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Creation Date: 2004-02-26
No need for a well-thought out article on anarchy today. I was thinking more about capitalism yesterday during dinner. That's for good reason. You see, if a person chooses to work in a capitalist society (most people have), they have certain guidelines they must follow. These guidelines are imposed by businesses and customers. As an employee, a person has little power, but not much required and much flexibility. As an business owner, a person has power, but is required to make profit and is at the will of the customer and must find good employees. The customer has needs and only has the power to buy or not buy*. These are the guidelines by which capitalism works.

* This does not always work in many cases, but in most cases can be exercised in some way.

In order for this system to work, things must come into place. Let me explain it.

1) Business owner sees a need that s/he can organize a solution to.
2) Business owner gathers capital and employees to meet this need.
3) Customer has a need which the business satisfies and purchases it.

Above you see an interesting, yet simple idea. Looking at it, it may present no new information. However, thinking about new things, a person can find many interesting things that they can exploit. Other things a person can beware of and think about.

Imagine a restaurant that serves tasty tofu. Three chefs, three waitresses, and a manager work full time each. The chefs are paid $15 per hour plus half of tips. The waitresses are paid $10 per hour plus half of tips. The manager makes $50,000 per year even though he works nights and weekends. Suzy, the owner of the store pays for everything and makes profit. Suzy allows her manager to set prices. We shall calculate one month of profit for Suzy.

Chefs: $15 per hour * 3 chefs * 4.3 weeks per month * 40 hours per week = $7740.00
Waitresses: $10 per hour * 3 waitresses * 4.3 weeks per month * 40 hours per week = $5160.00
Manager: $50,000 per year / 12 months = $4166.67
Rent: $1000 per month
Utilities: $100 per month
Food: $1 per meal (gormet tofu is cheap) * N customers = 2*N
Capital: $5000 / 5 years * 1 year / 12 months = $83.33

N Customers pay $M
Revenue: N * $M
N * M > 18250 + 1 * N
N * (M - 1) > 18250

M = $5
N > 4562.5

Suzy needs 163 customers per day (20 customers per hour, 8 hours per day) everyday to break even. This is a hard task. The employees take no risk, but must work hard to ensure profit for Suzy or they will lose their jobs. This is the way of business. Some of the numbers are way off, but don't let that fool you, this exercise shows how difficult owning a business is. I know for a fact that at least one Starbucks has these exact numbers. How do I know? I asked a barista at BofA towers. Being a barista in a financial center of a major city is much more demanding than we say, but I know the baristas are up to the task.

In my years of thinking, I have thought of ways to decrease the profit margin. That's right, not increase, decrease. You see, if I can decrease the profit margin, I can sell a product for cheaper. If I reduce the investment, I can make a profit now which leads to better projects. But there are ways to reduce investment and cost which I have moral objections to: overseas wage slavery is one. So the idea is to use modern methods to reduce investment. In our above system, the most expensive cost is labor by far. By reducing the amount of labor, costs are reduced. If the owner decides to be his/her own chef and waitress (I've seen it done), the costs are drastically reduced so the number of customers needed to turn a profit is decreased. For certain jobs, working at home is much more efficient than working at an office. That is the next largest cost/investment. Hack Mars is taking literally no investment but time. Time is what I have more than enough of. I have no employees and no office. I spend money on capital, but no more than I would spend otherwise (my gaming rig doubles as a dev machine). There is no outlay in development. When I start producing the game, I'll have to pay to press 1000 CDs with DVD boxes and color inserts. But that will be my risk, my investment. Actually since I'm going to be selling over the internet, I don't need to press CDs or buy DVD boxes if I want for the first 100. I could just use CDRs, Jewel cases and color inserts while I test the market. Hack Mars will be crash course in starting from zero in the business world. I hope you will enjoy it as much as I do.

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