Monthly Archives: April 2008

Getting to the Point of “I Can Do This!”

Before you can embark on a new project, you need to believe you can do it. In order to believe you can do it, you need have to some self-confidence. In order to have self-confidence, I think you need to do one or both of the following:

  • Accumulate small wins. Successfully take baby steps. So if you want to write a book, for example, you first write and publish an article that gives you confidence in your writing ability.
  • Expose yourself systematically to the techniques and habits of those who have already done it. In other words, demystify the accomplishment. If you want to start a company, read tons of first-hand accounts and talk to entrepreneurs to understand step-by-step how they did it. This will de-mystify the achievement, not allowing you to attribute John Doe’s success as some “magical talent” that’s been with him since the womb (a typical excuse).

By the way, self-confidence — telling yourself, “I believe I can do this!” — is only half the job. The other litmus test before starting something is, “Does this excite me?” Both must check out positive for the project to succeed.

How else do you cultivate the self-confidence that will allow you to set forth towards an ambitious goal?

(hap tip to Cal Newport for helping spark and think through this idea)

The Surest Defense Against Evil

From Joseph Brodsky‘s 1984 commencement speech at Williams College:

The surest defense against Evil is extreme individualism, originality of thinking, whimsicality, even — if you will — eccentricity. That is, something that can’t be feigned, faked, imitated; something even a seasoned impostor couldn’t be happy with. Something, in other words, that can’t be shared, like your own skin: not even by a minority. Evil is a sucker for solidity. It always goes for big numbers, for confident granite, for ideological purity, for drilled armies and balanced sheets.

Wonderful. Found in his collection of essays entitled Less Than One.

(hat tip: Robert Faggen)

CEO Pay Gap – Research Summary

Bob Sutton has a great summary of the research around CEO comp and how overpaid CEOs affect business performance / recruitment. Here are the findings he cites, some editing on my part:

  • You can overpay other senior executives too and thus entice them to stay; or you can create a big gap between the overpaid CEO and everyone else, which leads other senior executives to jump-ship. Either way, overpaying the CEO has costs beyond the extra dollars the CEO gets.
  • When there are bigger pay differences between the CEO and other members of the top management team, organizational  performance tends to suffer — and the negative effects of such pay dispersion is most pronounced in high-technology firms.
  • When the CEO is getting a lot more money than the next executive, he or she will likely be afflicted with other signs of narcissism.
  • If the CEO is overpaid, the decision to overpay the rest of the top team isn’t a purely good thing — reducing pay dispersion when the CEO is overpaid can cause a company to waste even more money.
  • While this research so far seems to be that paying the CEO a lot more than others isn’t a good thing for the company, there are some studies that suggest this isn’t always the case.

I’ve seen firms fall prey to the fourth point — they pay the CEO what the market rate is (they have no choice if they want the best) and then, in an effort to narrow the gap between his comp and everyone else’s, they overpay the senior execs. I would advise a company to pay the CEO what he could command in the market, pay the senior execs what they could command in the market, then use other types of incentives to retain and please the senior execs as opposed to simply escalating their cash comp to reduce the pay dispersion between #1 and #2, 3, 4, and 5.

Peter Thiel’s Optimistic Thought Experiment

Peter Thiel is one of the most successful start-up entrepreneurs in recent time (PayPal), start-up investor (Facebook), and hedge fund manager (Clarium). Needless to say, it’s worth following his thinking.

I’ve now twice-read his 10,000 word essay in the latest Hoover Policy Review entitled The Optimistic Thought Experiment: In the Long Run, There are No Good Bets Against Globalization. I still can’t get my head around all his points, including his proposed connection between financial bubbles and the level of globalization. Hopefully you, dear reader, can help me. Until then I thought I’d excerpt some of the more interesting paragraphs that jumped out at me.

He frames his essay thusly:

For macro investors, it would be an abdication not to wrestle with the central question of our age: How should the risk of a comprehensive collapse of the world economic and political system factor into one’s decisions?

From the point of view of an investor, one may define such a “secular apocalypse” as a world where capitalism fails. Therefore, the secular apocalypse would encompass not only catastrophic futures in which humanity completely self-destructs (most likely through a runaway technological disaster), but also include a range of other scenarios in which free markets cease to function, such as a series of wars and crises so disruptive as to drive the developed world towards fascism, anarchy, or both.

Are all past bubbles part of The Great Boom?

It is beyond the scope of this essay either to enumerate all drivers of these trends or to determine whether the pro- or anti-globalization forces will gain the upper hand in the longer term. Still, the following conclusion seems safe: Since we are very far from any stable equilibrium, the future is likely to be much more or much less globalist than the present.

Nevertheless, this Great Boom is also very different from all previous bubbles. This time around, globalization either will succeed and humanity will achieve a degree of freedom and prosperity that can scarcely be imagined, or globalization will fail and capitalism or even humanity itself may come to an end. The real alternative to good globalization is world war. And because of the nature of today’s technology, such a war would be apocalyptic in the twenty-first century. Because there is not much time left, the Great Boom, taken as a whole, either is not a bubble at all, or it is the final and greatest bubble in history.

