Flexner Report – Why Medical Care Costs So Much

https://en.m.wikipedia.org/wiki/Flexner_Report

This 1910 report basically said too many doctors were being trained. As a result, women were banned from medical schools and about half of medical schools were closed down. Now each doctor could make far more money on average.

My suggestion to fix healthcare is to remove regulations limiting the number of students training to be doctors each year and remove practicing requirements. We especially should dump the entire patent system.

Shred your worries

At LA art show with Scott

Surrogate Parenthood: 1,000 Children

I proposed an idea to Laurel today: We could have 1,000 children that are 100% ours through surrogacy. Basically, the scientific technique is that they harvest her eggs and my sperm and then implant fertilized eggs in a surrogate mother.

Rinse and repeat 1,000 times and you have 1,000 children that are all genetically yours.

I don’t think I could even remember that many names.

Not sure what the legalities are, but at least from a cost perspective you would need to go somewhere far less expensive than the United States with much more lax laws on surrogacy.

Laurel said no.

Internal Tool Building

The more I build internal tools to help automate our processes here at Coalition and bring greater efficiency to our clients and employees, the more areas I see that I can improve! I now have probably a year of programming work… probably need to hire another developer to work with me on these improvements.

Landlord Lease Buyout – My Initial Offer

My landlord wants to buy me out of the awesome lease I have. Their goal is to redevelop the whole massive property into a booming retail & residential & office complex that will multiply their square footage as well as what they charge per square foot. I spent a year hunting hard to find the best possible office space for my company with the most long term benefits. The landlord stopped by today and had a conversation with me about all of this. Here is my opening thoughts to him on what the lease buyout could be structured like. What do you think? Also, I included his initial response.

Name changed for privacy:

<Landlord’s name>,

I really enjoyed our meeting today! It was by far the best start to a relationship we have had with anyone representing <Landlord Company> so far. Being pressured by other <Landlord Company> employees in the past to leave my lease was very unpleasant. I think we will be able to figure out something that is fair and makes sense for both of our businesses so you can get a much better use out of the property here. It’s much better to work as allies than the other options.

I understand that you are thinking it will probably be 18 months till you want to break ground and begin the redevelopment. I mentioned it took me 12 months to find this place, so the sooner we get a plan of action together, the easier I think everything will go.
Building a new residential / retail complex and rebuilding our office building should be highly profitable for <Landlord Company>. You can multiply the square footage available for rent while also greatly increasing the rent per square foot. The increased property value will be many millions of dollars.
My thoughts on Coalition’s cost / compensation factors for exiting our lease:
  • We took possession of the property in April 2014 and the lease runs through to April 2024 I believe. We have a little over 7 years left. Approximately 87 months left on our lease I believe. It sounds like you guys would like to begin construction perhaps when we have about 70 months left on the lease, so you would like us out before then? We currently pay something like $2.10 per sq ft. A comparable space will probably cost us $4-6 per sq ft per month. (estimate: $4.50 – $2.10 * 70 months *5000 sq ft = $840k)
  • We also have the expense of the disruption to our business:
    • Probably a couple of months of lost revenue from the time and effort and downtime and distraction of moving (estimate: monthly revenue of $250k * 2 = $500k)
    • Changing all of our marketing & sales & advertising materials ($30k)
    • Informing all of our clients and employees and prospects (??)
    • Losing employees who don’t want to move to the new location (anticipate 20% staff losses of in office people with related expenses) (estimate – we have 20 employees, based on my experience last time I would lose 4-5. Cost of recruiting 4 * 20k = $80k)
    • Losing clients from the distraction of the move / clients who like being in close proximity / etc (estimate: based on last time we lost 5-10% from the disruptions .. included probably in the first bullet with lost revenue)
    • Paying contractors / construction to build out the new space ($50k?)
    • New furnishings / desks / chairs / decorations / art in the new office ($40-60k?)
    • Breaking our multiyear contract with the fiber provider (not sure)
    • Loss of easy access to the metro station which was a major reason in why we selected this location – makes us much more attractive by removing the commute from lots of areas of the city (not sure)
    • Increased cost of parking in new location. We pay $75 per spot and the local garages were asking $200 when I asked for a spot for new employees. (probably $1k a month over the remainder of the lease = $70k)
    • Loss of easy access to all the local partner companies, as well as the great restaurant and social scene here. (not sure)
    • Moving company expenses & breakage (not sure… $5k?)
Those are just my initial thoughts, I’d need to really analyze it further to see what else can be come up with. Ballpark might be around ~$1.6m. I know in a lot of markets tenants are getting crazy offers based on the landlord’s multi-million dollar gains, but I think we could possibly approach it from the cost to Coalition perspective I outlined above. If we leave, <Landlord Company> gains 70+ months of the entire property renting for far more which would probably put a buyout at several million dollars rather than the number I came to from cost calculations. What do you think?

