How Tesla and Bitcoin is forming the new economy Dogecoin

How Tesla and Bitcoin are forming the new economy

It is official. Tesla just invested/bought (it is hard to tell the difference today) USD$1.5B in Bitcoin and plans to accept it as payment. Just a few days ago, CEO Elon Musk tweeted positive messages around digital currency especially for Bitcoin and Dogecoin. While the intention of his Dogecoin tweet is still unclear, his tweet has send Dogecoin’s prices through the roof/moon/mars (it is hard to keep up with the terms anymore).

How Tesla and Bitcoin is forming the new economy Dogecoin

How Tesla and Bitcoin are forming the new economy Dogecoin

Disclaimer: No vested interest in Bitcoin/Dogecoin/Tesla.

In this article, I will attempt to explain what good and what not good will happen from this move and potential series of events that might unfold. If you are new to Tesla and Bitcoin, I would encourage you to read about my previous Bitcoin article: Is it too late to invest in Bitcoin?

 

Tesla’s Current Brilliant Capital Moves

One thing for sure. Elon Musk sure knows how to raise capital or get his hands on money. Previously, Tesla raised USD$5 billion from stock offering. The question had that time was do they really need the cash? It turns out that his timing was excellent. By selling shares at an expensive price, Tesla’s existing shareholder was not affected much by dilution. Effectively, he is raising capital from the equity market and still “protecting” his existing shareholder. I feel that it was a wonderful move.

Secondly, Tesla’s income comes from selling regulatory zero emission credits to other carmakers. Tesla would have noted a net loss for 2020 if it had not relied on this USD$1.6billion sale. To help build a sustainable economy, carmakers have to manage their pollution levels and have to buy green credits or face hefty fines or have their business licenses revoked. Selling of the zero emission credits is probably a 100% profit margin (there is no COGS). I feel this is pretty smart too as Tesla is selling something that is technically “free”. This will impact them once the other carmakers are more serious about their carbon emission.

 

Tesla Next Capital Move: Bitcoin

As of 27 Jan 2021 Motley Fool’s article, Tesla ended the year with a cash war chest of USD$19.4B. This already includes the $10B raised through stocks offering in 2020. With the purchase of USD$1.5B worth of Bitcoin, around 7% of the Balance Sheet (cash and equivalent) has been converted into Bitcoin. When you are investing in Tesla, you are now “investing” in Bitcoin.

How Tesla and Bitcoin is forming the new economy

How Tesla and Bitcoin are forming the new economy

Of course, Bitcoin surge > 20% to reach a new highs of USD$44,000.

In a official filing with the Securities and Exchange Commission, the company said it bought the bitcoin for “more flexibility to further diversify and maximize returns on our cash.” With the limited use of Bitcoin at the moment, I believe Bitcoin is another investment vehicle for Tesla. In this, I feel that Tesla would be able to “sell” Bitcoin when the time is right to edge up their quarterly results. However, this could impact them if Bitcoin prices fluctuate much.

 

Tesla and Bitcoin: The New Economy

You might be wondering why I named the article “The New Economy” by now. I would like to present a thesis of what potentially can happen and the likely impacts of it.

  • An Alternative Investment / Store of Value

This is the one that I like the most. Although it is known that Warren Buffett does not invest directly into Gold, he is invested into Barrick Gold, an Gold Mining company. Gold by itself doesn’t not have any utility. Barrick Gold offers a balance sheet, income sheet etc. Most people believe that it is hedge against the USD.

Similarly, what Elon Musk might be trying to do is to hedge against the USD. Think about it, 20% of all USD are printed in 2020 during the COVID-19 crisis. The value of USD might be compromised and this is where it gets exciting.

If the crisis isn’t managed well and the value of USD continues to crumble, Bitcoin might then be a good store of value. Bitcoin will then become the new worldwide accepted currency. Hence, the new economy.

