I’ve been fascinated with Orcas since I saw the movie Orca in the 90’s, and over the years, that fascination has not subsided.

I recently rediscovered rails when I needed a holiday project and decided to build a management dashboard for the company I work for. With it being a project done in my free time, I could focus my time on learning the basics rather than trying to build a working project on a tight deadline.

This is how I did it.

Read more on: www.experts-exchange.com

Since Paul Watson has been in the news recently (again), I started thinking about this. I know this is a very emotionally charged topic and people from both sides will fight it out like you will not believe…

Now before I go on, let me just say that there is few things I hate more than whaling. One of those few things would be Paul Watson…

At least he’s doing something

Let me make my case before the flaming starts… In abstract terms, the most common argument you hear for him is that he is at least doing something and that’s more than anybody else can say. What a load of bovine manure. All he does is strain the foreign relations between Australia, New Zealand and Japan to such a degree that there is no chance of a political solution.

He claims that the only way to stop the whalers is to make it unprofitable for them. Now I ask you with tears in my navy blue eyes – How is he going to do that? How can Sea Shepherd patrol the whole arctic circle with 2 ships and prevent the whalers from killing enough whales to start significantly affecting their profits? As you can see, I don’t buy that.

But look at how the whalers attack them

Yeah, I saw what the news agencies were reporting:

- Sea shepherd retaliates with harmless butiric acid after whalers throw stun grenades at them.
- Whalers detain sea shepherd crew members after inviting them on board.
- Watson shot by whalers after skirmish with them.
- And the latest: Japanese whalers ram and sink $2.5 million Ady Gil

I happened to see the first series. The Japanese started throwing stun grenades after being attacked by Watsons crew. Also, butiric acid is not exactly harmless – There’s the foul smell, but there is also he fact that it happens to be an acid (Surprising isn’t it). So it’s an irritant, dangerous to eyes, etc…?

Then there’s the incident with the whalers capturing their crew members. They were most definitely not invited and the whole incident was engineered by Watson to get publicity and to strain relations between Australia and Japan.

The shooting incident also seemed a little too neat, so I’m guessing Watson was actually shot by one of his cronies in his inner circle (If he was shot at all), but as far as I know he hasn’t bragged about that yet, so we’ll say that possibly the Japanese went too far there.

I’ll get to the supposed ramming of his expensive speedboat in a moment…

He’s reckless and risks lives

This is one of my main problems with him. He gets volunteers that has no experience, then blackmails them into risking their lives in his crazy schemes. In the first season, the first time they try to launch a speedboat, there’s a big cockup and a couple of crew members get dumped in the frigid arctic water with an upside down speedboat.

with the incident where they boarded the whaler, two untrained people boarded the whaling ship from a speedboat moving at full speed on rough seas. That is a very good way to get yourself killed. One of the guys that “volunteered” did so because he managed to damage one of the blades on the helicopter during the fiasco where the boat wasn’t launched properly and was feeling guilty.

With this “ramming” incident, he knowingly risked the lives of six crewmembers because he knew it would get good publicity.

I also notice that he’s quick to prattle on about how he’s willing to die for his cause and he has no respect for anybody that isn’t, however, he’s never on the frontlines – Pretty convenient isn’t it…

Finally, let’s get to the ramming incident

Let’s not mince words. From the video released by the japanese you can clearly see the water at the back of the speedboat churning as they operate the throtlle. As the whaler gets close they see that it’s going to miss and gun the motors to make sure that it hits.  They clearly intended to be rammed. (Look at around the 17 second mark on this video)

According to Watson the video they released afterwards show clearly that the japanese shipped turned sharply to hit the speedboat. Because there is no reference point, the only thing you can actually tell is that the 2 were moving towards each other. Besides that, the japanese vessel is too big, it couldn’t ‘veer sharply’ if their lives depended on it. And finally, a ship usually leans into a turn, especially if it’s a big ship travelling at speed. From this video supplied by Sea Shepherd, you can clearly see the ship leaning away from the speedboat.

In my mind, all it means is that Watson did it on purpose because he knew it would be good publicity (And in fact, he’s already come out and said that it’s been good for donations).

I wonder what experience the pilot has. Essentially 6 people were betting their lives on his abiltiy to manuever a speedboat into a space in front of a speeding destroyer with an error margin of about half a meter (2 feet). I’m sorry, but I don’t trust anybody that much.

