Father's Days Communiqué Part I: Passing a Business Down to a Next Generation

Dear Sonny,

Here is what I can tell you about starting a recycling company from scratch.  Or really, starting anything from scratch.  It could probably apply to a doctor's office or a house painting company.

writing about digital waste handling
At the beginning, when you are the sole employee, you pretty much have to work on getting the clients, and not promising to do more than you are able to do.  At the beginning, you are earning a reputation, which will compound over the course of the next ten years of your business.  My first "motto" was "we are who we say we are and do what we said we'd do".

You will learn on your own that it's really difficult to do every job in your company.  You can try, and it's worth trying so that you know what it is.    But you will discover what Adam Smith observed, that every hour you take away from a task you are indispensible to, to do a task you can outsource, will stunt your business growth.

You will find that you are completely indispensible to about 20% of the hours, because those hours are key to 80% of your income.  Which hours those are will be different for a 2-person, or 4-person company, than they are to a 40-person company.

In the first years of your company, you will consider yourself "indispensible" to work which you're not actually indispensable to.  There will be things you have to do which someone else could do, but you cannot afford them.  For example, I have a CDL truck driving license.   In the first years of the company, when we did 2-3 loads per week, it would have been foolish for me to hire a driver... the amount of time it took to administer and bill for could be done in the two days I wasn't driving, and actually leave time to spare for sorting loads (so that we could get the best value, and avoid the sorting cost at the recycler I outsourced to).

You will also find that you've hired some people smart enough to do other work, who are indispensible to grunt work, because you hired them before your company was large enough to have that percentage of administrative work.   Or you will promote people hired for grunt work by training them to do more detailed transcription, listing, testing, and record keeping.  (Or you will buy a big shredding machine to make all decisions much simpler, and all record keeping much shorter).

As my company grew, eventually adding 7 trucks, I obviously could not possibly have been "indispensible" as a driver, I obviously had to hire other drivers or be in 7 places at once.  But I was indispensible to certain key clients, such as the contract manufacturing factories which used to make certain types of CRT monitor and were paying to refurbish them.  Or as a salesman, often I'd drive the truck to certain key states and territories, where there was negotiation and deal making to be done which none of the CDL drivers knew enough to do.

And it turns out I was indispensible to keep liars from labelling the overseas ODM/OCM companies as primitive evil brown children beating victim monkey people [PEBCBVMPs].   With a single photo, shredding and planned obsolescence companies could torpedeo an entire market with non-tariff barriers, like those I studied, in college, in Japan (used in the 80s to block competition with American made exports).   I had to drive the truck to places like Long Island, to introduce large important clients to contract manufacturing executives, in order to blunt the accusation by NY shredding companies that I was "dumping on the poor".  Eventually, I want to be able to hire a specialist to do that work, too.  But it's tough to do on margins in a scrap/junk business, which is why we need an NGO called Fair Trade Recycling.  (Whoops, I'm slipping off message, back to the "how to" communique)

Eventually, my company grew to hire specialists in all kinds of jobs I'd been "indispensible to" when we were a small company.   People who test laptops.  People who wipe hard drives (knowing SATA from IDE, who you could rely on to actually wipe the data rather than play video games and then throw 50% of the drives onto the "bad, for shredding" pile because they didn't wipe them by the end of the day).  Truck drivers.  People who sell things on ebay.  People who can translate purchase orders from Latin American countries.

What remains is the Paretto Principle, the 80/20 rule.   The same 'indispensible or outsourceable" equation I used to hire my first bookkeeper, first truck driver, and first online sales person, continues to apply to each and every subcomponent.

If I had been in a major urban area, like Guangzhou, I may have been able to scale a whole business on one activity... doing SATA drives and outsourcing IDE drives, for example.  Refurbishing Asahi CRT monitors, but not Trinitron CRTs (which are very high quality, in terms of working hourse, but just "a devil" (the term the Hong Kong SKD investor told me) to refurbish.

That leads down another Paretto principle... stopping trying to repair or test the 20% of products that cost you 80% of the effort.

Ok, Dad, I think I've heard it before from this point.

