possible/probable

The government is spending $700 billion to increase liquidity so that a business like mine can get a loan to do a project like mine. You, the taxpayer, might wonder how it is working for me so far. In order to explain that, I need to tell you how I get money.

I have a bank. The bank takes deposits and lends that money to businesses like mine. But my bank is worried that I might default and they would end up owning a training facility. That is OK, as long as they didn’t pay too much for it. So they will only finance, let’s say, 50% of the cost of my project.

Now, as a small business, I need to come up with a huge down payment. This is extra tricky because when you buy a fixed asset, you don’t get to write it off that year: Land never gets written off, and you depreciate the construction over 39 years. Thus, not only do I need to retain earnings equal to the downpayment, I need to save an extra 50% for the taxes. This would delay my construction by a decade.

Seeing this problem, the Small Business Administration came up with the SBA 504 loan. They lend me 35%, my bank lends me 50%, and I come up with the remaining 15% of the cost of the project. It is difficult to express how effective this program has been at creating prosperity in America.

In fact, the obvious way to use taxpayer money to end a recession would have been to pump taxpayer money into the SBA loan programs: just lend money to me at a low interest rate, and I’ll invest it (and a big chunk of money from my bank) in a project that creates jobs and growth. (This would have been the surgical approach — the carpet-bomb approach is to buy up bad assets and faltering banks.)

Where does the money for an SBA 504 loan come from? Bonds are sold on the market. For the investor, the nice part about this bond is that it is federally backed: bondholders get paid, even if I default on the loan. Thus, to an investor, there is no real difference between a Treasury Bond and an SBA 504 Bond.

At the beginning of each month, someone at the SBA goes to Wall Street and yells, “Get your SBA 504 Bonds here!” And people rush to buy them. The more people who rush to buy them, the lower the interest rate. Last month, these investors got bonds at 5.5%. After fees and other expenses, small business people got the money for 20 years at 6.6%.

So, the market crashes and there is a “Rush to Quality” and I think to myself, “Aaron, there are going to be a lot of people rushing to buy those SBA 504 bonds. I don’t know what rate I’m going to get from the bank, but I’m sure the 504 loan rate is going to be sweet!”

However, this month when the SBA guy was on the floor yelling, “Get your SBA 504 bonds here!” Treasury Secretary Paulson was also the floor raising money for his bailout. He was yelling, “Get your Treasury Bonds here. I’m giving crazy interest rates! They’ve all got to go!”

The SBA guy had to raise his interest rates to compete with Mr. Paulson. This month, he got the money at 6.77%. This money will go to small business people at a rate of 7.72%.

Thus, the bailout increased the interest rate on SBA 504 loans by 1.1% in a single month. (On a large, 20-year loan, 1.1 percent is a very big deal.) So far, I’m giving this bailout a C-.

A big shout out to Miguel Alandete at REsource Capital Georgia who explained all this stuff to me. This project has given me a chance to learn more about how the world works, and Miguel has been very generous with his time and expertise.

Your refrigerator works on an interesting principle: When you put a gas under pressure, its temperature goes up. When you release the pressure the temperature goes down. In your fridge, there is a compressor that pushes the gas into a tube under great pressure. That is the coil behind your fridge that is warm. As the gas moves through this tube, it gives of its heat to the room. Then, it goes through a little nozzle into a tube that has very little pressure. The gas becomes cold. That is the coil inside your fridge. As the gas moves through the cold tube, it becomes warmer. And then it reenters the compressor. (Confused? Here’s a better description)

This also how air conditioners work: The warm coils are outside inside that noisy blower thing, the cold coil is in your basement cooling the air in your ducts.

If you have an air conditioner that also works in reverse to heat your house, this is called a heat pump. A heat pump can be made much more efficient (think twice as efficient) if you use the ground (instead of outside air) as a source or dump for the heat. This is known as a ground-source heat pump.

In the building industry, heating and cooling capacity is discussed in tons. A ton is about 12,000 BTU per hour. My facility needs about 30 tons. For each ton, a ground-source heat pump needs a 200′ deep hole. Drilling 30 of these holes (called “loops”) can be rather expensive — each hole costs about $2200 assuming you are buying in bulk like me.

As a result, a ground-source heat pump system will cost about twice as much as a normal heating and cooling system to install. I have decided to spend the extra money for a ground-source heat pump. Here are my reasons:

• It is efficient. The electricity for the ranch will come from burning coal. It seems like anything I can do to keep a little more coal in the ground is a good thing for us all. Over the long run (think 10 years) this efficiency will also save me money.
• It is quiet. Having several noisy blower things outside would totally harsh my mellow.
• It lasts longer. By keeping all the equipment inside, it should run for centuries.
• It makes hot water. When the heat is sucked out of the room, it can be pumped into cold water (instead of the ground) making hot water for showers.
• Tax credits. Remember the 700-billion bailout? It had a clause that gives a 10% investment tax credit for businesses that buy ground source heat pumps. And Georgia gives a 35% property tax credit for businesses that buy ground source heat pumps. Ah, beautiful socialism!

