Sunday, April 3, 2022
Our Universe
Sunday, March 13, 2022
Take It Easy
Historically, there is something quite curious about the all-encompassing work ethic of many of today’s masters of the universe. For Andrew Carnegie, at one point the world’s richest man, and many of his robber baron colleagues of the Gilded Age a century ago, diligence, perseverance, and industry were virtues to be preached—not practiced. The successful man of business was not a wage slave, paid by the hour or the day or the task, and he should not behave as if he were. Manually laboring drudges might work long hours without sacrificing productivity, but businessman could not. Their work required imagination, thought, calculation.
“Your always-busy man accomplishes little;” Carnegie wrote in 1883, “the great doer is he who has plenty of leisure. Moral: Don’t worry yourself over work, hold yourself in reserve, and sure as fate, ‘it will all come right in the wash.’” The American penchant for delaying gratification, for putting off retirement, for working ceaselessly, for refusing or canceling or postponing or cutting short vacations was, the Scottish-born Carnegie believed, monstrously self-defeating. It sapped the creativity the man of business required to move forward. Americans, he remarked to his cousin, “were the saddest-looking race … Life is so terribly earnest here. Ambition spurs us all on, from him who handles the spade to him who employs thousands. We know no rest. … I hope Americans will find some day more time for play, like their wiser brethren upon the other side.”
Carnegie was not alone in preaching a gospel of leisure. In his autobiography, Random Reminiscences of Men and Events, John D. Rockefeller—who accumulated a fortune estimated at $1 trillion in today’s dollars—admitted almost as a point of pride that he too “was not what might be called a diligent business man.” Though he had, as a young executive, punctually arrived at the Standard Oil offices in Cleveland at 9:15 every morning, he usually spent no more than “three hours a day” there. “He worked at a more leisurely pace than many other executives, napping daily after lunch and often dozing in a lounge chair after dinner,” writes his biographer, Ron Chernow. “By his mid-thirties, he had installed a telegraph wire between home and office so that he could spend three or four afternoons each week at home, planting trees, gardening, and enjoying the sunshine.” At age 50, complaining of fatigue, he withdrew from work for several months. A few years later, he retired completely. “I’m here,” he told an interviewer who asked about his remarkable longevity, “because I shirked: did less work, lived more in the open air, enjoyed the open air, sunshine and exercise.” Even during his working years, “which lasted from the time I was sixteen years old until I retired from active business when I was fifty-five,” Rockefeller admitted that he had “managed to get a good many vacations of one kind or another.”
Carnegie too balanced his adult years carefully between work and leisure. At age 27, while still an employee of the Pennsylvania Railroad Company, he wrangled a special leave of absence so that he could spend three months on vacation in Scotland and Europe. Three years later, at age 30, he left his business interests in the hands of Tom, his younger brother, and toured Europe for a year. In 1878, he took another year off to travel round the world. “Carnegie was never a hard worker,” observed his authorized biographer. “Not a hard worker, that is, in the grindstone sense; he spent at least half his time in play, and let other men pile up his millions for him.”
For Carnegie and Rockefeller, part of the magic of twentieth-century capitalism was the disconnect between work and riches. Capital invested wisely in plant, properties, and securities grew and paid dividends, and did so, almost by itself. For Carnegie, the child of a self-employed artisan, this was a revelation. “I shall remember that check as long as I live,” Carnegie wrote in his autobiography, describing his first dividend from the Adams Express Company, a freight-delivery service he held stock in. “It gave me the first penny of revenue from capital—something that I had not worked for with the sweat of my brow. ‘Eureka!’ I cried. ‘Here’s the goose that lays the golden eggs.’”
Carnegie was so excited by the check that before cashing it, he showed it to his friends at their Sunday afternoon gathering. “The effect produced … was overwhelming. None of them had imagined such an investment possibility. … How money could make money, how, without any attention from me, this mysterious golden visitor should come, led to much speculation upon the part of the young fellows, and I was for the first time hailed as a ‘capitalist.’” There was something magical about a poor boy receiving money without having to work for it. Carnegie had not “earned” his dividend check. Yet here it was, in a white envelope lying on his desk, and no one was going to take it away.
Watching over one’s investments and one’s company’s investments took time and effort, Carnegie would learn—just not a whole lot of it. At age 34, he moved away from Pittsburgh, the center of his business enterprise, to New York, the center of his leisure interests. He would, for the rest of his life, carry on his business from New York and his various homes in Scotland, where he spent at least three or four months every summer—and this at a time when the fastest form of communication was the telegraph. He did not attend board or management meetings or visit his mills or communicate on a daily or regular basis with associates, subordinates, business colleagues. He had detailed cost sheets delivered monthly by U.S. mail to his home in New York City, where he marked them up and sent them back to Pittsburgh, with lengthy memos attached. He set long-term strategies for his companies, chose his associates wisely, secured political and business alliances, as needed for expansion, and never took his eye over the profit-and-loss statements.