 

P.S. – Also one factor I forgot to include would be tax implications. Perhaps also legal issues with a less favorable lease?

The landlord’s response:

Joel

I also enjoyed our meeting. Great to know you are a UW guy!

As I said, we have a lot on our plate right now in terms of development and quite honestly don’t know that I can recommend to the family to move forward with everything at once!

We have other tenancies in the buildings that will also be looking for compensation on a move-out.

I will take your notes below in to consideration but at first blush it is higher than I would have anticipated

Lets keep the dialogue open and friendly

All the best

Matt

 

Rock climbing

I had a great session of rock climbing yesterday. Matt and I worked on a couple of good 11c leads, then did a little top rope. I got there early and did about an hour of bouldering and talked with Kristin and Gil for awhile. Good times! I think I was there 5:30-9:30.

Funny Government Physics Joke – Governmentium

Why I Spent $100k To Fight A $10k Small Claims Lawsuit

What follows is my personal perspective on an interesting dispute. Obviously, it is only my opinion of the situation and there are two sides to every story. I invite the other side to respond if they wish in the comments. I also made the decision to keep the other side anonymous after I first wrote the post with real names, mostly because I hope to not inflame them further and I would prefer to never hear from them again. 

When I was ten years old, I was at recess playing tag with my friends. One boy got into an argument with me about something. He stepped close and hit me, then ran away. I chased him, but he ran up to the teacher monitoring recess who had not seen anything previous. He gave her a big hug, and looked back at me with a grin.

As an adult, I was put into a similar situation. My company, Coalition Technologies, was hired by another company – TheClientCompany – to upgrade their website theme on BigCommerce starting on August 26, 2014.

It was a relatively small project that looked straightforward. The CEO and owner of TheClientCompany, a fellow named John Donald Deep (he goes by Donald), actually provided us the PSDs so it was just going to be a simple HTML / CSS build. Donald was paying us $12,000 for 116 hours of work to convert his PSDs and set up a few extra features on his website. We provided a rough estimate of 30 business days (6 calendar weeks) to complete the project.

Once the project got started, my development team realized that the PSDs provided by the client weren’t in a format conducive to a web build. We let the client know about this, and volunteered to help fix his PSDs at no additional charge to him. Our designer spent a couple of weeks fixing these PSDs and getting everything corrected, then handed it off to our developers around September 5th, 2014.

My developers worked on the construction of the website and roughly six weeks later at the end of October they were wrapping up work. However, Donald Deep at this point began to make lots of requests for out of scope items not included in the contract. My team bent over backwards to accommodate him and finish these items. By the beginning of November, we had gone far beyond what he had paid for. Our team had racked up 294 hours of work on a project that TheClientCompany had only paid 116 hours for. Our contract requires that before a website launches, final payment must be made. My team launched despite this and continued to work on it for him. When I reviewed the situation, I was quite frustrated at having lost money on this project.

I contacted the client and let him know that he needed to make his second half payment (he had paid the first half when we started). I also let him know that any further out of scope work would require a retainer, but that we’d be happy to help him with it.

Donald Deep’s email back to me was close to 2,000 words of outrage that I would request the final payment before he was perfectly happy with everything we did. My reaction back was poor: in my email back I told him I was stopping all work on the project and reverting his website back to his old theme until he sent payment. He was still able to sell and process orders like he had done for years before hiring us – it was just that he had to do it using his old theme again.

