Personal Finance Blog

Tips And Stories To Help You With Managing Money

Finding A Business Partner

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Finding a good business partner may be a little tricky, but according to Max Levchin, co-founder of PayPal, it is one of the most important decisions you can make.

Max Levchin earned a bachelors degree in Computer Science from University of Illinois at Urbana-Champaign, where the first first Internet graphical browser, Mosaic was developed. This browser led to the boom of the 1990s and made the Web accessible to the ordinary person for the first time. Firefox 3, developed from this basic browser, had more than 8 million unique downloads the day it was released, setting a Guinness World Record.

After being influenced and taught at the same institution where Mosaic was created, Max decided to head for the Silicon Valley. Not intentionally looking for a business partner, Max randomly walked into a classroom on the Stanford University campus, trying to get out of the heat and searching for an air-conditioned place to sit.

He sat in on a lecture given by Peter Thiel. Peter Thiel’s expertise in business and entrepreneurship inspired Max to chat with him after class. The next day they met for breakfast and he shared with him several ideas he had for business projects. This meeting was the beginning of an extremely profitable business partnership.

They ended up creating a company called PayPal, an online payment processing company which allows people to send money to each other in a completely new and different way than they had ever been able to before. PayPal sold to eBay on July 8, 2002 for $1.5 billion dollars. Max’s share was worth $34 million and Peter Thiel’s share was worth $55 million.

One of the qualities of a good partnership is that the partner can tell you when your ideas are good and also when they are just way off base. The success of the partnership depends on you choosing the right person.

Some partnerships last a lifetime and end up being good for both parties, while others may last half a life time and end up with one or the other sending their partner down the river. Choose your business partner as wisely as you would choose a marriage partner.

Who Is Max Levchin?

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max-levchinThere are many people who can be considered pioneers in the development of web technology and most seem to be millionaires or billionaires. Max Levchin is no exception. Who is he?

He is a thirty-five year old, computer scientist and entrepreneur. He was born in the Ukraine, and moved to Chicago, Illinois in 1991 under a political asylum. He earned his bachelors degree in computer science at the University of Illinois at Urbana-Champaign.

Accomplishments

In 1997 he co-founded two companies NetMeridian Software and SponsorNet New Media.

In 1998, he co-founded FieldLink with Peter Thiel and John Bernard Powers. Powers left the company and the company name, FieldLink, was soon changed to Confinity. The two partners, Levchin and Thiel then developed  the popular payment product known as PayPal. After merging with a company called X.com, the official name of their company was changed to Paypal Inc. Levchin was well known for developing the anti-fraud component of PayPal called CAPTCHA a process that will differentiate computer input from input by human beings.

PayPal went public in 2002, and shortly afterwards, eBay purchased PayPal for $1.5 billion dollars.  When PayPal was acquired by eBay, Levchin’s interest in the company was worth $34 million dollars.

Levchin did not remain idle after this aquisition. In 2004, he went on to create yet another company called Slide. He invested $7 million dollars of his own money in this company. Funding was also acquired from various venture capitalists. The company was first developed to allow users to organize photos on their computers and post them to personal blogs. Later it became known for creating applications that became very popular on Facebook. Some of the applications were “Top Friends”, FunWall”, “My Questions, “Fortune Cookie”, and “Super Poke”. By 2008, Super Poke Pet was launched were you can care for and buy things for a virtual pet.

On August 6, 2010, Google purchased Slide.com for $182 million dollars. Levchin received $39 million dollars for that sale. Shortly after that, on August 25, Google offered him a job as the Vice President of Engineering.

Advice To Entrepreneurs

Max Levchin’s best words of advice to other technology entrepreneurs is to try your best to find a good co-partner. Having the checks and balances from another person that you have respect and trust for and the ability of that person to tell you when you are way off base at exactly the right time is extremely valuable, if not the most valuable thing.

Future Plans

It will be exciting to follow his next accomplishments as a new Vice President of Engineering at Google.

Entrepreneur Receives Praises From Bill Gates

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At a recent gathering held in Aspen, Colorado called the Aspen Ideas Festival, where leaders from around the world gather to discuss ideas and issues of global concern, Bill Gates spent time speaking  about a remarkable man, Sal Khan. Sal Khan, a recent hedge fund manager, has taken his business to a new level. He is now helping to educate the masses. “This guy is amazing, said Gates. “I’d say we’ve moved about 160 IQ points from the hedge fund category to the teaching-many-people-in-a-leveraged-way category. It was a good day his wife let him quit his job.”

Sal Khan was probably not surprised by the recent public attention. In 2009, his site and “academy” was awarded the Microsoft Tech Award for education.

Sal Khan has created over 1800 learning videos on subjects like  calculus, chemistry, economics, finance, geometry, linear algebra, physics, venture capital, statistics and trigonometry.

Sal has an exceptional ability to take complicated concepts and teach people in ways that are easy to understand. He narrates the videos and uses a big black background to draw on as he speaks. Mr. Gates has used the videos to help his own children learn biology and algebra.

It is interesting to know a little about Sal and his background. Sal Khan was born in Louisiana. His father was from Bangladesh and his mother from Calcutta, India. He received a perfect score on the math portion of the SAT. He has three bachelor degrees, one in mathematics, one in computer science and one in electrical engineering from the Massachusetts Institute of Technology. He also holds an MBA from Harvard. In 2009, Khan Academy, and received the Microsoft Tech Award for education.

