Monthly Archives: April 2008

Phantom Cash Flow, Fast Word #2

Let us continue on our journey of exploring the language that accredited investors use to build wealth quicker by using Fast Words. We are now on Fast Word number two.

Phantom Cash Flow

This is an interesting term, have you heard it before? Phantom Cash Flow is something you might overhear a sophisticated investor using. Phantom Cash Flow is basically referring to income or cash flow your making, but you won’t actually see the cash itself, because it is kind of Phantomish.   Let me explain using real estate as a teaching example.

If you own a piece of real estate as an investment, that real estate is like a mini-business, it has income and expenses.  And at the end of the year you have to file a profit/loss also called a ( P & L) at the end of the year.  You got to file taxes.

One of the great tax deductions that real estate offers is called Depreciation.  Depreciation allows you to write off a percentage of the value of your building each year over a certain amount of time.  Basically if you own a building Depreciation is a nice write-off that you can declare as an expense and reduce your net taxable income for a long time.  See the government made this tax rule that if you own a building, they recognize that your building is sorta falling apart over time and is depreciating in some what, so they let you incur this as an expense that you can write off, which will reduce your net taxable income.  If you reduce your net taxable income, you of course pay less in taxes. 

Let us say that an apartment building you own brought in $200,000 in revenue this year.  And that your building depreciated about $20,000.  So now on your taxes you can put an extra $20,000 of depreciation on your apartment expenses.  This is basically an expense that you can write off.  So what happens is your net taxable income was originally $200,000 is now $180,000 because you just wrote off $20,000 worth of depreciation expense.  See the deductions again; lower your net taxable income.  This in return will make you pay less tax at the end of the year. 

See, this is an example of Phantom Cash Flow.   You were able to decrease your net taxable income by $20,000 by using depreciation as an expense. This reduce in net taxable income means you essentially make more money at the end of the year because your paying less in taxes.  So this is extra money in your pocket that you are going to receive, more as a savings because you are paying less int axes.  But it is still money extra your earnings/saving, this is why its called Phantom Cash Flow. 

If we can reduce you from paying $50,000 in taxes to only having to pay $30,000 in taxes.  You basically just gained an extra $20,000 in cash flow because that was extra money you saved!   You kept an additional $20,000 in wealth, but you diddn’t really get the cold hard cash to say, but it is extra income because you just saved a bunch of money on taxes.  Money you earned but your not really seeing.  This is why it is called Phantom Cash Flow.  Cash Flow that is being earned, but you don’t see it, thats why it’s sorta Phantomish as I like to say.

Now you know what Phantom Cash Flow is.  If you were with us last time you learned what an accredited investor was.  Till next time, let us keep using fast words.  If you change the way you think and talk, you will change your life.   Is this the first time you’ve heard the term Phantom Cash Flow?

Meetup202 – Bay Area Affiliate Marketing Meet-up was Awesome!

Yesterday we had our first Meetup202 event in downtown San Francisco.  It was a huge success, there were almost 20 people there.  Some were first time affiliate marketers, PPC users, to more experienced affiliate marketers that did it full time and some SEO gurus.  Giovanna from SEOBook was also there, was great to network with everyone there.  We look forward to the next event on May 31st, you can find details at Meetup202.com.  If you were in the bay area and diddn’t go for whatever reason you missed out is all I can say.  I learned a lot there.  I ended up talking with people for 7 hours during the event and had dinner with a few too.  Here are some of the people who joined us. And pictures below.

Matt (sk1tech)Amy, Jeff, Matt (Kwandom), Pete, Claudia, Luba, Christian, NanaBaffoe, Michael, Giovanna (SEOBOOK), Silver, Justin, Jimmy and Lana

Say Hello to Prosper202, (Tracking202 and Export202 Self-Hosted), and were giving it all away!

Prosper202 is what everyone has been waiting for.

Prosper202 is a self-hosted PPC tracking solution, it is the same code used on Tracking202.It also comes with Export202 which allows you to duplicate PPC campaigns from network to network.This software is powerful, self-hosted and fast. All you need to do it get started is simply download the files, upload them to a dedicated domain name and run the 5 minute installation script. It’s that simple.

