So there I was, trying to guess/remember my password to sallie mae dot com for tax purposes… when I was suddenly prompted with a rather personal question…

“What is the first name of your favorite relative not in the immediate family?”

Oh. crap.

Not “crap” because I was suprised they are asking me for this very specific piece of information; “crap” because I vaguely remember filling in the answer to this mandatory question last year around this time and I don’t remember what I put. 

I’m pretty sure I entered something glib and trite like “yomamma” out of annoyance and/or paranoia. “They must be collecting my personal information on behalf of the government or greedy advertisers,” I thought to myself. “I’ll show them.”

Well they showed me instead. And I almost locked up my account trying to guess my way in. But that prompted a little more investigation— what other questions do they make people answer under the guise of “account recovery secret questions.” And by THEY I mean financial institutions.  Well here are a few:

Yea, check that out— it looks like a psychiatric pre-session questionnaire. Now I’m not saying that companies are sneakily grabbing up more and more of people’s privacy real-estate under a cloak of convenience. But I AM saying that this information is just the kind of stuff that can help target some ads at you, logistically associate you with other people, contribute to a psychological profile, place you at a location, or any number of other creepy things.

So your bank is data-mining select pieces of your private information on the sly, using the “secret recovery question” technique. And we should ALL be mindful of what we share with them. 

In lieu of the recent mess involving Lulzsec and friends, i bring you some words of wisdom from the past. Unsurprisingly, it is starkly relevant, even today

The Conscience of a Hacker 

Written on January 8, 1986

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Another one got caught today, it’s all over the papers. “Teenager Arrested in Computer Crime Scandal”, “Hacker Arrested after Bank Tampering”…

Damn kids. They’re all alike.

But did you, in your three-piece psychology and 1950’s technobrain, ever take a look behind the eyes of the hacker? Did you ever wonder what made him tick, what forces shaped him, what may have molded him?

I am a hacker, enter my world…

Mine is a world that begins with school… I’m smarter than most of the other kids, this crap they teach us bores me…

Damn underachiever. They’re all alike.

I’m in junior high or high school. I’ve listened to teachers explain for the fifteenth time how to reduce a fraction. I understand it. “No, Ms. Smith, I didn’t show my work. I did it in my head…”

Damn kid. Probably copied it. They’re all alike.

I made a discovery today. I found a computer. Wait a second, this is cool. It does what I want it to. If it makes a mistake, it’s because I screwed it up. Not because it doesn’t like me…

Or feels threatened by me…

Or thinks I’m a smart ass…

Or doesn’t like teaching and shouldn’t be here…

Damn kid. All he does is play games. They’re all alike.

And then it happened… a door opened to a world… rushing through the phone line like heroin through an addict’s veins, an electronic pulse is sent out, a refuge from the day-to-day incompetencies is sought… a board is found. “This is it… this is where I belong…”

I know everyone here… even if I’ve never met them, never talked to them, may never hear from them again… I know you all…

Damn kid. Tying up the phone line again. They’re all alike…

You bet your ass we’re all alike… we’ve been spoon-fed baby food at school when we hungered for steak… the bits of meat that you did let slip through were pre-chewed and tasteless. We’ve been dominated by sadists, or ignored by the apathetic. The few that had something to teach found us willing pupils, but those few are like drops of water in the desert.

This is our world now… the world of the electron and the switch, the beauty of the baud. We make use of a service already existing without paying for what could be dirt-cheap if it wasn’t run by profiteering gluttons, and you call us criminals.

We explore… and you call us criminals.

We seek after knowledge… and you call us criminals.

We exist without skin color, without nationality, without religious bias… and you call us criminals.

You build atomic bombs, you wage wars, you murder, cheat, and lie to us and try to make us believe it’s for our own good, yet we’re the criminals.

Yes, I am a criminal. My crime is that of curiosity. My crime is that of judging people by what they say and think, not what they look like. My crime is that of outsmarting you, something that you will never forgive me for.

I am a hacker, and this is my manifesto. You may stop this individual, but you can’t stop us all… after all, we’re all alike.

+++The Mentor+++ 

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In general, the faster we are able to communicate, the easier it will be to share information (including digitally encoded art— books, music, movies, etc). When it took 45 minutes to download a song on Napster, I had a lot less songs. Now I get as many as I want with AAIR. My point is that, as we get faster Internets, we can send stuff around faster. 