On technology vs. “technology”:

…There also exists a critical distinction between technology and investments called “technology.” To take a particularly easy case from the prior technology bubble, a “technology” company that sells pet food online by purchasing Super Bowl advertisements offline may not be a technology company at all. The solutions to hard engineering problems are not necessarily valuable, but it is unusual for the solutions to easy engineering problems to have much value in the long term.

On the China bubble:

To say the least, there are many eerie parallels between the Chinese stock market of early 2007 and the Nasdaq of early 2000: an abstract story of long-term, exponential growth; rampant speculation; and unprofitable or overvalued companies.

One intermediate possibility is that the China of 2014 will be like the internet of 2007 — much larger, but with winners very different from the ones that investors today expect. The largest New Economy business is Google, a company that scarcely registered in early 2000. Might it also turn out that the greatest Chinese companies of 2014 will be concerns that are private and tightly controlled businesses today, rather than the high-profile and money-losing companies that have been floated by the Chinese state?

By the way, here are some video interviews with Thiel on the BigThink, a wonderful collection of stimulating, brief interviews with smart people.

Are You a Golden Juggler?

Some people are born to lift heavy weights, some are born to juggle with golden balls, says Joseph Epstein:

The golden jugglers are the ones with wit, the ability to pierce pretension, and the calm detachment to mock large ideas and salvationist schemes. They eschew anger and love small perfections. They go in for handsome gestures…have wide sympathies, and understand that a complex point of view is worth more than any number of opinions.

That’s from Epstein’s latest essay collection called In a Cardboard Belt! via a Claremont Review of Books review. The late Bill Buckley called Epstein the wittiest writer alive.

Other Epstein nuggets found in the review:

  • “Charm is the desire to delight, light-handedly executed.”
  • “Writing cannot be taught, but it can be learned.”
  • On how to act now that he’s 70 years old: “If the game is to be played decently at seventy, one must hark back as little as possible to the (inevitably golden) days of one’s youth, no matter how truly golden they seem…Start talking about thenadays and one soon finds one’s intellectual motor has shifted into full crank, with everything about nowadays dreary, third rate, and decline and fallish. A big mistake. The reason old people think the world is going to hell, Santayana says, is because they believe that, without them in it, which will soon enough be the case, how good really can it be?”

What is the Meaning of Democracy?

Here’s E.B. White‘s take on “the meaning of democracy” as written in The New Yorker during the middle of World War II:

It is the line that forms on the right. It is the don’t in don’t shove. It is the hole in the stuffed shirt through which the sawdust slowly trickles; it is the dent in the high hat. Democracy is the recurrent suspicion that more than half the people are right more than half of the time. It is the feeling of privacy in the voting booths, the feeling of communion in the libraries, the feeling of vitality everywhere. Democracy is a letter to the editor. Democracy is the score at the beginning of the ninth. It is an idea which hasn’t been disproved yet, a song the words of which have not gone bad. It’s the mustard on the hot dog and the cream in the rationed coffee.

(Hat tip to my Mom, who spotted this in a book she’s reading about Churchill and Roosevelt’s friendship.)

Jack Welch: Least Helpful Predecessor

Jack Welch, legendary former CEO of GE. Jeff Immelt, current CEO of GE. Welch groomed Immelt.

So this is not what Immelt probably expected from his former mentor as GE suffers a bit on Wall Street:

On April 16th, in an apparent bid to wrest the title of "least helpful predecessor" from Alan Greenspan, the suddenly outspoken former Federal Reserve chairman, Mr Welch informed viewers of…CNBC, that "Jeff has a credibility issue. He’s getting his ass kicked," before promising to "get a gun out and shoot him if he doesn’t make what he promised now."

It’d be one thing if Immelt was thought to have a motivation issue or didn’t know that he was in some deep shit. That’s not the case here. This is just dumb on the part of Welch.

On the topic of Welch, I’ve long been befuddled by how much businesspeople idolize the guy. I mean, OK, so he had an incredible run at GE. He’s been one of America’s most successful CEOs. That doesn’t mean every business owner can learn from him.

Circumstances matter. Are the tips from a CEO of a $300+ billion dollar company going to be useful to someone running a 10 person company, or even a 1,000 person company? I doubt it.

There are many successful CEOs and it’d be smarter, it seems to me, to find someone who is doing a little bit better than you (ie, 3-5 years ahead in terms of progress), and study that person.

Instead, we flock to read Welch and Trump and Gerstner, thinking that their experiences can help us understand our own. Worse yet, people fork over thousands of dollars just to hear Donald Trump speak in-person at a Learning Annex conference or whatever. I couldn’t think of a worse way to invest professional development money.

Should You Take Notes in a One-on-One Meeting?

Recently I met with some young, green entrepreneurs to discuss their business idea. I gave them a bunch of feedback at the end of the meeting. They nodded hungrily and said they appreciated it.