So, back to the title:

Whale wars or whale whores

The 11th episode of season 13 of Southpark parodies Watson and Sea Shepherd and is titled Whale Whores. The Wikipedia page gives a good overview of the plot and protrays Watson as somebody that is just interested in publicity, and hints at the hypocrisy of fighting against whaling but having no problem with slaughtering chickens and cows.  I don’t think you can really take anything away from the Southpark episode, but I only found this after the Ady Gil sunk, so I just found it interesting how polarised the opinion of Watson is.

It would seem that everybody either hates him or loves him. There is no gray area.

Posted via web from riaancornelius’s posterous

Now before I get lynched, let me try to explain. Democracy depends on having at least 2 political parties that could run the country properly. It also depends on the majority of people being educated enough to make the right decision.

Lets take the US for example. At the end of the day, I think that despite some peoples opinions, we can see that regardless of whether the democrats or the republicans are in charge, things seem to be going OK. In this case where there is only 2 parties and they are both fairly competent, the choice of your voters actually doesn’t matter, so whether they are educated or not is actually irrelevant. They actually vote on some fairly small issues. How do you get to this point though?

If we go back to Africa now, look at the vast majority of countries that went from some kind of dictatorship to democracy. Let’s take South Africa for example. The “dictators” were the apartheid government. When we finally became a democracy in 1994, The vast majority of black people that voted, voted for the ANC because they were the liberation party and they were the hope for the future. At this point, of course any sane black person (regardless of their education) would not have voted for a white party. I see no problem with that. Sometimes change is needed, and you have to throw caution to the wind and just try something different. I say this because I don’t think anybody could predict how the ANC would turn out.

However, 15 years later, we can see that the ANC is getting it wrong. The economy is not great, but I guess we can blame that on global situations. However, infrastructure is falling apart – Roads, Electricity, Water, Sanitation… And they are all falling apart because of incompetence, laziness or corruption.

The education system is destroyed.  People go through highschool without being able to read. Now there is talk of lowering university entrance requirements because not enough “previously disadvantaged” people are getting degrees and this is unfair. Of course, if this happens, people will get into university and fail to complete their degrees, at which point the quality of tertiary education will have to be lowered. And so on until we have perfect equality – Nobody will be educated.

I can go on about the problems.. Unemployment and poverty is probably as high as it was under apartheid, but at the same time, the government is basically paying people to have more children (Through grants and subsidies).

However, lets just accept that things have not gone well for the last 15 years. When I say this, I mean things have not gone well for anybody regardless of race. The only people who profits is the guys right at the top, and that’s all they care about.

You would think that maybe a rational society would stand their ground and say that it’s time for another change. However, because the ANC liberated the people from apartheid, there is blind loyalty. Of course, the fact that the majority of people are uneducated means that the ANC leadership can just come out and say that it’s all because of apartheid still. They’re still trying to solve the issues caused by apartheid. And any attack on them or any of their leaders (Even if convicted of corruption),  is a racist attack or an attempt to discredit black people by whites that can’t stand black leaders…

Essentially, I think that democracy can’t work unless you have a choice of competent leaders and a society that is competent to make the choice. In Africa, you also have the problem of tribal loyalties and the fact that african tradition is based on a tribal system with very strong tribal loyalties and essentially dictatorial structures. The ANC might be democratically elected, but now that they are in power, they are always right and has to be supported and defended no matter what.

In an African democracy, you don’t generally get a change of regime until the country fails spectacularly. Even in Zim, I suspect uncle Bob did actually win every election up to the last 2. And even the second last one I think he might have won without cheating. It was only in the last election that people finally realised what was happening. Before that, people actually believed him when he said they were starving because the evil colonial companies weren’t supplying food, etc.

I have no idea what the alternative would be, but based on history, Can democracy ever work in Africa?

Maybe it’s just because I’ve been looking at facebook more this year than I normally do, but the overwhelming theme for me has been the “Only 1 more week ” or “Only 3 days to go”, etc, messages that I keep seeing.

That seems a bit strange to me.

Seth Godin sums it up perfectly in his (absolutely brilliant) book “Tribes”. He says that “How was your day?” is the most important question you can be asked. If the answer isn’t “Great!” for most of the times you get asked this, you need to start looking at what’s going wrong.

Usually, what’s going wrong is that your job sucks (Or at the very least, you don’t enjoy it).

So, How was your day?

There’s several ways:

1. Cut expenses
2. Decrease rate of attrition
3. Charge more
4. Sell more

Cutting expenses

Cutting expenses is not really a solution. If you can cut expenses, you should do so in any case, but it shouldn’t really make more than a 20 – 30% difference. On our example, that means 2-3 licenses a month more, which translates into an increase of 16-28% per month without a fixed term, and 24-33% increase with fixed contracts.

