Man of The Year 2010

Control your Cash NOT our man of the year

Won't send us a pic? Then you get a police sketch.

Picking a Man of the Year before the year is over is senseless, but that doesn’t stop every media outlet from doing it. At Control Your Cash, we can buck convention while remaining literal. We don’t give an award for Man of The First 11 Months of 2010 and Maybe December of 2009 If Anyone Can Remember Back That Far. Nominations opened on January 1 and closed Friday.

Here’s our winner: Brandon of Indiana. He lives what appears to be an upper-middle class life on a barely middle-class income, and isn’t incurring debt in the process. We devoted 3 posts to him last year, which is even more than we devoted to the stupidity of receiving income tax refunds. Read his captivating and inspiring story, CYC’s first trilogy.

Awarding the prize was a tough decision. The incumbent, Bob from Las Vegas, did nothing to disgrace himself. Nor did runner-up Brandon Jennings, one of the most underpaid players in the NBA but a guy who knows the value of a buck. Brandon of Indiana didn’t accept our interview request, and we didn’t bother trying to reach Jennings, but since he’s a public figure we can at least assemble the workings of his profile.

Young Money tattoo

He's not kidding

Jennings was born in Compton, CA to unmarried parents and never went to college, making him the kind of person whom the media hopes develops a crack habit so they can make an example of and pity him. But Jennings doesn’t need your pity. He’s too busy enjoying self-determination.

In 2006, under pressure from major colleges, the NBA initiated a shortsighted rule that prohibits high school players from immediately jumping to the league. The colleges, after all, provide most of the raw material that the NBA turns into slick entertainment. This rule made sense, because the league was being overrun by underachieving, fundamentally unsound, lazy, immature, obscure players who’d never gone to college and would never win anything or craft any kind of legacy in the pros. You know, losers like Kobe Bryant (Lower Merion HS, Philadelphia, ’96), Kevin Garnett (Farragut Academy, Chicago, ’95), LeBron James (St. Vincent-St. Mary, Akron, ’03), Jermaine O’Neal (I’m getting tired of looking up their high school names), Tracy McGrady (ditto)…you get the idea. Carpenters and auto technicians don’t need to go to college, nor do baseball and hockey players, but it’s the End of the Republic if basketball players don’t. Because Division I college athletic programs are all about enriching students’ minds, and not about exploiting those students for as much revenue as possible while paying them the laughable pittance of room and board.

The NBA rule stipulates that incoming players be at least 19 and a year removed from high school. So Brandon Jennings, like every other high schooler who’d chosen basketball as a profession and spent his teenage years dedicating himself to that goal, was stuck in the position of not being able to find an apprenticeship that paid him as much as possible. Until he found a loophole.

While the rule says you have to be out of high school for a year, it doesn’t say what continent you have to live on. Jennings moved to Italy and played professionally there. He returned to the United States a year later, was drafted by the Milwaukee Bucks, and in a refreshing display of iconoclasm, became the first highly-drafted player in history to skip the nonsense of the draft ceremony itself. No video exists of him sitting in the audience, sweating, waiting for his name to get called, hugging his extended family, putting on a baseball cap and showing fake affection to the NBA commissioner. Instead, he strolled in several picks after the Bucks had drafted him.

The result? First-team all rookie, the youngest player in history to score 50 points in a game, and now, at 21, he’s driving a $26,000 car. It’s that combination of irreverence, excellence, self-determination and frugality that makes us proud to call Brandon Jennings our Control Your Cash Man of the Year runner-up.

**This post is featured in the Carnival of Wealth #20**

**Also feature in the Carnival of Personal Finance #292**

5.3 billion birds in the hand

A bird in the hand

We had the hardest time keeping the little freak still for the picture

Is the ability to recognize opportunities a characteristic from birth, or a teachable skill?

Most of us miss out on most opportunities, by definition. Otherwise we all would have sold our houses in 2008, invested the proceeds in Cost Plus stock, then bought the houses back this fall for pennies on the dollar. You didn’t, which is why you’re still reading personal finance articles and trying to make sense of the world.

