft for acquisitions that they claim to be anticompetitive.

My Thoughts

As a strong advocate for small business, its safe to say that I’m not a big fan of big tech companies crushing competition with monopolization. However, I (not a lawyer) am failing to see this as a strong case for the DOJ. Google is certainty not the only place to place digital advertisements, with Meta and Amazon on their heels.

Also, you do not have to use Google to promote your business. If you are an advertiser nothing is stopping you from going directly to where you want your ads displayed. I’m not talking about the search ads that comes up when you “google” something. To me, that would fall under their monopilzation as a search engine, which I think the DOJ has a much stronger case for (I havent heard the word Bing in a while.)

If they want to claim that the Google has monopolized the search engine industry that makes sense but to claim that they control the entire digital ad industry seems like a stretch.

What do you think?

P.S. when i was researching this article I googled “Google”. That’s pretty Meta. Okay I’ll stop.

Let’s face it, paying taxes isn’t fun. However, it’s best to get ahead of it to ensure you don’t end up paying any fines or late fees.

Luckily, fractional financial service companies, like Skyview CFO, have become more commonplace over the last couple years. The lingering effects of the pandemic have led to a rise in freelancers, and virtual services that mesh with the work-from-home or hybrid working environments

Fractional financial services can help business owners save time and money by ensuring your accountant doesn’t have a large pile of disorganized information to bill you at a substantial hourly rate to make heads or tails of.

What are Fractional Financial Services?

At Skyview, we provide three different types of services: Fractional bookkeeper, controller, and CFO services. Think of us as the translator between you and your accountant. Maybe you just need someone to clean up your books, or just an extra set of eyes on your numbers. That can seem costly, especially if you don’t have the budget to hire anymore full-time employee. This is where a fractional services can be a cost effective solution.

Fractional Bookkeeping

It’s 2023 and the days of bookkeeping being recorded in actual books are well and gone, as are the days of needing a software downloaded on your desktop. Accounting platforms, like QuickBooks have made the shift to online which allows for the virtual bookkeeping industry to exist.

The average salary for a full time bookkeeper is approximately $50,000. By providing our services virtually on a part-time basis, we are able to come in at a significantly lower rate – as lows as a couple hundred dollars per quarter!

A fractional bookkeeper will categorize your income and expenses, save and file your receipts, reconcile your bank accounts, process your payroll and produce your financial statements essential for both you and your accountant.

Fractional Controller

A fractional controller is more hands on than a bookkeeper. They can provide services such as budgeting, forecasting, price shopping, pricing strategy, and other analytical reports, in addition to the standard bookkeeping services above

Fractional CFO

A fractional CFO is more geared towards startups who need financial guidance, business planning, and funding tactics. This can be a much better alternative to a full-time CFO who will either demand a substantial salary, or equity.

Find Out More

If any of these services appeal to you, or if you just want to set up a free consultation drop me an email at brandon@skyviewcfo.com !

I miss the old Kanye…

No but really, I remember the first time I listened to The College Dropout. I was spoiled. As a rap/hip-hop fan, I thought that every album should be that great. Kanye followed it up with hit after hit, cementing himself, not just as one of the most talented rappers, but as one of the most talented musicians of our generation. While this is my opinion, it is hard to argue that his historic rise wasn’t due to incredible talent as he followed up his 2004 debut album with now-classics like Late Registration, Graduation, 808s & a Heartbreak and My Beautiful Dark Twisted Fantasy, all of which peaked at #1 and went at least triple platinum. (I even liked Yeezus and The Life of Pablo which both went double platinum).

Everyone handles success differently. We’ve seen many young stars fall off early and others able to handle the limelight. As for Ye, it has become increasingly evident that his stardom, combined with mental illness, has turned him into a man who now believes he is untouchable, or as he would probably put it: God-like.

In addition to being a historically great musician, Kanye has supplemented his success with other ventures, especially as a fashion designer. His shoes still sell for thousands of dollars on the secondary market even though they’re pretty hideous.