  • Increase adoption of Bitcoin

In my previous article about Bitcoin, I questioned about the “lack of adoption” of bitcoin. There seemed to be a HODL attitude on diamond hands. As Tesla cars gets traction in the world, they could really start to accept Bitcoin for their goods or service all over the world. As the velocity of Bitcoin transaction circulates more and more around the world, people will eventually have to use Bitcoin in their everyday transaction. It will give birth to a new worldwide accepted currency.

The question remains if people would actually want to use Bitcoin for transactions with the increasing Bitcoin prices.

 

Final Thoughts By Wealthdojo

Elon Musk decisions usually leave people feeling awe or just confused. Certainty, he already has raving fan base to help him push prices to wherever he wants it to be via a tweet. I can only say he is a good marketer, a great business man and definitely an excellent story teller.

Till next time!

 

For those of you who want to kick start your Wealth Management journey in 2021, why not consider joining my telegram channel?

Join my Telegram Channel for a tip a day! In Wealthdojo, we dedicate a small amount of time daily for learning new things. Continuous learning is one of the greatest secrets of success.

For those of you who want to turbocharge your journey, contact me at chengkokoh@gmail.com. I would like to hear from you what your experiences are currently and from there, we develop a plan specially catered just for your journey.

We wish you all the best! Stay Safe and Take Care!

Chengkok, Sensei of Wealthdojo.

3 Things I Learnt About Gamestop Wall Street Bets VS Hedge Fund Short Sellers

3 Things I learnt from the Gamestop Saga

It is 29 Jan 2021. Gamestop (GME) share price is $325. It has gone up a long way since early January when price is around $17. The battle is still on. Several brokerage companies like Robinhood has started to restrict trading on GME. So much for a company that believes that everyone should have access to the financial markets. With this, I believe there might be more interest going towards Bitcoin.
If you unsure what happen, do check out the first article How Gamestop is better “investment” than Tesla, where we explain the hype on GME.
Disclaimer: I do not have any position in GME/Bitcoin. Indeed, I have “missed” out on the huge runs of those companies but time will tell. Here at Wealthdojo, we seek to understand what has happened fundamentally. Even in the insane movement in the stock market, we aim manage our wealth in a logical and systematic way.
3 Things I Learnt About Gamestop Share Price

3 Things I Learnt About Gamestop Share Price

 

The Update

Things were not pretty over the last few days.

  1. Hedge Funds had to closed their short positions taking in huge losses. Melvin Capital (the guys that have shorted GME) have not announced how much losses they suffered but Citadel and Point72 have infused close to $3 billion into Melvin Capital to shore up its finances. They have also deny going into bankruptcy but supposing have been bailed out.
  2. Several brokerage companies started to restrict trading. On 28 Jan, they only allowed people to sell their shares of selected companies. On 29 Jan, they allowed people to buy only one share of selected companies. This came as an outrage as if you restrict people to only sell. There is only one direction the company can go.
  3. Robinhood started to draw up to $600 million from their line of credit. They have also raised more than $1 billion from existing  investors. It is to pay customers who are owed money from trades and also fulfil regulations. They probably did not manage risk properly by allowing those shorter to short too much.

From this episode that is still ongoing, I hope to share 3 important lessons that we can learn as retail investors.

 

Leverage

Time and again, this word comes out to haunt the financial market. If you can remember the 2008 financial crisis, lines of credit is so easily available that even a prostitute can take a dozens of mortgage loan (Unverified information from Netflix: The Big Short).

When you leverage, you are using money that you don’t have to purchase a stock.

Leverage example:

You have $100,000. You want to invest in ABC shares (assume it is $1) because you believe the share price will double for whatever reason in the next few days. You leverage by borrowing another $100,000 to invest paying an interest (we are going to ignore interest in the calculations). You buy 200,000 shares using your $200,000.

When ABC shares doubles (now $2), you would have $400,000. You pay back $100,000 and your portfolio is now $300,000.

If you didn’t leverage and borrow, your portfolio only grows to $200,000.

Your money grows “faster” when you leverage.

