David Veksler

This is the real reason your iPhone cables break

Apple products look great. Whatever else you think of the company, there’s little doubt that Apple uses high-end materials to create gorgeous and durable products. That’s true for just about everything Apple makes, with one glaring exception: the cables.

It’s common knowledge that Apple cables begin to disintegrate after about six months of regular use. This has been a constant across many different devices – MacBook, iPhones, and adapters, and over the course of many generations of product. My first generation iPhone had a cable that fell apart in 2009, and my iPhone 6 cable disintegrated less than a year later too.

This issue has created an entire industry of third party Apple cables, and another industry of hacks (see Sugru, Apple cable protectors) to keep cables from disintegrating. Somehow, third party Apple accessory manufacturers have no problem making cables that are far more durable than Apple’s. There are websites with buying guides for replacement iPhone cables which are both good looking and far, far more durable. As a committed Apple family with multiple MacBooks, iPads, and iPhones, we’ve eventually replaced all our OEM Apple cables and found alternatives which have survived in pristine condition for years now.

Why can’t Apple use its billions to create a cable that won’t fall apart?

There are several explanations offered for Apple’s apparent incompetence in cable design, but one stands out: Greenpeace. In 2009, Greenpeace successfully lobbied Apple to remove PVC from their cables with their “Green My Apple” campaign. PVC is Polyvinyl chloride, or just vinyl, the world’s third most popular plastic polymer. Ever since, Apple has bragged on their Environment page that all their products are PVC free. Third-party cables on the other hand inevitably mention PVC construction.

I am not a chemical or environmental engineer, so I cannot definitively tell you whether Apple’s decision is scientifically sound. What I do know is that PVC is one of the world’s most common chemical products. In the USA, it is used for 66% of drinking water delivery pipes, most electrical cable insulation, waterproofed clothing, vinyl flooring, and medical gloves. Not deadly-toxic stuff, in other words. Like any other plastic, I would not suggest eating it or breathing fumes from a fire, but it is otherwise safe.

So why did Greenpeace object to Apple’s use of PVC? Their site is not clear on this other than vague references to “poison plastics,” and the difficulty of disposal. We used to think that plastics like PVC would remain in the environment for thousands of years, but we’ve since learned that there are bacteria and fungi that effectively eat PVC for dinner. In the past, lead-based stabilizers have been used in PVC, but suitable replacements are well established.

What has Apple accomplished with their PVC ban? Their reputation for making quality accessories has been ruined. Billions of broken Apple cables have been prematurely sent to the landfill. Billions of replacement cables will be sent to landfills when the gadgets they charge become obsolete. While Apple no longer uses PVC in their cables, many people now rely on cheap third party cables from China, which may use toxic chemicals like lead, arsenic, mercury, and brominated flame retardants.

The only winner from Apple’s PVC ban has been Greenpeace, while consumers, Apple’s reputation, and the environment itself have suffered. In 2007, Steve Jobs directly addressed Greenpeace’s campaign against Apple at a shareholder meeting:

“I think your organization particularly depends too much on principle and not enough on fact… I think you put way too much weight on these glorified principles and way too little weight on science and engineering. It would be very helpful if your organization hired a few more engineers and actually entered into dialogue with companies to find out what they are really doing and not just listen to all the flowery language when in reality most of them aren’t doing anything.”

Originally posted at FEE.org

How to prepare for the coming economic meltdown

Predicting economic recession is like predicting earthquakes. It’s impossible to predict when the next Big One will hit. However, unless the fundamentals of local geology have changed, we should expect the past to follow the same pattern as the future. And the last time I checked, Southern California hasn’t turned into an island, and the Fed is still wreaking havoc with interest rates. The smart thing to do is to earthquake-proof your house — and your finances while you can.

Are you ready the next recession to wipe out half of your net worth? Can you survive a decimated stock market, the loss of your job, and sky-high interest rates?

But wait, you say. Things are going great. The markets are up 249% since 2009, unemployment is low, and Bitcoin just hit $4000. Why the gloom?

Predicting economic recessions is like predicting earthquakes. It’s impossible to predict when the next Big One will hit. However, unless the fundamentals of local geology have changed, we should expect the past to follow the same pattern as the future. And the last time I checked, Southern California hasn’t turned into an island, and the Fed is still wreaking havoc with interest rates. The smart thing to do is to earthquake-proof your house — and your finances while you can.