Kanye, like any successful artist, has developed a devout following. I was definitely a big fan but never considered myself to be a Kanye “Stan”. In case you don’t know what a Stan is, it is a slang term that means die-hard fan. It is a reference to the song Stan by Eminem, in which he raps from the point of view of a crazy fan who murders his pregnant girlfriend because the fictional version of Eminem had not been responding to his fan mail. Kanye’s “Stans” love him and will go to bat for him, probably due to all of the great memories his music has provided them over the years.

Stans will buy his shoes and clothing, go to all of his concerts, and often defend his racist remarks. Ye still has many Stans, even though his last four albums were borderline unlistenable (yes, that’s my opinion but look me in the eye and tell me you like Jesus is King).

It’s hard to admit your childhood idols aren’t who they once were. Usually, that happens to us in sports, as I’m sure most Tom Brady and Aaron Rodgers fans could probably relate to right now. (I’m sort of kidding I think Brady will still somehow win another Superbowl). Nonetheless, it is hard to admit the talent has faded from those we once thought to be indestructible.

Over the last few years, however, Kanye has made it quite hard on his Stans to remain on his side as he continues to go on these despicable tirades, support white fascists, run for president, and in his latest work, SAYS HE WANTS TO KILL JEWS.

As a Jewish person whose great-grandparents hid in haystacks in 1940s Poland to avoid the Nazi’s, it’s not a difficult decision for me to say, “yeah, I don’t like this guy anymore”. Not to mention that his music is essentially just Church Choir music these days. I do find it perplexing for anyone to still be defending this man. Unless, of course, you yourself are a white male fascist.

In case you are unaware of his anti-Semitic remarks let me break it down for you: On October 8th, he tweeted that he is “going death con 3 On JEWISH PEOPLE”. Not leaving much up for interpretation here, but Kanye goes on (in the same tweet) to claim that he “can’t be Anti-Semitic because black people are actually Jew[ish] too”. If your confused it’s okay, I had to look this one up. What he is trying to reference here is a theory that black people are decedents of Israelites. In fact, Kanye clarified by saying, “When I say Jew, I mean the 12 lost tribes of Judah, the blood of Christ, who the people known as the race Black really are.” (The tribe of Judah was one of the 12 tribes of Israel.) Kanye is not the only famous person to support this theory.

He also went on to say that he thinks George Floyd died from a drug overdose, and not from the knee of Derrick Chauvin being pinned on his neck for nine minutes. So if you don’t feel bad for Jews being slammed by Kanye, at least (hopefully) you’d find it rather despicable for him to mitigate the death of Floyd. Right? RIGHT?!?!?!?

Soooo Kanye thinks that Black people are Jewish, but that Jewish people are manipulating and controlling Black people. “Milking them for everything they’re worth” he often says. He blames every person who does not want to do business with him on the “Jewish Media”. He specifically called out Ari Emmanuel, CEO of Endeavor and who the Entourage character, Ari Gold, was loosely based on (fun fact), as another powerful Jew doing anything to mute him at all costs.

In an interview last week with Piers Morgan, when asked if he would walk back the ‘Def Con 3’ remark, Kanye laughed it off, admitted it was racist, and said he needs to “fight fire with fire”. So he is blaming Jewish people for everything going wrong in his life, thinks he is actually Jewish, but that Jews are manipulating everyone to “cancel” him. It probably doesn’t help the fact that Pete Davidson (a Jew) was dating his ex-wife and rubbing it in his face.

How are Kanye’s corporate partners/collaborators dealing with the backlash? Well, Adidas finally announced that it is cutting ties with him following the likes of Balenciaga, and various media platforms, including Lebron James’ show, The Shop, that have Kanye content in production. His agency, CAA, dropped him, and it looks like pretty much every partner associated with Ye has finally had it with him.

Adidas said they expect to take a $250 Million dollar hit by dropping Ye, which is kind of an annoying thing for them to point out. Essentially, they are whining, “hey look at us giving up all this money because his STANS still buy his ugly sneakers no matter what he does or say.” Good for you Adidas, so noble of you to give up all that money your making off of a self-proclaimed racist. MAZEL TOV.