The tricky part is who should design and install the system for me? The technique is new and there is a lot of money involved. Thus, this is an important and difficult decision. I’ve got it down to two companies: GeoThermal Energy Solutions or Coolray. Anyone have an opinion?

For any heavy topic, there is one person who is “The Best”. For example, if you want to learn to write apps for Windows, Jeffrey Richter is the best person in the world to teach you.

Big Nerd Ranch is trying to attract the best. We don’t really care what the topic is — Cobol, hazardous materials handling, worm farming — if the best will come teach and a dozen people are willing to pay to take the class, we will put it on the schedule.

One of the reasons that I am building the facility is to create an environment where the best will want to teach.

To help me create that environment, I have hired Gamble+Gamble as my new architects. I’ve been working primarily with Mike Gamble who is also a professor at Georgia Tech.

Here is what the firm looks like:

We are facing a few engineering challenges: city water, sewer, and gas will not reach the site for several years. So, we must deal with a well, a septic tank, and a buried propane tank. (Not to mention the normal engineering challenges of HVAC, hot water, electricity, water retention, and keeping the classroom ceiling from falling down.) So, the architects are “pencils up” for now while the civil and mechanical engineers work their magic.

Georgia has been in a drought, and some tired, ugly pines are battling with my lovely hardwoods for water. Next Wednesday, I am going to reduce a couple of those old pines to firewood. Mikey Ward and his chainsaw have graciously volunteered to help. Thanks, Mikey!

If you want to help or you want some free firewood, we will be at 9055 Terry Road, Fairburn GA, 30214 starting at around 10:30 AM. Follow the sound of the chainsaw.

When I watch TV, I am surprised at how many car commercials there are. I am also surprised how little the ad says about the car. The voice-over usually says something like, “Awaken the beast within.”

I suspect those companies are trying to sell the viewer an identity. It is the saddest sort of scam, because you can’t buy your identity and a new car is a really expensive way to say, “Beast Inside!”

If I made a car commercial, it would say something like “It is a four-door car with decent gas mileage. It is really reliable and did quite well in the crash tests. It is less expensive than similar cars made by other companies. And it comes in yellow!”

Some people think that because my name is on a book they bought, that I drive a Maserati. Actually, I drive an eleven-year old Toyota Camry. (We also have an aging minivan, but Michele drives that most days.) Here is a photo I took of my ride today:

Some of you probably have expensive cars that you love. I could not be more happy for you.

But times are tight. Maybe some of the young people out there are thinking about buying a car they can’t really afford. Maybe the car payments will keep them from doing something they really want to do. To those people, I’d like to point out that many cool people are quite happy driving crappy cars.

I started Big Nerd Ranch with a car-sized check, and I’ve noticed something: A nice car and a decent adventure often cost about the same amount. Few people can afford both.

Walden and Otto went out to the site with me today. Here they are helping saw up a fallen tree.

It reminded me of an exchange that has not yet happened:

Walden: OK.

Aaron: Did they teach you how to make breakfast for 18 people, yet?

Walden: No, Dad. Still no lessons on breakfast prep.

Aaron: Have you told them that you are going to be innkeeper? What are they teaching you in this school?

Walden: I did well in spelling today.

Aaron: SPELLING?! Listen to me now, son: spelling is for people who don’t know what they are going to be when they grow up.

The investment bankers in my life are aghast that I am building an inn. They see my nice, tidy, debt-free balance sheet and say, “Why would you want to take on debt to build an inn?”

To make a move like this, one must take the long view. When Warren Buffet buys a company, he tells the manager: “Run this company as if you own it and you are not allowed to sell it for 100 years.”

By this criterion, the inn is a no-brainer:

• The student’s experience is improved
• We get complete control over our schedule
• The value of the brand gets a boost from having a “Mecca”
• Assuming we teach many classes each year, we will lower our costs
• The raw book value of the company increases as we pay off our loan
• We get a recurring tax break as the buildings and furnishing depreciate over 39 years
• And, assuming it is successful, we should learn enough to replicate this success a dozen more times

However, I sometimes wonder if it is fair to put the whole family on the 100-year plan. Maybe Walden doesn’t want to be an innkeeper. I love him, and I want him to be able chose his own career.