We originally launched T202 with the idea that we would never give away the software as a self-hosted application. But we received lots of feedback from users requesting we make a self-hosted version. So you know what, we listened, and now we are going to give the users what they wanted. Self-hosted software. I like to call this, success through customer feedback.

So how much is Prosper202? We are giving it all away for free.We have decided to make Prosper202 free for the same reason we made Tracking202 free. We are excited for the opportunity to help thousands of affiliates earn more money and make an impact on someones future. What gets me most excited is when we receive emails from users telling us how much our software has helped them make more money. It is a great feeling knowing that you have been able to help someone out, the best feeling.

PPC Affiliate Marketing will never be the same!

Check out the Prosper202 website, download your application and start installing it on your server! Join our newsletter so you can receive email alerts when we release new updates. Discuss with other Prosper202 users on our affiliate marketing forum. If you like RSS follow our new official Prosper202 company blog to stay up to date with what we are doing. And finally if your in the Bay Area, come to our Meetup202 affiliate marketing event to meet other local affiliate marketers.

I want to say thank you to Scott Weaver over at Affiliate Toolbox who helped refine some queries to make Propser202 compatible with MySQL 4. I want to also thank all of our users who have provided feedback on our applications and ultimately helped us get to where we are now. And thank you, for your interest in our services. I appreciate the opportunity you have given me to work with you, I look forward to making our relationship a profitable one. Thank You.

Something Is In The Air

http://i1.wp.com/www1.istockphoto.com/file_thumbview_approve/437828/2/istockphoto_437828_giant_smiley_big_smile.jpg?resize=117%2C117Oh boy, I’m excited. Something is in the air, and no it’s not a macbook.In 12 hours Tracking202 and Export202 self-hosted are going to launch. Also this Saturday we have our Meetup202 group getting together, we already have 39 members and growing! At this rate our meetup group will have over 365 members within a year, all learning, associating and growing together. Should be a blast.You’re going to like what you see in 12 hours. It’s time to see the all the seeds our team has planted now grow into trees. It’s been 8 months of long development to get to this stage, this should be good. We’re going to announce something crazy with this release, you probably won’t believe it when we tell you what it is.

Hiring A Hacker

Everyone needs a hacker!

We just we just started working with someone who tests the cyber-security state of a financial institution for a living. I was fortunate enough to meet them at ad:tech. (again another reason why going to the events is priceless)

I won’t disclose their name because I assume they want to remain anonymous. They are testing the security of our self hosted applications to make sure everything is secure before releasing it to you! So far everything has been secure on our applications and the code I’ve wrote, which is awesome.

How much does a hacker cost if your curious? Well I’m sure prices vary, but if your curious, our guys are about $150/hour and they’ll test whatever you need tested. It’s a great feeling to know already that most of it is secure already and no loop holes have been found yet. In 2006 I was concerned about security and began studying it, so security has always been a huge concern for me as a developer. And it should be for you too if you want to develop something big that lots of people use.

Thanks for everyones’ interest in beta testing our self-hosted applications which will be released this week. We will be shipping you a secure application that you can feel safe using. So stay tunned.

And for any programmers out there, before you release your product into the wild I’d recommend having a penetration tester run through all of your code to make sure it is secure too. Most people don’t think about security, but you will.

If your not going to the events, your dying. ad:tech was awesome.

The real education isn’t the information you will find on the public blogosphere, or even my blog. The real gold mine of information, I mean the really valuable information, the few tips and tricks that could earn you tens of thousands extra each month are found when talking person to person, face to face. Although you can make alot of money personally by focusing online all day, if you were to also attend more events you would find yourself even further ahead and networked than if you did not. My personal opinion.

There are people in your life that you will meet, that will have dramatic difference in your life. Whether it is learning some good ideas from them or you end up partnering with them for instance, there are some key people that can and will make a major difference in your personal and business life. And the events are important because it will put you in a better position to meet the people who can really help you and give you insightful information that can accelerate your learning curve by several years. It is all about being at the right place, all of the time, and going to the events can place you in the best position for growth at that specific time.

Ad:Tech for me started 2 days prior to the event. What I mean is I had meetings before official ad:tech event started, and then would have meetings during the 3 day ad:tech spree, and then 2 days after ad:tech as well. For me, ad:tech was a 7 day event of face to face contact with all of the people I’ve been talking to online, and even meeting some other powerful people in the network personally. It has been great, and have made great new connections, and strengthened existing connections.

