Author Archives: Alexander Hay

Passion vs Persistence

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I was initially going to name this post “Inspiration: Passion vs Logic and Persistence” but I thought that might put people off. Has it so far???

Early this week a very nice lady from my business networking group contacted me on Facebook and in introducing herself asked me “what is it you are passionate about”?

Passionate? Me? I am a lawyer who specializes in asset protection and tax planning. I avoid talking about what I do at parties because I don’t want to put people to sleep. Passionate?

I told her how I helped people to form companies and trusts in order to protect their assets, reduce their taxes and obtain greater financial privacy, provided her with some of my credentials, yada yada yada. Then I asked her what she did. Well, it looked like I avoided that one.

She answered me and explained to me what she was working on. Then she again asked me “what is it you are passionate about?” Damn. Well I am either going to have to totally ignore this and not respond, or try to come up with some way of answering that is not insulting.

You see, I do not think very highly of passion. Don’t get me wrong, it serves a valuable purpose at times, but in business I don’t see the value. I realize that this goes against all the recent self-help programs and gurus. I am just not into the “aspirational” culture and society.

This was my answer: “Every day I try to wake up early, I try to do what is right, I try live up to my obligations, I try to honor my principles, and at the end of the day I look back. And if I am not altogether happy with how I did that day, I go to sleep knowing I am going to have another chance tomorrow to do better.”

That’s it. No passion.

This week I read an interesting article that I think is somewhat related: “Don’t Bet Big. Little Bets Are The Ones That Turn Into Billion-Dollar Ideas“. This articles discusses how some of the greatest entrepreneurial creations of the last 20 years have been “discovered” and not “created”. They were discovered by persistent people:

“When I was in business school, one of the most common things I would hear people say was that they wanted to do something new—like start a company or take an unconventional career path—but that they needed “a great idea” first. That always surprised me a bit, especially at an entrepreneurial hub like Stanford, since most successful entrepreneurs don’t begin with brilliant ideas—they discover them.”

The author points out that one of the biggest ideas in recent history was the result of a class project to improve library searches: Google.

I can just imagine the discussion between the two creators, Larry Page and Sergey Brin, as they discussed what they were going to do for their class project:

Larry: “Man that idea sucks. We have to come up with something better than that! Something exciting and revolutionary.”

Sergey: “Well you come up with something then. That’s all I can think of.”

Larry: “What about 3D environments for computing?”

Sergey: “What do we know about that? Plus where will we get the equipment.”

Larry: “But library search algorithm??? Can we get any more boring than that?”

Sergey: “Like I said, come up with something better.”

Larry: “Ok, library search algorithms it is. It should be enough to give us a passing grade.”

And so Google was born. Not in a passionate moment where someone cried, “Eureka!” but in a calm and plodding way.

Logic combined with Persistence, in my humble opinion, will beat Passion in much the same way the tortoise beat the hare. Not only is Passion a rather transient and unreliable motivation, but it also can be fickle; the same Passion that makes a man want to marry his wife will make him desire another. But more likely it is not the Passion that drives the cheating spouse away, but just fatigue. Passion gets old.

Of course behind the Logic and Persistence must exist Optimism. You must believe that after doggedly plodding on day after day well after the magic is gone, something out there will turn up that will dazzle you or at least give you a reason to keep going. That is true inspiration.

 

 

Wordle: Passion vs Persistence

Is your website bullet-proof?

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Most of the time I post on the importance of Asset Protection, Tax Planning and Financial Privacy, but today I thought I would post on something a little more technical: website security.

About 8 years ago I used to promote my business through seminars located in exotic places like Cancun, Playa del Carmen, Belize, Panama, Costa Rica, Latvia, etc. Yeah it was a tough job, but someone had to do it.

Well, at one seminar in Cancun I had an unusually large number of walk-ins to the seminar. I was curious where they were coming from and it turned out that they had actually come to Cancun to attend a competitor’s seminar. They had heard about my seminar and decided to ditch the other guy in favor of me. They heard about my program based solely on word of mouth. Well I gladly took their money, and enjoyed the weekend enormously!

Until I arrived back in the Good Ole US of A. It was then that I discovered that my website had been closed down, and that my URL was being held hostage by my hosting service. It turned out that the competitor in Cancun found out about his attendees abandoning his seminar in favor of my seminar and took his revenge by accusing me of spamming him. He fabricated an email that I had never sent by lifting acceptable promotional material posted on a commercial site, and changed the headers to appear like an email. My hosting service shut me down without any further notice or explanation. I was shocked. How could this happen?

Luckily for me, my hosting service responded to my request for reconsideration, reviewed the claim of spamming, and in fact concluded that the charges were false. My website was reinstated, and I was back in business.

But this made me start thinking: How can I improve my website security so that no one can ever do this to me again? I started calling around and talking to friends. Someone referred me to a Russian hacker who was living in New York. He used to work for some odd agency of the Soviet Union during the Cold War commonly called by three letters. He agreed to show me how to bullet proof my website.

3 Steps to Making Your Website Bullet Proof

Step One: Separate your domain name (URL) from everything else. Do not set up your website at a one-stop shop that provides you with the convenience of registration, DNS service, and web hosting all in one location. Instead register your URL at one of those discount registration services. I use http://www.cheapdomainnamesdot.com/. They are cheap and efficient, and easy enough for me to use it. I would consider paying a little extra and getting the privacy option (no information regarding the registration of the domain name is publicly available).

