Monday, February 29, 2016

Could Donald Trump Be a New Kind of Transactional President?

The possibility that Trump would step on favored political toes and act pragmatically to rein in Imperial over-reach terrifies the bloated Imperial city of Washington D.C.
Political scientist and theoretician Joseph Nye, Jr. differentiates between transformational presidents and transactional presidents: transformational presidents consciously set out to radically transform America and/or America's role in the world, while transactional presidents are pragmatists who focus on managing crises and responding with caution rather than taking bold and dangerous bets.
Nye explains the difference in Do Presidents Really Steer Foreign Policy?: George H. W. Bush was a (successful) transactional president, George W. Bush was a (failed)transformational president.
Other historians have drawn distinctions between ideologically driven presidencies (Reagan and Carter, for example) and those who practiced realpolitik--making decisions based on realities and circumstances on the ground rather than on an overarching moral or ideological framework. Richard Nixon is widely seen as a realpolitik president, as were Harry Truman and Dwight Eisenhower.
You see the overlap, right? Ideological presidents are transformational, as the world inevitably fails to match up to their ideals and goals. Realpolitik presidents are transactional, making decisions based on context, risk, and the situation on the ground. These presidents are often criticized for not "saving the world," i.e. intervening to "right" some morally reprehensible crisis, or for not "defending America's interests" more aggressively.
Obviously, every president has a mix of ideological underpinnings and pragmatic skills.
As I pointed out in Sorry, "Feel the Bern" Fans: President Sanders Won't Change Anything, very little of the Imperial machinery is under the direct control of the President, and Congress and the Supreme Court can block a variety of presidential aims.
The mainstream hysteria about President Trump (and to a lesser degree, about President Sanders) is misplaced: rather than be the ruin of the nation, either president would face a number of limits on his power.
Playing devil's advocate here--perhaps Trump would be an extremely transactional/ pragmatist president who would decide everything on a case by case basis. The two political parties and the Status Quo of institutions and Imperial agencies like predictability; everyone likes knowing politicos can be bought off or compromised, and they like ideological presidents because their choices are fairly predictable.
Trump upsets the Establishment precisely because he maintains a freewheeling lack of predictability and vulnerability to the usual blandishments of money and power. Not only can't he be bought, he doesn't toe any ideological line.
Here's a sample test for an effective president: can he/she cancel a big, costly, failed "but it creates jobs" weapons system like the F-35? The political pressure to maintain spending billions on a DOA weapons system like the F-35--$200 billion each, underpowered, buggy and unable to best the aircraft it replaces in unrigged air-to-air combat, even after decades of development and years of "fixes"--is immense.
Hillary Clinton would never cancel such a politically powerful weapons system, even though when speaking privately, every unbiased military advisor would admit it's a complete catastrophe. (Could the Skunkworks design and mock up a better, cheaper aircraft at a third of the cost of the failed F-35? Why not let them try? They did so with the F-16.)
Could President Trump (or President Sanders) take the political heat and cancel the F-35 in favor of a faster, better cheaper replacement that doesn't try to be everything to every service?
The possibility that Trump would step on favored political toes and act pragmatically to rein in Imperial over-reach terrifies the bloated Imperial city of Washington D.C. This is why he is painted as the Devil Incarnate by the mainstream (i.e. bought and paid for) media and both political parties.
A transactional president who would make pragmatic decisions that gutted Imperial over-reach and eliminated failed programs because they are unaffordable and ineffective is dangerous to the Status Quo because he can't be bribed or swayed by the usual siren songs of ideology or party politics.
Taking the other side of the argument: suppose Trump ends up caving in to the usual Imperial pressures. How would that any different from electing Goldman Sachs Hillary? Wouldn't it still be more entertaining and less dreary than four years of completely predictable Imperial over-reach and the protection of privileged financial elites with Goldman Sachs Hillary?
Why Trump and Sanders Were Inevitable: It was only a matter of time before we had a populist backlash to 30 years of flawed globalization policies that both parties embraced. (via Cheryl A.)

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Sunday, February 28, 2016

What If There Are No More Googles, Facebooks or AirBnBs?