However, if ABC shares drops to 0. Your original $100,000 is now 0. However, you now owe $100,000.

If you didn’t leverage and borrow, your portfolio just suffers the maximum lost of $100,000 but you do not owe people’s money.

The above is a 1:1 leverage. It is possible for you to have a 50:1 leverage in the financial market. Imagine how scary it is if the trade don’t go according to plan. That’s 50x of $100,000.

 

Investing with margin or leverage is the fastest way to lose all your money. We won’t deny the fact that it is also the fastest way to make more money. Ideally, you should only invest with the money you already have. I believe we will see how this spans out in the days ahead especially if there are big hedge funds using leverage in their GME positions.

Prisoners Dilemma

I never thought I would see this happening after my university days. Readers of Wealthdojo will probably know I’m a behavioral economics fan. Seeing prisoners dilemma play out in real life is somewhat very fulfilling.

Let’s set the context first. When the brokerage stopped people from buying. All you could do was to sell the stocks. Hence, it became a situation of sell or don’t sell among the retail investors.
3 Things I Learnt About Gamestop Prisoners Dilemma

3 Things I Learnt About Gamestop Prisoners Dilemma

I have created a payout table to facilitate the discussion on the prisoners dilemma.
3 Things I Learnt About Gamestop Prisoners Dilemma Part 1

3 Things I Learnt About Gamestop Prisoners Dilemma Part 1

Shareholder #2 best response is to sell. This is because if Shareholder #1 were to sell, Shareholder #2 is better off selling than not selling (2 > 1). If you sell but other investors don’t sell, you win but other investors lose. If Shareholder #1 were to not sell, Shareholder #2 is better off selling than not selling (5 > 4).

3 Things I Learnt About Gamestop Prisoners Dilemma Part 2

3 Things I Learnt About Gamestop Prisoners Dilemma Part 2

Similarly, Shareholder #1 best response is to sell. This is because if Shareholder #2 were to sell, Shareholder #1 is better off selling than not selling (2 > 1). If Shareholder #2 were to not sell, Shareholder #1 is better off selling than not selling (5 > 4).

3 Things I Learnt About Gamestop Prisoners Dilemma Nash Equilibrium

3 Things I Learnt About Gamestop Prisoners Dilemma Nash Equilibrium

The Nash Equilibrium for this game is for both of them to sell getting a payoff of (2,2). Logically, both shareholders will sell.
Although (4,4) is the most ideal for them, it requires all the GME investors to coordinate and don’t back out on the deal. It will certainly play on the motivation on the GME investors to stick on with don’t sell.

Motivation

3 Things I Learnt About Gamestop Wall Street Bets VS Hedge Fund Short Sellers

3 Things I Learnt About Gamestop Wall Street Bets VS Hedge Fund Short Sellers

I have learnt that in investing, different people will have different motivation. I find it bizarre for people to randomly ask someone on their opinion and whether to invest in the stock market at this moment of time.

If you ask a trader, he will say yes because the S&P is upward trending.

If you ask a value investor, he will say no because valuations are crazily rich.

If you ask a growth investor, he will say yes because there is still growth.

If you ask Warren Buffett, he will just buy back his own shares.

If you ask Elon Musk, he will tweet Gamestonks!

If you ask me, I will sit at the sidelines and continue to collect excellent companies and a sensible price.

For the people at Wall Street Bets, they are there to send a message.

 

If you decide to follow any of them, make sure they have the same motivation as you. Otherwise, you might find yourself in an awkward position.

 

Final Thoughts By Wealthdojo

When you thought 2020 was an epic year, 2021 came as another surprise. This episode definitely hasn’t closed yet. Who knows this might be a trigger for another financial crisis. If it comes, the question is “are you ready?”.

 

For those of you who want to kick start your Wealth Management journey in 2021, why not consider joining my telegram channel?

Join my Telegram Channel for a tip a day! In Wealthdojo, we dedicate a small amount of time daily for learning new things. Continuous learning is one of the greatest secrets of success.

