Site Meter

August 27, 2013

DINKs vs SITKOMs and Other Family Finance Disasters


When it comes to socking away money for retirement, practically nothing beats being a DINK. A married couple without any children, and both parents working, is often referred to by this acronym, representing the Double Income, No Kids. Sometimes the DINK acronym is followed with a lower case "y", as in "yet". No kids, yet, so now's the time to take that extra vacation or save money, because trust me, you'll need it.

Some couples blissfully stay in this stage for their duration - happy for both partners to be significant wage earners, and not adding on any expenses disguised as smiling children. But others don't, which often leads to the inevitable decision of how quickly either parent returns to the workforce, if at all. Some parents, usually the mother, take reduced career roles or part-time jobs, to augment the child raising, and others try to make do with the primary wage earner's income, knowing it will be a little bit tighter around the house, but by gum, generations previous have made it work, so why can't we?

This is the lesser known and obviously much less healthy option of being SICK, "Single Income, Couple Kids". With income decreased, approximately by half, and expenses up, the flexibility in finance is decimated. Junior needs new clothes, or to eat regularly, or to attend classes, or maybe he needs braces. And the second member of the couple still likes shopping.


Living in Silicon Valley as I do, there's plenty of great opportunities for hard working people to find incredible jobs with incomes often the envy of other parts of the country and world. Often, however, the expenses rise to match - especially when it comes to the base living expense of owning a home. Time and again, I've seen happy couples start to fret as they outsize their small apartment, and their family prices themselves out of the Bay Area, as they retreat to cheaper places, be it Texas, Utah, Oregon or Tennessee.

Still others try to ignore the oppressive costs of ownership and enter into the "sounds funny but isn't really funny" reality of what's known as a SITKOM. As it was explained to me by a coworker, that's where you have a Single Income, Two or Three Kids, with an Outrageous Mortgage. That's a sitcom with a laugh track, but it's at you. You can work yourself crazy and never see those kids, you can have an equity event that makes your living comfortable, or you can leave, essentially. Those are your options.

Zillow Prices in Sunnyvale. Lots of M's, Few K's.

Consider, for example, the current bubble that's happening in Bay Area housing. My wife and I bought our home in Sunnyvale, which is pretty mid-level on the Peninsula, priced a tad higher than Santa Clara and the East Bay, for example, but trailing the ritzy Palo Alto, Los Altos and San Carlos for housing prices. In 2010, seeing prices fall from their 2007 highs to about 90% of peak, we bought at what I saw as 90 cents on the dollar, getting ourselves a 4 bedroom home with room for ourselves and our soon to be three kids. In the ensuing three years, with an economic recovery, a nearby Facebook IPO, and continued growth for area jobs, our home is now priced greater than 30% ahead of where I bought it. I certainly couldn't afford to live where I live now if I were looking, if that made any sense.

Editor's Note: Trust me, I'm glad it's gone up. So don't get me wrong.

Taking the abstracts out, the median price for a 3 bedroom home with just over 1,500 square feet in the area is approximately $1 million. With interest rates around 3.75% to 4%, and property tax to match with about $12k a year, you can pretty easily see your expenditures, on the home alone, being upwards of $5,000 or more out of pocket every single month. And that's before you turn the lights on for electricity, get water going, ask for garbage pickup service, add TV or Internet and put a single spoonful of food into your growing kids' mouths. So if you're taking home $60k a year after taxes, you have to be making about $90k just to cover that cost, with no additional headroom. It takes a salary of significantly more, along with perks like stock options that have real value, to be able to keep above water each month.

A Typical Area Home's Meteoric Rise

Exciting math, right? That's part of why you're seeing stories about developers piling into bunkbeds at hacker lofts in  San Francisco, and others are saying it takes an equity event (or two) for an entrepreneur to even afford to stay here.

That hair-thinning worry and the corresponding rise in home value, as well as the knowledge that prices could eventually reverse themselves (as things that go up often come down), has me occasionally putting out ideas. For example, if our home sold for the price Zillow lists it, and most homes do, or even higher, I could pay off our mortgage in full, and with the resulting cash, I could buy a equivalent home elsewhere in the country and fully pay off four years of college for all three of my children without any issue. As a parent who wants to make sure my kids are taken care of, and one who wouldn't mind taking expenses down, it's a fun logic test, if nothing else.

