If you thought Mark Zuckerberg buying a Walmart with his 5 billion dollar limit credit card to setup a giant trampoline arena for padded sumo suit wars you're close. If you thought hidden costs, you win a pony**.
Walmart, Hail to the King Baby
Walmart the epitome of logistics and cheap manufactured goods is America's favorite department store. But for the lower cost on six packs of under wear
- we subsidize Walmart employees with government healthcare (most are uncovered)
- community wealth is harvested to a remote cost center, unless you live near Walmart's HQ
- driven by cost, cheaper foreign goods have exasperated erosion of national manufacturing capability
Facebook may appear to be a free site to socialize (or snoop) on your friends and play games but it has it own set of hidden costs.
- While most users consciously ignore the distraction of ads, what about ads embedded into news feed, search and banners all around the messages of friends. Imagine calling a friend and being put on hold mid conversation to listen to an ad. I'm confident "free" phone services like this are on the way. Your attention and time aren't free.
- The aggregation of user generated content is a well known maneuver for web businesses. Why fight to generate content when users can do a better job of entertaining themselves. While I believe this is a good idea in theory, the practice of taking the vast majority of that collective value is questionable at best
- Data and relationship portability is nil. Do you want to swap microblogs from Facebook to Twitter, Posterous or Tumblr? Good luck with bringing your network and all your posts with you. In fact, out of all the blog like social web services only a handful are cooperative to changing services. This is the equivalent of changing mobile service providers but not being able to call your friends
Credit card companies appear to be the perfect lender. I can leverage a 30 day payment period and get rewards to eek extra value out of any purchase I make.
- The credit card business thrives on late payments. If you fall into a tight squeeze (see US unemployment rates) the credit companies want to be the first ones to swoop in and bail you out. They have statistical evidence of correlation between high balances and missing a payment. This triggers the trap of abusive interest rates and collection agencies ready to buy that debt at a premium if you don't pay it off fast
- Every transaction with a credit card incurs a fee to the merchant which is passed on to consumers in the form of higher prices. This varies between 1-5% and for the majority of core community businesses (small) it's closer to the high side
- Don't forget about fees related to currency exchanges. Credit cards will convert currency at the cost of a generous percentage.
- Inactivity charges. These are pretty stealthy, because we tend to use one or two cards for most of our transactions to ease book keeping, but may have several cards
Still with me? Now the good news
Being aware of these hidden costs means you can spot them in many different areas of your life. They're literally baked into everything we do and use. Here's a quick list of just a few hidden costs I pay throughout a day:
- email ads
- meetings, hint I could be working
- 7-11- Farmville ads on my big gulp and over the store front door^
- news sites - twitter, Hacker News, my favorite blogs, and rss reader all have their own agenda whether it's page views, marketing, or aggregation of content. A minute on twitter can quickly turn into an hour of reading intriguing posts
- my smart phone. I can be distracted or interrupted at any time by an email or text message. If I'm working on a tough problem I'll even welcome the escape from facing down the challenge of learning something completely alien to me (the nuances of shifting web frameworks)
- my day job. But wait I get paid for that right? Timing is everything, and when a hot idea strikes it can cost me 3 long days and the motivation to implement the "new hotness"
- programming languages - which one am I most enamored with today, what will get the job done fastest. At work it's C++ but there are hidden costs in reading extraordinarily verbose code which conceal the beauty and simplicity of well implemented algorithms.
If I opt for Ruby I have to start building utility libraries from scratch and the processing time is longer* - Victus Spiritus- yup this blog has had all forms of hidden costs. Hunting down pluggins, updating everything, learning the basics of php and more about HTML/CSS with a never ending quest for the perfect theme. The pay off is I'm minimally capable with these tools, but do I want to master CSS or found a company?
- and the list goes on...
Notes:
*= A much as I dig Ruby from a solution design perspectives, it's runtimes are dog slow for math compared to c/c++. I've considered Duby by Charles Nutter but dynamic invocation on the JVM may make JRuby my goto language
^= it looks like Mark Pincus & Zynga are building games that don't suck based on development investment
**= Pony's are in limited supply, see Ruby's default value for inventory size