For those of you who want to turbocharge your journey, contact me at chengkokoh@gmail.com. I would like to hear from you what your experiences are currently and from there, we develop a plan specially catered just for your journey.

We wish you all the best! Stay Safe and Take Care!

Chengkok, Sensei of Wealthdojo.

 

Is it too late to invest in Bitcoin?

Is it too late to invest in Bitcoin?

Happy Birthday!! On 12 Jan 2009, Nakamoto sent 10 bitcoin to Hal Finney. This became the first “transaction” in bitcoin history. 12 years later, prices of Bitcoin exploded to reach USD$40K (on 9 Jan 2021). What a journey! Such exponential increase in prices tend to spike interest among the retail investors on their wealth management journey. If you reading this, welcome to the club.

In this article, I will write about my understanding of bitcoin, where we are at the moment and also answer an important question in your mind.

Is it too late to invest in bitcoin?

Is it too late to invest in Bitcoin?

Is it too late to invest in Bitcoin? Source: Logo vector created by starline

Disclaimer: I don’t claim to be an expert in Bitcoin. All views represent my own. I would love to engage in a healthy discussion of bitcoin in the comments section below.

 

Context Of Bitcoin: Currency Of Trust

Bitcoin was born slightly after the full swing of the banking crisis. What started as a subprime mortgage crisis eventually created a domino effect that crippled the ENTIRE world financial system. You can imagine the distrust in the financial industry at that time.

The original Satoshi Nakamoto white paper states: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”

Financial institutions now have new and stricter regulations to comply. At the same, another school of thought arose. Skip the financial institution altogether. It is what it meant by disruption. Imagine a world where you can make financial transactions without going to a bank. This loosely translates to a more efficient and cheaper financial services.

 

This is where Bitcoin was born.

Bitcoin is positioned to be the “currency of the future”. This boils down to back to the fundamental of money which is trust. The US Dollar has been positioned to be the global currency because it is widely accepted and “trusted” (consider why you won’t want to hold Zimbabwe’s currency). 61% of all foreign bank reserves are denominated in U.S. dollars, and nearly 40% of the world’s debt is in dollars. On the dollar bill, you will see this world called legal tender which means that it is acknowledged by the laws as a mechanism to settle a private or public debt or in order to meet a fiscal responsibility which includes paying taxes, abiding by contracts, and finally damages or fines.

Bitcoin is making waves as it becoming more “widely accepted” (I will discuss more about this later). It is also “trustable” as it is backed by blockchain technology. To put loosely, blockchain technology is used to share valuable data in a secure, tamperproof way. That’s because blockchains store data using sophisticated math and innovative software rules that are extremely difficult for attackers to manipulate. At this moment of writing, Bitcoin is not legal tender yet but is deal with as property or goods.

For a deeper understanding of cryptocurrency, blockchain technology and bitcoin, here is a good article by PwC.

 

Can it ever be used as money?

In the economic literature, something can only be used as money when it has these 3 functions. A medium of exchange, a measure of value and a store in value. Perhaps the heavily debated issue is if Bitcoin if it has a store in value.

Is there a store in value?

Bitcoin Price Volatility

Bitcoin Price Volatility

Consider this graph on the volatility of bitcoin over the past year and also past 10 years. The prices of bitcoin was never in any sense stable (which is what makes it exciting). Prices volatility have been north of 20%. A store in value is defined as something that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved. Whether you are a bull or bear for bitcoin, I think we can agree that there is no predictability for the value of the coin in the near future.

Is it being used as a medium of exchange?

While Bitcoin transactions has been increasing over the years as it slowly become more “widely accepted”, we are unsure how much of it is being translated into real goods and services. According to newbtc, only 33% of bitcoin transactions are being used to purchases goods.