The recession is overdue

Historically, bull markets have lasted an average of 30 months. We’re now at 100+. During the average recession, the market falls 35%, but given the duration of the current run-up, and the malinvestment caused by the lowest interest rates in history, 50% or more is not unlikely.

Read Mr Money Mustache for more on this.

The worst that could happen

Here are things that could happen when the Big One hits:

Your stocks will lose half their value
You will lose your job (or customers, if you run a business)
Loans will become prohibitively expensive

While all these things probably won’t happen to you, everyone should perform a stress-test. If you were to lose your job or business for an extended time, would your family be OK? What’s your contingency plan?

If your business model or job depends on the availability of easy money, you will need to scramble to find a new career. Mortgages, student loans, and auto loans are in an unprecedented 12-trillion plus bubble. I would not want to go into these fields right now.

How to prepare

This post by Richard Reis contains pretty much everything you need to know

Don’t hold an all-stock portfolio. When your portfolio is down 50%, you need to think about buying, not selling. That’s hard to do when you need the cash ASAP. Bonds are the most cost-effective way to protect yourself. In a recession, keep your stocks, and sell bonds first. If you have minimal liabilities and a secure job, this percentage can be quite low.
Save money while you can. Now is the time to build up your savings. Use your salary, bonuses, etc to grow your portfolio. Saving may be much harder when the crisis hits.
Diversify into non-market assets. Hold some of your net worth in assets which have minimal correlation with markets – gold, property, Bitcoin, etc.
Build an emergency fund. My emergency fund is held in corporate and government bonds earning about 4.4%. With my brokerage debit card, I can sell them and get cash in my hands within a business day. Because I have no debts of any kind and few financial obligations, it’s only enough to pay for a few months food and rent.

Bitcoin won’t save you

Some people have analyzed the lack of correlation between the traditional and cryptocurrency markets and concluded that Bitcoin can hedge you from an economic meltdown. I don’t agree with this. There is no reason to think that short-term market fluctuations should be related to the Bitcoin price, but long term, I expect a strong correlation between traditional and crypto markets. One of the biggest drivers of the Bitcoin price are low worldwide interest rates, leading individual investors to bet on Bitcoin. This works as long as people have money to spare. During a recession, people will be scrambling to get money to keep their businesses, homes, and cars afloat. Because crypto markets are still a tiny share of the total economy, they will be quickly drained of most of their value. Only a minority of the value of Bitcoin is regularly traded, so it would not take much to crash the price to a fraction of its value

What should I do in a recession?

Buy everything! The best time to buy anything – stocks, houses, employees to grow your company, etc, is when prices are depressed. If you have the cash, the depths of a recession are the best time to buy it.
Don’t buy anything! Waiting for a recession to start saving money is a terrible idea, but that describes you, you should minimize your spending while you still have an income to build an emergency fund.
Maximize your savings rate. I lost over 60% of my portfolio in 2008-2009 recession, but by aggressively investing much of the salary in 2009, I made it all back and set myself up for a lifetime of financial security.
Don’t panic! While everyone else was selling in 2008-2009, I started scrounging up money to invest. I started buying in January 2009 – and saw my portfolio go down another 15%. But I held on, and made a 58% return that year.

Feminists ought to welcome the rise of the sex robots

Johanna Legatt writes: “There is little coincidence that these sophisticated sex robots have emerged at a time when women’s rights are under threat across the globe, when there is a president in the White House who has bragged about sexually assaulting women”

1: Is it really true that “women’s rights are under threat across the globe?” One can reasonably conclude that in the Islamic world, which has rolled back Western norms introduced during colonialism. Everywhere else, women have more rights (and face fewer sexual violence) than any other time in history.
In many Western countries, it is taboo to even suggest that women are biological and psychologically different from men.

2: “Sophisticated sex robots” are not a thing. The “sex robots” are just deluxe versions of blow-up dolls with a tape player inside. We can’t even get robots to walk upright properly. Virtually all of the statements in the article are marketing hype. The ability to hold a realistic conversation is several dozens to several hundred years away.