Sal Khan has made a huge contribution to the world by providing an education to anyone who may be wanting to learn. From all corners of the world, people can benefit from his videos.

Budget is Not a Dirty Word

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The word “budget” may seem like a dirty word, but during these trying economic times, it can be your life line. If you think “it can’t happen to me”, look around you; national unemployment is hovering around 9.5%. Unless you are self-employed, you have no idea what lies around the corner.

Sadly, the great majority of us have never had to budget our money. Our parents and grandparents grew up when times were lean, living within their means, on a budget, which became a habit. But, those of us born after 1945 have grown up in the land of plenty, quite accustomed to instant gratification. A budget can be a hard pill to swallow.

Do you live paycheck to paycheck? Do you “do without” as a result? Do you regularly bounce your account? If you answered yes to any of these questions, a budget will be your salvation.

The first step in planning a budget is to gather the family. Write down every possible, itty-bitty expenditure. You can transfer it to a computer spread sheet later, though many people prefer to use an inexpensive accounting journal; writing it in longhand seems to get their creative financial juices flowing.

Sort your expenses from the largest to the smallest, then focus your attention on ways to reduce your largest. If you can refinance your home, you may be able get enough to pay off your vehicle, which may enable you to put money into a savings account, a tax-free IRA or to pay off your high interest credit card debt. The end should always justify the means, so consider this carefully.

Now, look at your credit card debt and commit to becoming “plastic free”. You will want to save one or two cards for emergencies, but these should be cards you’ve held the longest and should be paid off along with the rest. You may even want to cancel the cards you don’t plant to keep, insuring you can’t add to your debt. Also cancel that costly “insurance” you have on each card. That money would be put to better use by applying it towards the balance.

Just start with the largest balance and start budgeting extra money to pay on that card. Do this faithfully. Once you have paid off one card, take that money and put it towards the next, plus what you’ve already been paying, then do it for the next and the next…. It may take some time, but time flies when you’re having fun! The satisfaction of paying off each card will be incredible.

Consider online bill pay to save on stamps, envelopes, pens, checks and time. Stamps and stuff add up, while your time is incalculable; add the cost of your morning latte at $3.50 ($910.00 annually) and the family dinner out 3 times a week (upwards of $4992.00 a year for a family of 4). If you start looking at the receipts for the last month or two, you can identify a lot of frivolous spending that can be cut or reduced.

Allocate money to savings and treat your savings account just like any other bill. You can’t take the money back that you’ve paid on your electric bill, right? Treat your savings much the same and include long-term goals like retirement, college and inevitable high dollar household needs in your annual budget.

No, it won’t be easy, but it will ultimately be extremely satisfying. Try it, just for a few months, and see how much better you feel. It really helps to know exactly where your money is going and as you save, having that financial cushion will be absolutely priceless. Budget is not a 4-letter word; it is a 6-letter word, just as “relief” or “comfort” is.

Ten Money Saving Tips That Anyone Can Use

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More and more individuals are becoming budget conscious everyday. If you want to join the club in gaining financial freedom by saving money then you might want to use some of these money saving tips.

  1. Use Cash.  Forget about your credit cards and use cash instead. You will avoid  interest fees and it will help you fight temptations to making unnecessary purchases.
  2. Compare prices. Price comparisons help you save when grocery shopping. Use the Internet to do your best comparison shopping. Sites like groceryguide.com and mygrocerydeals.com allow you to compare prices in grocery stores that you shop at, saving you both time and money.
  3. Use coupons. If you add up the savings you get when using coupons, you may be surprised at how much difference they make. Check your local papers, magazines or surf the net for printable coupons. Remember to check the fine print for any special rules that may apply.
  4. Trade In Unwanted Electronics. National retailers like Best Buy, Costco and Sears have trade in programs. Some will accept Apple Ipods, Apple laptops, mobile phones and PC laptops and let you have gift certificates to use for new purchases.
  5. Research Your Insurance Coverage. Before buying insurance for you or your loved ones compare and analyze your risks in the insurance you are currently paying for. Do you have enough to cover you in case of catastrophe? Make sure you are well covered to protect you from exorbitant losses. Meet regularly with your insurance man to discuss your protection.
  6. Pay Insurance Yearly. You can avoid paying monthly fees if you pay annually. Ever little bit of savings helps. Figure out how much you can save yourself by paying annually.
  7. Use Online Alerts. Many companies have an automated email alert system that will notify you of sales coming up for the products you normally buy. You can subscribe to money saving newsletters. You will be notified about amazing deals and discounts through email. Travel package deals are sometimes only available through specials advertised through email.
  8. Walk More Often. Are there places you can get to by walking instead of driving? If you make it a habit to get exercise by walking places you would normally drive, you end up doing two good things for yourself. Save money on your gas expenses and your gym expenses. Maybe you’ll be able to give up an expensive gym membership with your new exercise plan.
  9. Avoid Impluse Buying.  Most retail prices are lowered to get you do buy things you weren’t planning on. So sometimes even though items are on sale, they may not be a good purchase for you. Impulse buying expensive items because they are on sale has risks that come along with it. Postponing purchases can give you extra time to make sure that you really want the item and that you can really afford it.
  10. Keep Learning New Ways To Save. There are a lot of sites that have information about saving money. Read those often to keep yourself alert to new money saving tips.

There are also online coupons available for those seeking discounts.