The current batch of tech companies claim to be disruptive, but they're all derivatives of the rare unicorns that scaled globally right out of the gate and now dominate their space--and whatever new spaces attract their fancy.
It's an article of quasi-religious faith in tech circles that a few of the hundreds of start-ups touting their "disruptive" potential will blossom into super-profitable giants like Google and Facebook, or fast-growing companies like AirBnB that may not yet have profits but which have scaled fast enough to dominate their space--and richly reward early investors.
Two recent Guardian (U.K.) stories on the Digital Gold Rush frenzy in San Francisco and Silicon Valley cite this faith in the inevitability of "the next big (and hugely profitable) thing" as the basic justification for investors and venture capitalists to spread billions of dollars over hundreds of new start-ups--many which started somewhere else in the world but which migrated to the Bay Area to tap the seemingly inexhaustible venture-capital vein of cash.
Silicon Valley braces itself for a fall: 'There'll be a lot of blood' Wannabe entrepreneurs are still piling in to San Francisco, but there’s a sense that time is running out on the exuberant startup world
Is the dotcom bubble about to burst (again)? In Silicon Valley, millions of dollars change hands every day as investors hunt the next big thing – the ‘unicorn’, or billion-dollar tech firm. There are now almost 150, but can they all succeed?
The possibility that none of the current batch of start-ups will scale up and reward early investors with 100-fold returns is the darkest sacrilege in the Tech Faith.
The idea that tech has exhausted ideas that can create tens of billions of value almost overnight is so counter to accepted beliefs that it is akin to declaring the Earth is flat.
Yet there is nothing intrinsically causal in the faith that 5 "Unicorns" ($1 billion+ valuation) that scale up to tens of billions in valuation and eventual profitability will emerge from a field of 500 start-ups--or even from 5,000 start-ups.
Statistical odds are not a useful tool in assessing the likelihood of a Google or Facebook emerging from the current batch of start-ups.
Rather, it requires an assessment of the potential of the concept to scale in utility and user base.
The conventional faith in an endless supply of Unicorns is based on stories such as AirBnB: a concept that now seems obvious was undiscovered and undeveloped, and even after it was launched, few grasped its global potential.
But if we examine this idea more closely, the core value is very broad-based: the core of AirBnB (and Uber et al.) is taking potentially productive assets that are currently not in the market and creating a transparent market for them: empty rooms, unused vehicles, etc.
From what I can gather, the majority of current start-ups are simply derivatives of ideas that have already taken root: Tinder for dogs (no, I did not make this up), Uber for bikes, AirBnB for parking spaces, etc., in seemingly endless profusion.
This reveals a key weakness in the boundless faith that the next AirBnB is already breathing, and simply needs an injection of cash to explode on the world stage: all these ideas are consumer-based rather than production based.
For example, digital technologies that enable higher crop yields, lower failure rates in manufacturing, etc., have quantifiable value because they either lower the costs of production or increase productivity.
This is the foundation of the Fourth Industrial Revolution that is replacing human labor on a global scale: replacing high-cost human labor with lower-cost technology is a dynamic that is essentially unstoppable and endless: whatever human labor remains must either become more productive via technology, or it will decline because few can afford the cost.
Start-ups that are derivatives of existing platforms are competing for a diminishing supply of market oxygen. The dominant players aren't standing still, and the absurdly limited prospects for start-ups that extend the basic ideas to fringe markets will soon be revealed once the Gold Rush mentality is replaced with hard-nosed analysis of revenues and net profits.
The reality is that tech ideas that boost productivity and cut costs are relatively mature or limited to specific industries. The build-out of digital technologies in the consumer sphere--the sphere that so enamors those seeking the next billion-dollar idea--is far more mature than is generally appreciated.
This is highlighted by the thin gruel being pitched as "technologies that will change your life." These lists are all extensions of existing technologies and platforms; I have yet to see one that qualifies as life-changimg. If anything, most add little more than friction to already-complicated tech-dependent life.
How much value is there in Tinder for dogs, refrigerators that can place an order for more milk once they sense the milk carton is almost empty, and the hundreds of similar marginal ideas?
The true-believers are confident all these extensions of sensors and digital communications will create trillion-dollar markets for more technology. Color me skeptical.
I see the tech field as having extracted all the easy gold, just as the first miners in the Sierra Nevada foothills stumbled across huge gold nuggets just waiting to be picked up.
The idea that it's all hard-rock mining from here on is sacrilege to the Tech Faithful. Let's see how many of the current batch of start-ups turn into gold and how many are false gold. My guess is 99.9% are false gold.
The early miners got rich because the initial supply of exposed gold was easily gathered up--no tools or expertise required. Once that easy-to-get gold was exhausted, the 99% who came behind were left with slim pickings. I will be surprised if even one of the current batch of derivative start-ups becomes a Facebook by 2020.
Why does this matter? Asset bubbles inflate not just from central bank policies (though those are essential ingredients of any credit/asset bubble)--they result from a widespread investment thesis or belief: that the Internet will keep gorwing rapidly, that real estate can never go down, and so on.
If technology is no longer the source of incredible stock market valuations, then what's left to inflate the next bubble? If the answer is "nothing," then the stock market can lose 2/3 of its value and not bounce back.
The ultimate arbiter of stock valuations is profit. If profits plummet and Unicorns never reach the promised heights of profitability, a 2000-type crash to valuations based on real profits is inevitable.
This is somewhat analogous to the decade of the 1970s, which saw the stock market decline in real (inflation-adjusted) terms for over a decade.
Put another way: if tech no longer powers the stock market's central narrative, then we've run out of bubble-engines. And if we run out of bubble-engines, the system can no longer depend on "the wealth effect" to power consumption, fund property taxes, and everything else the current arrangement depends on for its financial survival.
If you think Tinder for dogs and talking fridges are poised to reap billions in profits, by all means invest your own capital in these ideas. But don't expect any of the current batch of wanna-be's to ever scale up and generate billions in profit.
This essay was drawn from Musings Report 5. The weekly Musings Reports are emailed exclusively to subscribers and major contributors ($50+ annually).