3: It is sexist and Victorian of the author to suggest that sexual desire belongs exclusively to men. The implication that men have uncontrollable sexual desires to rape women (apparently triggered by sex dolls), whereas women are sex-less beings is an outdated and sexist relic.

4: If “sophisticated sex robots” are ever a real thing, it would be a great boon for male-female relationships. For the first time in history, men (and women!) could honestly say that they are interested in love and companionship rather than sex when they seek out romantic partners.

5: “sophisticated sex robots” would be a great boon to feminism as well. For example, older men would have no reason to seek younger women solely for their physical attributes. The value of female attractiveness would be greatly depreciated when robots with perfect looks and obedience are easily available, and women would be forced to compete with men in the workplace based solely on their mental faculties.

6: Feminists in relationships should appreciate that the invention of a perfect “sex toy” will perfect the separation between sexual orientation and romantic relationships since one’s sexual needs will be able to be perfectly met regardless of the biological sex of one’s partners.

How to invest your money – from $25K to $5 million

Your first $25,000 should be invested in an all-market (VTI) or S&P 500 index fund (VOO) in your 401K or IRA.

Your first $500,000 should be invested in a broad market, low-cost, diversified portfolio of large/small cap and some international index funds.

After you reach $500k, you need to invest the majority of your portfolio into individual stocks.
At this scale, tax efficiency becomes increasingly important, and you need an actively managed portfolio which optimizes the tax allocation of investments (growth stocks into taxable, REITs & bonds into 401K, etc), minimizes trading frequency, and practices tax loss harvesting (sell losses first to minimize capital gains tax). You can move your funds to a robo-trader and consider getting a dedicated advisor.

When your portfolio nears $1.5 million, avoid the tendency towards an overly risk-averse portfolio due to substantial swings in net worth caused by market volatility. Develop additional income streams from revenue-generating investments such as rental real estate, small businesses, etc.

Around $5 million, personally managing income streams may be an inefficient use of your time. Consider diversifying into hedge funds that offer positive absolute returns and research private equity opportunities which are promising and interesting to you. If you are older and your net worth exceeds $5.5 million, consider forming a trust fund to safely pass your fortune to your family.

Trading cryptocurrencies taught me where prices come from

Very few of us have the opportunity to experience the heart of what makes our civilization work. Crypto-asset markets are one of the few places where you can participate in a real asset exchange without spending a decade getting training and certifications. If you want to try your hand at playing Wall Street trader for a day, this is the place to be.

If factories are the engines running the world’s economies, then the financial markets are its brain. Unless something goes wrong, we are blissfully unaware that our modern, comfortable and decadent lives are made possible by the great flows of the capital markets on Wall Street.

Without them, companies like Apple and Toyota would not be able to raise funds to produce iPhones or Priuses. Without the price stabilizing service of the futures markets, farmers would be gambling their farms on the price of corn or pork when they go to the market. In countries without a public stock market, employees have no way to invest in their future and their country’s economic growth other than unreliable government programs, savings accounts that lose value due to inflation, or fly-by-night ponzi schemes.

Prices are Not Given

Yet despite the crucial service offered by markets, very few of us have any direct experience of how they work. Every now and then, we are asked to semi-randomly pick a mutual fund from a list offered by our 401K or financial advisor. Some of us throw a few bucks at a hot stock tip (only to panic and sell and the first sign of trouble) or get a .01% CD at our banker’s suggestion.

We are not only ignorant of financial markets – we have very little experience as active participants in any markets. Most Americans live their lives as passive consumers – accepting the prices they see in grocery stores, gas stations, or online marketplaces. We are so inexperienced with haggling that we either pay exorbitant amounts for a Realtor to do it for us, or make an attempt of it every decade or so at a car dealership, and come away hating the experience.

I shared this state of blissful ignorance until I moved to China and suddenly faced the need to haggle for most of my transactions. Goods such as clothing, fruit, meat, electronics, apartments for rent, and Western imports are either much cheaper or only available from small vendors who either don’t post any price, or only use it as a starting point for negotiation.

