MONTESSORI | Key to Innovative Passion?

Tony Wagner

On May 3 Harvard celebrated its 375th anniversary in New York with a focus on Harvard's "tradition of innovation". I wrote about it on HuffPost and more recently on my CityEconomist blog. One of the things Harvard has done is to create a Technology and Entrepreneurship Center, which sounds a lot like the NYC Cornell-Technion center that will be created on Roosevelt Island in New York City.

The first Innovation Education Fellow at the T&E Center is Tony Wagner, who has written a four-star (on Amazon) new book Creating Innovators: The Making of Young People Who Will Change the World. Knowledge@Wharton interviewed him about his book. They asked: "How can parents, mentors and others help young people to develop creativity and the skills of innovation as they age?"

Wagner: ... [E]ncourage more exploratory play. So many parents are programming their kids' days and weeks, are worrying about their kids resumes in kindergarten or even earlier. What they need to understand, first and foremost, is that passion derives from more exploratory play. I don't know whether you picked this up in the book, but I uncovered research to the effect that many of the most successful entrepreneurs and innovators today were, in fact, products of Montessori schools, where it is much more of a play-based form of learning. I think the second thing that parents need to understand is they cannot and they should not try to protect their children. Too many parents are helicopter parents who are trying to hover. They are trying to tell their children how wonderful they are, which I think is a huge mistake. You really have to allow kids to experiment and to make mistakes because that is how they are going to gain self-confidence. They don't gain real self-confidence from having been protected and living in a cocoon all their childhood.

My mother (Hilda van Stockum Marlin) and grandmother (Olga Boissevain van Stockum) were both trained in the Montessori Method by Maria Montessori herself. My sister Sheila founded many Montessori schools in the UK and currently is based at High Elms Manor in Garston, UK. We have just located a copy of my mother's curriculum book, which she prepared under Ms. Montessori's direction. We are still hunting for the original book in full color.

BOOKEXPO | Future of Publishing

At the three-day BookExpo and BlogWorld at the Javits Center a couple of weeks ago, I spoke with quite a few people about the future of the book-publishing and e-publishing industries. The first thing I found out is that no one is prepared to make any firm forecasts. But here are some recurring themes:

1. E-Books are for the time being keeping publishers alive because they are getting paid for their backlists through e-book fees, and this isn't taking any work. Also, e-books, rather than proving to be a substitute for physical books, are making it poosible for people to read more.

2. Bookstore Closings are seriously affecting the mass-market publishers, who could always count on unloading large quantities of excess books on the bookstores. The high profit margins on mass-market books (which means just about any book printed in large quantities that is and sold at a low price) are attractive to bookstores because they are purchased as gifts or as bargains. But they are hard to sell sight unseen by mail or email. The number of mass-marketers of books is shrinking.

3. Author-Reader Links are made difficult by the unwillingness of on-demand publishers like Amazon (and its subsidiary CreateSpace) or iInfinity or others to provide authors with the names of their book buyers. In the view of many at the two conferences, this is very short-sighted because the future of publishing is in a heightened connection between authors and readers. CloudWave, with whose principals I spoke at length, is trying to address this connection.

4. Author Promotional Efforts are now expected by publishers. Less famous authors who are building their reader loyalty through websites and emails are surprising their publishers with their long lines at book-signing events.

WOMEN | They Start More Firms But Get 1/9 of the $

Amanda Steinberg advises women on their finances through NY-based Daily Worth, which has attracted venture-capital funding. She has commented on the following facts reported by  Crains New York:
- women start companies at twice the rate of men, but
- they own about one-third of US small businesses, and
- receive just 11 percent of VC funding.

Her take is that - VCs don't like to fund "lifestyle" startups that women tend to favor, and - taking on a startup requires a commitment to the business that may interfere with the desire of many women today to have control over their non-work hours.  My source for this is the latest NYTECH Newsletter, referencing

JOBS | What Keynes Said, What Bush 43 Did

What did Keynes really say? He argued that governments able to run deficits, because they can print money, should run deficits in weak economic times - and run surpluses in good economic times.

What Bush 43 did was run deficits in good (low unemployment) economic times. By putting the winter woodpile in the stove in late summer, he stirred up the anti-deficit forces so that Obama had a hard time getting enough wood together for the stimulus he needed after the crisis of 2008.

This is the central message Paul Krugman has been hammering home in his New York Times column for months or years and in his excellent piece with his wife Robin Wells in the latest July 12 New York Review of Books. The NYRB article reviews the relative roles of Larry Summers, CEA Chair Christina Romer, Timothy Geithner et al. in the Bush 43 response to the financial crises of 2008 and then the Obama response to the spreading economic crisis of 2009.

The "starve the beast" thesis of the Reagan era (cut taxes and create a deficit crisis that will inhibit spending) turned the United States from the largest creditor nation in the world to the largest debtor nation. Under Bush 41 and 43, the Federal Government continued to run deficits even through unemployment was very low by historical standards. Only Bill Clinton, during the Democratic interregnum, ran surpluses. I commented on this in September 2008.

At precisely the point where all the anti-deficit armory was assembled, the financial crisis hit and its size and psychological impact had a huge economic impact on the U.S. and world economy. Just as the anti-deficit forces went to work, the need for stimulative spending suddenly became acute. As Krugman has argued at length, Obama's response fell short because of growing GOP opposition in the Congress. One reason is that state and local government revenues fell with the economic decline (they can't print money) and this offset the national stimulus. So states and localities have been faced with huge deficits in FY09-FY11 and more deficits face most of them in FY12 and FY 13, with no stimulus money left to help.