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Friday, February 26, 2016

How The Seeds Of Revolution Take Root: the Middle Class Loses Upward Mobility

If you cap the volcano, eventually the pressure beneath rises to the point that the cap gets blown off in spectacular fashion.
That the dramatic upheavals of war, pestilence and environmental collapse can trigger social disorder and revolution is well-established.
Indeed, this dynamic can be viewed as the standard model of social disorder/revolution: a large-scale crisis—often a bolt-from-the-blue externality—upends the status quo.
Another model identifies warring elites and imperial meddling as a source of revolution: a new elite forcibly replaces the current elite (known colloquially as meet the new boss, same as the old boss) or a dominant nation-state/empire arranges a political coup to replace the current leadership with a more compliant elite.
A third model was described by David Hackett Fischer in The Great Wave: Price Revolutions and the Rhythm of History. By assembling price and wage data stretching back hundreds of years, Fischer found that cycles of economic growth spawn population growth, resulting in more workers entering the market economy. Their earnings trigger a demand-driven expansion of essential commodities such as grain and energy (wood, coal, oil, etc.).
In the initial phase, wages rise and commodity prices remain stable as supplies of essential goods expand and the demand for labor pushes up wages.
But this virtuous cycle reverses when the supply of essentials no longer keeps pace with rising population and demand: the price of essentials begin an inexorable rise even as an oversupply of labor drives down wages.
Fisher found that this wage/price cycle often ends in transformational social upheaval.
While proponents of these models have a wealth of historical examples to draw upon, these models miss a key factor:  the vulnerability or resilience of the nation-state facing crises.
Some nations survive invasions, environmental catastrophes, epidemics and inflation without disintegrating into disorder. Something about these nation’s social/ economic /political order makes them more resilient than other nations.
So rather than accept the proximate causes of disorder as the sole factors, we should look deeper into the social order for the factors behind a nation’s relative fragility or resilience.
The Decline Of Shared Purpose
Historian Peter Turchin defined a key factor in the resilience of the social order as "the degree of solidarity felt between the commons and aristocracy," that is, the sense of purpose and identity shared by the aristocracy and commoners alike.
"Unlike the selfish elites of the later periods, the aristocracy of the early Republic did not spare its blood or treasure in the service of the common interest. When 50,000 Romans, a staggering one fifth of Rome’s total manpower, perished in the battle of Cannae, the senate lost almost one third of its membership. This suggests that the senatorial aristocracy was more likely to be killed in wars than the average citizen….
The wealthy classes were also the first to volunteer extra taxes when they were needed… A graduated scale was used in which the senators paid the most, followed by the knights, and then other citizens. In addition, officers and centurions (but not common soldiers!) served without pay, saving the state 20 percent of the legion’s payroll….
The richest 1 percent of the Romans during the early Republic was only 10 to 20 times as wealthy as an average Roman citizen.
Roman historians of the later age stressed the modest way of life, even poverty of the leading citizens. For example, when Cincinnatus was summoned to be dictator, while working at the plow, he reportedly exclaimed, 'My land will not be sown this year and so we shall run the risk of not having enough to eat!'"
Once the aristocracy’s ethic of public unity and service was replaced by personal greed and pursuit of self-interest, the empire lost its social resilience.
Turchin also identified rising wealth inequality as a factor in weakening social solidarity. By the end-days of the Western Roman Empire, elites held not 10 times as much wealth commoners but 10,000 times as much as average citizens.
Wealth inequality is both a cause and a symptom: it is a cause of weakening social resilience, but it also symptomatic of a system that enables the concentration of wealth and power in the hands of the few at the expense of the many.
Diminishing Returns On Complexity & Expansion
Thomas Homer-Dixon’s excellent book The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization outlines two systemic sources of increasing fragility: diminishing returns on complexity and the rising costs of continuing strategies that worked well in the past but no longer yield positive results.
Successful economies generate surpluses that are skimmed by various elites to support new layers of complexity: temple priests, state bureaucracies, standing armies, etc.
All this complexity adds cost but beyond the initial positive impact of rationalizing production, it reduces productivity by draining potentially productive investments from the economy.