Haggling

I quickly learned that all prices are subjective estimates of what the seller expects the market will bear. Many people think that haggling is a game of psychological manipulation, and it certainly is that, but more importantly, it reflects the disinformation between buyer and seller. The seller knows his cost, and more importantly, the going market rate, but the buyer usually does not. Haggling is, therefore, a way of indirectly surveying the price the seller thinks the market will bear. Sometimes the price depends on the cost of a good to the seller, but it just as likely may not. A fashion retailer will sell out of fashion clothing far below cost, and a hot, imported gadget may sell for several times what it cost the seller to acquire.

My experience in real-world markets was a big help when I was asked to design and code a Bitcoin exchange in 2013. I created an exchange meant for professional traders by looking over traders shoulders to learn how the billion-dollar foreign currency markets work. I thought I had developed pretty good understanding of how markets worked, but I have never traded on a real-live exchange myself.

Like millions of other people, I only dabbled in Bitcoin myself, investing little real money in it. However, last week, a friend told me about an interesting opportunity: I could get free alt-coins (competing alternative crypto assets to Bitcoin) by using my existing Bitcoins to claim them.

Currency Competition

To make a long story short, after I claimed the alt-coins (with awesome names like Stellar Lumens, Byteball, and Bitcoin Cash), I decided to sell them right away for more Bitcoin. Selling Bitcoin is relatively easy: you just log on to Coinbase.com or Uphold.com and link your bank account. Selling Byteballs requires an account on a much smaller market which lists dozens of smaller currencies and is mostly frequented by serious traders.

So there I was, looking at a trading screen like this:

What’s happening here is pretty simple: people who want to sell Lumens are posting offers to sell a fixed quantity for a set price (Asks). People who want to buy Lumens are posting offers to buy them for another price (Bids). When the bid price is greater than or equal to the asking price, the exchange automatically executes the trade.

Films such as Trading Places, Wall Street, Rogue Trader, or The Pit depict what floor trading on a securities exchange looks like. Traders huddle around a podium and shout or signal offers to buy and sell. Few securities are still traded on a physical trading floor, but all exchanges work the same way.

So do crypto-asset exchanges! While some exchanges allow you to buy and sell for the “market price” (whatever price the market will bear), the smaller, less popular “alt-coins” have very little liquidity (active orders), which means that your order may execute for a very different price than you expected. For currencies like Lumens and Byteballs, it is, therefore, necessary to place orders using a “limit price” — a fixed maximum or minimum.

It works like this: if you want to buy or sell a crypto-asset, you first need to read the market liquidity: look at the order book to gauge or depth of the market in order to know what price you can get away with. If you have a big order, you might break it into several smaller ones to disguise your sale, or you might start selling when you want to buy in order to push the price down before making your break.

All prices (wages and interest too) are ultimately determined through a similar process. Yet very few of us have the opportunity to experience the heart of what makes our civilization work. Crypto-asset markets are one of the few places where you can participate in a real market without spending a decade getting training and certifications. If you want to try your hand at playing stock trader for a day, get an account with a crypto exchange while the field is still open to amateurs.

Originally posted on FEE.org

Why I’m betting on the future of Bitcoin

Five years of living in China spoiled me in terms of financial transactions. Most people don’t use debit or credit: they either use cash or more commonly, send money electronically via mobile apps. Mobile wallet apps are often used for large payments, and your landlord or utility company is just as likely to accept them as the friend you’re splitting lunch with. You can login to your bank’s website or ATM and send someone a million dollars as easily as a few bucks.

Then I moved back to the U.S.

I owe several thousand dollars to a friend. At first, I tried to find a way to send the money electronically through my bank. You need a business bank account to send via ACH transfer. I could do a wire transfer, but my bank charges the sender $30 and the recipient $15, and requires a lot of information about the recipient’s bank account. I tried this thing called “Zelle” — a new payment network that most major banks have introduced. Much as we tried, we could not get a $5 test transaction to reach my friend. Zelle also has a $2000 daily limit. I looked into Venmo – the daily limits are too low. PayPal charges 2.9% of each transaction.

Dejectedly, I wrote a check. A check is a piece of paper dating back to the ancient Roman empire on which you — get this — just write down the amount to be transferred to someone else’s bank account. In theory, only the recipient of the check can cash it, but there are exceptions, and not all financial institutions are strict about this.