When A.B. Farquhar, a Pennsylvania businessman, boasted that he was in his office every morning “by seven in the morning” and was the last one to leave in the evening, Carnegie laughed at him. “You must be a lazy man if it takes you ten hours to do a day’s work. … What I do … is to get good men, and I never give them orders. My directions seldom go beyond suggestions. Here in the morning I get reports from them. Within an hour I have disposed of everything, sent out all of my suggestions, the day’s work is done, and I am ready to go out and enjoy myself.”
Andrew Carnegie had learned, early in his business career, that no individual was indispensable nor irreplaceable. The corporate model was a wondrous creation. Its successful operation required a firm division of labors. Success depended on the effective delegation and coordination of leadership functions and responsibilities.
Carnegie never apologized for his success as a businessman nor for the millions upon millions he had made. Business was not for him the highest calling a man might answer. Carnegie loathed being referred to or honored as primarily a businessman. He had left Pittsburgh, a city that was too intent on business, for New York City, the cultural and literary capital of the nation. He intended to use his leisure to educate himself, to make the acquaintance and learn from the premier intellects of his day: from Mark Twain, Herbert Spencer, and Matthew Arnold; to attend lectures; to become an intellectual, a wise man, and an author.
His gospel of leisure enjoined him—and others outside the realm of wage slavery—to behave as free men ought to. The wage slave had no choice but to dedicate his life to work and hope that there might be time left over for leisure. But Carnegie—and Rockefeller—chose to order their lives such that large portions of their waking hours might be dedicated to leisure, not as an escape or alternative to work, but as an end in itself. The rich man could afford to depart from the everyday world of work and business for something far more exalted, the world of leisure.
The irony of ironies was that, instead of moving forward into this brave new world of leisure, as Carnegie had, too many businesspeople, in Carnegie’s day and in our own, have voluntarily imprisoned themselves in the work world as if they too were wage slaves with no alternative but to work their lives away.
Source –
Take it Easy: David Nasaw on the Work Habits of Andrew Carnegie (substack.com)
Friday, February 25, 2022
Working Hard
It might not seem there's much to learn about how to work hard. Anyone who's been to school knows what it entails, even if they chose not to do it. There are 12 year olds who work amazingly hard. And yet when I ask if I know more about working hard now than when I was in school, the answer is definitely yes.
One thing I know is that if you want to do great things, you'll have to work very hard. I wasn't sure of that as a kid. Schoolwork varied in difficulty; one didn't always have to work super hard to do well. And some of the things famous adults did, they seemed to do almost effortlessly. Was there, perhaps, some way to evade hard work through sheer brilliance? Now I know the answer to that question. There isn't.
The reason some subjects seemed easy was that my school had low standards. And the reason famous adults seemed to do things effortlessly was years of practice; they made it look easy.
Of course, those famous adults usually had a lot of natural ability too. There are three ingredients in great work: natural ability, practice, and effort. You can do pretty well with just two, but to do the best work you need all three: you need great natural ability and to have practiced a lot and to be trying very hard. [1]
Bill Gates, for example, was among the smartest people in business in his era, but he was also among the hardest working. "I never took a day off in my twenties," he said. "Not one." It was similar with Lionel Messi. He had great natural ability, but when his youth coaches talk about him, what they remember is not his talent but his dedication and his desire to win. P. G. Wodehouse would probably get my vote for best English writer of the 20th century, if I had to choose. Certainly no one ever made it look easier. But no one ever worked harder. At 74, he wrote
with each new book of mine I have, as I say, the feeling that this time I have picked a lemon in the garden of literature. A good thing, really, I suppose. Keeps one up on one's toes and makes one rewrite every sentence ten times. Or in many cases twenty times.
Sounds a bit extreme, you think. And yet Bill Gates sounds even more extreme. Not one day off in ten years? These two had about as much natural ability as anyone could have, and yet they also worked about as hard as anyone could work. You need both.
That seems so obvious, and yet in practice we find it slightly hard to grasp. There's a faint xor between talent and hard work. It comes partly from popular culture, where it seems to run very deep, and partly from the fact that the outliers are so rare. If great talent and great drive are both rare, then people with both are rare squared. Most people you meet who have a lot of one will have less of the other. But you'll need both if you want to be an outlier yourself. And since you can't really change how much natural talent you have, in practice doing great work, insofar as you can, reduces to working very hard.
It's straightforward to work hard if you have clearly defined, externally imposed goals, as you do in school. There is some technique to it: you have to learn not to lie to yourself, not to procrastinate (which is a form of lying to yourself), not to get distracted, and not to give up when things go wrong. But this level of discipline seems to be within the reach of quite young children, if they want it.
What I've learned since I was a kid is how to work toward goals that are neither clearly defined nor externally imposed. You'll probably have to learn both if you want to do really great things.
The most basic level of which is simply to feel you should be working without anyone telling you to. Now, when I'm not working hard, alarm bells go off. I can't be sure I'm getting anywhere when I'm working hard, but I can be sure I'm getting nowhere when I'm not, and it feels awful. [2]
There wasn't a single point when I learned this. Like most little kids, I enjoyed the feeling of achievement when I learned or did something new. As I grew older, this morphed into a feeling of disgust when I wasn't achieving anything. The one precisely dateable landmark I have is when I stopped watching TV, at age 13.