Now let me say this: nothing will stop you (or me) from listening to The College Dropout occasionally and reminiscing on the good memories that the “Old Kanye” brought us as a talented musician, and yes, he may still get some royalties from that, but we all need to STOP SUPPORTING THIS MAN. Stop buying his stupid sneakers, stop listening to his terrible music, stop defending him because he’s bipolar. I empathize with mental illness but being bipolar IS NOT an excuse to incite fascism and to blame everything that goes wrong for you on a specific culture or race. This man has consistently showed us that he is a menace, and a threat to the Jewish people by calling on his Stans to share his belief that the Jews “control everything” and are responsible for everything bad that happens in this world. Sounds exactly like something Hitler would say.

Let me spoil something for you. Jews do not control everything. I mean if they are, I guess my secret Jewish Illuminati meeting invitations are getting lost in the mail. But seriously, if Jews DID control everything, I’m sure there would be a lot less people getting away with blatant Anti-Semitism. If we controlled everything, Donald Trump probably wouldn’t have been president (don’t give me that Jared Kushner is a Jew crap). If we did control everything I WOULD HAVE WAY MORE CLIENTS.

Are there a lot of Jews in Hollywood? Absolutely. Are there a lot of Jews in the media? Sure. Are there a lot of Jewish lawyers? Plenty. That does NOT mean every Hollywood exec, media personality, or lawyer is Jewish. In fact, it’s pretty racist to assume that if I say so. If the powerful Jews in those industries go after you for making anti-Semitic remarks… it’s probably because we fear anti-Semitism.

Here’s one thing I do want you to take away from this long winded rant. The reason so many Jews have gravitated to those professions and are indeed considered “powerful” is because 6 MILLION OF US WERE KILLED IN THE HAULACAUST SO WE HAVE DEVELOPED A TIGHT KNIT COMMUNITIES THAT FOCUS ON FAMILY, AND APPRECIATING WHAT OUR ANCESTORS WENT THROUGH TO ENSURE OUR SURVIVAL. WE MAKE SURE TO RAISE OUR CHILDREN TO BE KIND, EDUCATED AND SUCCESSFUL SO THAT WE CAN PUT OURSELVES IN THESE POWERFUL POSITIONS TO ENSURE THAT PEOPLE LIKE KANYE DON’T KEEP GETTING AWAY WITH THIS AND TO DAMN WELL MAKE SURE THAT ANOTHER GENOCIDE NEVER HAPPENS AGAIN.

Anyways, although it was a little late, good for Adidas and all of the other companies and people denouncing Kanye West over this. It should not have come to this point, but I’m sure Adidas and Balenciaga will survive without Ye just as they did long before him.

And as for Kanye, I know you had a dream you could buy your way to heaven but too bad you woke up and spent it on a necklace.

How much can you sell your new product for?

If you are creating something new, the most difficult dilemma I find many of my clients face is how much they should charge.

What will people pay? Can I produce it at an affordable rate?

With new products, it can be tough to find something on the market to compare it to in order to get a price. This is why you need to figure out where your product lies on what I like to call The Eraser Spectrum of Value.

Let’s say you came up with the original idea to put an eraser on the end of a pencil. Pencil erasers are a very useful product, but how much value does it bring to consumers compared to existing alternatives? In other words, what problem are you solving and how much would people pay for your solution?

In the case of the pencil eraser, the problem being solved is being able to quickly correct a writing mistake. What are the existing alternatives? You can buy a separate eraser, you can simply cross out your mistake, or you can use white out.

While pencil erasers are very useful, there are plenty of low cost alternatives that essentially do the same thing albeit less conveniently. Therefore, the ultimate value that a pencil eraser provides is not that high in the grand scheme of things. With a low value proposition, the selling price must be even lower, otherwise no one would buy it.

Now let’s look at the other end of the spectrum…
Imagine you just came up with the idea for the first seatbelt. The problem being solved is… well… dying in a car crash. The alternatives to the seatbelt? Not wearing one, riding a bike, walking, etc.