How do you stop someone from sharing every song ever made when it can be transferred in 30 seconds on some darknet or via side-channel, encryption, or steganography? They only way I see is to invade people’s privacy to enforce regulations. To snoop on people to make sure they aren’t sending stuff that violates the principles that copyright seeks to enforce. Or to control the devices people use with an iron fist, like Apple (and even that’s usually not enough— e.g. jailbreaking).

I don’t think there will be a middle ground. We are either going to give up our privacy and control of our own property in order to prevent piracy, or copyright will become obsolete since there’d be no way to enforce it.

Why even bother with trying to find a compromise? We are at the precipice of human social evolution— never have we had the ability to communicate information so quickly in all of human history (probably). And although there is a lot of talk about the future effects of the death of copyright, nobody knows for certain how it’ll affect society. 

But my concern is whether or not it’ll be worse than the alternative… the effects of the loss of freedom of private communication… is it even possible to prevent private communication without controlling people’s minds?

The current music industry distribution trend is like a baby’s milk bottle. It can deliver nourishment from a manufactured container, and allows precise control (over things like temperature and nutrient concentrations). Indeed, you can go to the store and get your baby formula and warm it up and everything… but at the end of the day, its not the same as a natural, functional mom-boob.

And not from just a product standpoint— the entire experience is different for the baby as well. 

The Open Music Model (OMM) is the idea that music can be a subscription-based service where people pay a flat fee for access to a catalog of music. Essentially music as a service, instead of as a discrete product. And just like the baby formula, this is a manufactured solution (fee-based service w/ infrastructure in this case) that has some substantial drawbacks when compared to the more natural solution (free for all, do what you want). 

I think the biggest issue with this model has to do with the money. The OMM suggests $5/month (apparently based on surveys of at least upper middle class America), and that’s for services that hit all of the OMM requirements (which none has actually done yet). But the deal breaker is the fee itself IMO… shoot, even $1/month is too much for MANY people. Speaking from experience, this knocks plenty of music fans out of the equation. The only disposable cash I had as a kid was my lunch money— I wanted just one CD, I’d have to go without eating lunch for 3 weeks. 

F-that I said.

Genearlly speaking, if you can’t buy it then you will either find a way to get it, or you will do without it. From this I draw a basic hypothesis: the more people can’t afford to pay for music, the more they will justify freely sharing it (piracy), thereby creating a market for free music.

I realize that my personal experiences with sharing music is anecdotal, but it’s a fact that more people are getting poorer more rapidly than other people are getting richer (this is true even on the global scale). Where is your monthly music money when you’re worried about paying rent and buying food? 

Bottom line: music CAN be subscriptionized, and music sharing CAN be criminalized. You could try to turn it into HBO if you want. Just don’t expect the young and the frugal to be on board. I imagine these people may or may not be critically important if your purpose is to make as much money as you can. However, they are VERY important if your purpose is to *reach* certain demographics or share a message.

I understand the concern— all this drama is because people want money so they can live their life. Sure, I get that. And even the OMM says that it should be easy to get compensated as the artist. But this doesn’t preclude a 100% free access model, since there are other ways to get paid as a content creator besides selling songs in units. 

So the problem with the OMM, or any future music service that leans toward a consumer fee/tax, is that music is too expensive for mass consumption if its not absolutely free.

Because people are getting poorer, and piracy is getting easier to justify. 

Which begs the question, where do we go from here…? 

It was weird at first, introducing myself as an entrepreneur. Actually, I never even use that word in person to describe what i “do”, opting instead for “I have a day job and a side hustle.” Which would have sounded shady some 10 years ago… but today everybody has a side hustle, so i usually receive more curiosity than confusion.

Yet my uncertainty on considering myself a “real” business owner (the kind most people think of when you say “I have a company”) is usually out in full force, and it most likely has to do with the fact that:

• I haven’t yet made or lost money from it, except maybe registering a domain name. 
• I don’t employ anyone, and have no separate office, so it’s just me.
• The phrase “I work on apps and stuff” doesn’t present a clear visual. At all. (even tho it does give me good opportunity to talk about my projects, past and present). 

And of course, there are all the non-traditional-business tendencies I employ, like giving stuff away for free, heavy use of pirated software, working under the influence, etc. Some readers can understand where I’m coming from with this; what might be, at its core, a slightly chaotic and moderately unconventional business strategy is just par for the course if you’re just kicking around side projects…

But let’s be honest, what comes to your mind when you think “business owner?”