Now Steve Malanga of the Manhattan Institute castigates states and localities for spending too much in good times and not putting away money for bad times. He quotes Keynes. He tells us he asked then-Mayor Koch to put money into a rainy-day fund. Koch correctly responded that elected officials find this difficult to do. So far, rainy-day funds tend to be spent at the first hint of dewfall.

Here are my comments:
1. Keynes was focused on the national level.  Counter-cyclical fiscal and monetary policy is meant to be applied at the money-printing level. States and localities just don't have that power. When Greece and Spain gave up the drachma and peseta, they gave up their ability to pursue a counter-cyclical policy for very long - that power has gone to the European Union and the European Central Bank.
2. States and localities have to balance their budgets.  Balanced budgets are the law in many states and it's reality in the rest of them. When states and localities talk about deficits they are talking about gaps that must be faced. These gaps must be closed through borrowing or other gap-closing measures.
3. Some counter-cyclical mechanisms work well. Revenue-sharing with states and localities was a good idea. New York City's averaging of assessed values over five years is a hugely successful mechanism that evens out property-tax revenues over the business  cycle.    

BLOGGING | How to Make It Pay!

Russ compares a startup to a time bomb. If you can't
 finance the startup period, it blows up.

June 8, 2012–The best talk I heard the last two days at BlogWorld and BookExpo was by Russ Henneberry.

The title of his talk was "Defuse the Time Bomb: How to Generate Income from the Blog When Time Is Running Out."

He starts with some images of ticking time bombs and their use in movies to create urgency and excitement.

He relates this to his own situation when he lost his 9-5 job and suddenly was forced to look at his blog as his livelihood, as his daughter was born and he had a family to support.

He compares the wire at the left (the "red" wire) to passive income such as royalties from books or licenses for software. Many founder of startups want to rush into that phase so they can retire quick. The wire at right (the "green" wire) is active income, trading time for money, as in:

• teaching a course, 
• training, 
• coaching or 
• consulting with a client.

Russ's argument is that the best course of action when there is no time to lose is to focus on the "green" wire, the active income. Trading time for money is more reliable, for three reasons:

• While you are developing your ideas, people pay you for your time.
• You get to listen to your clients and improve your ability to address their problems.
• You deepen and broaden your expertise. The best teachers are people who do what they teach.

The key to active income is public speaking because each speech is an opportunity to get business. The rest is a focus on pricing, terms, contracts to gets paid, and business cards to solicit clients.

He gave three books as references for the consulting part of the startup: Fred Miller, The Referral Engine (very practical), No Sweat Public Speaking, and Seth Godin's The Dip - When to Quit.

A blog can help grow up a consulting business because it can mention other people and make them part of your community. It establishes trust and authority. It should also educate prospects so that when a client calls they understand what you do and the terms under which you work.

Once the "green wire" business is under way, it is time to go back to the "red wire" - the passive income.  The problem with selling one's time for money is that it is hard to scale up a business that is built on this platform. One can hire staff to make better use of one's time but the principal will be the person the client wants to see. To scale up, one needs passive income from royalties and licensing.

Passive income requires time to build a reputation and a large audience because the revenue tends to be small per item. He uses the example of Katie's Frozen Custard, which had many buyers, but not enough to keep its doors open. "You have to sell a lot of custard to make a living."

SEO Moz started by selling services to Fortune 500 companies. Then it went into the software business to make their system available more widely. A Career Academy became a membership-based community.

The new problem here is how to sell a $30 product via computer. That leads to the need for copywriting skills. Why do people say "yes" to a request via computer? The promotion can be outsourced. The next requirement will be to build a list - attract names to the site, retain them, share them. 

For this phase, Russ cited three more books that were useful to him:

Cialfin, The Psychology of Persuasion; Ash, Landing Page Optimization; and Joe Sugarman, Advertising Secrets of the Written Word. 

Wrapping up, Russ stressed three points from his remarks:

1. You have to sell a lot of cups of custard to make a living. Selling lots of something inexpensive takes time.

2. Learn how to make money directly with one's skill - then work on getting it in shape to sell online.

3. Start with active income, then use passive income to buy your life back.

As a final recommendation he cited authorityblogger.com and guestblogging.com.

That's Russ (L) and CityEconomist Blogger John (R)
at BlogWorld 2012, Javits Center, NYC, June 8, 2012

After his talk I got our photo snapped by my nephew Greg Marlin of Experts.AI.  Russ told me he runs a consulting firm called Tiny & Mighty, which helps small St. Louis firms to get started and to prosper. His website is tinyandmighty.com. I told Russ that what he is doing sounds a lot like what Michael Phillips, author of the classic The Seven Laws of Money, has undertaken in San Francisco for half a century under the Briar Patch name ("Howdy, Briar"). It's good to see the work go on. Russ is sensible and inspiring.

NYC | Emergency Preparedness

June 2, 2012–One of the problems that emergency planners have in New York City is that people don't believe that a natural disaster could damage the City. After all, hurricanes that come up the East Coast are supposed to peel off and head out to sea before they reach New York City.

But that's not the way it happened in 1938, when the hurricane slammed in to Long Island. It's not the way it may happen in 2012 or beyond, as hurricane patterns are affected by global climate change. There was a story in the New York Press in 2005 about the problem the City might face if a hurricane is headed to New York City.

Bob Trentlyon, former publisher of the Chelsea-Clinton News and other papers has recommended it to my attention as a timely article. I agree with him. It's worth reading. Ask not to whom the hurricane may be heading. If you assume it's not heading for you, by the time that you find out that it is, it may be too late to move.