Several people I've talked to remember getting serious about work around this age. When I asked Patrick Collison when he started to find idleness distasteful, he said
I think around age 13 or 14. I have a clear memory from around then of sitting in the sitting room, staring outside, and wondering why I was wasting my summer holiday.
Perhaps something changes at adolescence. That would make sense.
Strangely enough, the biggest obstacle to getting serious about work was probably school, which made work (what they called work) seem boring and pointless. I had to learn what real work was before I could wholeheartedly desire to do it. That took a while, because even in college a lot of the work is pointless; there are entire departments that are pointless. But as I learned the shape of real work, I found that my desire to do it slotted into it as if they'd been made for each other.
I suspect most people have to learn what work is before they can love it. Hardy wrote eloquently about this in A Mathematician's Apology:
I do not remember having felt, as a boy, any passion for mathematics, and such notions as I may have had of the career of a mathematician were far from noble. I thought of mathematics in terms of examinations and scholarships: I wanted to beat other boys, and this seemed to be the way in which I could do so most decisively.
He didn't learn what math was really about till part way through college, when he read Jordan's Cours d'analyse.
I shall never forget the astonishment with which I read that remarkable work, the first inspiration for so many mathematicians of my generation, and learnt for the first time as I read it what mathematics really meant.
There are two separate kinds of fakeness you need to learn to discount in order to understand what real work is. One is the kind Hardy encountered in school. Subjects get distorted when they're adapted to be taught to kids — often so distorted that they're nothing like the work done by actual practitioners. [3] The other kind of fakeness is intrinsic to certain types of work. Some types of work are inherently bogus, or at best mere busywork.
There's a kind of solidity to real work. It's not all writing the Principia, but it all feels necessary. That's a vague criterion, but it's deliberately vague, because it has to cover a lot of different types. [4]
Once you know the shape of real work, you have to learn how many hours a day to spend on it. You can't solve this problem by simply working every waking hour, because in many kinds of work there's a point beyond which the quality of the result will start to decline.
That limit varies depending on the type of work and the person. I've done several different kinds of work, and the limits were different for each. My limit for the harder types of writing or programming is about five hours a day. Whereas when I was running a startup, I could work all the time. At least for the three years I did it; if I'd kept going much longer, I'd probably have needed to take occasional vacations. [5]
The only way to find the limit is by crossing it. Cultivate a sensitivity to the quality of the work you're doing, and then you'll notice if it decreases because you're working too hard. Honesty is critical here, in both directions: you have to notice when you're being lazy, but also when you're working too hard. And if you think there's something admirable about working too hard, get that idea out of your head. You're not merely getting worse results, but getting them because you're showing off — if not to other people, then to yourself. [6]
Finding the limit of working hard is a constant, ongoing process, not something you do just once. Both the difficulty of the work and your ability to do it can vary hour to hour, so you need to be constantly judging both how hard you're trying and how well you're doing.
Trying hard doesn't mean constantly pushing yourself to work, though. There may be some people who do, but I think my experience is fairly typical, and I only have to push myself occasionally when I'm starting a project or when I encounter some sort of check. That's when I'm in danger of procrastinating. But once I get rolling, I tend to keep going.
What keeps me going depends on the type of work. When I was working on Viaweb, I was driven by fear of failure. I barely procrastinated at all then, because there was always something that needed doing, and if I could put more distance between me and the pursuing beast by doing it, why wait? [7] Whereas what drives me now, writing essays, is the flaws in them. Between essays I fuss for a few days, like a dog circling while it decides exactly where to lie down. But once I get started on one, I don't have to push myself to work, because there's always some error or omission already pushing me.
I do make some amount of effort to focus on important topics. Many problems have a hard core at the center, surrounded by easier stuff at the edges. Working hard means aiming toward the center to the extent you can. Some days you may not be able to; some days you'll only be able to work on the easier, peripheral stuff. But you should always be aiming as close to the center as you can without stalling.
The bigger question of what to do with your life is one of these problems with a hard core. There are important problems at the center, which tend to be hard, and less important, easier ones at the edges. So as well as the small, daily adjustments involved in working on a specific problem, you'll occasionally have to make big, lifetime-scale adjustments about which type of work to do. And the rule is the same: working hard means aiming toward the center — toward the most ambitious problems.
By center, though, I mean the actual center, not merely the current consensus about the center. The consensus about which problems are most important is often mistaken, both in general and within specific fields. If you disagree with it, and you're right, that could represent a valuable opportunity to do something new.
The more ambitious types of work will usually be harder, but although you should not be in denial about this, neither should you treat difficulty as an infallible guide in deciding what to do. If you discover some ambitious type of work that's a bargain in the sense of being easier for you than other people, either because of the abilities you happen to have, or because of some new way you've found to approach it, or simply because you're more excited about it, by all means work on that. Some of the best work is done by people who find an easy way to do something hard.