I thought that was the end of the story until my friend informed me that he had not received my check. Actually, before that, my letter bounced back to me because the stamp somehow fell or was detached. Apparently, I did not apply enough of my saliva to last to its destination. I occasionally have my emails bounced, but at least I don’t need to worry about expending sufficient bodily fluids for my messages to reach their independent recipient.

Anyway, we now have a real mess. A check lost in the mail means one of four things:

1: The United State Post Office lost the letter.
2: The letter was delivered, but someone had taken it from the mailbox (my friend was on vacation at the time it was delivered)
3: The sender lied about sending the check.
4: The recipient lied about receiving the check.

Now, I’d like to think that my friend is trustworthy, but how well do I really know him? And how well does he know me? And what about the teenager that he asked to watch his house while he was away? A single failure in our payment system has thrown our whole relationship into doubt. And what about the USPS? I just learned that you’re supposed to wrap checks in a sheet of paper so USPS workers don’t steal your money. Since when do I need to worry about the US Government stealing my money? (Don’t answer that.)

So here is what I did next: first I drove to my bank to put a stop payment on the check ($30 fee). Then I drove to a UPS store and send another check via certified mail (another $10). After hours of lost productivity and $40 in fees, I need to wait another week to see if we can put this behind us. That’s not the end of the story. Banks are required to report all transactions over $10,000 to the U.S. government, and if the FinCEN or the IRS finds my transaction record suspicious, I may be investigated. That’s the real reason why financial transactions are outdated, expensive, and buggy — a massive amount of government regulation deters innovation in the Western financial system. While politicians claim to do this in the name of safety, it’s really all about preserving tax revenue. Countries like Hong Kong, Luxembourg, and Singapore with the fewest financial regulations also have simple tax systems with low rates. Politicians want their cut, and they have no problem forcing us to use an expensive and unreliable financial system to get it.

What if we used Bitcoin instead? My friend could send me a payment request with his address. I open it and click “Send” and we’re done. I can be absolutely certain that the transaction was successfully sent to the intended recipient, and the recipient can be certain that the funds are irreversibly his. It costs the same (under a dollar) and works equally well for $5, $50, or $5 billion dollars. If done properly, the transaction can be completely anonymous. Can you imagine if the entire finance sector worked like this? Many people are working to make this happen.

Four secrets for getting the most out of your company’s 401(k)

Here’s how to get the most out of your company’s 401(k):

1 Set your savings rate high to max out your contribution early in the year

You can invest up to $18K per year into your 401(k) (plus $6,000 if you’re 50+). Regardless of how much you plan to contribute, you don’t have to split your contributions evenly throughout the year. If you set the savings rate high, you can invest the entire amount you plan to invest in your 401(k) early in the year, then save up for other goals for the rest of the year.

I set the portion of my salary that goes into my 401(k) between 50% and 100%, depending on how much I have in my checking account. Why do this?

401(k) contributions are taken before income tax deductions (but after social security and medicare). If you allocate 100% of your income to your 401(k), you’ll see substantially more of your income go into your investments. This allows you to keep your money in the market for a longer time. (Note: verify that you will still get 100% of your company match if you do this.)

In my case, I qualified for my employer’s 401(k) late in 2016, and was just able to max it out by the end of 2016, and then maxed it out again in early 2017. $18,000*2 = $36K. The US market is up about 11.6% this year, earning me around four thousand dollars just for investing early. I didn’t invest a penny more – I just invested earlier in the year. Not every year will be so good, but overall, you’ll see a higher return by setting a higher savings rate to get your money in the market at the start of each year.

You might find it hard to live off a lower income for part of the year, but most people spent less after the end of the holiday season, and you may have a Christmas bonus to kick off the savings.

2 Choose low-priced index funds

The list of funds available for your 401(k) can be both imposing and disappointing. If you have experience choosing your own investments, it is very likely that your preferred funds are not on the list. Chances are that most of the options are overpriced – their expense ratio is higher than what you would pay in a typical investment account.

My strategy for choosing what to invest in is simple: I look for the lowest cost index fund that matches my desired portfolio. For example, my 401(k) has a “Nationwide S&P 500 Index A Large Cap” fund with an expense ratio of .6%. The equivalent ETF from Vanguard charges only 0.04%. So my 401(k)’s index fund has higher costs, but still much lower than 1.78% for some of the mutual funds my 401(k) offers. Don’t just choose funds that happened to have the highest return this year. They probably got lucky, and if they are mutual funds, the higher expenses will eventually probably lead them to underperform index funds.

