Saturday, February 28, 2015

What Fifty Shades Gets Wrong About Money and Sex

The hit novel turned film suggests wealth makes men sexy to women. That's misleading.

Does money make men more attractive to women? On the surface, both popular cultureand social science research seem to say yes.
The standard social science explanation for this phenomenon gets expressed in evolutionary terms: Because impregnating as many women as possible gives a man’s genes an evolutionary advantage, men are more superficial and promiscuous. Conversely, because of the time and energy required for a single pregnancy, women are choosier and more preoccupied with finding a mate rich with resources to provide for offspring. Or, at least, that’s the theory.You can’t take a step into the academic literature without tripping over a study showing that women place higher value than men on a partner’s wealth, that women are more attracted to men with nice cars, or that womenorgasm more with rich partners.
The success of the Fifty Shades of Grey franchise certainly does little to dispel all this. The story—for those living under a rock—details the sexual awakening of a young woman seduced by a billionaire, whose physical attractiveness is matched only by his fleet of luxury cars, helicopter, penthouse apartment, and cushy CEO job running his own company. In other words, as author E.L. James has put it, Christian Grey is “every woman’s dream.”
“He’s very good looking, he’s very good at sex, he’s disgustingly rich,” she told TIME.
To be fair, it’s intuitive that a partner with means is more desirable than one without, all else being equal. A recent poll found that 78% of coupled Americans of both sexes say they’d prefer a partner who is good with money over one who’s physically attractive. And if you are a man who feels pressure to impress women with your money, or a woman who felt titillated reading about Christian Grey’s alpha status, you probably buy into the theory without even realizing it.
But as it turns out, this popular narrative about men, women, sex, and money isn’t all it’s cracked up to be.
A recent study has found that the common depiction of women primarily seeking out rich and powerful men (and men seeking out young and attractive women) is fairly uncommon in practice and—crucially—doesn’t reflect the reality of successful relationships or what actually makes people happy.
The research, by University of Notre Dame sociologist Elizabeth McClintock, has found that gender differences more or less disappear when you discard self-reported attraction scores and instead examine how real couples pursue one another, date, and settle down. In reality, rich women are just as likely as rich men to use their status to snag a more-attractive mate. And across the board, relationships in which people are essentially trading status for sex tend to be uncommon and short-lived.
Instead, McClintock found that the biggest force that predicts a successful match between people is actually how well all of your qualities match up. That means, for example, that people of similar physical appeal tend to pair off, and those with comparable educations and financial means are drawn together.
What’s perhaps counterintuitive, then, is that a woman seeking a rich man is actually better off getting herself a raise than a makeover. Likewise, a man seeking an attractive lady will see higher returns investing in a gym membership than a brokerage account.
So why does the tale of the rich, experienced man seducing the pretty ingenue persist in popular imagination, not to mention the academic literature? McClintock found that many existing studies took for granted the very gender roles they were supposed to be measuring, examining only women’s attractiveness and men’s status or money, while ignoring men’s appearance and the wealth and education of women.
As Northwestern University psychologist Eli Finkel told New Yorkmagazine: “Scientists are humans, too, and we can be inadvertently blinded by beliefs about how the world works.”
Indeed, we’re all better off disposing of our blindfolds—even if they’re made of the finest satin.


Tuesday, February 24, 2015

Became a millionaire at 28, but it came with a price

She helped build a tech company that was sold for $37 million... when she was only 28! But Lim Qing Ru’s newfound wealth came at a price.