Are you familiar with Groupon? Not a ridiculous question – we asked a fairly with-it 24-year old woman about it the other day. She’d never heard of it. The company’s clever name gives you a hint as to how it works. You enter your location at Groupon.com. Every day, in every city Groupon serves, the company pairs with a local retailer to offer a limited-time deal. This isn’t 10¢ off a jar of lemon curd, either. Current Groupon deals include $49 for a 1-hour facial, $10 off a ticket to a Stanford University basketball game, $50 of food at the Pewter Rose Bistro in Charlotte, NC for $25, etc. The catch is that a certain number of people have to sign on or the deal won’t go into effect. (That number is posted for each deal, along with the number of remaining people needed to activate the deal.)

The mutual benefit here is obvious. Customers save money if enough of them exist to activate the coupon, but lose nothing if there aren’t (membership is free for both customers and businesses.) Meanwhile, the merchant gets guaranteed customers who went out of their way to show an interest in buying the product. If too few people sign up to activate the deal, the merchant loses nothing (and gains information – either “we need to offer a sweeter deal” or “what we’re selling is so bad that no one’s interested.”) Groupon keeps half the coupon revenue.

Like Twitter and eBay, Groupon is the kind of enterprise that makes a rational person kick himself for not thinking of the idea first. The website is sleek, informative, and easily navigable, particularly on a phone. Even the descriptions of the deals are entertaining to read – a staff of moonlighting comedy writers and stand-up comics creates them. Groupon started a little over 2 years ago in Chicago, offering discounted pizzas at one particular joint. Today, the company has 35 million members in 250 cities on 4 continents. It employs 3,000 people, most of them in sales. When the venture capitalists came calling, Groupon management stood at attention. Liberal estimates say the company will take in $350 million this year. It’s hard to imagine that Groupon’s expenses are more than a tiny fraction of that. Back in April – 1/3 of Groupon’s life ago – the company was making $1 million weekly. Groupon founder Andrew Mason has lofty ideas – he claims that he wants to do for local businesses what Amazon did for online retail.

Mason might be a visionary, but his business acumen is curious. A few weeks ago, Google offered $5.3 billion (excluding incentives) for Groupon. That’s about what Sirius XM is worth, but Groupon makes money. Whether the Google offer was in cash or Google’s resilient stock, Mason and his partners could have gotten ultra-rich faster than just about anyone in the history of commerce.

Mason turned Google down, because he’s insane.

Groupon is a great idea, and one that’s easy to copy – just ask LivingSocial, CrowdSavings, Tippr or one of Groupon’s hundreds of other new competitors. LivingSocial already has almost as many visitors as Groupon, with a website that’s hard to distinguish from Groupon’s at times. Groupon didn’t just get big quickly: it reached its perihelion shortly thereafter. Sure, there are millions of non-members to convert, but why should they patronize Groupon when its competitors are offering the same thing free? The competitors are increasing exponentially while the potential customer base grows arithmetically. It’s a Malthusian problem for a different century, only this one doesn’t involve cannibalism and starving orphans. Besides, how many discounted spa treatments can the world handle? (Groupon’s clientele is overwhelmingly 30ish and female.)

Mason’s strategy, at least as he tells it, is to do an initial public offering and turn his company over to ordinary investors by 2014. By which time we’ll have discount-searching polycarbonate chips implanted in our heads. Seriously, at the rate the number of his competitors is growing, Mason could have 2000 Groupon knockoffs to contend with by then. The greater the dilution, the less interest Google or anyone else will have in Groupon’s targeted customer information. Groupon management let a winning lottery ticket expire in the name of future aspirations. The iron is almost cool to the touch as this point, and Mason still isn’t striking it. Check back in a few months when another potential suitor makes a low-9-digit offer for Groupon. If that.

And if someone offers you what seems like a ridiculously high price for something, don’t double down on your own good fortune. Take the freaking money.

**This post is featured in the inaugural edition of Totally Money Carnival**