Actually it might be the later if you see the young-hacker-startup-person archetype more often; but for lots of people, the brotha with the 1998 vintage-era cell phone means serious business. So without getting too buzzwordy, I’d describe my company as of the lifestyle-umbrella persuasion. There’s nothing special about it— any apps or side projects I make are designed, developed, and presented as a product of the business. Essentially, I’m doing the same things I do in my spare time anyway, just under an LLC.

The benefits, of course, are that I have all the perks of a business without having the huge maintenance overhead.

I could add someone to the company, open business accounts and transact with other businesses on a more businessy level, etc.

Yet I don’t have to file a lot of the random corporate papers and forms that other legal business entities are responsible for (C-corp, S-corp, etc). And the money the company gets is mine as long as I pay the taxes on it. More people should have LLC’s just because they’re pretty useful and easy to start.

From what I’ve learned, when it comes to actually starting an LLC, there are 3 general ways to go about it:  a professional way, a cheap way, and a fast way.

The professional way is to pay a good corporate lawyer to walk you through everything. It may take longer and is almost certainly the most expensive option, but you would have confidence that all the i’s have been dotted and t’s crossed. And if they aren’t you can blame someone else.

The cheap way is to fill out and submit the forms yourself, but that can also take time (especially if you’ve never done it before) and there may be some gotchas. But if you just don’t have the cash and don’t mind getting your hands dirty, it’s probably worth it. This used to be harder when forms had to be mailed in. But nowadays you can do a lot of this through official state and government websites.

But the fast way (and probably the easiest) is to use online legal document services. They handle the form filing and you get a nice package in the mail with the details when it’s all ready.

Now I understand that each state/province/prefecture has different rules and regulations regarding forming and maintaining a company. And I would be remiss to not suggest you look up information that pertains to your specific situation. But for those who are interested on how I did my umbrella LLC for pretty cheap, I’m about to break it down.

Form the LLC

After making sure nobody else is using the name you want, the basic things you need to do are:

• File an Articles of Organization form for your company in your state. It’s just like 2 pages for real, and you can even do it online in Virginia.
• Pay a (~$100) tax because Uncle Sam always gets a piece or two.
• Get an EIN. This is also a form (SS-4) that you have to file. Fortunately you can also do it online. The EIN is like the social security number of the company. Use it to open bank accounts and stuff.

Alternatively, you can use online legal doc services like Legal Zoom to do all that for you (but you still have to fill out THEIR version of the same forms). It costs around $200-400 depending on the level of service you want. But they do everything from paying the registration fee (added to your bill…), to sending the documents to the right places, to acting as your registered agent.

Don’t relax just yet— you might have the essential stuff done, but there are some other things you might want to take care of.

Next Steps

Get a company bank account, debit cards, etc. Since you have an EIN, you can go to a bank and open a business account. This way you can keep separate accounts and it looks a lot cleaner than mixing your business with personal finances.

Handle your taxes. As a single owner LLC, you are a “disregarded entity” by default, meaning taxes are passed-through to you personally. In addition to filing your existing tax forms, you’ll also need to file a 1040 Schedule C (sometimes E), in which you detail some of your business finances.

Also, look out for state taxes. Virginia charges a $50/year tax to maintain LLC status. They’ll send reminders in the mail.

Mind the corporate veil. For all intents and purposes, you’re the sole member of a registered company. So on paper, treat yourself like an employee for legal purposes. Pay yourself a salary; don’t just go dipping into the business account. Other best practices include drafting an operating agreement (it’s your company, so you write the rules), and maintaining a registered agent (when people want to mail the company, this person gets the mail and forwards the important stuff to your home address).

And that’s it! It’s not hard to be a business owner. Most of it is just basic paperwork to fill out and, fortunately, the Internet makes even that stuff a breeze. Also, this whole process gives you hands-on experience with this sorta thing, and you can get as involved as you want (planning official meetings, writing little business documents and crap, etc). But more importantly, you now have a platform from which to launch the rest of your creative ideas. And FYI, this is the same process you’d use when making your own record label too, so feel free to throw some music in the pot and add your creative juices.

Having a business is like a prerequisite for this entrepreneurship lane. But that doesn’t mean it has to be painful or expensive.

Entrepreneurship is about vision, culture, and passion. So don’t let the little details get in the way (at least not until they become big details). 

-Tux