As well as learning the shape of real work, you need to figure out which kind you're suited for. And that doesn't just mean figuring out which kind your natural abilities match the best; it doesn't mean that if you're 7 feet tall, you have to play basketball. What you're suited for depends not just on your talents but perhaps even more on your interests. A deep interest in a topic makes people work harder than any amount of discipline can.
It can be harder to discover your interests than your talents. There are fewer types of talent than interest, and they start to be judged early in childhood, whereas interest in a topic is a subtle thing that may not mature till your twenties, or even later. The topic may not even exist earlier. Plus there are some powerful sources of error you need to learn to discount. Are you really interested in x, or do you want to work on it because you'll make a lot of money, or because other people will be impressed with you, or because your parents want you to? [8]
The difficulty of figuring out what to work on varies enormously from one person to another. That's one of the most important things I've learned about work since I was a kid. As a kid, you get the impression that everyone has a calling, and all they have to do is figure out what it is. That's how it works in movies, and in the streamlined biographies fed to kids. Sometimes it works that way in real life. Some people figure out what to do as children and just do it, like Mozart. But others, like Newton, turn restlessly from one kind of work to another. Maybe in retrospect we can identify one as their calling — we can wish Newton spent more time on math and physics and less on alchemy and theology — but this is an illusion induced by hindsight bias. There was no voice calling to him that he could have heard.
So while some people's lives converge fast, there will be others whose lives never converge. And for these people, figuring out what to work on is not so much a prelude to working hard as an ongoing part of it, like one of a set of simultaneous equations. For these people, the process I described earlier has a third component: along with measuring both how hard you're working and how well you're doing, you have to think about whether you should keep working in this field or switch to another. If you're working hard but not getting good enough results, you should switch. It sounds simple expressed that way, but in practice it's very difficult. You shouldn't give up on the first day just because you work hard and don't get anywhere. You need to give yourself time to get going. But how much time? And what should you do if work that was going well stops going well? How much time do you give yourself then? [9]
What even counts as good results? That can be really hard to decide. If you're exploring an area few others have worked in, you may not even know what good results look like. History is full of examples of people who misjudged the importance of what they were working on.
The best test of whether it's worthwhile to work on something is whether you find it interesting. That may sound like a dangerously subjective measure, but it's probably the most accurate one you're going to get. You're the one working on the stuff. Who's in a better position than you to judge whether it's important, and what's a better predictor of its importance than whether it's interesting?
For this test to work, though, you have to be honest with yourself. Indeed, that's the most striking thing about the whole question of working hard: how at each point it depends on being honest with yourself.
Working hard is not just a dial you turn up to 11. It's a complicated, dynamic system that has to be tuned just right at each point. You have to understand the shape of real work, see clearly what kind you're best suited for, aim as close to the true core of it as you can, accurately judge at each moment both what you're capable of and how you're doing, and put in as many hours each day as you can without harming the quality of the result. This network is too complicated to trick. But if you're consistently honest and clear-sighted, it will automatically assume an optimal shape, and you'll be productive in a way few people are.
Source –
Sunday, February 6, 2022
Losing Our Edge
No one has to tell you you’ve come to the right place. The look of merchandising authority is complete and unmistakable.’’
That’s how the New York Times described Sears in 1983.
'‘In the markets we enter, we’ll be dominant,” said its head of retail. Few doubted it.
After dominating American retail over the previous century, Sears in 1983 was pushing into banking. Few doubted it would win there, too. “On a scale of 10, not to be flip about it, I’ve got us at about 10.5,” its chairman told the Times.
That wasn’t hyperbole. Sears was the largest retailer in the world housed in the tallest building in the world spreading its operational expertise into new businesses. Its catalog was the Amazon of its day.
Then everything fell apart.
Sears made more profit in 1954 than its market cap is worth today.
There’s one story about what Sears did wrong, which is well known.
There’s another story about how common these declines are. More than 40% of all public companies go on to lose effectively all their value.
The only thing harder than gaining a competitive edge is not losing that advantage when you have one. That’s as true for careers and investment strategies as it is for business. And since people are naturally optimistic, there’s a tendency to put more thought into finding an edge than not losing it once you find one.
Competition and incompetence are usually blamed when a competitive advantage dies. But here are other factors I’ve seen pull winners off the podium.
“Being right is the enemy of staying right because it leads you to forget the way the world works.” – Jason Zweig. Buddhism has a concept called beginner’s mind, which is an active openness to trying new things and studying new ideas, unburdened by past preconceptions, like a beginner would. Knowing you have a competitive advantage is often the enemy of beginner’s mind, because doing well reduces the incentive to explore other ideas, especially when those ideas conflict with your proven strategy. Which is dangerous. Being locked into a single view is fatal in an economy where reversion to the mean and competition constantly dismantles old strategies.