Bitcoin Transaction Trend

Bitcoin Transaction Trend

That being said, I believe that there will be more transactions in future. My question is IF my Bitcoin is appreciating at such an insane level, why would you ever use it to buy something? Taking a note back into May 22, 2010, now known as Bitcoin Pizza Day, Laszlo Hanyecz agreed to pay 10,000 Bitcoins (USD$400,000,000 or USD$400million today) for two Papa John’s pizzas for USD$25. Who in the right mind would want to use Bitcoin to buy anything? Imagine something that you bought at $25 then would now be USD$400million. There would be an extreme incentive to keep money or HODL (someone that keeps cryptocurrency rather than selling them).

Will more people start to use Bitcoin?

It is written that there is an “increasing adoption” of Bitcoin. I have my doubts as shown by this Bloomberg article. About 2% of the anonymous ownership accounts that can be tracked on the cryptocurrency’s blockchain control 95% of the digital asset. Due to the finite nature of Bitcoin, an increasing adoption have to mean that the number 2% should start to go up. I believe there are some whales that are currently holding the bulk of Bitcoin for it to be used meaningfully as money.

Personally, I believe the original intent of it being used as money is now being shaken.

 

Bitcoin As An Investment Speculation

While I believe the original intent of Bitcoin have not been carried out, you cannot not deny that the people have been making money on it. Whether Bitcoin should be invested depends on who you are asking or who you are.

Futuristic Individual – Yes. We will be using cryptocurrency in future.

Value Investor – No. Because there is no value creation in Bitcoin (No revenue/cashflow/earnings).

Technical Analysis Trader – Buy at signal. Sell at signal.

Bullish Retail Investor – Hell Yeh. Huat ah!

Bearish Retail investor – Run for the hills! Let me tell you a story of the Tulip bubble.

Personally, I believe that there is room to speculate on this. With no foreseeable future usage (in my own humble/limited capacity), I feel that it is a strange asset class but an attractive tradable instrument.

 

Final Thoughts By Wealthdojo

There are still many things shroud in mystery. Who is Satoshi Nakamoto? Who are the 2% who is holding Bitcoin’s wealth? Are they the Russians, Chinese or terrorist? We will never know (at least for now).

With Bitcoin entering into the financial system, they have became part of the system they have set out to replace. The disruptor seemed to have become absorbed into the legacy system. The banks will live another day.

All views represent my own. I would love to engage in a healthy discussion of bitcoin in the comments section below.

 

For those of you who want to kick start your Wealth Management journey in 2021, why not consider joining my telegram channel?

Join my Telegram Channel for a tip a day! In Wealthdojo, we dedicate a small amount of time daily for learning new things. Continuous learning is one of the greatest secrets of success.

For those of you who want to turbocharge your journey, contact me at chengkokoh@gmail.com. I would like to hear from you what your experiences are currently and from there, we develop a plan specially catered just for your journey.

We wish you all the best! Stay Safe and Take Care!

Chengkok, Sensei of Wealthdojo.

 

The Year of Impact 2020 What did it teach us

The Year of Impact 2020: What did it teach us?

2020 has been an exciting year. Words like “WFH”, “Zoom”, “COVID19”, “Essential workers” that made no sense in 2019 has became buzz words. Everyone has been affected. I believe it will be good to look at this year and see what we can learn from this (this is what I have learnt in 2019). I have invited the best financial bloggers in Singapore to share about what kind of impact 2020 has on them. Let us know in the comments if this resonates with you.

The Year of Impact 2020 What did it teach us

The Year of Impact 2020 What did it teach us?

 

#1: Wealthdojo says… “Life Goes On”

On 7 April 2020, the Singapore Government announced the implementation of the circuit breaker. It wasn’t pretty. It caused a huge uproar in my company. The financial services industry is one that we need to meet people face to face. My colleagues were worried that our consultancy business will be affected. Almost all of us are anxious to know how we can conduct our business when we cannot meet our clients or prospects. How can we help our clients claim for their critical illness bills if we cannot go out to get their original receipts? Will this be the end of financial services?

In one week, all these questions were resolved. Though, it felt like ages.