Unfortunately, the buy low and sell high mentality one brings to the stock market, where you can trade a stock you bought earlier in the day or week, doesn't really apply to physical goods and livelihoods like a home. You can't just opt out of the housing bubble for a month, wait for prices to cool as you park in a hotel, and then buy back your home at 20% off. If you could time that, you'd be a magician.

So that drives SICKies like me to think of even more aggressive ways to make change. Can the spouse get a job that more than pays for inevitable daycare and doesn't saddle us both with compounding damage to lost face to face time with the kids? Is playing the lottery or PowerBall when it hits record highs a solid investment? Can I augment my income by playing professional poker if I watch enough Hold 'Em on late night ESPN? Or should I just put everything I have on the next tech IPO and ride their coattails?

Don't get me wrong. I love Silicon Valley and there's really no other environment like it - where so many people obsessed with tech and changing the world through innovation reside in one place, and where so many of them refuse to take no for an answer. But as someone who was working here through the first dotcom boom and crash, and has seen recessions since, I hardly want to see the tide turn the other way and find those of us who have been taking the extra step to expand a family and keep a solid job going are on the wrong side of the ledger.

Prices are going up, and it could come to a point where you need to command two incredibly high paying jobs and an equity event even to survive. It could be an odd phase of the inner city in reverse, with the less privileged fleeing to the outskirts and commuting in to work with those who've already hit it big. That'd be SICK.

August 19, 2013

The Twitter Google Netflix iPad Dotcom YouTube Facebook Era

As technology has weaved its way into practically every aspect of our lives, it has become something of a challenge for historians, journalists and others to try and encapsulate this new era of near-pervasive Internet, dramatically reduced barriers to publishing, and obsessive gadget accumulation.

I grew up in a world where a whole generation of people could be summarized easily, defined by population bumps like the Baby Boomers, a shared experience in battle, as Tom Brokaw frequently cites in The Greatest Generation, or quite simply, by the assigned letter given to those born in a ten to fifteen year period, like Generations X and Y. Now, newsmakers and analysts alike are trying to explain just what this new era should be called. Is there one device or one company or one shared experience that defines us?

With some quick research, it's clear there are many players vying for the elite status of owning our tech-savvy era. I tapped into Google (disclosure: I work there) for a few examples. Let them play out and see if you favor one over another or have a better option. All screenshots current as of Friday, August 16th, 2013.


The iPod Era: 69,100 Google results
Represents: The iPod at peak was more than half of Apple's revenue, outpacing Mac and all software sales. The iPod was a cultural phenomenon representing fashionable portability of digital media and personalization of music listening.
Is it over? Yes. According to AppleInsider, the iPod Era ended in 2010.


The iPad Era: 132,000 Google results
Represents: The first successful tablet computer disrupted the old way of doing many things, and picked up where Apple's iPod and iPhone had left off.
Is it over? Probably not. The iPad Era launched in 2010. Debate from AdAge questions if it's done.


The Google Era: 259,000 Google results
Represents: Near-instant retrieval of information, and a reduced need to memorize. Ability to scale.
Is it over? Nope, unless you think Business Insider is onto something.


The Twitter Era: 401,100 Google results
Represents: Near-instant ability to communicate and a real-time medium.
Is it over? No.


The Facebook Era: 1,040,000 Google results
Hey look! A book: The Facebook Era
Represents: Increased connections with social ties, and ease of discovering personal information.


The myspace Era: 59,500 Google results
Represents: Like Facebook, only earlier, more personal information online, simple creative sharing.
Is it over? Yes. Absolutely. This dude missed the whole thing.


The Blogging Era: 150,000 Google results
Represents: Ability for anyone to publish, in long form, at no cost.
Is it over? Getting there. In 2004, this guy claimed 2014 would finish it up.


The Android Era: 297,000 Google results
Represents: The entry and rapid adoption of Android as a smartphone OS. 
Is it over? No.


The YouTube Era: 210,000 Google results
Represents: The ability of anyone to publish video and have it be seen around the world. Also represents casual video consumption relative to professional 
Is it over? No.