But you can only really do this once, and then you have it done. It might slip and you can cut costs by 5-10% at a later stage, but nothing significant.

Decreasing your rate of attrition.

This is hugely important for longer term growth, and is especially important if you don’t have fixed term contracts. If you can decrease your attrition rate from 15% to 10%, after 18 months, you are earning 42% more, but the point of equilibrium is at 90 contracts after 27 months (58% more)

For fixed term contracts, if you can decrease attrition to 80%, you are only doing 5% better after 18 months, but you are growing your business twice as fast at that point.

Charging more for each license

This is very simple to understand, If you charge 10% more, your net income goes up by 10%. The main problem you face is that at some stage, if you charge more, you sell less. The challenge is finding the point where the combination of increased income but decreased sales are most profitable.

If you are selling 20% fewer contracts when you charge 30% more, you are still making more money than you would have, but if you increase your price by 40% and sell 50% less, you’re in trouble.

A good way to find out what you should be charging is to test. Line up 150 leads, and go see them. Try to sell to 50 at your normal price, 50 at 25% less and 50 at 25% more. Now you can get a good idea of what kind of closing ratios you have at each price point and which price would be most profitable for you.

Selling more

There are two ways to sell more. You either have to see more prospects, or you have to increase your closing ratio.

The first way to sell more is to improve closing ratios

If you normally sell to 3 out of every 10 people, you can sell to more people if you can find a way to sell to 5 out of every 10 people you see. This is a rather simple concept, but is not usually easy to accomplish. The main reason is the fact that the sales people are too close to it, and just can’t necessarily see a better way.

There would be a lot of ways you can improve your closing ratios:

1. Highlight the benefits better. Benefits, not features. We can send a reminder to everybody that owes you money is a feature. We can improve your debt collection by up to 63% is a benefit.

2. Make it risk free. 60 day money back guarantee. No payment until successfully implemented, etc.

3. Make it relevant to the prospect.  If you show a client a 3 hour demo and two hours of it is on how to improve their debt collection when they don’t sell on credit, you’ve lost them.

4. Keep it to the point. Don’t show them every single feature in a 3 hour demo when you can sell them on your software by showing them 1 key feature that is relevant to them.

5. Create urgency. “We’re running a 20% off promotion, but only for the next week. ”

The second way to sell more, is to just see more prospects.

The easiest way is to find another sales person that can sell your software with the same kind of closing ratios as your existing sales force. Another way would be to get your existing sales people to see more people. To do this, they will have to spend less time selling to leads than they do so that they can fit another 1 or 2 leads into their day.

This actually highlights a completely different problem. Where do you find leads? If you can’t find leads, your closing ratios doesn’t matter, your price doesn’t matter, your rate of attrition doesn’t matter and your costs doesn’t matter. You’ll be bankrupt before any of these things can become a problem.

What Crisis?

All of us just stick our heads in the sand and pretend that things aren’t that bad. Next year we’ll have the football world cup, and that’s magically going to fix everything. (Somebody suggested to me that our heads are actually somewhere in the region of our colons… This is also apt).

Personally, I think it’s time to wake up. So let’s look at a few different areas:

The judiciary

I always said that we lose all hope the moment the judiciary isn’t free any more. I don’t think we’re there yet, but when a judge accused of trying to influence the outcome of a trial is likely to become chief justice, I’d say there’s reason to be concerned.

Also consider the fact that the scorpions was disbanded supposedly because they had achieved their goal and was not needed anymore. Then a couple of months down the line they’re replaced by the hawks… Sounds a lot like getting rid of the guys that were uncovering too much corruption and replacing them. Maybe I’m just cynical.

Our chief of police has been under investigation for quite a while now. There are suspicions that he was involved in organised crime (Inside operation destroy lucifer). The most amazing part though is that he has been on ’special leave’ for 18 months, and his contract was actually renewed during this period!?. In other words, he can’t work because he’s probably a criminal, however, the government is still paying him.  He’s now been replaced by a politician (Bheki Cele named as new police chief) because in the words of our president he’s “distinguished himself in a number of areas, including finding solutions to taxi conflicts in the province … successful anti-crime campaigns as well as improving road safety on provincial roads and highways“. Unfortunately, this is all that immediately jumps to mind for me: Speeding minister wants racist whistleblower found. So excuse me if I don’t feel overly confident about yet another political appointment (Opposition: Cele appointment based on political links).