Donald absolutely exploded. His next email to me was over 10,000 words of outrage. All caps were used quite extensively, as well as many exclamation marks, and accusations of every kind. I became angry reading through this.

I replied with a short email stating we would be happy to do more work on his website, but that he still had to pay his final payment first and set up a retainer for further work.

After a couple of days, I received an email from Mr. Deep saying that his “life is amazing” and that he “was feel good today” and wanted to settle this matter. This seemed a bit crazy to me, but I was happy that he was willing to solve the issue together now. He said that he had hired a new development firm and just wanted to make the final payment to me in return for all the code we had written and have them finish the work. I agreed, with the condition that he not do a chargeback later. Donald Deep replied later that same day and agreed.

I released the code to him and he gave me the payment and I forgot about the matter…. until 3 months later I received a notice that the TheClientCompany was attempting a chargeback. Ugh, quite frustrating. I spent a couple of full days preparing all the email records, the contract, screenshots showing the website was completed and submitted all of this to the credit card company. A few weeks later, the credit card company agreed we had done the work and gave us back the money they had put on hold.

Once again, I forgot about the matter.

A full year or so later, the true drama began.

I received a letter from a law firm demanding that I pay $250,000 for damages to TheClientCompany. Not sure how they calculated that when they had only paid $12k for the website and their revenues were quite small (to the best of my recollection it might have been a few thousand a month total sales). I sent a reply back explaining my perspective on what had happened and providing evidence and that Donald Deep had of his own volition provided me a written settlement offer after all was said and done.

A few weeks later I received a small claims notice in the mail that I was being sued for $10,000 (the small claims maximum) by Donald Deep. At this point, I made my biggest mistake and figured it was such an obvious win that I did not even need to attend the small claims hearing. After all – we had clear evidence showing we did all of the work and Donald Deep himself had proposed a written settlement agreement after all was said and done. I sent my office assistant in my place to explain the matter.

My office assistant told me that the judge did not give him a chance to present the case and appeared to be angry and berated him. He told me that in less than ten minutes total the judge decided the case and moved on to the next one. A couple of weeks later, we received a judgement stating we had to pay $10,000 to TheClientCompany. I was completely shocked as I had thought it was such an obvious decision in our favor.

I read up further on California small claims and discovered that a defendant has a right to appeal and get a trial de nuevo… basically a new fresh trial. However, in the second trial the small claims cap of $10,000 is removed and the judge can potentially award much more money in damages to the plaintiff. This scared me, but I believed that we were in the right and had been treated unfairly in the first trial and had not had a chance to present our case. I filed the appeal.

About a month later, I appeared in court to defend our case. This time, Mr. Deep decided that he would not allow a pro tem to hear our case. A pro tem is an attorney who hears the case in place of a judge since California is very short on judges. Mr. Deep had allowed this the first time. There were no judges available to hear the case, so they rescheduled us for a month later.

This same thing repeated four or five more times.

Each time I was scheduled to appear in court, I spent a couple of hours the day before refreshing my memory on the case and the facts so that I could present our side. I would miss most of the day of work.

Finally, after almost a year of showing up in court only to have our case delayed again and again because Mr. Deep refused to let a pro tem hear us, a sympathetic court employee went hunting through the court house for a judge. She finally found a criminal commissioner (still not a judge), but Donald Deep agreed for the case to be heard by this individual. The criminal commissioner had left for the day though so we had to wait another month.

Both parties showed up to the court in December 2016 and the actual commissioner was there to hear the case. Unfortunately, the commissioner was a gentleman in his seventies and did not really understand even what a website was. After letting each side present their cases, he asked us to come back in a month with expert witnesses who could advise him on what was what.

Yesterday, January 6th 2017, we had our final hearing in this matter. The old commissioner had asked a younger commissioner to take his place in hearing the matter. This commissioner was very sharp and reviewed all of the evidence and asked tough questions. The commissioner ignored the usual small claims approach of each side presents for five minutes and then a decision is made; instead, she heard us for a full two hours. She even called for a break when Donald became upset. She allowed Donald to present all of his side of the story, then had me present my side.

