Starting in September, I started assisting Tesla with investor communications and therefore have been not blogging as much. For one, my days are full. (I am also still doing executive coaching.) For two, it seems fitting to write less.
But I did want to share some thoughts as we head into 2017.
Working at Tesla, you hear the words “first principles” a lot, which has not yet become a widespread business buzzword, but absolutely colors how employees are encouraged to think. Studying Tesla over the years influenced me so much that I named my company, Solve for X Coaching, after this philosophy.
It’s a concept based on physics, which means you take things down to the physics and mathematical levels and question all assumptions. Put another way, you ask “why” continuously until you get down to science (or in my view, in the case of life, guidance from religion or philosophy, and even then, you could probably still drill down deeper to the atomic level.)
It requires that you eliminate thinking by analogy or comparison with known processes. Analogies look at how something else works and then applies that knowledge to the current situation. But the problem with that is that you end up blind to things that could change. Analogies might help in understanding how something works right now, but they don’t help to build something new and better from scratch.
If you apply this way of thinking to the structure of your own life, sometimes dangerous and miraculous things will happen. Dangerous because it’s hard to maintain the status quo if you’ve questioned everything, miraculous because you discover how much of your own life design is within your own power.
It’s hard to do it on one’s own, though, with is why I like being a coach and working with people as they lean forward into their own life designs. We all have blind spots, myself as well. I can’t believe how many huge ones I’ve seen in my own life through executive coaching.
In my own life, when I boil things down to the science, so many of my recent decisions come down to biology and acceptance of that. I have monetary, career, family and motherhood aspirations that often seem to conflict with each other. As a female member of our species with a biologically and psychologically driven desire to reproduce, for instance, I must birth and nurse my offspring and I accept that is a limiting factor on my overall earnings potential. It also defines what I’m solving for now. What I’m solving for in the future will change.
I accept that my two biggest performance constraints in any corporate environment are 1) my biologically and psychologically driven desire to reproduce and care for offspring and 2) my underdeveloped spatial intelligence, in part caused by nearsightedness and astigmatisms, which make me bad at driving and navigating in any environment. Meh. Luckily, I offer enough strengths to compensate for those two.
I share this self-analysis because we can all do something similar in our own lives. It’s hard to be bitter when we own our choices and recognize what is outside of our control. (The rules of science are outside of our control.)
If you are facing conflicting desires or what seems like an unsolvable problem, take it down to first principles, down to the science. Break it all down, nay, wreck it, and build it back up, even if only in your own head. And see what solutions you come up with.
“And so God made the world and stocks and bonds.” —Geoff Dodd, my hilarious and competent Series 7 instructor.
What is Wall Street? What’s the difference between a stock and a bond? Why do we even have a stock market?
You are not alone if you have made it to adulthood and you don’t know these things. I’m going to help you out via an eight-minute read, hopefully in a way that sticks.
A lot of smart people, even with advanced degrees in law or medicine, get fuzzy brained on this stuff.
It’s never formally taught to anyone outside of business, and even people with masters degrees in business need further studying to pass a licensing exam to work in the financial markets.
In fact, much of the media that reports on this stuff doesn’t really understand it. I know because I’ve been a financial journalist and then, as an analyst, have helped journalists at financial publications get up to speed.
You probably know that there is a such thing as a stock market and that you’re supposed to be involved in it to win at life, but maybe then it kind of falls apart for you. And yet, everything about Wall Street is so ubiquitous that nobody is allowed to admit that they don’t know anything about it.
If that last paragraph resonates, then this post is for you. Seriously, no worries.
Here’s a Q&A based on real conversations with friends over the years.
What is Wall Street?
Wall Street is literally a street in the lower Manhattan section of New York city. The New York Stock Exchange is based there.
Wall Street is figuratively a term used to describe the ecosystem of high finance. That includes the broader financial community, hedge funds and mutual funds, brokerages, investment banks, and everything having to do with the capital markets.
In late 2011, when the Occupy Wall Street movement took up space at a lower Manhattan park about two blocks off of the literal Wall Street, a lot of people who work on figurative Wall Street kind of, well, laughed. Because everyone knows the real money is managed out of midtown. And besides, it wasn’t stocks that caused the global financial crisis of 2007-2009. It was bonds. Duh.
What are the capital markets?
A bright and creative English major asked me this once. Great question!
So, capital is a fancy word for money. In general, you wouldn’t use it to describe the cash in your pocket but rather amounts so large that it would be silly to call it “money” anymore, and so we call it “capital.” Capital is synonymous with large sums of wealth or assets.
Capital is fuel for growth. A great idea that would enrich people’s lives at scale would go nowhere without capital.