Although I can’t blog about every meeting I had of course, I did get a chance to goto the ad:tech blogger dinner, who I believe Ms Danielle put on. This was a lot of fun getting a chance to meet other bloggers in person, and really build a relationship.

[left to right] Greg Morgan, Garret Gee, me, Ian Lee, Gloria, Bob Buskirk, Ms Danielle, Ian Fernando.

The best part the event was 5 blocks away from my apartment in san francisco. I believe also the web 2.0 conference is next week just a few blocks away too in downtown san francisco.

The real information isn’t in the public blogosphere, it is at the events, at the dinners and at the parties. And even though I never went to a single party during college because I was working, I will goto them during the conferences because its business, and I get to exchange ideas with others. I was able to meet other local web 2.0 startups and even 2 people from a venture capital firm.

The next events I will be going to will be to our event, the meetup202 event. The media breakaway conference and affiliate summit east which we both already have passes for. If your at all serious about the affiliate marketing industry be there. To get different results you have to do different things. And if you are unsatisfied with your current situtation, not making enough affiliate income, and you are not coming to the events, well?…… You really gotta change what your doing then and start coming to the events if your trying to change your game. If you want to be someone who makes a serious amount of money in this business I will see you at the events, and if your not there, I won’t see you there at the events and I’ll be working with everyone else who did show up.

Sometimes success is so easy, we just have to do it. To many people message me everyday saying there going to do this and this, and then don’t do anything at all. So I no longer listen to what people say, I just watch what people do. If you tell me you want to make some serious money and then you do not go to the events, your not serious about making money. Ok…..

Now some people could be the exception to the rule and they already know most everything and already earn a large amount of money might not need to be at every event, and just need to implement what they already know. Thats fine, because they already have the knowledge, the skill and their network built up already. And I’d argue that those who are already grandmasters at what they do have been to the events before and networked with key people who have helped them, and whom they still work together with today. But the key to remember is, these people already earning a large amount relaxing now have invested their time before and gone to events and networked in the past to help them get to their current stage.

I challenge you to be one of the people who is results oriented instead of talk oriented. Someone who actually listens to good ideas and then goes and applies them and then says next, I’ve accomplished this, now what do I need to do, and then does it all over again. I say goto the events, and then people don’t go and then they ask me if there is something else they can do to build their business. Don’t they get it, I already gave the tip to goto the event, and if they want to get to the next level of knowledge they first had to implement the first tip, which was having them goto the event. If they don’t goto the event, and then ask for more tips, they didn’t implement the first tip, and I can’t help them get to the next level. What am I suppose to say to them? They already know what to do, they just have to do it. I can’t share tip number two, if they’re unwilling to implement tip number one, why waste mine, and everyone elses’ time?

What I’m saying is, if you want to take your skill to the next level, be at the right place all of the time. And you can do this by being at the events that are in your specific industry and put effort into making the most out of each event. Invest the time to search, and find the key people that will be able to help you out. I challenge you to come to theses events with the few who make it. If you are serious about affiliate marketing, let’s see it, so lets meet at next event ok? I look forward to meeting you there, take care, take charge and take none of this as an insult, but as a challenge to push ourselves and really make it to the events, and meet some key people who can increase your learning curve by several years. Make it happen!

New Alexa Ranking System

I check alexa quite a bit, and I noticed today that the rankings have been dramatically changed. It seems like alot of websites got hit pretty hard on the ranking. Some top 5k alexa ranking blogs have now dropped to about 20,000. Where some of the previous 20,000k alexa ranking blogs have dropped down to 70,000. However on a good note, tracking202 has benefited from the new alexa rankings and ours has risen! You can find more information here on the new april 15th alexa ranking changes here.  Below is our tracking202 alexa graphs.

Tracking202 Alexa Graph

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Fast Words, Faster Words That Create Wealth Faster. An Introduction: Accredited Investors

One way to dramatically increase your net worth over time is by changing the words you use. A long time a go I talked about fast words, how you could simply create more wealth faster by using a faster vocabulary of wealth build terms than slow terms.