So, I won’t stand in his way if he would rather be an instructor.

When I started Big Nerd Ranch, I recognized my strengths and my weaknesses. I am a good teacher and a good programmer, but I’m not much of a sales/accounting/strategy kind of person. I really needed a boss.

I met Emily Herman when I was six. We grew up in the same neighborhood near Washington, DC. Because she is the most cunning person I know who still has a very strong sense of integrity, I asked Emily to be my boss. And, because I had no actual money to pay her, I gave her stock: 40% of the company. Over the last seven years, Emily has carefully grown the company and created space for me to do writing, teaching, and programming.

Emily did not want to build the ranch.
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The forest where Big Nerd Ranch will be built is quite lovely. It is filled with White Oak, Hickory, Sweet Gum, Red Maple, Dogwood, Tulip Poplar, and Ironwood trees. There are Christmas and Broad Beech ferns. There is at least one turtle.

I know these things because Fulton County arborist Leah Pine wandered around the land with me today. The main purpose of her visit was to identify invasive, non-native species (so I can kill them), but she generously took the time to identify many of the native plants for the city boy.

She also found the turtle.
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I love my architects.

Main building viewed from rear. Mostly brick. Metal roof.

Thursday, they broke up with me over lunch.

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I was teaching in Europe last week, and I was reminded of something: There are 400 million native English speakers, but over a billion people who speak English as a second language. English is the language of business and technology around the globe. At any given instant on this planet, most people who are speaking English are not native speakers.

(As a native English speaker, I’m rather pleased by this arrangement — I can go anywhere in the world and ask, “What am I eating?” and someone in the restaurant will be able to answer. I haven’t always been pleased by the response, but I have always received one.)

Several languages, including Swahili and Esperanto, have evolved specifically to be second languages. Unlike English, these languages are easy-to-learn and small mistakes result in small misunderstandings (”Inflammable”?!?).

English is still evolving down its wandering path. In this post, I’d like to suggest that we make a conscious effort to make the language easier to learn and use correctly.

Because of new technologies, new companies, and new slang, words are added to our language all the time. Perhaps we should choose to spell them phonetically. Perhaps we should make sure that new nouns are pluralized with the addition of an “s”. Perhaps all new verbs should be regular.

Perhaps we should take a good look at common forms of incorrect grammar and see if they actually make our language easier to learn. Maybe we should give a loose leash to those who are trying to make English more accessible.

I am going to try to use simple language and limited slang in my writing. When one considers the population of the world, it seems rather rude to address only the native English speakers.

A related article at Wired

As part of the use permit application process, one must invite everyone who owns land within a quarter mile to see and comment upon your plans. So, I wrote a nice invitation and delivered it to the 17 landowners near the future site of the Big Nerd Ranch.

Tonight, a lovely spring-like evening, was the meeting. I dressed in a non-threatening manner, drove out to the site, set up a table, and spread out the plans. I sat down behind my table and waited for outraged neighbors to show up.

No one came! I should be happy — apathy makes building something like this easier — but I am actually a little disappointed that no one was curious enough to show. I’m doing something cool here, dammit.

Fulton County accepted my application for a use permit. They gave me a big orange sign to post so that my neighbors know what I am up to. I posted my sign today.

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Before you can start building something in Fulton County, you need to go through the entire process to get a use permit. We are applying for a “Country Inn” use permit. The first step is to make a site plan — where are the buildings going to go.

Here is the site plan. I’ve annotated it in red. Click on it for a PDF.

You will notice that we have used only one of the two lots. (The other lot would be to the right of this one.) The architects tell me that the spaces they wanted to build on were all on the first lot. So, I’m leaving the other lot untouched for now.

Our neighbor on two sides is a developer called Minerva. Minerva is planning to develop the land into several dense villages separated by walking trails and green space. The plan is to follow Serenbe’s example. At the moment is is just 2000 acres of forest, but someday we will be just a short walk from a coffee shop and a hardware store.

If all goes smoothly, we will submit our Use Permit Application by the end of July, and we will get approval or denial from Fulton County in October.

The Big Nerd Ranch is now 13 acres. The buildings will be located at 9055 Terry Road, Fairburn, GA.

You’ll remember that I had already purchased 6.7 acres. The lot was rather long and narrow (about 900′ x 300′). So I hunted down the people who owned the long, narrow lot next to it. Today, Gayron and William Johnson sold me their 900′ x 300′ lot. Now, the ranch will be safely ensconced in 900′ x 600′ of forest. Here is a photo of the Johnsons, who told me at the closing today, “Well, we weren’t planning to sell it, but you kept pestering us…”

The question I keep getting from architects is “What is your budget for the project?” This is a very strange question. Building the ranch will give the students a better experience and gives me total control over our schedule. Thus, I’m willing to spend a lot of money to make it happen.