Maintaining financial success takes precedence over traits that were vital to building the initial idea. Nothing to lose is a wonderful thing to have. You focus all your energy on building something great. Having a quarterly dividend to maintain is what happens after you build something great. But it can come at the expense of what made you successful in the first place. Deutsche Bank once asked large companies how they prioritize cash flow in a crunch. I’ll let them explain:
After cutting deferrable investment, firms would borrow money to pay the dividend, as long as they do not lose their credit rating. Next, they would sell assets at fair value and cut strategic investment. Only if all these actions are insufficient, would they resort to a dividend cut.
They cut strategic investment to maintain the dividend. This is Christmas to scrappy newcomers.
Mistaking a temporary trend for a competitive advantage. Serendipity often masquerades as skill. Take monetary policy. The top three investing skills are patience, temperament, and having your career coincide with a 30-year uninterrupted decline in interest rates. Or sales: Orange County circa 2006 convinced many subprime mortgage companies that they had a leg up on traditional lenders. Sure, exploit opportunity when the wind is at your back. But don’t be surprised when an outgoing tide reveals the limits of sustained individual greatness.
Scaling a product requires scaling HR, which is monstrously complex and usually unrelated to your original skill. Designing a device or discovering an investment strategy is a million miles separated from managing 500 or 1,000 people. Managing one-hundred thousand people is a different universe. Even when responsibilities are delegated, creating a culture that promotes trust, creativity, and growth is likely a totally different skill than was required to build your product in the first place.
The decline of paranoia that made you successful to begin with. I like the idea that systems are better than goals, because once you reach a goal you tend to stop doing the thing that made achieving the goal possible. “I’m going to work out every day” is better than “I’m going to lose 10 pounds” because once you lose 10 pounds you’ll probably stop working out. Same thing happens when a successful business or career hits a big goal. Paranoia is a trait newcomers use to combat how deeply the odds are stacked against them. But it tends to die once a goal is hit. Few things sap the paranoiac drive to do better than stable cash flow and high profit margins. Michael Moritz of Sequoia was once asked why his firm had thrived for 40 years. “We’ve always been afraid of going out of business,” was his answer. That is an exceedingly rare response in a world where most people step back, see all they’ve achieved, and assume they can breathe a sigh of relief.
Reputational momentum is vicious and unforgiving on the way down. The more successful you are the more people want to be associated with you – which is great. But that’s equally powerful in reverse. Someone early in their career can screw up and recover quickly, moving onto the next company. A successful person or company has each flaw blared across the news, saturating the gossip channels of their network. Lehman Brothers’ 2008 struggles made front-page national news; a small community bank could have been at its wits end with hardly a soul aware. Sears fits this bucket: Everyone is aware how strained it is, so no one – customers, employees, investors, vendors – wants to be associated with it.
Brands are hard to build and even harder to span across generations. You can do everything right and still fail because customers don’t want to be associated with products of their parents’ generation. Morgan Stanley could make the indisputably best robo advisor in the world and millennials would still prefer Betterment. That’s how Charles Schwab blossomed in the 1980s and 1990s; with a brand baby boomers felt was theirs, not their parents’. One of my goals as a writer is to bow out the moment I realize I’m too old to understand how the game is played anymore. Companies, with indefinite time horizons, have to keep trying. A few of them pull it off; more often it’s painful to watch.
Source –
https://www.collaborativefund.
Saturday, January 22, 2022
Learning from Obama's decision making
One of the first things I discovered as President of the United States was that no decision that landed on my desk had an easy, tidy answer. The black-and-white questions never made it to me - somebody else on my staff would have already answered them. And while few decisions in life are as complex as the ones you face in the Oval Office, I did walk away from my eight years as president with some thoughts on how to approach tough questions.
In March of 2009, just a couple of months into my presidency, the economy was in freefall. Unemployment was up to 8.5 percent, on its way to ten percent. 800,000 Americans lost their jobs that month, families across the country were losing their homes, a tanking stock market was depleting their 401ks, and a difficult credit market was making it hard for small business owners to take out the loans they needed. To turn around any of this required stabilizing the financial system, and to do that, I had settled on what was the least bad of three lousy options - subjecting the 19 largest banks to "stress tests" to see whether they had the capital to survive an even worse economy.Nobody was happy about it - not the public, not Wall Street, not me. My own advisors disagreed about the path forward, with some calling for a sharper condemnation of the bankers whose recklessness had gotten us into the mess, and others saying that such gestures might stifle the very market confidence we needed.
To get everybody on the same page, I called a meeting with my economic team. We spent a long, exhausting day hearing from Treasury Secretary Tim Geithner about how the stress tests were going, hashing out various alternatives, and pushing every idea to its logical conclusion to see if it might work. By evening, I left the meeting to have dinner and get a haircut and told my team that I expected a consensus upon my return. But the truth was that, through that gruelling process, I had already reached my decision to let the stress tests bear out. Within six months, the economy would start growing again. And by the next year, the biggest banks had paid back every dime of taxpayer money - plus interest.