The value of a seatbelt is pretty high because there are not many alternatives that can easily provide the same value, especially since it’s main function is to prevent the consumer from dying.

While a pencil eraser and a seatbelt are both very common products used by millions of people everyday, you would be way more apprehensive to buy a car without seatbelts than you would a pencil without an eraser. Why? A seatbelt provides way more value, and the alternatives are far more risky/inconvenient. But just because an eraser isn’t as valuable doesn’t mean it cant be a viable business.

If you can produce it at a lower cost than the value it provides, it can sell.

Once you get a figure out where your product lies on the spectrum, you can come up with a value and see if you can produce it at a lower cost. Even though seatbelts are highly valuable, I still can’t go out an sell them for $1 million. As for the eraser, because the value is so low, it would be almost impossible to sell one for $5.

You have an idea. It solves a problem and creates a value. If you can produce it at a cost that’s less than the value it creates, you can create a viable business with an appropriate selling price.

Don’t panic! While there is strong evidence that says yes, you can die early due to stress on the job, there are very different kinds of job “stress”. The point of this post is to help identify what causes you the most stress at work and understand what type of stress is the most dangerous.

Stop me if you’ve had this conversation before… you’re meeting up with your old college buddy at happy hour and they ask, “so, how’s work?” You scoff, do a little shrug, and robotically respond “It’s work.”

After a brief awkward pause you remember you should probably ask them the same thing so you return the favor, “What about you?” Your friend let’s out an identical scoff to yours and agrees with your assessment, “It’s work.”

You both then stand their awkwardly and sip your $5 beers in the sticky midtown pub.

No? Just me? Well anyways, I’m sure you’ve complained once or twice to your friends and coworkers about your job. Don’t worry, you’re not going to die because your boss wears too much perfume, or because you office is in Dumbo and you thought it was going to be a remote role, but now it’s “hybrid” and you wouldn’t have crammed into the Upper East Side if you had known that.

Most people do not like their job in this country – it’s a fact. According to a 2018 study, conducted by Morning Consult, just 33% of U.S. employees said they were “very satisfied” with their current job. I’ve had jobs I’ve hated, and I’ve had jobs I’ve hated slightly less. As a business owner I have by far the most stressful decisions to make than I did in any of prior roles. I have days where I love it, and I days where I want to throw my computer out the window. Upon reflection I realized my frustration at former jobs all came down to lack of control.

The jobs I had shortly after graduating Syracuse University with a degree in both Finance & Entrepreneurship, I sat in a cubicle and was monitored constantly for 8 hours per day. I was docked pay if I was late, and may have been scorned once or twice for taking too much time on a lunch break. However, the jobs were quite simple. Add up a few numbers in excel. Copy and paste a few paragraphs. File documents into another file. REAL GROUNBREAKING STUFF. But the job itself was not stressful. Nobody was going home hungry if I missed an email.

Today I am faced with many more difficult and stressful decisions than I was in the cubes. Like, whether or not it’s a good use of my time to keep writing this article. As a business owner, a consultant, and an employer, my decisions don’t just affect my paycheck and life, they affect my clients, my team, and if I had kids probably them too. But I am way happier than I was when I lacked control.

This isn’t a pitch to leave corporate America and start your own business. Just because you’re not a CEO or a manager doesn’t mean you shouldn’t have control over how you do your job. As long as your are completing the duties asked of you professionally, you should be treated like the adult you are. On the other hand, if you are a manager you might want to think about how much you tend to micromanage and the damage it can do to your business in the long run, because there has been statistical evidence that one’s degree of control in their job has a correlation with an increase in chances of getting a heart attack, or dying due to other early onset health conditions.

In his book Naked Statistics, Charles Wheelan cites a famous British study known as the Whitehall Studies that followed 17,530 civil servants over the course of 7.5 years. They were able to make a distinction of those with “low job control” by asking questions like “can you decide when to take a break?” or “Do you have a choice in deciding how to do your job?”. After years of research and subsequent studies, they were able to find a strong correlation between having a low degree of control in your job and dying from coronary heart disease.