In one week, I changed my business processes. I have conducted business meeting with my clients and prospects over zoom. I quickly adjusted to the new norm while learning new skills. I have also helped my clients transit into the new norm with a special message for them.

Life Goes On.

Those that didn’t adapt into the new norm were left irrelevant quickly. We shouldn’t be complacent thinking that things will remain the same. Business trips fell almost 100%, there is huge transition into E-Commerce, we are primarily working from home. I believe many things will change over the years. 2020 just accelerated many changes.

Keep Relevant. Life Goes On. 

For those of you who are new, check me out at 6 Levels Wealth Karate.

 

#2: Frugal Youth Invest says… “Slow down pace of life”

If not the circuit breaker, we would have continued to focus on our work or self and overlooked our closed ones. Circuit Breaker has forced us to slow down our pace of life, spend quality time while fighting the pandemic together. 2020 has taught me the importance of work life balance and how we can fall back on our closed one for support, something that we have always overlooked because of our busy schedule.

Check Weiming out at Frugal Youth Invest.

 

#3 Life Finance says… “Plus ça change, plus c’est la même chose

The more things change, the more they stay the same.

The year started on a high note – stocks kept soaring to new heights, brushing aside the snippets of bad news which popped up every now and then. And then everything went belly-up – markets crashed, economies faltered, and oil prices slumped. In response, interest rates were cut to zero, but still nothing could stop the bleeding. In the chaos, financial pundits opined that the world had changed irreversibly, and buy-and-hold was a fool’s mantra. Instead, they proclaimed, now was the time for selling first to buy back lower when the true crash came, buying alternative investments instead of stocks, day-trade and be nimble. Sell options. Anything but staid and boring buy-and-hold, or even buy-on-the-dips. Fast forward almost a year later, stocks, markets and economies are emerging from the rubble, and the old school buy-and-hold and buy-on-the-dip investors have seen their investments recover, and maybe come out a little ahead, while half the pundits have vanished.

Sounds familiar? But that’s not about 2020. That’s the story of 2008.

Check Life Finance out at LifeFinance.

 

#4: Rachel says… “Struggles happen in your life for a reason”

2020 taught me that I can get through anything. Whenever you’re struggling, it can seem like the struggle will never end. But struggles happen in your life for a reason. They teach you how to be resilient and maintain faith in yourself to get through it. I’m grateful for the tough times that 2020 has brought into my life because I’ve learned a lot about myself in the process.

Check Rachel out at heyitsrachel.

 

#5: Jocelyn says… “Regain some work life balance”

2020 will probably go down in memory as the year of upheavals and change. I count myself among the lucky ones to have been able to keep my job and health during this trying year. I picked up a new craft during circuit breaker out of interest and a desire to fill my time. That has grown into an online business selling handmade crochet items! It is not easy to juggle a full time job with a side business selling time-intensive handmade items but it has been incredibly fulfilling 🙂
On the investing side of things, I made a good call to pivot away from our local shores in search of better growth opportunities. Cloudflare, Alibaba and Tencent are some of my frontrunners of the year. Looking ahead to 2021, I hope to regain some work life balance and continue growing my portfolio!

Check Jocelyn out at Financial Freedom by 40

 

#6 Marc says… “Focus & Prioritising”

For many, 2020 has been the age of information overload & massive overwhelm. While it’s great that many of us have been making full use of the time in lockdown to learn, upgrade and upskill ourselves, many of us have been caught up with watching too many programs, participating in too many workshops and learning from too many online courses. Because of that, lots of us are stuck, paralysed, and have not progressed as much as we would like. And so, I realised that instead of just absorbing new information into our lives, taking action, aka “implementation”, plays a huge part if we want to grow too. As our time and attention is limited, this also means Focus & Prioritising is extremely important too – and if not, we will just be trying to sign up for every webinar or Facebook Live and just hopping from 1 topic to another (potentially wasting thousands of dollars & countless hours of our precious time & money in the process.