Rather than chase that tangent, however, let me now tell you what the difficult part is - hiring and training the right employees to do the right job.

Actually, I'll leave both of those rabbit holes to a Part 2 and 3 of this Fathers' Days Blog.  Because I saw you check your Iphone for texts, or emails.   Twice.  Part of what makes for good communication is knowing when to stop, when the vessel is full, when a listener has already gotten the 20% of information they need to understand 80% of what you need to tell them.   It's "communication science".  Believe it or not, that's what my Father, Bill Ingenthron, taught as a Ph.D. at the University of Arkansas.  Mass Communications and Mass Comm Law.
message in its most general meaning is an object of communication. It is a vessel which provides information. Yet, it can also be this information. Therefore, its meaning is dependent upon the context in which it is used; the term may apply to both the information and its form. A communiqué(pronounced /kəˈmjuːnɨk/) is a brief report or statement released by a public agency.
OK, you're chipmunking your smartphone again.   So I'll try to keep each of these Fathers Days Blogs to a commuique level, and pick up the tangents in Part 2 and Part 3.

In the end, you'll see how aggressive growth necessitates poor communication.   So does full employment (minimum unemployment).   The more people I hire, the more people I have to communicate with.   If you don't love people, either outsource the work overseas, or buy a shredder and pass a law against outsourcing the work overseas.

The manufacturers who transferred USA tech jobs overseas (Korea, Japan, Taiwan) are not subsidizing shredders in the USA to avoid competing with other overseas outsourcers, in places like Africa, Brazil, and India.   They are willing to scare the buyers in Africa and the sellers in the USA with "ju-ju" words (cognitive dissonance, cognitive risk), liability law (patent extension), and monopoly via product stewardship (sole responsibility for end-of-life of their own product).

That is the type of thing I had to learn not to try to explain to truck drivers.  Or, sadly, high paid environmental protection officials.  The more you try to explain, the more you risk confusing the people you explain it to.

I know first hand by trying to explain CRT markets to truckers, bookkeepers, hard drive wipers, environmental compliance officers, clients, and NGOs.  Have tried it for years.

Father's Day Communique, Part II:  Teaching Triage
Father's Day Communique, Part III:  Jackie Robinson (Expanding the Pool)
Father's Day Communique, Part IV:  Poisoning My Well

~ ~ - - > Postscript (because I suck at communiques, and you are here on Father's Day).

Nun's Story 1959
Just one more observation... the 80-20 rule.  What you can see in the history of my business, is that the value shifts, the relative importance changes.   If you have a purchase order for 1,000 working Pentium 5 computers, and you only have 200 in inventory, sales and trucking and testing are important.   If you accidentally buy 2,000, and can only sell 1,000, the 20% shifts dramatically away from trucking and towards downstream marketing.  In a heartbeat.

This is ultimately why I favor my skills as a job creator, working with employees able to shift and change with priorities and decisions.  This is how we have outfoxed Big Shred and the Planned Obsolescence companies.   A big shredding machine has a lot of trouble with 1000 sticks of SDRAM when there is a value added market for 200 sticks.   Shred or not?  A machine cannot decide.  We send our surplus and our bad sticks to the machine, and the margin we make on the good ones offsets the outsourced cost of the bad ones.

That is why Big Shred needs a goon, Basel Action Network, run around like Rolf Gruber, a 17 year old delivery boy, blowing the whistle on the Von Trapp family, headed off to Vermont.  And that is why the Von Trapps need Sisters willing to sin by pulling off 

Part V, perhaps, will be some insight into Nazi Germany and how the Nazis would have used the NSA telecommunications monitoring, and it may be used in the future with chilling effects.

It will be used to stifle the 5% of innovators.   You don't take on all 20% of the troublemakers, Hitler taught us.  You only have to choose 5% of the population, and go so raging jackass crazy on them (jews and gays) that the 20% of innovators and challengers is cowed.  In doing that, you will lose some scientists, who will move to another nation... if there is another free nation to move to.  It's called a "Chilling Effect".

Which is why Big Shred wants to make a public example out of an exporting company.  They are looking hard for one, they will go concentration-camp crazy on them.    They should choose their battles wisely.

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