You will often find accredited investors using faster words more often. What is an accredited investor, don’t worry, I’ll explain below. That’ll be a new fast word for you to begin. But let me give you a quick example of the old fast words post if you don’t have the time to read it now.

  • a slow word is saving money, a fast word is raising Capital.
  • a slow word is appreciation, a fast word is Depreciation or “Phantom Cash”
  • a slow word is high paying job, a fast word is Cashflow

Do you see the difference in language, that rich people generally talk with stronger, more powerful faster action words than poorer people. The rich and poor don’t talk just differently, they talk the complete opposite. And you understand this. I’m sure you already talk much differently than your friends if your already more successful. And now of course realize, there are even more successful people talking even strong and faster words than we do that were not even aware of.

I once heard that your IQ increases as your vocabulary increases. So lets increase our vocabultarys sohall we? So I will start to post one for now, and in later posts, new fast words that you might not be aware of so together we can increase our vocabulary and our IQ. But of course I’m not just going to talk about any words, were going to explore fast words that by using them will increase our income making abilities by ten folds because we are using faster money making language whichw ill affect our actions and ultimately, our income.

The first fast word today, is about “accredited investors.” I mention it earlier in this post about how accredited investors more often say fast words than non-accredited investors. Let’s first explain what is an accredited investor.


Accredited Investors

An accredited investor is actually a term defined by the IRS to describe a high-net worth individual or couple. You are either an accredited investor or not in the eyes of the IRS. Here is what describes an accredited investor as an individual.

  • A personal or couple, has a net worth exceeding $1 million dollars
  • A single person who has earned over $200,000 in the last 2 years in a row, and is expected to do the same next year
  • A couple who has earned over $300,000 in the last 2 years and is expected to do the same or more next year.

In essence, an accredited investor is someone defined by the IRS who makes money, or either has a lot of money. But the real question here is why does the IRS have a definition for accredited investors, they didn’t just decided to say people making money were accredited investors for no reason, there is a specific reason they have defined a person as accredited and I’ll share that with you.

It can really be summed up as this, the IRS believes someone who is accredited has enough financial intelligence to take part in risky investments. Because of this, they have made it illegal for some non-accredited investors to invest in certain things. You see a non accredited investor can only invest their money into a security managed by the SEC, while the accredited investor does not.

So for instance, if you wanted to invest other peoples money into stocks for example, if you were not registered for the Securities and Exchange Commissions, it is illegal to invest peoples money if they are non-accredited investors. The SEC regulates all securities, and the reason the do this is because they are trying to protect the non-accredited people from loosing their money in a risky investment. So they make it illegal if you aren’t accredited to invest into certain things that aren’t regulated, non-regulated SEC securities.

Basically the IRS doesn’t think that if you aren’t accredited you are more likely to be scammed by someone. And if you were an accredited investor they believe you are smart enough about money that you have enough intelligence to invest into something un-regulated.

Now if again lets say you wanted to invest other peoples money in stock, and you had your business your security registered with the SEC already, the SEC has already made sure that you are doing legitimate business and now anyone can invest into your security. The SEC regulates securities and makes it illegal for you to invest the money of poorer people so you can’t take advantage of people if you are selling an registered security. But you could invest the money of an accredited investor because the SEC manages they can handle their own money and make the investment.

So on the legal side of this all, the person who would get trouble is the deal maker, and if you put together stock deals or real estate deals for instance and you weren’t registered with the SEC, you could come under serious legal attention by the SEC if you were putting deals together for non-accredited investors.

So to sum this up, the importance of this post was to tell you what an accredited investor is, and that there are investments that not all people take can in part in. If it is not regulated by the SEC you have to be an accredited investor to take part in it. So you want to be an accredited investor.

Have any questions on what an accredited investor is?

The Scorpion and the Frog

Everyone should know the story of the Scorpion and the Frog.