Check Marc out at Master Implementers.

 

#7 The Moss Piglet says… “Reflect and to identify the mistakes you have made”

2020 is the year I learnt to appreciate everything I have.

This has been a long year. I am convinced that 2020 had more than 12 months. The first quarter was going great for me. Projects were moving smoothly, stocks that I bought were going up. Those months are now a distant memory and it sure feels like they happened in a different year.

Then Covid-19 hit and it all became a blur. First off, I hope that everyone that was directly affected by the virus is doing okay. I found myself having more time to spend with my wife and 1 year old kid, this I truly appreciate. I also found out that it was near impossible to work at home while taking care of your restless child. Others were not so fortunate, my poor workers were locked up in their dormitory rooms for 4 months. Each of them were so afraid of getting tested positive of the virus. From them I learnt to appreciate what I have and the importance of extending your care and concern for others’ well-being.

It is an important time to reflect and to identify the mistakes you have made. After every storm comes a rainbow. I am sure that there will be a lot of opportunities post Covid-19 and we must prepare ourselves to capitalise on that.

On a final note, I would like to wish all Wealthdojo readers a brand new 2021 with happiness and good health. Cheers.

Check YeeSiang out at The Moss Piglet.

 

Final Thoughts By Wealthdojo

Wishing you guys the best! It is less than 30 days before 2021. It is a time to reflect on what happened in the previous months and see what we can learn from this year. Don’t let it go to waste!

Write down your reflection in the comments below! I look forward to see your comments.

Special thanks to Weiming, LF, Rachel, Jocelyn, Marc and Yeesiang for your contributions and wishing you a great 2021 ahead!

 

Join my Telegram Channel for a tip a day! In Wealthdojo, we dedicate a small amount of time daily for learning new things. Continuous learning is one of the greatest secrets of success.

For those of you who want to turbocharge your journey, contact me at chengkokoh@gmail.com. I would like to hear from you what your experiences are currently and from there, we develop a plan specially catered just for your journey.

We wish you all the best! Stay Safe and Take Care!

Chengkok, Sensei of Wealthdojo.

5 Ways Tony Hsieh Changed The World Quote

5 Ways Tony Hsieh Changed The World

This post is dedicated to Tony Hsieh. He died on 27 Nov in a house fire. He is well known to be the CEO of Zappos which was later sold to Amazon for USD$1.2Billion. In his years, he made many impact to the world and these are the some I’m personally thankful for.

This is a non personal finance post. However, I believe we can learn from the actions and the values that he had. Here are 5 ways Tony Hsieh changed the world.

5 Ways Tony Hsieh Changed The World Quote

5 Ways Tony Hsieh Changed The World Quote

 

The Fore-Runner For E-Commerce

People would have agreed that Alibaba, Lazada, Shopee or even Amazon to be the success icon for e-commerce. To put things into perspective, Amazon started in 1994, Alibaba started in 1999 but only found success years later. Zappos started in 1999 and found resounding success by doing something that people thought was crazy then.

They sold shoes online and offered free 60-day shipping AND returns policy. In 2003, Zappos decided to give customers 365 days to return the shoes, as long as they were in “like new” condition and in the original box.

In 1999, this was a crazy idea. It was a time people bought shoes from stores because people could actually try them to see if it fits. Mind you, there was barely any online shopping and a lot of distrust buying things online. Many people also thought that the return policy would kill their financials as it was expensive then.

Fast forward 20 years later, you can buy almost anything online and return policies are a norm. They were certainly way ahead of their time. Do you have an idea that people thing is crazy?

 

The Focus on Customer Service

In an era in which we demand cheaper and better products, Tony focused on customer service. Many businesses become so focused on the product or service that they end up forgetting the most important factor that ensure their business prosper: their customer. Tony did not.

In 2004, Zappos’ customer loyalty team embarked their 24 hours a day, seven days a week, 365 days a year shift. In a world where customer service is a cost center, Zappos employed 25% of their staffs (2004) as customer services. There are no scripts and no time limits on phone calls. It was just a full time job making sure their customers were happy.