While the Whitehall studies were conducted more than 50 years ago, the underlying message has been supported by subsequent studies. The bottom line is that while all types of job can be stressful in their own regard what really eats at peoples psyche is not feeling like they have any control or say in how they lived their life.

Therefore, I find it very important whether you are an entry level worker or a CEO, giving people as much flexibility as you can when it comes to getting the job done is how successful companies operate. What do you think?

A growing concern in America these days is the health of the middle class. The wealth gap has continuously been expanding for over a decade, and has been the main topic of political debates for as long as I can recall. This isn’t a post about which side of the isle is right, who should be taxed what, but rather an explanation of why basic statistics allows for people with more money to grow their wealth faster than those with less money.

A famous, yet concerning statistic is that most Americans would not be able to afford an unexpected $400 bill. That’s very concerning considering unexpected bills come up all the time. Flat tires, floods, a terrible war that causes a tremendous rise in gas prices, a global pandemic that shuts down the entire world, and whatnot. Because so many Americans are just $400 away from bankruptcy, that brings us to my first point of how probability makes the rich richer: insurance.

Insurance companies make billions of dollars by utilizing probability. To make things simple, let’s say that you own a car worth $20,000 and you pay a $400 monthly premium. In exchange for your monthly payments, the insurance company will pay to replace your $20,000.00 should it be lost, stollen, or damaged (yes, I’m ignoring plenty other contingencies for simplicity) (and deductibles). If buy this policy and your car is stolen one month later, the insurance policy was well worth it, and a loss for the insurance company. However, the insurance company has predetermined the likelihood of your car being stolen or damaged to be 4% in any given year. For the insurance company to make money on this policy they want you to make it at least 4 years without needing the $20,000 payout ($20,000/$400/12mos=4.1 years). If there is a 4% chance per year that you will need a payout, there is a 16% chance over a 4 year period; that’s pretty good odds for the insurer. Also, the further into your policy you need to make a claim, the less of a loss the insurance company bears (If you crash one month into the term, you’ve only paid them $400 and they need to cough up $20,000, if it’s one year in than you’ve paid them $4,800). Despite the odds being in insurance company’s favor, they have a risk you will crash and they will lose on your policy. The goo thing for them is that you’re not their only customer. The insurers make sure they will be profitable by providing many policies to many people with similar odds. The collection of all these premiums allows them to pay you in the event you smash that car into a tree. I’m not even going to mention the reinsurance industry. That’s right, there are insurance companies that insure insurance companies.

So why should you be paying a policy that only has a 16% chance of being “worth it?” Well, as I just mentioned, most Americans cannot afford an unexpected $400 bill. So we can safely assume wayyy more Americans cannot afford an unexpected $20,000 bill. The idea here is that you’d rather pay $400 each month to avoid a situation that would completely derail your life. You can’t afford the risk.

Let’s replay this scenario but now pretend you’re Warren Buffet (or any billionaire of your choosing). I highly doubt you’d be buying a $20,000 car, but let’s just pretend you are for some weird reason. $20,000 won’t even make a dent in your bank account, so it would actually make sense for you to forego the car insurance (ignoring the fact that it’s required by law) because there is only a 16% chance that it will be worth it, and even if you do end up having to pay $20,000 to replace the car, it will not derail your life. This principle shows that being rich literally affords you to the ability avoid a monthly payment that those with less money need to make. If both you and Warren Buffet bought the same $20,000 car, you essentially have to pay an additional $19,200 over 4 years than for the same car because you cannot afford the risk.

Risk is another way of describing probability. I know what you’re thinking, rich people aren’t getting richer because they’re avoiding insurance premiums. No, but the same principle applies to investment and generating wealth. A core investing concept is that the riskier an investment is the greater the rate of return needs to be. This is due in large part to the fact that there are such things as risk free investments. I can put a dollar into a savings account that pays 1% interest each year with zero risk. Given that fact, I would never make an investment that pays the same 1% rate but also has a 10% chance of failing, because I can make the same amount of money with no risk. Because there is such thing as risk-free rates, risk needs to be compensated when it is taken on.