One problem. Neither took a single note during the meeting. As I read off a list of 6 or 7 specific things I had written down in my notebook, they nodded but did nothing else.

I’m a notebook-and-pen kind of guy. I try to carry a notebook around with me everywhere because I never know when a good idea will strike me, or when someone will tell me something I want to remember. In meetings, I not only take notes to remember things — I’ll trust paper notes over someone’s memory any day of the week — but also to signal respect to the person talking. I want to show that I value their ideas.

I apply this value the other way, too. That is, if I give someone specific, responsive feedback over several points, I appreciate it when he writes it down because it shows he’s taking my time / ideas seriously.

Here’s the catch: sometimes there’s rationale not to scribble notes in a meeting. If you’re trying to build a personal relationship with someone, or are out with a friend, sometimes taking notes can make the interaction seem too transactional. Also, if you are taking notes but your partner is not, a subtle power dynamic can emerge (ie, the person taking notes is less than the person not taking notes).

In the end, it’s a personal choice. I take notes all the time, regardless of situation. There’s no worse feeling than trying to remember that golden nugget of wisdom that you didn’t write down. I also try to signal that I value my partner’s time. But I can appreciate the perspective that in certain non-professional interactions taking notes can be weird and maybe counterproductive in the long-run.


One logistical note: sometimes a “notebook and pen” can be digital — ie, your PDA. I use my T-Mobile Dash to write down blog posts, quotes, etc. that come to mind during the day, and then transfer to my computer at the end of the day.

Here’s Tim Ferriss on “how to take notes like an alpha geek.” To me, this is over-optimizing the organization part of it (which is a central problem I have with many productivity hacks — over-optimization), but it’s worth a read to see different people’s systems.

The Guilty Sense of Privilege

From the latest positive review of Keith Gessen’s new book, this time in Slate:

One of the pleasures of Gessen’s novel is how well he reproduces the speech patterns of brainy, left-wing Ivy Leaguers—their sardonic deployment of social-theoretical jargon, their riffs on technology and capitalism, their anxiety about status, and the pride in small failures meant to refute their guilty sense of privilege.

I want to riff on the “refute guilty sense of privilege” bit.

Since 70% of our population does not have a college degree, anyone who has the opportunity to go to college in America is privileged. Those of us at selective colleges and universities are even more privileged, as a red-carpet path to power unveils itself after graduation via alumni networks and brand name prestige.

Regardless of whether you “earned” your privilege or not, the fact is the moment you enter the gates of a selective higher ed institution you are immediately thrust ahead in the societal rat race. Colleges often remind their students of this fact. They do so rather bluntly.

Convocation speeches might detail the extraordinary opportunities presented to we students, ask us to “look around and remember how lucky we are to have these opportunities,” and then insist, in more complicated language of course, “Now go save Africa!” I sat in an assembly in high school once that made precisely this point, where by the end everyone felt terrible that we had thick shiny textbooks while the schools in Bangladesh of which we had just seen pictures hardly managed a physical classroom, let alone textbooks.

The do-gooders among us ran off to set up a “donate your used textbooks drive,” but no one was pondering the implicit idea the school was endorsing which was action-to-assuage-guilt is better than no action at all, or at least action motivated by other things.

It’s not just schools — most charitable organizations in the U.S. use guilt-tripping as a primary mechanism to induce individual donors to give.

I’ve long said that as someone who was born in the richest state in the richest country in the world, I couldn’t have gotten any luckier out of the gate. Does this create some amount of guilt due to un-earned privilege that has allowed me to do things that I just couldn’t have done had I been born in, say, Peru, or even born into a broken family in Compton with no daddy and a crack-abusing mommy? Yep. Is this guilt healthy, does it create a sense of a gratitude and/or motivate me to make the most of my winning number in the genetic lottery? Maybe. Probably. Maybe not?

Dealing with guilt due to privilege is itself a privileged worry to have, relatively speaking, but many Americans have it, and I think there’s an opportunity to explore the emotion in a way more nuanced than it’s being approached. Maybe this is literature’s purview — maybe even Gessen’s. I’ll have to read his book to find out.

Cuckoo for Switzerland

Swiss

John Fund has a piece in a recent issue of The American on how under-appreciated Switzerland has become the envy of Europe. It’s good fodder for those of us who love Switzerland.

The country is consistently at the top of quality of life rankings. Its people are among the most productive in the world. Its culture is fascinating (four official languages!). And as Fund emphasizes, its smart economic policies have led to a high level of prosperity and innovation.

The summer after my junior year of high school I left America for the first time to participate in a student-exchange program in Zurich. That trip opened my eyes to international travel…and the rest is history.

I’m excited to be going back to Switzerland in less than a month. I’ll be in St. Gallen for a week, as I was a winner in the St. Gallen Symposium essay contest. Then I’ll be in Zurich for a few days visiting friends, and then Massimo and I will go to Prague for a few days. Drop me an email if you live in any of these three cities and want to meet up, or if you have tips on Prague.