Building temple complexes and vast palaces for the aristocracy appears affordable in the initial surge of productivity, but as investment in productivity declines and the population of state dependents expands, surpluses shrink while costs rise.
Meanwhile, strategies that boosted yields in the beginning also suffer diminishing returns. Conquering nearby lands and extracting their wealth paid off handsomely at first, but as the distance to newly conquered territories lengthen, the payoff declines: supplying distant armies to maintain control over distant lands costs more, while the yield on marginal new conquests drops.
Expanding land under production was easy in the river valley, but once water has to be carried up hillsides, the net yield plummets.
What worked well at first no longer works well, but those in charge are wedded to the existing system; why change what has worked so brilliantly?
As the costs of complexity and state dependents rise, productive people grow tired of supporting an economy suffering from terminal diminishing returns.
Empires do not just suddenly collapse; they are abandoned by the productive citizenry as the burdens become unbearable. The independent class of tradespeople (a.k.a. the middle class), driven into serfdom by taxes, lose their shared identity with the aristocracy. Beneath the surface, social cohesion frays. Once the benefits of the status quo no longer outweigh its costs, the system is vulnerable to an external disruption that would have been easily handled in previous eras.
The Suppression Of Social Mobility
There is another key factor in the resilience or fragility of social order: the permeability of the barrier between the ruling class and everyone below. We call this permeability social mobility: how easy is it for a working class family to rise up to the middle class, and how easy is it for a middle class family to enter the political and financial aristocracy?
I recently read Venice: A New History, a fascinating account of Venice's rise to regional empire and its decline to tourist destination.
What struck me most powerfully was Venice's long success as a republic: it was the world's only republic for roughly 1,000 years.
How did the Venetians manage this?  Their system of participatory democracy accreted over time, and was by no means perfect; only men of substance had much of a say. But strikingly, key political turning points were often triggered by mass gatherings of craftsmen and laborers.
Most importantly, the system was carefully designed to enable new blood to enter the higher levels of power. Commoners could rise to power (and take their families with them if their wealth outlasted the founding generation) via commercial success or military service.
The Republic also developed a culture that frowned on personal glorification and cults of personality: the nobility and commoners alike deferred to the Republic rather than any one leader.
In Venice, the political leadership (the doge and the Council) were elected via a convoluted series of steps that made it essentially impossible for one clique to control the entire process.
The doge was elected for a term, not for life, and he had to be acceptable not just to the elites but to the much larger class of movers and shakers--roughly 1,000 people in a city of at most 150,000.
Venice's crises emerged when the upwelling of social and financial mobility was capped by elites who were over-zealous in their pursuit of hegemony: all those blocked from rising to power/influence became the source of political revolt.
If you cap the volcano, eventually the pressure beneath rises to the point that the cap gets blown off in spectacular fashion.
The suppression of social mobility and the monopolization of power by the few at the expense of the many are universal dynamics in social orders.
Broadly speaking, Venice's 1,000-year Republican government, with its complex rules to limit concentrations of power and insure the boundaries between elites and commoners were porous enough to diffuse revolution and social disorder, speak to what is once again in play around the world: social unrest due to the concentration of power and the suppression of social mobility.
I don't think it's a stretch to say that the greater the concentration of power, the lower the social mobility, the greater the odds that the system will collapse when faced with crisis.
When the entire economy is expanding faster than population, and this tide is raising all ships, the majority of people feel their chances of getting ahead are positive.
But when the economy is stagnating, and those in power are amassing most of the gains, the majority realizes their chances of securing a better life are declining. This is the pressure that is being capped by the status quo that first and foremost protects the privileged.
How porous are the barriers to social mobility in our society? That a few people become billionaires from technological innovations that scale globally is not a real measure of social mobility for the masses.
In Part 2 we identify the wellspring of revolution, and reach a conclusion that may surprise many.
Click here to read Part 2 of this report (free executive summary, enrollment required for full access)
This essay was first published on peakprosperity.com, where I am a contributing writer.