B Millionaire at 28 Her World Print Feb 2015.png
On the middle finger of her left hand, Lim Qing Ru sports a ring with “April 10 2014” engraved on it.
That was the day news broke that Zopim, the tech company she joined as a co-founder in 2008, had been acquired by an American software company for a reported US$29.8 million (roughly S$37 million).
The payout was split between herself and four other co-founders, making her a multimillionaire overnight. She was then two weeks shy of her 29th birthday.
“We went from being nameless entrepreneurs to instant role models for the tech industry,” says Qing Ru, who turns 30 this April. “All of a sudden, everyone was paying attention to us.”
Journalists spun a blithe tale about how a group of scrappy entrepreneurs finally made good after years of surviving on meagre salaries: They created a winning product – a chat widget that allows business owners to send instant messages to customers and provide real-time customer service – after which the company was wooed by US-based customer support firm Zendesk. The co-founders then signed an acquisition deal that gave each of them multimillion-dollar payouts. It was the perfect rags-to-riches tale. Or so it seemed.
Like giving up a child
The truth was, it wasn’t quite the happily-ever-after that most people imagined it to be.
“[The acquisition] wasn’t an easy decision,” admits Qing Ru. “I spent seven years building the company with my blood, sweat and tears. Then, I had to let it go.” After signing the agreement, she sobbed uncontrollably. Till this day, she hasn’t spent a cent of her millions – she can’t bear to. All of it is sitting in a bank.
If going into a business is like getting married (“you stick with your partners through thick and thin”), then building a company is like giving birth to a child, she explains. “It’s heartbreaking to give up your baby.”
Even after the deal was closed, there were nail-biting moments. At the time of acquisition, Zendesk was a relatively young company and had not yet launched its initial public offering (IPO) – its IPO was launched only in May, the month following the acquisition. A portion of Qing Ru’s payout was in the form of Zendesk shares, which could very well have ended up worthless if the IPO had failed. “If things had turned out badly, I would never have forgiven myself,” says Qing Ru. “I would have signed away my baby for nothing.”
Fortunately, things went well. Zendesk shares started trading at $11.40 apiece – above the company’s off ering price of $9 – and their value doubled to around $23 apiece in December. Every day, she thanks her lucky stars that her instincts turned out right.
How it started
Money was never Qing Ru’s motivation in life. Her supervisor father and housewife mother were frugal folk who often took her to playgrounds as a child as they didn’t want to splurge on toys. She says cheekily: “I became quite a bully. If I saw a boy on my favourite toy car at the playground, I’d tell him to get off! When you have to share, you learn to fight for what you want.”
She majored in philosophy at the National University of Singapore. While there, she was disappointed to learn that most of her seniors had ended up as public servants. Being a bureaucrat and following procedures wasn’t her idea of an exciting career.
After poking around, she stumbled upon the university’s underground start-up scene: Student entrepreneurs were working in converted bungalowoffi ces on the fringes of the campus. Engineers, programmers and designers ate, slept and worked side by side in these spaces, feverishly talking about their passion projects. “Just being in the same room as them, and soaking up their energy, excited me,” she says. “They were a very different breed.”
Through these circles, Qing Ru met Royston Tay, Wu Wenxiang, Kwok Yang Bin and Julian Low. The four friends had just started a new tech company: Zopim.
She and the boys were all straight talkers and shared the same sense of fun. When the guys travelled to Silicon Valley to pitch their company to investors, they asked Qing Ru to represent them in a Singapore start-up competition. Soon after, they invited her to join Zopim as a co-founder.
Surviving on $500 salaries
Most entrepreneurs have the same woe: slogging for hours on pitiful pay, fuelled only by passion and coffee refills.
But Qing Ru is reluctant to dwell on those details. “If we had focused only on the sacrifices, we never would have accomplished anything,” she says. “Was it really important to have a big pay cheque? You don’t need a lot to survive. Was it really important to work only eight hours a day? But we enjoyed our work! These ‘sacrifices’ were conscious choices we made.”
They weren’t easy choices though. In her first year of work, Qing Ru and her co-founders paid themselves just $500 a month. After that, they went without salaries for half a year.
She recalls having food poisoning and not being able to afford the $15 doctor’s consultation fee. “I went home, cried and slept it off ,” she says baldly.
Stress and long working hours turned her skin sallow. She talks self-deprecatingly about how she stopped bothering with makeup and haircuts, and wore cheap, baggy pants (“the sort from the pasar malam!”) to work as she had no money to shop.
“I would think, ‘How can I care about clothes when I have sh*t to do!?’” she says with a laugh. Even her boyfriend started hinting about her sloppy dressing. “He met sharply dressed women in his investment banking job... and then he’d meet me,” she deadpans.
The two broke up several times, partly due to the strain of their jobs, but they always got back together; they’re still dating now. “Being apart made me appreciate him more,” she reflects. “He saw me through my struggles and we survived so many problems together. That’s more important than finding some fantasy guy with a checklist of impeccable qualities.”
A tough fighter
One of Qing Ru’s most enduring memories of Zopim is that of the founders’ twice-yearly performancereview sessions. Th e five of them would coop themselves up in a room for 14 hours without breaks and give one another feedback – and they didn’t mince their words.
“If something had been handled badly, we would say ‘that sucked’ or ‘that project was f*cked up’,” she says. “I was in charge of marketing and my co-founders once said to my face that none of my work mattered if I couldn’t deliver a viral campaign.”
Such sessions were part of the company’s culture of absolute honesty. “When your team sets high standards for you, it means they trust you to deliver,” she says, adding that her colleagues’ candidness was vital in pushing her to improve. She adds with a grin: “It helps that I’m very thick-skinned.”
Where to go from here?
Today, Qing Ru is the director of customer advocacy at Zendesk. While she’s happy in her role, one senses a certain restlessness when talking to her.
Now that Zopim is a success, she dreams of creating another start-up one day. “Starting a business is not about making money – I mean, how much do you need to survive?” she says. “It’s about the legacy you want to leave behind... the impact you want to have on the world.” -- HW