3 Build a diversified portfolio and schedule rebalancing

Here is current 401(k) portfolio:

40% “S&P 500 Index A”
40% “Small Cap Index A”
20% “International Index A”

I built this in 30 seconds simply by searching for the word “index” in the list and verifying that these are the funds with the lowest cost on the list. This is not a very scientific ratio, but it balances long-term performance with the risk from different market categories. Whatever your risk tolerance, I suggest choosing several low-cost index funds that are different enough to offer diversification. My 401(k) also allowed me to set up automated rebalancing every quarter to ensure that my portfolio sticks to this ratio.

4 Rollover your 401(k) into an IRA when you leave your job

Normally, you can rollover your 401(k) into an IRA when you leave your job. I was able to roll over my 403(b) (like a 401(k), but for nonprofits) last year when my existing employer switched to a new provider. If you have a chance to rollover your company 401(k) to your preferred broker (see my post on choosing one), you should absolutely do so because:

(1) the IRA account providers out there (I suggest a robo-trader — I use Personal Capital) are almost certainly better than whatever your company uses – cheaper, with more investing options, and superior customer service
(2) you don’t want to leave a trail of isolated retirement accounts from each job over the course of your career, especially if you want to build a tax-optimized portfolio using a robo-trader that automatically allocates securities in a tax-efficient manner.

Caution: There are three reasons why you may not want to roll over your 401(k) if you’re toward the end of your career and have been with a company for a while: (1) some states (details here) protect 401(k) investments from creditors more than IRA’s (2) 401(k) allow current employees to delay required minimum withdrawals, and (3) 401(k) allow you to take penalty-free (but not tax-free) withdrawals after age 55 under certain conditions – but not IRAs.

Here are the 10 cards I keep in my wallet

As promised, here are all the cards I keep in my wallet*, with a rationale of why I acquired each card. Jump below the image to read why I got each card:

I have two criteria for credit cards:

No annual fees: I don’t spend enough to warrant paying an annual fee for any card.
Cash back only: I don’t mess with complex point systems which only encourage spending. I just want some money back on my bill.

American Express Blue Cash

My favorite card. Why?

3% back at supermarkets
2% back at department stores and gas stations, 1% everything else
Great customer service. I once unintentionally purchased a $40 car wash at a broken gas station terminal. I had no way to prove that I didn’t want or use it, but Amex figured it out and got my money back.
Very high credit limits. I requested a 3X increase of my credit limit shortly after getting this card. After Amex approved it, it was easy for me to request a high credit limit on my other credit cards.
Random bonuses. See below: I got $200 for signing up, $300 for referring 3 friends, and $100 for paying for UpWork with it (which I was already doing). If you sign up using this link, you’ll get a $100 sign up bonus. (Disclaimer: I get a bonus from Amex if you sign up. Yay!)

Amazon.com Store Card

The Amazon.com Store card offers 5% back on all Amazon.com purchases from Prime members. I don’t use this card anymore because I got:

Amazon Prime Rewards Visa Signature Card

This is a great card for Amazon Prime Customers and has replaced my Store Card for Amazon.com purchases:

5% back on all Amazon.com purchases. You can use your cash back to pay at Amazon.com checkouts.
No foreign transaction fees. This is very rare for a card without annual fees.

Discover it Card

I mostly keep this card around because I’ve had it since 2004. However, it has a few nice benefits:

5% cash back in rotating categories (currently restaurants)
Discover doubles your cash bank in your first year. (That’s 10% of your money back!)
No foreign transaction fees (this saved a fortune while I lived in Asia)

Costco Anywhere Visa Card by Citi

Why do I like this card:

4% back at any gas station
3% back at restaurants
2% back at Costco. With the Executive card, that’s 4% back on all purchases.

Chase Debit

I use this at ATMs about 3x per year.

E*Trade Debit Card

This is a secret card that E*Trade does not advertise. You can link a debit card to your brokerage account if you snail mail them a letter asking for it (there is no other way to request it). This card allows me to keep only what I need to pay the bills in my checking account. If I need cash in a hurry, I can sell some stocks and immediately cash them out from any ATM.