  • One day, a scorpion looked around at the mountain where he lived and decided that he wanted a change. So he set out on a journey through the forests and hills. He climbed over rocks and under vines and kept going until he reached a river.
  • The river was wide and swift, and the scorpion stopped to reconsider the situation. He couldn’t see any way across. So he ran upriver and then checked downriver, all the while thinking that he might have to turn back.
  • Suddenly, he saw a frog sitting in the rushes by the bank of the stream on the other side of the river. He decided to ask the frog for help getting across the stream.
  • “Hellooo Mr. Frog!” called the scorpion across the water, “Would you be so kind as to give me a ride on your back across the river?”
  • “Well now, Mr. Scorpion! How do I know that if I try to help you, you wont try to kill me?” asked the frog hesitantly.
  • “Because,” the scorpion replied, “If I try to kill you, then I would die too, for you see I cannot swim!”
  • Now this seemed to make sense to the frog. But he asked. “What about when I get close to the bank? You could still try to kill me and get back to the shore!”
  • “This is true,” agreed the scorpion, “But then I wouldn’t be able to get to the other side of the river!”
  • “Alright then…how do I know you wont just wait till we get to the other side and THEN kill me?” said the frog.
  • “Ahh…,” crooned the scorpion, “Because you see, once you’ve taken me to the other side of this river, I will be so grateful for your help, that it would hardly be fair to reward you with death, now would it?!”
  • So the frog agreed to take the scorpion across the river. He swam over to the bank and settled himself near the mud to pick up his passenger. The scorpion crawled onto the frog’s back, his sharp claws prickling into the frog’s soft hide, and the frog slid into the river. The muddy water swirled around them, but the frog stayed near the surface so the scorpion would not drown. He kicked strongly through the first half of the stream, his flippers paddling wildly against the current.
  • Halfway across the river, the frog suddenly felt a sharp sting in his back and, out of the corner of his eye, saw the scorpion remove his stinger from the frog’s back. A deadening numbness began to creep into his limbs.
  • “You fool!” croaked the frog, “Now we shall both die! Why on earth did you do that?”
  • The scorpion shrugged, and did a little jig on the drownings frog’s back.
  • “Because I’am a scorpion”
  • Then they both sank into the muddy waters of the swiftly flowing river.

Why do I share with you the story of the scorpion and the frog? I share the story of the scorpion and the frog with you because it has always served a great reminder to myself, that in life you will sometimes be stung for reasons that make no sense to you at all. The story provides an important reminder to be cautious at all times when dealing with situations, and that literally some people in your life do harm to you because they are scorpions.

I’m sharing this with you not because I was recently attacked by a scorpion, but I have been before, and far too many times at that. But I was recently talking with an associate about how hard it is to find great people to work with, I mean really good people, people that you could trust your life to. I’m sure you can think back when you have been stung by a scorpion before.

Whenever you feel uneasy about doing something with someone else due for whatever reason, generally it is a good guideline to go with your gut feeling and not work with that individual. I’m sure many of us have done to many deals with other people who we were first skeptical about doing business with, did it anyways and then have regretted it later on. The worst part about it is we knew it all along, follow your gut instincts, if you feel a bad vibe always remember the story of the scorpion and the frog. Think the opposite of the Nike slogan, just don’t do it.

Again I’m not posting this because something has happened to me, everyone I’m working with is great. But I believe everyone should know the story of the scorpion and the frog. Let the story of the scorpion and the frog be a warning to you, to be careful in dealing with some people which will save you years and years of pain.

What did you think about the story? Is there some more lessons from the story that I missed? Share. I’d like to learn too.

Veni, Vidi, Vici

Veni, Vidi, Vici :: Latin for, “I came, I saw, I conquered.”

Well it has been a year since I first declared I would drop out of college and move to Silicon Valley to build an internet company to one million dollars a year in sales. A lot has changed since that time, and it took six months after that blog post to actually start the move. I’ve been here for about 6 months now and I’m excited to say, “Veni Vidi Vici!” I have reached a point that I was able to pay off everything and now focus on building an internet company full time and not have to worry about living expenses.

Upon coming to the bay area I did not have sufficient income to support myself here, I moved with a head full of dreams and with abunch of credit cards! Two months in a row I had to pay my rent using business credit cards. *I avoid placing any un-secured debt in my personal name, so it does not hurt my personal credit score.

My rent is $1,300 a month for a studio apartment in downtown, plus $200/month for my parking space with a $1,500 deposit. So total rent is about $1500 a month, at the end of all the additional random living expenses I was paying about $2,500 a month to live down here with out much of a *positive* net income stream. I’d then spend an additional $10,000 on server equipment I couldn’t really afford at the time, but we needed it so we had to make it happen. Then hosting the servers was also expensive, over $750/month for our full rack down in San Jose, and then additional attorneys at about $475/hour and paying my accountant. All the while I had to also remember if my tenants moved out of my house in Portland, it’d leave my rental home unrented forcing me to dish out an additional $1,500 a month for mortgage when I didn’t have the cash. Luckily they never moved out.

