My Idea Became a Billion Dollar ($945 million) Company

Back in 1999, three Nortel employees, namely myself, Claude Bouffard, and John Shannon were enjoying beers after work at the Royal Oak pub in Kanata, Ontario. We bantered about some ideas around micropayments on the internet. Why couldn't we pay small amounts of money, such as 25 cents for the newspaper, and have it just show up on our phone bill? We worked in the DMS division of Nortel and had some idea of how the billing system worked. After all, telcos have very well established billing systems for handling tiny line items, and they have an established system for reconciling these amounts amongst themselves. So the idea was essentially that you'd click on a link, a secure transaction box would pop up and prompt you for your "Go Pin". Well, the name Go Pin would come later but it serves to help you understand how it would work. The 25 cents or whatever it was would simply show up on your phone bill.

Our VP at the time, Bob Tipple, was convinced enough by John and Claude to allow Claude to run full-time with the idea. Claude being the infectious ball of energy that he is, drove the idea forward to the point where it had enough legs for the internal incubator folks to take the whole idea seriously. John and Claude sold it to the incubator folks, I was occasionally cheerleading from the technology side. Nortel created the business as GoPin Inc, and venture capitalists were found, and finally a CEO, Gary Marino, from the banking industry in the US came on board to lead. The company underwent a number of name changes, to Pinmoney then I4Commerce, then BillMeLater and it moved to Baltimore. Also, as you likely already figured out by now, the original idea morphed into BML doing realtime credit checks and handling the billing, as opposed to trying to herd the cats we like to call telcos.

Ironically the company sold for $945 million, more than Nortel's total market capitalization today. What did I get? Well, I do have a nice mug, a great story, a sense of pride, and I'm a little older and a bit wiser now. Maybe it's time to try another idea, but this time actually get some money out of it. I do not know how Nortel itself fared, they likely cashed out to a VC early.

Update: This has been picked up by the mainstream media, I have made the front page of the Ottawa Citizen today (Oct. 9). Why does everyone have to misspell my last name?

Don't Catch a Falling Knife

Today I would simply like to say that one should wait until the stock market stabilizes and begins a sustained upwards trend before you decide to buy in. While you may look at those low stock prices and start to salivate, please hold off, unless of course you prefer to just roll the dice with wild abandon, or have gambling money you want to spend now. By holding off, you might not end up buying the absolute bottom, but don't be greedy, have some prudence in these times of uncertainty. If you prefer, buy in on a regular basis over time (dollar cost averaging), that's a better idea than trying to grab at some of these falling knives.

The Race Has Begun for TFSAs

Today, the race has begun in Canada to get you to sign up for a tax free savings account. Since TFSAs don't actually come into effect until Jan 1, 2009, ING Direct has decided to simulate it from now until the end of the year by paying you double the interest. As of Jan 1, 2009 they will automatically register a TFSA with the government for you (based on the early simulation account), and transfer up to $5000 from this early simulation into it.

I urge any of you with any money just sitting in a savings account somewhere, and you probably do since the equity markets are in turmoil, to consider opening your TFSA now. If you do it today, and fund it to the full $5000, expect a nice bonus interest payment on Dec. 31 of this year of about $35. Earning 6% on your money (as of today's rates) is pretty darn good and beats any GICs out there. I don't want to sound like a complete fan boy for ING Direct, I'm sure that there are similar offers at other progressive financial institutions too. Feel free to share by leaving a comment.

The $700 Billion Bailout

So let's say that they strike a deal and the government buys up all that bad paper. Then what? People still can't make the mortgage payments and the defaults continue? I don't understand why the lenders don't just renegotiate or freeze the interest rates to keep people from defaulting on their mortgages. Propagate the lower earnings from those mortgages up the food chain into the ABCP. Everybody ends up getting less, except the little guy ie. the homeowner gets to continue living in their home and make payments towards eventually owning it. Have the government issue coupons attached to the mortgages, the value of such coupons dropping each year. This allows both the homeowner and lending institution to be weaned out of the situation slowly. This also avoids needing to have all the $700 billion up front, apart from having to buy up enough of the currently worthless paper to keep the system afloat right now

Scary Financial Times

With the collapse of so many financial institutions looming in the US, and the Fed stepping in with $100 billion+ dollars of prop-up funding, one has to be very worried. The US is already running yearly deficits close to $500 billion, so this extra prop-up cash has to be coming from the printing presses (ie. from out of thin air) and/or via loans from other countries such as China. The Fed did not cut interest rates this week, so that tells me that they're likely worried about the printing presses fueling inflation.

Some people may see these times as a great buying opportunity, but I don't recommend trying to catch a falling knife. Wait until things settle out, and cross your fingers that they do. If you're looking for a decent GIC rate, ING Direct just came out with a 1.5 year GIC at 4%. I think it's a time limited promotional rate since it beats the rates on all their other GICs except for the 5 year which also has the same 4% rate.

Saving Money on Cell Phone Use in Canada

Since there's been a lot of hype recently in the cell phone market with the launch of the iPhone, I thought I'd point out an easy way to potentially save yourself a couple of hundred dollars on your cellphone bills every year. It essentially hinges on how much you use your phone and when. If you're a heavy user, just continue to regularly examine your cell phone use and shop around, assuming you're out of contract of course. If you're a light user, then consider using a pay as you go or prepaid plan. For example, I'm on Roger's Paygo. I use their virtually unadvertised $100 (+ tax) prepaid card, since it has 365 day expiry time. I'm also on their 1 cent evenings and weekends "plan" with it. This does last me an entire year. So I'm paying $8.33 (+ tax) a month for a cell service and it includes call display and optionally voicemail. If I put more money into the account before the time expires, it all rolls over into the next 365 days. They allow you to build it up to a maximum of $500 I think. Any Roger's phone can be turned into Roger's Paygo, once out of contract of course. They may even give you some free airtime to get you going.

I'm not running a Roger's commercial here, but they do use the technically superior GSM for their network. I wish we had another GSM competitor in this country. But there's also a few other reseller deals using Roger's network that are also very good value. The first is 7-11 stores, with their Speak Out Wireless offering. The second is Petro-Canada Mobility.

If you're stuck with no option but to use Bell's network, then please have a look at Virgin Mobile.

How Much Do You Spend on Coffee?

Starbucks has just announced that they're closing 600 locations in the US. While you might joke that this only represents one city block, it is actually significant and impacts a lot of their employees. When times start to get tough, people start to cut back on discretionary spending. But rather than deny themselves some of those simple pleasures, they tend to look for cheaper alternatives. Today I'd like you to take a moment and think about how much money you're dropping on coffee in the course of a work day. If you are spending $5 a day on coffee at work, then that's $100 a month. Over the course of a year, that's $1200. For many people, that's a week on a beach in Cuba.

You can make your own delicious cup of coffee quite cheaply. For example, a kilo can of Hills Brothers medium roast coffee is under $5 at Price Chopper. Use 18% cream (not 10% coffee cream) and you can have a cup that will be at least as good as Tim's if not better.