Fast forward 20 years later, your business’s reviews online can make or break your reputation. Just look at how Lemonade is focusing on customer satisfaction now. Have you gave a good review to someone recently? Maybe you can do so for me =)

 

Quirky Corporate Culture

After Amazon bought Zappos over, the employees in Zappos was afraid that the corporate culture in Zappos would change. Amazon was known to have an intense corporate structure as compared to Zappos experimental, fun and quirky culture.

Tony maintained the culture and Amazon has been keeping a hand-off approach for Zappos.

In the famous CEO statement, Tony titled his speech “Zappos And Amazon Sitting In A Tree” and assured the culture will remain the same or better. It is one of the best CEO statement I have ever read. In it, he reassured that his employees will still have a job and the leaders will continue running the company. Please have a read.

Personally, I related to this strongly. I’m working in the Financial Services Industry where our performance are measured with sales. It is not a secret that the company I work for is profit driven (just like most companies). However, I’m blessed to be in a District (aka sales team) where we measure success differently. As a result, the culture of the district is one that focuses on delivering the best value to our clients in terms of strategic planning and also claim experiences. I’m very thankful as I don’t think it will be easy to find a company that is accepting of a culture like ours. It is much easier to focus on my client needs in such a very supportive culture. Does your company have a supporting culture?

 

Relationships

When asked what was his greatest achievement, he mentioned:

“The relationships and friendships. We focus a lot on company culture, so these are not just co-worker relationships but true friendships, where people choose to hang out with each other after work or go on trips together. [That also applies to] the relationships with our vendors and other business partners.”

In an age where we are more connected digitally but disconnected physically and emotionally, his focus on relationship struck a chord in my heart. I have friends (whom I don’t hang out much anymore) who were constantly on their phones, checking their emails/Facebook notification/ Instagram notification during the time we were having lunch/dinner. Connecting with them was a struggle as they will be distracted every 3 seconds looking at their phone. The relationship that we have now are conveyed through a “like” on Facebook and it disturbs me greatly. I do treasure the Facetime I have with people now.

Tony’s focus on relationship (you can have the same with wealth) inspires me and I hope that it will be my greatest achievement in my life too. When was the last time you sat down with someone and look into him/her in the eye and talk?

 

Happiness

5 Ways Tony Hsieh Changed The World Delivering Happiness

5 Ways Tony Hsieh Changed The World Delivering Happiness

One buzzword for the younger generation would be “Happiness”. Although his book is on business lessons, it is applicable to many life lessons. One of my favourite is “Go with your heart”. This statement is easy to say but not easy to practice. Sometimes, it would mean breaking expectations that has been subconsciously imposed on us.

In the world’s culture asking us to do more, earn more, it is not easy to go with your heart. I dare say that most parents want their children to be an engineer, doctor or a managerial job that is “stable”. It took me great courage to go with my heart by venturing into the financial services industry and also the investment industry. There were many heartaches, my parents felt it was a waste for a University Graduate to be an insurance agent, , many times they asked me to find a “real” job, many times I felt like giving up. Nevertheless, in every leg of the journey where I followed my heart, I learnt more about myself. It wasn’t easy but then again life never was.

Are you following your heart? What is your heart saying?

 

Final Thoughts By Wealthdojo

Things are never really the end. It is the start. Because of Tony, I believe many people have believed things are possible and we are living in their version of the world that they have dreamt up.

What’s your vision of the world? Are you participating in your vision or are you letting people fill it up for you? Are you the educated poor? If today is the last day you are living, what would you be doing?

Look forward to see your comments.

 

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For those of you who want to turbocharge your journey, contact me at chengkokoh@gmail.com. I would like to hear from you what your experiences are currently and from there, we develop a plan specially catered just for your journey.

We wish you all the best! Stay Safe and Take Care!

Chengkok, Sensei of Wealthdojo.