Well after several months of this, I accumulated close to $23,000 in unsecured business debt on my credit cards. Although this may not be a lot of money to some of you reading this, I understand, but appreciate the challenge, not the actual amount. Moving to one of the most expensive cities in the United States without a job and a real steady income stream trying to bootstrap a company isn’t exactly easy. And for those who have done it, I know you all do very well now, and I am happy to join the inner circle with you everyone who has done this before me and made it. Good luck for some who didn’t make it, which there were some switching to full time entrepreneurship who I talked to who didn’t make it work so well and had to go back to their jobs to get income again because their online gig wasn’t supporting it full time yet. However, for all of those who have tried, and are trying, keep going, try again sooner or later you will succeed. You only fail when you stop trying.

So I’m excited to say I have now stabilized all of my living expenses down in one of the expensive cities in the United States, and even a little extra, enough to fly 3 days out of the week! I was able to pay off all of the unsecured business debt and now have money even left over and growing. It is a great feeling to know you’ve made it, or at least made it to the point where you no longer have to work anymore if you didn’t want to, and can do about anything you want to.

The below chart is a Break-Even Analysis chart, it shows the typical cashflow situtation of most businesses. On a personal level I was way in the red down there for awhile, but I’m now in the green zone and life is flying *literally.*

But really the most exciting thing is now that I have enough passive income to live off of so now I can full time build a fortune. Key note to remember, making a living, and making a fortune are two completely different things. The goal is to first make your living, the money you need to live and sustain, and then as soon as possible you want to switch over whenever you can, to start to build your fortune full time.

See when your start out, you might not have the 100% passive income yet to support yourself without working. So you might to work a job to make your living, but on the side, make sure you are working on building your fortune, at least in your spare time. If you are still working on making a living, always always, make sure on the side you are still building your fortune even if its part time. Because building your fortune is what is going to make you successful, and ideally you want to get there as soon as possible *without giving up other important things too, I should add.*

Once you make your living income passively, then you can start to build your fortune full time. What an exciting thing to be able to do. I can now focus on building my fortune full time, with no distractions, and nothing holding me down.

And this is what this post is about, it is about achieving financial freedom to live without working now, so that I now have the time to work full time on building a fortune. It is about getting to a turning point in your life where you can now start to become incredibly valuable to the marketplace. It is time to develop like no other, it is time to work on building my fortune full time.

So where are you on the break-even chart? I hope you’ve at least started in it, if not what are you waiting for? If your in the red good luck, because the next thing after red is green and your already on your way! And if your in the green like some of you are already, lets make it even greener!

So lets make a fortune then shall we? And how long is this going to take?

Making a fortune can take 15-20 years, sometimes less, sometimes more. What is exciting though is when you are truly focused on building a fortune, it will start to grow exponentially after some time. But it takes a long time to get your exponential growth going. At the first it is slow like a snail, and then it picks up pace and keeps building, sooner or later it just keeps going with or without you. Then you know your really in for something good.

If your progress seems slow, just remember, its supposed to be that way. To get to a sprint you first start out slow, and then after some large steps you will start to gain speed and momentum. To many people start the process only to be disappointed with the results after a day or two, or 2 weeks, or even 3 months. Whats with the giving up attitude? Just make it happen, this is for the long run, you need to work your butt off, you really do, and it is going to take some time, alot of time. But I promise you it will take off sooner or later, and it won’t seem like anything is happening for the longest time, and then sometime in the future you will hit it, and you will succeed, and you will be a success. I promise you it if you just keep going! The graph shows the exponential curve, where are you on the curve?

See the curve starts out slow, very slow, extremely slow. And after a long time it starts to build, and then all the sudden you will have so much success you won’t know what to do with it. But it might take 3-15 years to do it. So make it happen, I’m still in the beginning too, I’m not quiting, so you better not neither. Start doing 200% more work in half the time.

And soon you’ll also be able to say!

Veni, Vidi, Vici