When someone says, “I need startup capital,” they are referring to the money they need to get their business running — to buy equipment or hire people. When an individual says he hopes to “capitalize” on something, in a literal sense, he means he wants to make money off of it or use it to his advantage in some way. When an investment bank says it wants to capitalize something, it means to fund it, or provide capital for it.
The term capital markets primarily refers to the stock and bond markets.
What are the stock and bond markets?
The best way to answer this question is to first answer the question that you are not asking. Knowing the purpose of a thing can help you to better understand it. Ask me what’s the purpose.
Ok. What is the point of the stock and bond markets?
Yay!
Every business is a glorified lemonade stand. So let’s start there.
Off to a good start. (Photo credit: Rebecca Schley, Flickr, Creative Commons license)
You open your first lemonade stand. It’s popular, people love it. You want to expand. All businesses need money to grow. You calculate that you’ll need $70,000 to open a physical store on Main Street.
To generate this $70,000, you could use your own money. But maybe you don’t have $70,000 laying around (because if you did you might be smarter than going into the lemonade business?) Anyway, to raise the money, you could go to a local retail bank* or credit union.
Ok, so you go to the bank and the friendly loan officer gives you a bank loan and you use it to open your lemonade stand.
Now let’s say your lemonade stand is awesome and you decide to expand nationwide. What do you do next**?
If you need a tens of millions of dollars, you might raise what’s called venture capital. Venture capital, or VC money, comes from wealthy people called venture capitalists who run their own companies, aka VC firms, that take big risks on startups in hopes of making more money later.
But what if you wanted to raise hundreds of millions of dollars?
Well, then you would turn to the capital markets: Wall Street.
Organizing funding so that companies can grow is exactly what Wall Street is for***.
If you need hundreds of millions of dollars to make your dream a reality, no retail bank is going to lend it to you. To raise large sums, you need an investment bank, the ten largest of which are JPMorgan Chase, Goldman Sachs, Bank of America Merrill Lynch, Morgan Stanley, Citigroup, Deutsche Bank, Credit Suisse, Barclays, UBS and Wells Fargo.
In sum, there are two primary ways to raise a lot of money:
If you sell stocks, then you are selling equity. Another way to say this is that you are raising equity, that is, selling shares of ownership of your company. Others buy a little piece of your company, or a share of your company, and you get the shareholders’ money. In return, you no longer own 100% of your business. When a corporation sells stock to the public for the first time, that is known as an initial public offering, or IPO.
What is cool about raising money by selling stock in your company is that you never have to pay that money back. What sucks is that your profit forevermore belongs to the shareholders in proportion to their ownership percentage. The only way to get back ownership is to buy back your own stock. Once you sell equity, it is sold, no matter how big your company gets.
In sum: Stocks are equity and equity means ownership. The holder of the stock is an owner of the company.
If you sell bonds, then you are selling debt. In other words, you are borrowing money that you eventually have to pay back with interest. On the other hand, the ownership structure is maintained. After bond holders are paid back with interest, they have no claim on the company. Your company could grow to the moon and all that profit is yours so long as you own 100%.
In sum: Bonds are borrowing and borrowing means debt. The holder of the bond is a lender to the company.
That’s the point of view of the company that needs capital.
On the flip side of all that is the investor — the person who lends or gives money to the company that needs it. If you’re reading this blog, you are probably an investor in some form. Investors are anyone with an individual retirement account, anyone counting on a pension, anyone who puts money into a 401(k), and all the people on up the money management chain who guide an individual’s money into a proper portfolio of investments.
Wall Street’s basic function is to allow money to flow to where it is most needed. This flow makes modern life possible.
In the case of bonds, entities borrow from future earnings to make that future better in some way. In the case of stocks, entities democratize their future earnings by allowing people to take a risk and invest, and hopefully gain wealth without expending effort.
Ok, so the point is to get money from the people who want to invest and give it to the people who need it. I still don’t get the New York Stock Exchange. What are the stock and bond markets?
Ok so let’s say Jill buys shares in Tom’s lemonade stand company. Jill buys $2,000 worth of stock in Tom’s company. Tom got his money, good for him. Jill now gets a share of Tom’s profits, no matter how small. Is Jill stuck with that investment for life? No. Jill can turn around and sell her shares to someone else. But she needs a market to do that.
After a corporation (or government entity) has raised money by selling stocks or bonds, the stock holders and bond holders can sell their holdings to other people. This is called trading**** and it happens in what’s known as the secondary market.