The Dotcom Era: 1,490,000 Google results
Represents: Referred to as much as a bubble as an era these days, the first rush online by traditional services and businesses. Many did exceptionally well. Many more disappeared. 
Is it over? Yes. At least the first round.


The Microsoft Era: 423,000 Google results
Represents: The last few decades of a world where personal computing was dominated by Windows PCs and Microsoft software.
Is it over? Many people think so. In fact, a "Post-Microsoft Era" has been discussed.


The Steve Jobs Era: 67,900 Google results
Represents: Steve's personal impact on the world of technology, design, marketing and one of the most successful companies in Valley and tech history.
Is it over? Unfortunately, yes, as Steve passed away, but his impact lives on.



The Netflix Era: 41,600 Google results
Represents: On demand instant access to a wide variety of films and TV shows, and the business impact for those in more traditional markets. A disruption of Hollywood.
Is it over? No.

So what era are we in? If you went by total numbers, the Dotcom Era had the most Google results, but that's historical by nature. The Facebook Era is in second place, with Google properties, including YouTube and Android having nearly as many when combined. The iPad era is still strong, with Twitter putting on a good rising show, and Microsoft being high in the rankings, given its market penetration.

Other good options I either didn't run or tested but cut so this post isn't a mile long... "The Yahoo! Era", "The Amazon Era", "The Google Glass Era", and more... it's all fun. Can you think of others? What's the winner in your view?  

August 15, 2013

Real Valley Stories: Emailing the Company About Future Layoffs

Editor's Note: Part 9 in an irregular series of stories from my 15 years in Silicon Valley. Part 8 talked about how I determined I was undervalued at work, and started a process to catch up. This time, another real example from the trenches, about how I once prematurely notified the entire company layoffs were coming - and the effort to undo that mistake.

After the dot-com crash and subsequent recession in the early part of the last decade, many venture-backed companies, including my own, were fighting to stay relevant and alive in a suddenly more challenging environment, where customers were exceptionally risk-averse, going with what the vendors they knew and not the ones they didn't yet know. With this challenging landscape as a backdrop, one of the storylines that emerged was not so much one of thriving, but simply survival - and if there was an opportunity to get positive press simply for sticking it out, even if we weren't hitting on all cylinders, it was one we'd go for.

At that time, in early 2002, one of the roles I held for the company in marketing was internal communications. As we gained customer wins, case studies, press releases and press mentions, it was typical for me to take the story and send it to one of our many Exchange distribution lists to the company so we could  all share in the good news. I'd add a one-paragraph intro, send it off and watch the backslapping and replies come in. Sometimes, I didn't even have to do a lot of the work, but I always got some of the credit.

One morning, my news alerts on the company turned up an interview our CEO had done with the Wall Street Journal. I'd known the story was coming, and as I read it, the CEO talked about how we had scaled back our goals from our original unrealistic expectations, had tightened our budgets and had even been forced to do some staff reductions. That last part seemed odd to me, as we hadn't done any reduction in force, but seemed to make sense, as two of our senior vice presidents, one in product marketing and one in sales, had left the previous month.

Wait... You're Saying I've Been Sacked?

As with all our news bites, I copied the text in full, excerpted the relevant quote and emailed it to the company, positioning the news as our showing strength in a tough economy. This bit of work done, I then went to the next task at hand, where my desk voicemail was lit, showing I had a message. I listened, with some horror, as it was a message from my boss, having been left earlier in the day, saying specifically, "Louis, don't send the Wall Street Journal story to the company," which I had, of course, just done.

I stopped what I was doing, and sheepishly made my way to his office, not only ready for a verbal dressdown, but also curious why this piece was so particularly volatile. I knocked on his door and told him what had happened.

"Goddamnit, Louis," he snapped. "You have to recall that message, immediately..." along with a few other choice words, saying that the very first thing I should be doing every day is checking my voicemail and I should have known better.

Attempting to recall the message from the few-hundred person company wasn't perfect, as you can imagine. Those who had already seen the story hit their Outlook inboxes wondered why I'd recall a story from a paper as impactful as the Journal, which only further raised suspicion about what the CEO had said, or I had relayed. My own inbox filled with each individual recall success or failure, and needless to say, I was in my boss' doghouse for the remainder of the day, if not a bit longer.