A key moment came when I showed the judge that I had five separate sources each stating that I finished the work (Donald himself in emails from the time, BigCommerce’s agents in emails from the time, two separate digital agencies, myself, and my expert witness) and THEN showed that Donald himself had come up with the final written settlement agreement and we had agreed to it in writing over email.

At that point, the judge said “I’ve heard enough to make my decision”. This is when Donald became upset and began trying to argue that he had more information to share. The judge agreed to let him have a fifteen minute break to regroup, after which Donald present all of the other arguments and documents he could muster. I was given a chance to respond and showed my response again. The judge then told us that we will receive the decision in the mail in thirty days.

I believe that I won the case since the judge made her statement that she had heard enough after reading the key evidence of Donald’s offer of the written settlement agreement. I would put my chances at 90% of having to pay nothing, and 10% that I am asked to pay some amount back up to the price of the contract. I will update this post when the decision is returned.

Did anything good come out of all of this? Trying to look at the bright side, I think I have gained a much better understanding of the law. Dealing with this issue as well as other legal issues and reading multiple books on legal issues, winning at trial, etc I think has left me with the equivalent of half a law degree. I have lots of experience now writing contracts, researching and preparing for a lawsuit, and arguing persuasively in front of a judge. I also believe that I am building a solid reputation for not being an easy target for the sharks out there. I was able to back down a patent troll recently- in a matter of days after filing the lawsuit they dismissed it.

Oh… to finish my story about the little boy who hit me then ran to the protection of the teacher monitoring recess. I ran right up to both of them, and punched him in the nose. I got in big trouble, but I thought it was worth it.

I try to live my life and run my company in a principled way. I don’t give on on principles even when it is financially the wise decision. Fighting this issue for the last two years has been frustrating and has cost me well over $100k in my time and my employees time. If I am in the wrong, I will try to make it right… however, if I believe I am in the right I will fight through multiple appeals and beyond all financial reason to win.

Excellent advice and commentary available on Hacker News on this topic.

Additional notes:

  1. The big mistake we made was to allow so many changes for free and also to launch the site prior to final payment being received. I have policies in the company against both of those things, but my project managers have a strong incentive to be lax on them. If they raise a flag, it will result in an unhappy client and an unhappy manager and they will be caught in the middle. It is easier for them to just push stuff through and hope it goes unnoticed. This has been a difficult issue for me to resolve and I am still trying to figure out better ways to incentivize my team to avoid this. It’s a bit of a balancing act.
  2. I should have attended the first hearing. I do find myself somewhat conflicted though as to what advice to offer others in the same situation. In California small claims court, it seems that you basically can appeal a decision for any reason as the defendant. You could almost make it a practice to send an entry level person to fight the first one and only if you lose, go back and appeal. The other shocking thing is that if state you will not stipulate to a pro tem hearing your case, your case will most likely be delayed again and again. You could almost just do that till the other party gives up. I have doubts that a person angry enough to sue would give up though – I did not.
  3. The “other legal issues” I mentioned were other lawsuits I have been through:-A patent troll sue me a few weeks ago (got it dismissed voluntarily)
    -Another client with a stronger case sue for breach of contract a year ago (I won that and got attorneys fees). This was extremely stressful as it was for big money. I read several law books to prep for this one.
    -Six year ago my first salesperson sued for commissions after I fired her (she won because I didn’t have a contract)
    I don’t want it to look like I get in a lot of lawsuits. I have had over a thousand clients and only two ended in lawsuits. I have also had over 250 employees and thousands of contractors and have only been sued once.

Reading Blood Meridian

Interesting quote

“Moral law is an invention of mankind for the disenfranchisement of the powerful in favor of the weak.”

This comes from a chapter where the character the Judge argues might makes right and war is ultimate truth.

Black Mirror Episode One Season One

Just watched the very first Black Mirror episode. Excellent! I won’t give it away, but it is a strong indictment of human nature.