When you think of the stock market, you are thinking about the secondary market, which is the trading, or buying and selling, of shares of corporations. The initial purpose of raising money for the company has been met, and now the shares trade. The value at which shares trade depends on how buyers and sellers view that company’s future prospects. By value, I mean stock price.
As opposed to bonds, stocks are the easiest to understand and the easiest for media to report on. That’s because the stock exchanges are highly regulated and public. Some of the largest are the New York Stock Exchange (NYSE), the NASDAQ, the London Stock Exchange Group (LSE), and the Japan Exchange Group (JPX). The stock markets have a definite opening time each morning, a closing time, and an after-markets trading time.
Stocks are cool because you can know a given stock price at any time. Tesla shares closed at $222.93 today, which Google told me, here.
The stock market is bold, beautiful and open. There’s glamour to it. The media loves it. Many people understand it.
The bond market is more, uh, dark. And confusing. And it’s way way way bigger than the equity market. Remember the subprime lending crisis that caused the Great Recession of 2007-2009? Yeah, that happened in the bond market.
The mainstream press rarely writes about the bond market. It’s a snoozer of a topic, the prices aren’t public, and bonds are way confusing.
If you want to check the price of a bond, you have to call your broker. And he’d find out the price by calling someone else. I think. And check his Bloomberg screen. Or something.
If you specialize in debt structures or bonds in this lifetime, you can make a killing.
Is there anything else I should know?
There’s a lot more to all this, but you now know enough to make people avoid you at parties.
Know that the word security refers to any type of financial instrument, including stocks, bonds, some types of insurance, and options. And that there are lots of different types of securities to invest in — basically products created by the financial world.
Also, know that I used the term bonds loosely here and that other debt instruments include notes and bills.
Finally, I used corporations as an example here. Know that beyond corporations, governments are huge participants in the debt markets. As of this writing, the US government has $19,443,266,164,413.41 in debt outstanding. In English, that’s nineteen trillion, four-hundred-and-forty-three billion, two-hundred-and-sixty-six-million, one-hundred-and-sixty-four thousand, four hundred and thirteen dollars and forty one cents. All of that debt is held by individuals, institutions and other governments in the form of bonds, notes and bills.
Commodities are super fun and also have markets. Commodities include hogs, corn, currencies, wheat, oil, rice and so on. I’ve toured the Chicago Board of Trade in Chicago where everything is traded from corn to hogs to cattle, done in trading pits of men yelling at each other. Incredible to watch.
Footnotes:
*You could also do a Kickstarter or open a GoFundMe account to collect from people. I believe that it’s a bit disingenuous to ask other people to fund your dream without giving those people a return, but there’s a market for it and it seems to work for some. Here’s my unofficial simplified hierarchy of raising capital, by amount needed:
family and friends
kickstarter / crowd funding
community / retail / commercial bank loan
venture capital series A round
venture capital series B round
venture capital series C-F round
private equity raise
Initial Public Offering (IPO) / Debt offering
Secondary offering / Debt offering / Convert / Line of Credit, etc.
***In May 2015, I wrote to investor clients a partially tongue-in-cheek e-mail about concerns about Tesla’s cash burn. My e-mail was later quoted by Bloomberg News. Notice how much Wall Street looks at cash, capital, and access to capital. Excerpt from my e-mail:
I saw some hand-wringing this morning in other’s published research about Tesla’s cash burn. I think this is missing the point – the current cash burn rate is not a solid-set-in-stone line. Tesla has the option of drawing down further on its warehouse line and opening new lines to recoup the cash off of its leased vehicles. Also, deliveries in Q4 will be roughly 2x what they were in Q1, whereas expenses will only grow ~15% in that amount of time. And, in Q1, Tesla’s SG&A (recurring cash burn) actually ticked down sequentially, so they are to be commended for that – good cost control in Q1.
Finally, it turns out that Wall Street has some great solutions for companies in need of capital. In fact, funding rapid growth and sea change through companies such as Tesla is exactly what Wall Street is for. Worst case, a straight-up equity raise (and Tesla likely has even more favorable options) at the current level would raise more than $1b with about 3% dilution. As far as bear arguments go, the cash burn one misses the mark.
****I have yet to meet a stock trader I didn’t like. Traders are the blue collar Wall Street folks — usually pretty colorful and inappropriate. They’re forced to live in the moment as they enact trades and try to get the best price for clients. It’s almost like playing a sport.
“Time. We kill time, spend time, lose time, make time, beat time, take time, waste time; but we virtually never consider time, much less understand it.” –Richard Berendzen, physicist, astronomer and my university professor
Questions like these informed my faith and worldview as I minored in physics in college.
The way I conceptualize time is this way:
There you are standing there, still.