But. Every dollar that I spend on this project increases the likelihood that Big Nerd Ranch will go bankrupt under the burden of the debt.

So the answer would be “I am willing to spend what it costs and not one dollar more,” except an architect would only hear the first part. So, I make up numbers. I try to make up numbers that give the architect/surveyor/demolition man/contractor that look like they are passing a kidney stone, but doesn’t keep them from saying, “OK, we can do it for that price.”
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The lovely and talented Anne Kate Halsall has asked me to tell the story of “How I Got Started Programming”. There is a particular form to this meme, I will do my best to follow it.

How old? I was ten when the Hippies taught me to write code.

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Today we started the demolition of the Carey’s house. There is great excitement these days about folk art. This house is folk architecture. The house sits atop a couple of cement block walls, and about half of it seems to be made from a kit for a barn. There are a pair of french doors that open onto a 50-foot drop — like they never quite got around to building the deck that would have gone there.

These french doors created a problem in getting financing. One appraiser declared “This house is a death trap,” and it seems that many lenders don’t feel comfortable financing ludicrously dangerous dwellings. I, myself, am quite relieved to see it coming down.

Video of the backhoe lifting the front deck and tossing it into the basement

As the building came down, I asked the demo guy if we needed some sort of permit from the county. He said, “Well, sir, I don’t guess they can make us put it back up.”

Here is the backhoe in the basement:

The activity on my blog has been falling off. I’ve been quite engrossed with the building of the ranch, and the blog has not been getting the attention it deserves. Thus, I’m going to take quick turn, and begin blogging about the project.

After we were married, Michele and I volunteered at the Omega Institute. For seven weeks, we lived in a tent and helped run the retreat center. It was from this experience that I decided that technical training should feel more like a retreat, in the monastic sense of the word. And that I would create this “monastery for learning”.
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Today is my 39th birthday.

Yesterday, Michele and I celebrated 8 years of marriage.

On Saturday, I did my first triathlon. This photo is me coming out of the water after the swim.

On the Tuesday before that, I got the braces off my teeth. (For about 18 months, I’ve been living with the misery of braces.)

Clearly, it has been a big week, but that isn’t even the big news.
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The Telegraph recently posted a list of the 110 best books. It is a pretty good list, but they missed some of my favorites, so I thought I would create this addendum of great non-fiction books. (Disclosure: I’ve included a link with my associate number — if you buy the book, I’m going to get a kick-back.)
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Three books that I have been reading are related in interesting ways. They are all tied together by Maslow’s Hierarchy of Needs. So let me start there.

Maslow says that people pursue their needs in a predictable manner. First, a person takes care of the physical needs: food and shelter. While the person is looking for food, they keep thinking, “Man, when I get some food in my belly, I’m going to be so freakin’ content.” But, it turns out that the contentment is fleeting; as soon as there is food in the belly, the person starts to think about safety: storing food for a later date. When that is taken care of, the person seeks to fulfill their social needs: friends, family, and a sense of belonging. Finally, the person seeks self-actualization.

It is a pretty good model, I think. It explains why we are never as content as we thought we would be, but makes the discontent seem like a positive thing.

The three books are “The World Is Flat”, “Break Through”, and “Bowling Alone”.

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Walden is in first grade in the neighborhood public school.

Before going any further, let me point out the importance of public schools: Public schools are the mechanism by which we ensure that all Americans are given the opportunity to learn. Public school is where the rich and poor meet and recognize the humanity of the other. Public school is where future progressives and future conservatives adopt a language and an intellectual foundation upon which all debate will be based. A public school can act as the fulcrum around which a neighborhood finds purpose and unity.

Second, let me point out the best thing you can do for your local public school: send your children there. It is the families who read and think (like yours) who make our schools great. A public school populated only by students who can’t afford private school is a disaster — both for those students and for the nation they inhabit.

My Bully Pulpit

There are numerous people who worry about Walden’s education. At the top is the State Superintendent of Schools in Georgia. She has lots of power. Then, there is the Superintendent of the City Schools of Decatur and the School Board. They have power. And there is his principal, Greg Wiseman, who has a little power. Then, there is the School Council. The parents at Walden’s school elect a group of parents to advise Greg and the School Board. The School Council has no power at all. (I think the PTA could kick our ass if they wanted to.)

I am the chairman of the School Council. My only real power is that I get to make the agenda, and a couple of teachers, a couple of parents, and the principal have to follow it.

This week, I added this to the agenda: Why is cursive on the curriculum, but typing is not?

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