But the point is, in just a few short weeks on the job, I had already realized that because every tough decision came down to a probability, then certainty was an impossibility - which could leave me encumbered by the sense that I could never get it quite right. So rather than let myself get paralyzed in the quest for a perfect solution, or succumb to the temptation to just go with my gut every time, I created a sound decision-making process - one where I really listened to the experts, followed the facts, considered my goals and weighed all of that against my principles. Then, no matter how things turned out, I would at least know I had done my level best with the information in front of me.
Of course, that only works if you listen - really listen - to others. For me, that meant asking everybody in a meeting what they thought about the problem at hand. I'd call on folks in the back row, including the most junior staffer. That required people to come prepared to share their views.
But, like every leader, I had my blind spots. Late in my first year, Valerie Jarrett reported that some of the senior women on staff were experiencing a culture where the men on the team interrupted them, dismissed their ideas before adopting them as their own, and generally made them feel diminished - to the point where some of the women had altogether stopped talking in meetings. These were some of my most important advisors, so I convened them over dinner to hear more. Listening to their stories, I considered the degree to which my own tolerance for machismo behaviour had contributed to their discomfort and, inadvertently, stifled their important contributions. We didn't resolve everything in one night - but being aware was a start. The men, I later discovered, had been oblivious - and were appropriately mortified. They promised to do better, and a few months later, Valerie said she noticed some improvement.
One of the earliest decisions I had to make about the war in Afghanistan was one that had been pending since before I took office. Although we were planning to revamp our entire strategy, the commander on the ground was requesting an immediate deployment of an additional 30,000 troops. That's how I found myself in the Situation Room, two days after inauguration, discussing the issue with the principal members of the National Security Council - people like the Chairman of the Joint Chiefs of Staff and the Director of the CIA. Almost everyone in the group was inclined to support the troop deployment.
Except for my Vice President, Joe Biden. He made the case to delay deployment until we had a clearer strategy. It wasn't easy. Speaking up exposed him to criticism. But Joe's willingness to go against the grain and ask tough questions was invaluable - and it would continue to be a trait I relied on throughout my eight years. Because one of the risks of soliciting views from a large group is that a current way of thinking can quickly take shape and move everybody in the same direction. Having at least one contrarian in the room pushed us all to think harder - and, frankly, everyone was a bit freer with their opinions when that contrarian wasn't me.
You also want to create space to think. Remember that dinner and haircut break I took during that marathon economic session? That mattered, too. That was part of making the decision. Even in situations where you have to act relatively quickly, as was frequently the case during the financial crisis, it helps to build in time to let your thoughts marinate.
You can't always plan a well-timed break or predict how it might clarify your thinking. One evening in March of 2011, my national security advisors and I were engaged in a stressful discussion about whether to intervene in the ongoing conflict in Libya. At some point, I had to step out for a dinner with the U.S. military combatant commanders and their spouses.
Seated next to a young Marine who had lost both his legs to an IED in Afghanistan, I couldn't help but think about the decision that awaited me about whether to send more young men like him off to the battlefield. We sat just a stone's throw away from the airless Situation Room - but the space and perspective that dinner afforded helped refine my thinking. And by the time they cleared dessert, I had reached a decision.
In my first year, I would sometimes walk over to the small pool house by the Oval Office and have a cigarette (or two), savouring a quieter moment and letting my thoughts wander and deepen. After signing the Affordable Care Act into law, I finally quit smoking for good - but took pains to maintain other outlets, other rituals, that helped preserve some boundaries, however tenuous, between life and work. My morning workout, an evening walk on the South Lawn, after-dinner pool games with our dear friend and family chef Sam Kass. Whatever decision I might be carrying would breathe a little - and so would I.
Those rituals included leaving the Oval Office at six-thirty each night so that I could have dinner with my family. There was nothing more refreshing than spending that time with the three most important people in my life - listening to Malia and Sasha narrate their days, ask questions and tease me to no end. Afterwards, Michelle and I might get a few extra minutes alone to catch up. I always found myself replenished, as though my family had decluttered my mind and restored my equilibrium.
Many of us tend to work relentlessly - whether it's at our jobs or taking care of our families. It can feel like there just aren't enough hours in the day to take time out. But it's actually vital. One thing I learned as president was that the decisions I had to make were so weighty and consequential, the pace so unyielding, that it was easy to feel almost removed from myself. But the time I spent away from my desk, especially with my wife and kids - whether coaching Sasha's basketball team or date night with Michelle - was a crucial, daily reminder of who I fundamentally was as a person. This was so important, because we bring our whole selves to the decisions we make. And those decisions, in turn, both reflect and determine who we are.
That was something my mother made sure I understood. Once, she found out that I had been part of a group teasing a kid at school. She sat me down and told me that there were two kinds of people in the world: Those who only think about themselves and tear others down to make themselves feel important. And those who think about how others feel and avoid doing things that might hurt them. "So," she asked me, "Which kind of person do you want to be?"