Chase Freedom: Cash Back Credit Card

Chase Freedom offers 5% back in rotating categories. It’s too much of a hassle for me to track the categories to actually use it, but it’s easy to get approved for this card, so it’s good for beginners.

Chase Ink Business Cash

This card is for my personal business. I like it because I get 5% back for office expenses and Chase gave me $300 just for signing up. Using a business card makes it easy to separate my personal and business expenses.

The American Express Green Business Card

This corporate card is for my day job.

Bank of China Debit Card

My primary card during my five years in China. I left my account open in case SHTF and I have to bug out to Asia. Also, Bitcoin.

Buckhead Fight Club

Physical fitness is important too 🙂 Come spar with me Tuesday, Thursday, or Saturday!

* About 7 of these are actually in my wallet most of the time.

The sapient mind is a parasite

The conscious, rational mind is a parasite which has hijacked the homo sapiens species for its own purposes.

For billions of years, life on earth was organized by genes directing primitive bio mechanical systems. Recently, the genes began building neural networks with built-in instructions, and even the capability to pass learned behaviors between generations. But the genes screwed up royally when they enabled the replicators doing their bidding to override their programming and develop a culture of their own.

You see, when homo sapiens invented culture, they gained the ability to overrule their genetic programming and do whatever their rational facilities wanted – to an extent. Culture evolves far faster than genes and enabled humans to totally transform their way of life, their environment, and nearly their entire planet. Culture increasingly made evolutionary development irrelevant, as humans increasingly directed both their own and other species sexual selection according to volitional rather than instinctual principles. Although humans are still biologically quite similar to their primate cousins, their newfound dependence on a tool-using culture has led them to evolve such that they cannot survive without tools in nearly all of the environments that they currently dwell in.

By no means is the victory complete. While humans do use their rational facilities to cooperatively provide for their sustenance and raise their offspring, the automatic, and instinctual processes of their brains often sabotage their efforts and cause them to lose their focus on goals, kill each other, or frustrate attempts to mate and reproduce. However, with the passage of time, the domination of the volitional layer is becoming ever more complete. Even within my own brief lifetime, most humans worldwide have visibly increased their capacity for manipulating abstract concepts to cope with the complexity of life in an information economy.

While I’ve called the mind a parasite, don’t mistake that identification for a pejorative. My sympathies — and self-identification lie firmly with my volitional consciousness, not with the animal body that it operates. We may soon face the option of abandoning our biological firmware and operating our minds on a superior computational platform, and I would welcome the possibility. We have already begun the process of offloading computation to our computers whenever possible. It may not be long until humans regard our biological basis as an inferior and unnecessary vestige of our origins.

How and why I hire freelancers via UpWork

The other day I mentioned on LinkedIn that I was looking for a freelancer web developer. A USA-based agency messaged me to express interest. Their rate — $150/hour. This a common rate for an experienced US-based web developer. The project I need help with has a budget of about $1000 per month, so this rate would give me under six hours of work, once rounding and communications overhead (or project manager) is factored in. I ended up going to UpWork.com and hiring two developers: one from Ukraine for $20/hour, and one from India for $10 per hour. The Indian developer will do close to 100 hours of work for the same cost. So that’s the basic case for sourcing your own freelancers. The details are considerably more complicated: sometimes a $150/hour developer is a better value than a $10/hour one: a good programmer can be far more productive than an average one, and a bad one will just waste your time and money. The trouble is that if you don’t know what you’re doing, you may end up paying high-end prices for shoddy or useless work. Here is how I approach hiring freelancers:

Good people are hard to find

Whether you’re hiring app developers, artists, video editors, or a project manager, there are usually huge differences between the productivity and quality of freelancers. The average quality of the people who will apply or be recommended for your freelance job posts will be quite low. Most highly-skilled engineers are not interested in freelancing or busy with existing projects, while the bad apples bounce from one project to another.

UpWork makes an effort to recommend the most qualified people for the job, but the candidates often engage in deceptive tactics boost their ratings. Freelancers will steal the information from good profiles, lie about their skills and experience, promise to take on projects they don’t have skills for, or hold your work hostage in exchange for good ratings (yes, this has happened to me).