Monday, February 23, 2015

This chart shows the performance of the most successful company in the world

Take a look at this chart. It shows the performance of the most successful company in the world.
motley fool chart best companyS&P Capital IQ
One dollar invested in this company in 1968 was worth $6,638 yesterday (including dividends). That's an annual return of 20.6% per year for nearly half a century. No other company comes close to matching its long-term results, according to Wharton professor Jeremy Siegel. 
The same dollar invested in the S&P 500 over the same period would be worth $87, or 98% less.
What company is this?
Let's think it through.
It had to have been revolutionary. It had to have been innovative. It must be in an industry that changed the world — probably the biggest trend of the 20th century. It must have done something no other company could do.
Computers? Satellites? Biotech?

Nope. It's Altria, the cigarette company.  
Credit Suisse published a report this week on the performance of every major American industry from 1900 to 2010.
One dollar in the average American industry was worth $38,255 by 2010. That's an annual return of about 10% per year. Some did far better: $1 invested in food companies was worth about $700,000 by 2010. Chemical and electrical equipment companies returned about the same.
Then there's tobacco, which was in a league of its own.
One dollar invested in tobacco stocks in 1900 was worth $6.3 million by 2010. That's 165 times greater than the average industry.
During a century of innovation, progress, excitement, and scientific advancement, no industry did better than cigarettes.
Most people would look at these numbers and say, "Well, sure. That's what happens when you sell an addictive product."
But what's extraordinary about this story is that the cigarette industry has been in decline for decades.
Cigarettes are, of course, addictive. But smoking rates have been falling for half a century. Half the percentage of U.S. adults smoke today than did in the 1950s.
And even though there's been population growth during that period, it hasn't been enough to offsets the decline in smoking rates. Total U.S. cigarette consumption peaked in 1981 at 640 billion cigarettes. By 2007 that dropped 44%, to 360 billion:
cigarettes motley foolThe Motley Fool
By unit sales, tobacco is one of the least successful Americans industries of the last 30 years. Add to it that tobacco advertising has been largely banned for more than a decade, and legal settlements have cost the industry billions. It's amazing tobacco has been able to produce any returns, let alone the highest in American history.
Part of tobacco stocks' rise is thanks to foreign operations, in countries where smoking is more common and hasn't declined as much as the U.S. But there's more going on here. Altria spun off its international division, Philip Morris International, in 2008. Altria stock is up 289% since then, versus 79% for the S&P 500.
Part of it is the ability to raise prices. Tobacco product inflation has increased almost five times faster than overall inflation since 1950. But that, too, doesn't explain everything.
A lot of the price increases have been to offset rising tobacco taxes, which in some states make up more than one-third the sales price. (Altria pays far more in excise taxes than it earns in profits.) 
There is something about tobacco that leads to extraordinary returns despite a subpar business.

What is it?
It comes down to two factors, both of which are paradoxical and relevant to all investors in all industries.

1. Fear, disgust, hatred, and outrage toward a business is good for shareholders. 

A lot of investors (understandably) want nothing to do with tobacco companies. Some pension funds are barred from owning them. And then there's the constant threat of litigation, which has hung over the industry for decades.It adds up to millions of otherwise enterprising investors who won't touch tobacco stocks.
Low investor demand keeps tobacco-stock valuations low. Low valuations lead to high dividend yields. And high dividend yields, compounded over decades, add up to massive returns.
The more hated an investment is, the higher future returns are likely to be. The same is true vice versa. This is one of the most difficult investing concepts to come to terms with, but probably the most powerful.

2. Tobacco companies barely innovate. That keeps them sustainable. 

Innovation is exciting because it promises something new. New products. New markets. A new future.
But it's expensive. And even if you're great at it — like Apple is — you'll probably stumble one day.
The products Apple made just five years ago are utterly irrelevant today. The company has to reinvest itself every few years, continuously coming up with breakthrough products that blow us away. What are the odds it'll keep innovating consistently at the rate it has for another 20, 30, 50 years?
Pretty low, I'd say. Even the best players strike out from time to time, and ruthlessly competitive markets show them no mercy. It's rare that a leader sticks around for more than a decade in industries that undergo constant change.
Companies that make the same product today they did 50 years ago are different. They don't innovate, but they don't have to. It's a boring business, but it can be beautiful for shareholders because it keeps the companies chugging along for decades, if not centuries.
The ridiculously large gains from compound interest occur at long holding periods. They key to building wealthy isn't necessarily high returns, but mediocre returns sustained for the longest period of time.
You typically find that in boring companies that don't innovate, and sell the same products today that they did 50 years ago, and will likely be selling 50 years from now. Food, soap, toothpaste and, yes, cigarettes are good examples.