All these years later, her question still helps guide my decisions. On an official visit to Japan, I met with the Emperor and his wife, and instinctively made a little bow. To me, it was the most obvious, natural thing to do - a sign of respect in a different culture. I later learned that conservative commentators threw a fit, with one calling my bow "treasonous." Rather than anticipating and fearing the right wing's bizarre insecurity about my carrying out a culturally appropriate greeting to my elderly hosts, I followed my own basic humanity and sense of decency.
Everything I learned about making impossible decisions during the first two years of my presidency culminated in one of the toughest choices I had to make: whether to authorize the raid to take out Osama bin Laden. It was an operation rife with uncertainty and risk. So, I ran a tight process. I trusted my team. I listened to every voice in the room. I gave myself space to think. And then I made a decision that reflected my own personal sense of what was right.
While I couldn't guarantee the outcome, I was confident in making the decision.
Looking back, the number of complex situations I had to adjudicate seems remarkable - that's the job of the President of the United States. But the truth is that, even as regular Americans going through our days, we face countless decisions - a reality made even more acute by the pandemic. We're constantly assessing how to act and what to do, carefully weighing the safety of each choice. It can be exhausting.
The best we can do is find a framework that helps us consider our choices, knowing that there may not be one perfect answer. That way, we can rest a little easier knowing that did the best we could in the circumstances, come what may.
It's not always clean and straightforward. But as my mother would say to me, "The world is complicated, Bar. That's why it's interesting."
Source -
https://barackobama.medium.com
Sunday, January 9, 2022
The model locker room
I have played on a lot of teams in my life. Along the way, there have been a number of winning seasons, but just a few that ended with a championship. The winning seasons were nearly always a matter of talent. If we had more of it, we typically won more than we lost. If we had less, we did not. Since talent tends to be the defining factor in most competitive pursuits, this should not come as a surprise. What is less obvious, however, is what drove those special championship seasons.
Growing Up
When I played little league baseball, football, and hockey growing up, the gap between the best and the worst players was enormous. Some kids could barely swing a bat, throw a ball, or skate, while other kids could hit a curveball, throw a perfect spiral, and/or skate backwards with ease. As I got older though, the gap narrowed….a lot. Many of the weaker players quit and some of the best players regressed, but the biggest difference was that the competition increased dramatically as those who kept playing got better and a crop of talented younger players kept emerging. This pattern happens in nearly every sport and each generation. Just look at U.S. swimming legend Michael Phelps. At his peak, he held close to 30 world records. Today, just a decade later, that number is down to 4, including just 1 individual record. I did not give this dynamic much consideration when I was younger, but it is something I think about a lot as an adult.
As we age, it becomes increasingly clear that talent only gets us so far. Whether it is in sports, school, business, investing, or countless other competitive pursuits, the increase in the concentration of talent makes it more difficult to differentiate ourselves on talent alone. Look no further than Harvard’s class of 2024 class. Among its 29,000 applicants, it included 8,500 perfect GPAs, 3,500 perfect SAT math scores, and 2,700 perfect SAT verbal scores, despite the fact that Harvard only accepted ~1,700 students. Or at the fact that there are over 12,000 college football players in a given year who are all heavier, faster, and stronger than the vast majority of the players that came before them, yet still only ~200 will be drafted into the NFL (~1.6%). Intelligence and athleticism at the highest levels are no longer enough.
This creates an interesting dilemma. While someone may be improving on an absolute basis, they are often getting worse relative to their competition. Michael Mauboussin refers to this concept as the “Paradox of Skill”, which simply means that even though people may becoming more skilled at a certain pursuit, it is often more difficult for them to succeed because their competition is also becoming more skilled. This means that eventually the most talented people end up competing against one another, making it very difficult to become a bonafide superstar. Hence the paradox.
Given this reality, what should talented people in competitive industries do? Mauboussin suggests they should “pursue easier games”. Intuitively, this advice makes a lot of sense. If you seek out less talented people to compete against, your chances of success should increase. But what if there are no easier games to play? Or, what if you are not able to or want to play a different game? If I told one of my sons to quit playing soccer, lacrosse, or flag football and go play tiddlywinks because they would have a better chance of being a star, they would tell me to go pound sand. The same goes for public equity investors. Sure, there might be less competition selling residential real estate, coaching football, or investing in private companies in more remote parts of the world, but are these types of options realistic or desirable? For many, I would guess not.
So, if either my sons or a public equity investor were to recognize that talent alone may not be enough, easier games are not a realistic option, and/or they want to keep playing their current games despite the challenge, what would I tell them? I would advise them to keep pursuing what they love, but to seek out teams with great “locker rooms” to pursue them with. Doing so will give them a long lasting edge that isn’t talked about nearly enough.
A Team’s Composition
Many U.S. sports fans agree that the greatest victory in this country’s history was when a group of unknown college kids, led by head coach Herb Brooks, stunned the Soviets 4-3 in the 1980 Winter Olympics and went on to win the gold medal in ice hockey.