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Wednesday, February 24, 2016

A Teachable Moment: to the Young Person Who Complained About Her Job/Pay at Yelp and Was Promptly Fired

You identified two problems but do not propose any solutions to either one; and you missed the two real problems.
This open letter from a young customer support employee of Yelp in San Francisco to her CEO has garnered a variety of comments that display a common bifurcation: some are sympathetic to her struggle to get by in a very costly region on a modest salary, while others wonder if the letter is an Onion parody of clueless entitlement: An Open Letter To My CEO.
I am sympathetic to anyone who arrives in a very competitive "big city" with no local contacts and not a lot of experience or specialized training. That describes me when I arrived in the San Francisco Bay Area a few decades ago.
My B.A. is in philosophy, which has a similar market value to your degree in English, i.e. near-zero. But this doesn't mean my training in philosophy has no value; it simply means you can't walk up to a potential employer and say, "Hi, I have a degree in philosophy, hire me."
The value is only reaped by applying what you have learned. Studying philosophy taught me a number of specific analytic skills: to seek out false assumptions and identify problems and potential solutions. If you can't frame the problem accurately and coherently, it's impossible to identify any useful solutions.
These skills have served me well, despite my "worthless" degree. Though nobody had any sound reason to pay me a lot of money simply because I had a B.A. in philosophy, life presents a constant flow of problems that need to be analyzed in ways that enable the development of solutions.
In other words, there is a super-abundance of opportunities to apply what I learned.
Taking my own experience as an employee, employer, business owner and entrepreneur, I've condensed what I've learned about creating value (i.e. earnings) and the emerging economy into a book: Get a Job, Build a Real Career and Defy a Bewildering Economy.
It is less a career-guidance book and more of an explanation of how the economy actually works. It covers the eight essential skills you need to successfully navigate the economy as it is, not as we wish it was.
Rather than tell you the book is useful, I'll apply what's in it.
I don't think your age, gender, ethnicity, etc. is relevant. Anyone can apply what I'm sharing.
You have identified what you perceive as your two big problems: the cost of living in the S.F. Bay Area is very high, and your pay is too modest to enable the lifestyle you anticipated/expected.
You identified these two problems but do not propose any solutions to either one; and you missed the two real problems. Problems don't solve themselves; problem-solving requires analysis, diligence and a willingness to learn from others, to experiment and fail--not once, but continually.
You did not identify the third problem: your expectations are completely mis-aligned with reality. The S.F. Bay Area is one of the most attractive, stimulating, dynamic urban regions in the world, and it attracts capital and talent from all over the globe.
The demand to live and work here outstrips the supply of dwellings and high-paying jobs, so the costs of living are very high and the pay for labor is low unless you're able to take advantage of specific skills or social contacts.
Many of the people who come here seeking work are highly educated, experienced, creative, ambitious, hard-working, dedicated, etc., and many possess enviable social skills (social capital).
If you intend to find work here (i.e. if you don't have a large monthly income from a trust fund), you will be competing against extremely competitive, ambitious people, many of whom focus not on the hardships but on the opportunities. Expecting to outcompete these people for a high-paying job is unrealistic unless you have competitive skills, a strong work ethic, abundant social and human capital, etc.
Whatever you lack, you will have to acquire in order to be competitive in this environment.
if you want a degree that opens doors, earn a PhD in EE/CS from UC Berkeley or Stanford, or get top marks in your Stanford/Haas School (UCB) MBA program.
For the rest of us mere mortals, credentials don't offer much advantage, as this is one of the most over-credentialed locales on the planet.
The question is: what can you do to create value? It's not so much a matter of having job skills or experience; it's how those can be applied to create value--either for your employer or for your own enterprise.
So the real problem you have is: what can you do to increase your value creation and thus your earnings? "Unfair" doesn't count. Labor has a market value, end of story. Unfortunately, there is an oversupply of labor around the world and a scarcity of high-paying jobs.
It may seem like there is an abundance of high-paying jobs in the Bay Area because we're in the bubble factory of the world, but this is only a reflection of frothy VC-fueled valuations of zero-profit companies and highly paid employees' ability to make their employers obscene amounts of money.
if you want to earn $100,000, you need to bring in $500,000 in revenues for your employer, minimum.