Step Two: Establish a DNS Service separate from your URL registration and your web hosting service. What is DNS? Domain Name System (DNS) is a database system that translates a computer’s fully qualified domain name (URL) into an IP address. In other words, it is the service that directs your web browser to the proper computer site when you type “www.domainname.com”. I use a free service called http://zoneedit.com/. This service will accept the registration of your domain name from a third party registration service, and then forwards the DNS to a web-hosting service of your choice.

Step Three: Find a good web hosting service. This can be just about any service out there, but make sure they make it easy for you to have your registration and DNS separated out like I described above. A good web hosting service understands how this works, and will help you do it. If they say they do not understand what you are talking about, or make it sound like you are stupid, just move on. There are literally thousands of good services out there. I personally use http://www.hostmonster.com/, but I also like a free service called http://www.memebot.com/ which provides totally free hosting and some very nice template services as well.

There are other things you can do with this system as well, and once you get familiar with the structure of things it can be quite liberating. Changing web hosting services will literally take no more than a few keystrokes in your DNS service website. No one will ever shut you down. Your website will be bullet proof.

The Secret of Asset Protection Planning: Compartmentalization

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The secret of great asset protection is not secrecy or privacy, but “compartmentalization“.

This means that your assets are separated and protected from your liabilities and risks.

The ultimate example of the successful implementation of compartmentalization can be found in the USS Missouri, one of the most powerful battleships ever created and based upon the powerful Iowa Class Battleship model.

The Iowa Class Battleship was designed during World War II to be fast and nimble yet tough and reliable. Too much armor would make the ship slow and cumbersome, so the US Navy focused instead on compartmentalizing the ship so that no single strike could cripple or sink the ship.

The ship was divided into separate compartments protected by fire walls limiting any damage to the particular compartment that was hit. It was designed to withstand multiple strikes from torpedoes and shells without sinking.

In 1989, this compartmentalization unfortunately underwent its ultimate test when an explosion in one of the gun turrets set off the magazine (ammunition supply) below the turret. This explosion was catastrophic and killed everyone inside the turret compartment, but the ship itself was able to survive the blast intact; a blast that would likely have obliterated lesser ships.

This was because the explosion and fire that occurred could not spread to the other compartments.

This same concept can be applied to your business and personal assets. You NEED to separate your liabilities from your assets. Protect the sources of your income and wealth from the dangers inherent in doing business and simply living.

Wordle: The Secret of Asset Protection Planning: Compartmentalization

What is an LLC? Why should you care?

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A limited liability company (LLC) is a hybrid business entity that blends together characteristics of a partnership and a corporate structures. It is incredibly flexible giving limited liability to its Members (the owners) just like a corporation, but offering the ease of management of a partnership.

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It also can offer interesting tax advantages depending upon how you want to use it (but only if properly set-up). It can be set up to be treated as a “disregarded entity” providing “pass through” tax treatment, or it can be set up as a “taxable association” in which case it is taxed like a corporation, but without some of the negative aspects of a corporation. This can often avoid double taxation.

But the most interesting aspect of an LLC is its ability to protect your assets. How can an LLC protect your assets?

The LLC has many special features similar to a partnership that are very beneficial for asset protection:

  • A partial LLC interest, unlike shares in a corporation, cannot be easily seized by creditors. If a Creditor attempts to take your Membership Interest, the creditor will only receive an “assignment” of the interest. The creditor can take away your membership interest, but will not be able to vote in the absence of the unanimous approval of all the other Members.
  • An LLC can require Members to make additional contributions of capital. So if a creditor takes away your Membership Interest, the LLC may require the Creditor to make additional contributions to the LLC. If the Creditor refuses, he may lose his interest in the LLC.
  • If the LLC shows a profit, it is not necessary for the profit to be distributed to the Members but can be retained by the LLC. However, the Members will be taxed on this profit even though they did not receive it. So if a Creditor takes your Membership Interest, the LLC can operate at a profit, and may be able to force the Creditor to pay taxes on profits which the Creditor never received.

A creditor who attempts to take your shares in the LLC will only get an assignment of non-voting shares. The remaining shares will be held by the other members who may be friends, family, or even specially designed trust that will protect your interests. These other Members will be able to vote on who becomes Manager of the LLC, not the creditor that took an assignment of interest.

The other members may choose to appoint you or another friendly person to be the Manager of the LLC. As Manager of the LLC you will be able to decide whether or not you and other employees get a salary, whether or not assets are sold, whether or not profits are distributed, whether or not there is a need for additional contributions from the Members, etc.

In essence, a Creditor who takes your shares in a cleverly designed LLC will not be able to vote or control the company, will not be able to force distribution of assets or profits, may have to pay taxes on income earned by the company even though it never received the profits, and will be vulnerable to demands for additional capital.

As you can see this would be a very unpleasant situation to be in if you were a creditor, but a very good situation to be in if you are trying to protect your assets. Few creditors will want your membership interest in the LLC when they realize what a hornets nest they are getting themselves into.

I have designed a specific system to be able to take advantage of these attributes of an LLC. I call it The Personal Preservation Fortress®. Check it out if you would like to get more information on how to effectively and affordably protect your assets.