When asked how he assembled the team, as well as his University of Minnesota hockey teams (Brooks had taken Minnesota from a perpetual doormat to winning three Division 1 National Championships in 7 years), Brooks responded,
“The key to my recruiting was that I looked for people first, athletes second. I wanted people with sound value systems because you cannot buy values. You are only as good as your values. I learned early on that you do not put greatness into people…but somehow try to pull it out.”
If you have ever played athletics, you know exactly what Brooks is talking about. A great locker room brings out the best in people. It elevates the true leaders, convinces those with selfish streaks to put them aside, and enables a team to play beyond their talent level. Most importantly, when things are not going well, a strong locker room is what allows you to look each other in the eye and know you are going to turn things around.
When you are in one of these locker rooms, it is obvious. You can feel it. However, the trouble is that if you are not, you cannot.
The Business Locker Room
In business, a firm’s culture is its locker room and, I would argue, the most important determinant of long term success. Look no further than a discussion AirBnB founder Brian Chesky had with Peter Thiel. Chesky recounted that,
“After we closed our Series C with Peter Thiel in 2012, we invited him to our office. Half way through the conversation, I asked him what was the single most important piece of advice he had for us. He replied, ‘Don’t f*ck up the culture.’“
Thiel is far from alone. Sequoia Capital, widely regarded as the world’s best venture firm, has a section on their website titled “Seven Questions With”, which is a series of interviews with various partners, executives, and investors. In nearly every interview I have read, “culture” is referenced as the most important contributor to a company’s success. Jamie Dimon has mandated that JP Morgan employees return to the office, presumably due to concerns about the work-from-home impact on the firm’s culture. Legendary investor Steve Mandel recently commented that the number one thing his mentor, Julian Robertson, taught him was how important people are, starting with their integrity. Bill Ford of General Atlantic and Orlando Bravo of Thomo Bravo said something similar in recent interviews with Ted Seides on Capital Allocators. Maybe most notably, there appears to be a growing correlation between companies’ stock prices and their Glassdoor reviews.
A Model Locker Room
One of the most difficult parts about determining whether a team, fund, or company has a good culture is that there is no such thing as a model “locker room”. They come in all shapes and sizes. In my experience, some have leaders with the ability to motivate and unite the team, others have strong entrenched cultures created by prior generations, while others fit somewhere else on a vast spectrum of organizations. There is no magic formula.
I meet with a lot of funds and investors as a part of my job. For every one that we choose to partner with, we will often meet with more than 100 others. Almost all are full of talented people with impressive resumes and degrees, so checking the box for talent is relatively easy. This is no surprise given the fact that institutional investing is one of the more competitive careers one can pursue. The hard part is determining what is behind these resumes and track records because this is where a key edge and source of endurance resides.
What to Look For
Since there are no hard and fast rules regarding what defines a strong locker room or a culture, my preference is to keep it simple at the start. I ask everyone I meet with the first time to define the source of their “edge” and “endurance”. I want to hear why they think their fund has an advantage and why this edge is sustainable? More importantly, I want to see if there is consistency or dispersion in the team’s answers.
A few of the positive indications I look for are (a) shared ownership in the business, (b) low employee turnover, (c) diversity of thought, experience, and backgrounds, and (d) an aligned incentive structure. Dig a little deeper though and there are some less obvious indications of a good locker room. Namely:
Mentors – Does the firm prioritize mentorship? Do employees feel like they have advocates within the firm? Do the mentees eventually become the mentors?
Trust – Do people at the firm trust those around and above them? If younger employees look left and right in a meeting, do they admire these people? Do they aspire to be in their bosses’ shoes in the future?
Strategy – Do the “higher ups” value their employees’ opinions? Do they encourage open discussions or do they “steer” the conversation? Do they value differing opinions or just say they do?
Recruiting – What types of qualities does the firm prioritize when hiring? How much emphasis is placed on character versus sheer intellectual horsepower? Where do they recruit from?
Accountability – How has the firm handled disruptive colleagues? Are the most talented colleagues given exceptions or are they held to the same standard? How are good team players acknowledged and rewarded?
In each case, the more examples, the better.
These are not hard and fast rules. There never are. They are just some of the observations I have made after spending considerable time in a wide variety of locker rooms and offices.
A Long Season
Most careers, investing in particular, have plenty of highs, a number of lows, and a lot of mundane moments that fall somewhere in between. The high and mundane periods have a tendency to take care of themselves. The lows are what define you and the relationships you choose. They are the moments you realize how important your locker room is. Or, as Doug Leone, the current managing partner of Sequoia Capital, recently said in response to a question about how and why Sequoia was able to escape the dot com bust with positive numbers, unlike the vast majority of venture firms.
“It was a sense of camaraderie. It was the fact that each one of the cells in our bodies could not do that (walk away from those funds). It had nothing to do with, ‘we have to save our careers, our money, none of that’. It had to do with being a badass and doing what nobody else would do. That’s what it had to do with. Doing the right thing when it’s inconvenient for you.”
The tough times are the ones that make you realize how much you cherish having teammates and partners who are going to get you to the other side because this is what truly adds long term value.
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