Public broadcaster

Nothing actually has to be said over this. The public broadcaster is not unbiased and is nothing but a government mouthpiece:

• Politics taint appointments to SABC board says former chair
• SABC pulls Zapiro doccie again
• COPE accuses sabc of sabotage
• SABC reprimanded over unbalanced report

Health care

Private health care is to expensive to be used by 95% of the population, and for private health care, this is what you can expect:

• Not what the doctor ordered
• Bone stuck out after amputation

Our natural heritage

Quite often, the natural beauty of South Africa is quoted as a reason to stay. But we’re destroying that. Nobody cares any more.  Rhino’s are being shot for their horns (Sanparks  declares war on rhino poachers). Crocodiles are dying (Why kruger crocs are croaking), and while they aren’t cute and cuddly, they are generally less sensitive to environment changes than other animals. So if Crocs are dying, we can be fairly sure that everything else will too. And this so we can mine more (or cheaper).

While this is concerning, there is a more sinister problem facing the Kruger National Park.

Land Claims

First there are land claims in Kruger National Park (Kruger land claimants furious) where the claimants aren’t willing to take money rather than the land. Unfortunately for them, they know nothing about tourism, so cannot possibly expect to make any money that way. So, what they will try is subsistence farming. Now this might have worked 300 years ago when there was 5000 people, but now you want to dump 50000 people on the same land and expect them to farm it? (btw, I thumb sucked the numbers to make a point. The actual numbers doesn’t matter).

We see the same thing happening everywhere else. Land are taken away from successful farmers and given back to the ‘rightful owners’, who then destroy the farm, sell the equipment, eat the seeds, and try to just survive.  And what does the rural development MEC for KZN have to say about this: “This is an area of challenges. It is common to find beneficiaries receiving farms in a dilapidated state, without equipment and infrastructure. The challenge is that post settlement has not been adequately funded.” (Rescue plan for KZN farmers)

Wake up! It’s a lack of skills, not a lack of money. You can dump the R1.8bn that she proposes on them, and in 6 to 12 months they’ll be in exactly the same situation… You can’t expect a person with no training and skills to suddenly be a successful farmer because you gave them a farm and a truckload of cash.

Which brings me neatly to my next point:

Education

This has to be the only solution. However, our government isn’t interested in something that will take decades to fix the problem. Rather implement BEE and quota’s for sports teams, etc…

In a nutshell, the education our children are getting is so bad, that there is no future for them (Report slams quality of SA education). And instead of thinking that we should improve high school education, our governments solution is to lower entry requirements for tertiary education. Once this is done, too many people will drop out after a year or two and the quality of tertiary education will be lowered. Until we get perfect equality… Nobody will know anything.

Conclusion

I can keep going… I haven’t gotten to the fact that our electrical infrastructure is inadequate, our water and sanitation infrastructure is falling apart, roads aren’t being maintained, etc.

More worrying though, 15 years later, the government is still blaming apartheid for all the countries problems. They are actively encouraging racism and hatred and ensuring that the current generation of youth grow up with nothing but hate and contempt for anybody with a different skin colour.

Whenever Malema is criticised for his comments, it’s racist, or inspired by whites:
To applause, he said: “We are in court because the whites who are sponsoring this organisation, they want to make sure they embarrass the leadership of this movement.” (I won’t apologise says Malema), he threatens to kill for Zuma, and threatens Nando’s with militant action because he didn’t like their ad. And all of this is not only accepted, but actually cheered by his followers. This generation is the future of our country?

Unfortunately, the problem comes from the top. There is a huge amount of poverty, but more importantly, the poor are told every day that they deserve more, and that they are what they are because of the people that have more than them. When you breed that kind of contempt in more than 40 million people for the small percentage that are actually generating a tax income that must support everybody, it is only a matter of time before the whole system implodes on itself.

Right now everybody is optimistic for the future, but what’s going to happen after the football world cup have come and gone and everybody realises that everything is exactly the same as before?

When you sell software for a monthly fee, there are 2 possibilities:

1. No fixed term. Client stays as long as they require the service.
2. Fixed term contracts.

No fixed term overview

If we assume no fixed term, the average time a customer will stay with you is 4-8 months (With 8 months considered very good), and the average rate of attrition is usually about 15-20% per month. Of course these numbers are very dependant on the market, but lets do some maths:

Let’s assume we charge $100 a month, and each client stays for 6 months (an average attrition rate of about 15%). Lets also assume we are signing 10 new clients a month.  If this is the case, you reach an equilibrium after 18 months where you are getting paid for 57 licenses each month (and you are netting $5700), and unless something changes, you will not grow beyond this point.