Two days later, the layoffs preannounced in the Journal came true. That Friday, Silicon Valley's traditional day for eliminating positions, welcomed us with moving boxes and practically every conference room booked for a series of brief one on ones. There was frustration for some, tears for others, and relief for those who probably wanted out. More than one person came by my desk, knowing then what we had figured out earlier in the week, that the layoffs made the Wall Street Journal before they had even taken place, and the CEO had so matter of factly mentioned it, in a national publication.

For months afterward, as you can imagine, the very first thing I did when I got to the office each day, before email or grabbing a Diet Coke even, was checking my voice mails. I became even more careful as I shared news and announcements with our internal mail lists, to avoid anything that could possibly be interpreted as bad news, or an executive saying something he shouldn't. And yes, we had future rounds of layoffs, as the company cut itself practically in half before growing again to surpass its original peak, eventually filing for IPO, twice, and getting acquired.

Telling the Wall Street Journal about planned layoffs before the people impacted were told was bad. Sending news about that layoff to the very people who were going to lose their jobs was bad too. I never made that mistake again.

August 13, 2013

Connection Equals Endorsement: Reboot LinkedIn for Fun & Profit

Your (500+) connections badge in LinkedIn never got you a great job. More likely, it was one specific person in your network who might have referred you into your new role, and the endorsement of a few others who helped cement your claimed skillset and validated your tenure - in addition to your storied resume and skill at interviewing.

But somehow, as we saw in the world of Facebook, Twitter and other social networks, the race to claim more connections, with the thought of higher numbers being better, took hold of many of us, as we accepted loose ties, be they connections from colleagues in other departments, partners, vendors, customers, or even non-work friends, as we saw our numbers pass the coveted 500+ maximum LinkedIn would display. After all, it could be thought, if one has 500+ connections, they must be an incredible networker and know everyone.


It's not that I only know 143 people. These are the best at what they do
and are the most relevant to me right now.

For those of us who don't regularly change jobs or titles, spending extensive time on LinkedIn is fairly rare. It's a "set it and forget it" model, keeping one's work history intact, and one's network stable. But as one stays in a role longer, and ties to old companies and roles become less relevant, it makes sense to periodically prune one's connections, with a mentality that "connection implies endorsement." Rather than connecting to all previous colleagues, but only supporting a few, why not use the LinkedIn network to be a showcase of the very best you know and can stand by if future opportunities arise for them, or for you?

A few weeks ago, I set out to tackle my long-ignored but often abused LinkedIn message box. I was faced with thousands of requests to connect from complete strangers, from freelancers and consultants to SEO specialists, with the occasional high quality individual thrown in for variety's sake. As I dutifully hit "Report as Spam" time and again, while watching the Oakland A's beat whatever team they were playing on TV, the big mess of invites and connections started to become more clear and a new pattern arose - turning my tired profile and network into something useful for me and others.

I Took LinkedIn Below 100 Before Rebuilding (via Twitter)

It wasn't just enough to deny the random people from getting into my non-open network. It was just as important to raise the bar on who was already on my list. The vendor I once used nine years ago, and actually liked, didn't make the cut. The sales rep in the industry I haven't been in for five years who has since worked for three different companies got the axe. The office manager who I gave all my CDs to when I ditched physical media and went all digital had to go. All nice people. All totally irrelevant now - and likely, insofar as LinkedIn is concerned, never to be relevant again.

Ten Years Of a Network Is a Pretty Good Chunk

It has been more than ten years since I first joined LinkedIn, having been invited in May of 2003, and snagging a four digit user number back when that mattered. Over that time, I've been promoted, laid off, started a new company, been referred to a new one and transferred roles. Each time, it made sense to revisit my business profile and give it a reboot. We could all show the world we know tons of people. I could scrape my Twitter followers, my Google+ connections, and race up the chart. But it wouldn't make sense any more. Take the time to give your LinkedIn a scrub and make the data useful. If we're not connected, and you think we should be, and I won't flag you as spam, go ahead and give it a try here: http://www.linkedin.com/in/louisgray

Standard Disclosure: Google is where I work. We have a social network called Google+. This post is not Google's idea and the words are mine. No bias, real or assumed, is intended.