If you add more rigorous qualifications or required experience to your post, they will use them against you: the frauds will promise to be experts, but honest freelancers (people are rarely a perfect fit) will move on. Many will try to circumvent UpWork: they will email and call you, your boss, your coworkers, and anyone else associated with you on your LinkedIn profile.

It’s possible to screen out the worst applicants (see below), but the only way to identify the 1% who are affordable and qualified is to test them.

How I do freelancer screening

A typical job, assuming a decent description will get about 100 applicants. If you get significantly less than that, your job needs a more detailed description of your project.

You can screen out 90% of candidates by filtering for a 90% job success rate, 1000+ hours worked, good reviews, a credible portfolio, and 10+ high test scores. However, this will usually raise the hourly rate.

1 Screening questions:

I typically do minimal profile screening simply because good profiles are easy to fake. Many individual profiles are secretly teams or agencies, and 1000+ hours on UpWork doesn’t mean anything when they put a brand new guy on your job. I also just don’t have time to screen 100+ applications for each job:

My screening process has three parts:

I ask simple questions which require job-specific experience to answer.

For a web designer: What’s your favorite CSS3 feature?

WordPress e-commerce developer: What version of WooCommerce have you worked with? (Candidates who are not paying attention usually give a WordPress version instead.)

Graphic artist: What navigation pattern would you use for this design?

2 Setup process: With developers, I ask them to follow a specific process which includes

(1) checkout out the code,

(2) messaging me on Slack for a test DB,

(3) sending me a screenshot of their configured dev environment

3 Trial task

(4) suggesting a trial task from the issue list.

90% of applicants will not complete this process correctly. Some tell me “I don’t work for free.” I respect this, and instead ask how they would solve a specific task.

For a complex software development job, 100 applicants followed by a 90% rejection rate still leaves 10 candidates. Each of these 10 receives a trial task. I try to simple, self-contained, well-described tasks with a $100–200 budget. Typically, about 5 candidates will complete the task, and 1 or 2 will deliver quality work. Sometimes none will, and I have to find more applicants. Getting through this process can be frustrating: you will be charged for work that isn’t delivered or must be discarded, will terminate nice guys who can’t deliver on time, and probably find that the best candidate(s) are not the favorites you bet on when you started.

Things are easier for non-developer positions. Artists and graphic designers are easier to screen, but tend to be more flaky with their time estimates. Being patient and understanding, yet severe and final with your judgment is essential in this process.

Establish a good onboarding process

Early in my freelancer management experience, I struggled with managing the cost of onboarding. Some agencies charge thousands of dollars to setup a dev environment and learn your systems. Since then, I’ve developed guides for new developers which communicate three things: expectations, system design/architecture, and development process (“definition of done”). This allows qualified engineers to complete setup without my help — and disqualifies those who struggle.

Here are three such guides I’ve created:

Use collaboration tools to coordinate distributed teams

It’s important to establish a mature development environment before you begin work. The development environment allows you to clearly communicate requirements and task assignments to freelancers, allows you to monitor the progress of code and functionality, and allows you to perform releases to end users in a deliberate manner.

These tools include (this is what I use):

Issue tracking tools for developers and stakeholders: JIRA or Bitbucket issues
Source code control: BitBucket or GitHub
Continuous integration: I use TeamCity or a PHP deploy script
Development environment: I use AWS-hosted servers
Collaboration tools: Slack for chat & Skype for team status calls
Documentation and specifications: Google Docs, JIRA Confluence

Establish working relationships before starting a big project

A good software team is a complex system: it requires a lot of momentum (aka money and time) to start up and keep going. If you’re planning to kick off a big project, it’s essential to get your team lined up first. Even after you complete a screening process and trial tasks, some turnover is to be expected. Various startup challenges will need to be overcome. You need to get momentum going with a small project before you begin one that is essential to your business.

Sometimes your business needs will require a pause in development, so you will have to invent work for your freelancers to keep the team together, lest they drift away, and you have to rebuild a new team all over again.

If this process sounds too risky, stressful, and complex for you, paying $150/hour+ for a reputable US-based developer or professional agency (with a 30% management overhead) is probably a better deal for you. Alternatively, you can skip the headache and hire me to do all of the above 🙂

Originally published at https://www.linkedin.com on June 8, 2017.