The second problem you have is: what can you do to dramatically lower your cost of living? Since you didn't properly identify the actual problems, you were incapable of finding solutions. Now that we've identified your real problems, we can seek solutions.
As for living costs: your goal should be to live on one of your two paychecks a month: $733. Immigrants often get by on low-paying jobs and yet manage to buy a house and pay the mortgage off in five years. They do this by sharing expenses. If you want a very low-cost lifestyle, try befriending immigrants in your social circle (or add them to your circle). Someone will likely know someone in their extended group who has a room for rent (in a house they're buying by pooling six adults' modest wages).
As for food--shop only in Chinatown or ethnic markets. If you are careful and observe what the older ladies are buying, you will not be able to carry $20 of groceries. Just recently, I bought two pounds of beautiful tangerines for $1 in Chinatown and wonderfully fresh yao-choy veggies for less than $2. Many fish are available for $2 or $3 a pound; if you're vegan, pressed tofu is a cheap substitute for meat.
Asian-style cooking only uses a few ounces of meat/meat substitute anyway.
A carton of black beans used for seasoning (it adds umami) will cost you $1.29, and last you a year. A jar of chili bean sauce (a teaspoon enlivens a dish most wonderfully) costs $2.29.
You get the point: learn to cook vegetable-based meals and your costs to eat gourmet food will drop under $100 per month. A pound of beans and some Asian veggies will feed you for a week, and with some cheap seasoning, it will be delicious.
We eat better at home for $150 than people who spend $2,000 a month eating out. Anybody can learn how to cook with low-cost ingredients on YouTube University. Make a pot of spicy dal, experiment.
If you don't have any family to share expenses with, form a family-type group of responsible, honest friends. Rent a house with them, make some basic good-neighbor rules, and kick out whomever fails to fulfill their duties and responsibilities. It will be good experience for running your own enterprise.
Here is my version of a letter you could have sent Yelp's CEO:
Dear CEO:
I know you're busy, but I have two ideas that will immediately lower the costs of providing customer support while boosting productivity and employee retention.
After three months in customer support, I've observed that a few employees have developed ways to handle customer issues quickly and with relatively few coupons. Others solve customer issues by throwing coupons at everyone.
I've developed a brief, concise training program that would give every customer support employee the tools to resolve customer problems more efficiently and at lower cost than the present system.
If customer support teams were able to earn bonuses based on their improved productivity and lower costs, this would immediately improve employee retention, at a modest cost that would be more than paid for by higher productivity.
The benefits from these two ideas would be immediate. I am hoping you can get me fifteen minutes with the V.P. of customer support to present my training/productivity ideas, and I'm excited by the possibility that we could make dramatic improvements with a modest investment of time and virtually no capital costs.
Sincerely,
Yelp Employee
cc: V.P. of customer support
Which letter do you think would be more effective in accomplishing your goal of earning more money--your letter or my letter? As management guru Peter Drucker noted, businesses don't have profits, they only have expenses. Value creation boils down to cutting costs, boosting revenues and increasing productivity.
This is as true of a sole proprietorship as it is of a major corporation.
If the management of Yelp failed to show interest in your letter/proposal and did not even hear you out, you learned a very important lesson:
Yelp's management is incompetent and/or dysfunctional, and there is no opportunity for you at Yelp. This new knowledge clarifies your solution: find a job at a company/agency that is open to new ideas and is thus a place where you might be able to contribute value and grow your own human/social capital--and your earnings.
If you want to be in PR/media, start designing media/PR campaigns for small businesses for free. Most won't have any social media exposure; they will welcome your efforts to boost their revenues/customer base.
This is your job from hour 41 (after your full-time gig) to hour 55. Convincing small businesses to give you, an inexperienced person with no track record, hard cash, will be difficult; convincing them to let you design and produce a social-media campaign and share any increase in revenues with you is a much easier sell, because you're taking the risks: if the campaign flops, you earn nothing, and the business owner isn't out any cash.
But you will have learned a lot by the time you run 10 or 20 such campaigns, and if you do a good job, are honest, forthright and do what you say you're going to do, you'll assemble a useful network of contacts that will lead to opportunities you cannot anticipate.
There is much more in my book, but I hope you've learned something that can be applied to your future endeavors from this Teachable Moment.

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