Fixed term overview

Now for a fixed term contract, you have a somewhat different picture. Generally, attrition rates are much higher, so lets assume an attrition rate of 90% (after the initial fixed period), 10 sales a month, and a fixed term of 12 months. Because of the fixed term, you only start losing clients at the end of the period (Not always true, but a good approximation).

This means that for the first 12 months you are growing by 10 licenses a month until you reach 120 after 12 months. At month 13, you lose 90% of your clients from month 1, so you only grow by 1 license. Unless anything changes, this will keep happening every month, and at the end of 18 months, you will have 126 contracts (for a monthly income of $12 600).

So what does this mean?

On the surface, it looks like it is much better to sell on a fixed term, since after 18 months, you will be getting more than double what you would if you had sold on a monthly. Unfortunately, this is not necessarily true. The first risk is that it is much harder to sell a fixed term contract,  but even if you assume it is twice as hard, and you can only sell 5 licenses, you still have 66 licenses after 18 months, so it still looks like a better model.

Here’s the big problem though. You always have to sell at least as many licenses as the same month last year. Let’s assume you have a great salesperson for the first year and he sells 15 licenses a month and then leaves for a new job. Now a new person comes in and only does 5 sales a month.

Now you have 180 licenses after 12 months, but only132 after 18 months and 84 after 24 months, at which point it starts growing by 1 license a month again.

So what, you’re still making more money

While you are still making more money, the problem is that you have wildly fluctuating net incomes, and you just can’t be sure what your income will be in 3 months time. This isn’t conducive to a long term business.

If you factor in the licenses that will be canceled in the middle of the license period, you could have negative growth very easily. This can happen because businesses go bankrupt, owners die or emigrate, they find a better deal and just stop paying, etc.

This is true for both models of course, but changes will tend to be more sudden and dramatic with the fixed term contracts.

To a large degree, both models are pretty similar. The only real differences are the initial growth periods before we reach equilibrium, the number of licenses at the equilibrium, and volatility of your income.

Click here to view a spreadsheet with the maths

Graphs to show what the growth curves will look like:

In the next post I’ll explore ways to increase your income in both of these models.

As a software developer, this is obviously a problem I can relate to.  This is what I’d like to discuss in a bit more detail:

1. How are software sold. The easy way and the way that will make you money.
2. Understanding monthly licensing models.
3. Increasing monthly incomes and growing your business.
4. Summary of opportunities and problems.

First, how are software sold?

Software distribution isn’t necessarily difficult. Let’s say you’re selling a product for $30, All you need to do is find people that are interested in your product, sell them on the idea, collect their orders, and then get the product to them.

This is the basic model for selling anything, but with software, it’s usually even easier, since there is no physical product, so you can automate the whole process.  You can find prospects by using Google adwords or through a web page optimized for search engines for example, you can sell them on the concept on the web page, and you can have automated systems that get them to pay using a credit card and then give them access to download the product they paid for.

Ok, so where’s the problem? It sounds simple.

It is simple. It’s also wrong. You can make money this way, but you’ll never have a long term business. If you stop actively selling the software, you’ll run out of money pretty quickly.

If you want to make more money (And isn’t that always the goal in business?), you have to sell to companies at a higher price, and you have to sell at a monthly fee. This means you need to convince a company to pay $100 a month (For example), rather than pay a once off fee.

What about hardware?

On top of that, lets say that you need some hardware bundled with your software. Now you have new problems:

1. You need to pay for the hardware.
2. You need to warehouse the hardware.
3. You need to ship the hardware when a sale is made.
4. You probably need to pay more for packaging of a physical product.
5. You (or the client) need to insure the hardware.

From this, it is clear that you didn’t just increase the amount of money it costs to distribute your product, you also added a great deal of new logistics.

So how do you deal with this extra complications?

1. Charge more per month.
2. Charge an upfront fee for hardware and shipping.
3. Contract for a fixed term (e.g. 1 year).
4. Any combination of the above.

Of course, by doing any of the above, you make it harder to close the initial sale, which probably means smaller closing ratios and more sales visits to the client until you can convince a decision maker to buy your product (Assuming you are actually going to your clients and selling that way).

However, these problems only really make it harder to close the sale, and they add extra costs and logistics, but they don’t significantly affect the licensing model.

In the next post, I’ll explore the licensing model on both fixed and variable term licenses so we can understand how much money we’ll make, and then after that, we can look at how we can increase those amounts.