Let’s say the 10% risky investment will pay off 25% if it is successful. You have a decision to make now: do you want to make a guaranteed $0.01 on your $1 investment or do you want to risk losing that $1 investment for a 90% chance to walk away with $1.25?

We can use simple math to evaluate this: since the risky investment has a 10% of failing, the law of probability tells us that if you make this investment nine times out of ten you end up with $1.25 nine times and nothing one time. Therefore the expected value of the investment is $1.125 ($1.25 x 90% + $0 x 10%). Based on this principle, it makes sense to take on the risk as you have a greater chance to make more money than the mere penny you get from taking on no risk.

But wait! Think back to the insurance dilemma.

You bought the policy, not because you think its a sound investment, but because you want to avoid the situation that will leave you homeless. You, unlike Warren Buffet, cannot afford the risk of foregoing the insurance. Circling back to the investment scenario you can obviously afford to lose $1.00, if not then you should probably stop reading this and file for unemployment. But let’s say the investment was $100,000 instead of $1.00. The same percentages still apply and it still makes sense to make the risky investment from a math standpoint. The expected value is you’ll end up with is now $112,500 compared to the risk free option where you would walk away with $101,000. There’s only a 10% chance you end up with nothing and a 90% chance you make a $25,000 profit. But if that 10% were to happen would you lose your house? Your car? Your spouse? Probably (pun intended). Would Warren Buffet? He probably wouldn’t even notice.

You decide that you can’t pass up the opportunity. Uh oh! The investment backfires! The dreaded 10% outcome happens and you lose $100,000 quicker than you can say “I should’ve just kept my money under my mattress”. Perhaps you still have some savings left, and you convinced your spouse things will be fine. Life is fine… for now.

But now a new opportunity comes your way. This one requires the same $100,000 investment and has the same 10% risk rate, but the potential earning is a whopping 50%! You can make half your loss back! There’s just one problem: you no longer have $100,000 to invest again. You need it to pay for your $20,000 car loan and the $400 insurance premiums. Not to mention your mortgage, daycare, gas, and all your other bills. Unfortunately, you have to pass up the opportunity, and wouldn’t you know it? It’s a winner. Not only did it go up 50% it went up 200%!! You would have made up your loss and then some!

Now imagine you’re Warren Buffet again, you hardly noticed the loss of the original $100,000 so invest in the winner without much thought. Your investment is now worth $300,000! You’re up $100,000 even after losing out on the first investment.

Do you see what I’m getting at?

Risk is a type of probability. The richer you are the more risk you can afford. Warren Buffet can afford to make millions of these $100,000 investments (literally) because he can afford the risk/probability of losing $100,000 a few times and still be able to continue on with his way of life. By being able to invest in many different opportunities the law of probability tells us that he will indeed continue to keep making money in the long run, as the likelihood that every investment with a 10% risk rate failing gets smaller and smaller the more there are.

Another large factor I haven’t brought up yet is that by having more money you have access to more investment opportunities than those with less money. For example many private investment opportunities are only available for very large minimal investment amounts. Warren Buffet can invest $10 Million into a company that wouldn’t even bother with you even if you were willing to invest your entire life savings, despite the percentages being the same.

There’s an old saying that goes something along the lines of “the first million is the hardest to make”. That’s true, to some degree. Of course, most people do have to work hard to generate their initial wealth, but growing that wealth once it exists is a lot easier than building it from scratch. Wealth generation is like inertia; it takes a lot more energy to get started than it does to keep going. Probability tells us that the more investment opportunities you participate it, the more money you will make in the long run. However, opportunities are costly, and you’re risk tolerance (should be) determined by the amount you can afford to lose without derailing your life. Risk tolerance cost money, and the more money you have the more risk you can afford.

Probability keeps the rich rich, and the poor poor. What do you think?