But oh! Not still! You may be unmoving in the first three dimensions, length, width, and height. But you are zooming through the fourth dimension, which is time.
We are never still in Einstein’s spacetime. Of course, the faster you approach the speed of light in the first three, the slower it goes for you in the fourth — hello relativity!
Nobody sits still. We are hurtling through spacetime.
Per The Atlantic article, I suppose my conception is most like the “accretive” theory described at the end.
Perhaps when we die, we cease to flow through the first three dimensions so easily, but how could you ever cease to flow through the fourth? If time is made of particles, maybe we exist forever in the particles that we existed in, even as new time is added. Maybe heaven is merely another word for time.
Happy Saturday!
If you like to ponder time — and really, what better could you do with your time? — consider the following posts:
Some time a bit ago, a Seattle pastor posted this challenge question to Facebook: “To whom will you bring comfort today?”
It was early morning on the West Coast, which meant I had been working about five hours already. I thought back over my morning spent with clients discussing a stock that was selling off that day. My clients and I commiserated. We looked at what we got wrong. We looked to see if we could offset at least some of the blame to the management team. Some clients ranted and raged. Some were quiet and steady. All needed a confidential and trusted place to go over their thinking and decide what to do next.
What do you do when things go horribly wrong? When the amount of money being lost has more zeros than the average person can fathom?
You process it, you manage the cortisol pulsing through your blood stream to get to a place of rational thought, and ultimately, you have to decide on what to do next: Sell the position or double down at this lower level?
To whom was I bringing comfort? Hedge fund managers.
My position was a privileged one. For seven years, I studied the intersection of fear, greed and anxiety through thousands of conversations with extremely bright people. It was all very human and very fascinating.
Sometimes, we had the craziest high-five thrills I’d ever experienced. “Love that money! Woo!” – Ricky Bobby, Talladega Nights
Other times, it was vomit-inducing stressful.
Welcome to Wall Street.
If you manage assets* for a living, then I want you to know that part of the reason why your job makes you so anxious is because it is supposed to. People pay other people to manage their money for them as way to outsource financial anxiety.
People on Wall Street are paid to worry.
There are few industries where constantly anticipating what could go wrong is not the result of paranoia, but is actually part of the job description. (Military and tactical law enforcement are others.) The mental health profession says hyper-vigilance is a symptom of PTSD. On Wall Street, it’s a symptom of a job well done.
What’s that? It’s Thursday and you haven’t seen your kids since Sunday night, you’re fantasizing about moving away to a Greek island (or Florida), you have a vacation planned that will probably get eaten away by unforeseen events, and you find yourself taking your first deep breath of the day after market close?
No, you’re not crazy or doing it wrong. That’s your job.
Now go check your bank account. Ahh. Isn’t that better?
Also fun: Failure is never an option.
There is one way to be right: Beat the market.
There are infinite ways to be wrong.
Do you know what science calls it when there are infinite ways to have disorder and one way to have order? Entropy.
“Your job as an investor is nearly impossible: to make great decisions with incomplete information, while reducing uncertainty,” says Marc Balcer, a former hedge fund founder who now runs his own mindfulness coaching practice. He coaches people on how to manage high stress situations. Like me, he works with many Wall Street clients.
I’d like to share some observations that I believe affect the entire economy — from how publicly traded companies manage their businesses on a quarterly basis, to how capital is allocated, to the risk tolerance of ourselves, as a society.
And here, I’m just talking about stocks. I’m ignoring the gigantic, can’t be overstated how big, world of bond investing.
Investors – and people like me on the sell side who served them — are expected to predict future events and predict how a stock will react to those events.
Every quarterly earnings season is go-time in the world of stock investing. Do or die, the final accounting of our predictions in the quarter. Companies report out their financial performance and asset managers score themselves on their bets and then report out to their own clients on how the fund is performing.
Earnings season is The Reckoning. A typical portfolio of 12 stocks is going to have 48 reckonings per year. Plus, all the peers will report and those also move the market — and maybe the fund should have invested with one of them, instead. During earnings season, free time disappears and decision making rules the day.
Everyone is on high alert. Everyone is stressed. Decision fatigue becomes a real thing. It’s tough to manage constant reckonings. Everyone is constantly scored on the manifestations of their hard work, and performance is critiqued by colleagues, competitors, and clients.
Generally, the faster the money moves in a fund, the more stressed everyone is. The hierarchy of stress starts with the long-term mutual fund managers at the bottom (still paying attention but not as frantic) and increases until you get the fast money long-short funds at the top of the stress heap (huge amount of pressure to change positions rapidly and make decisions in the face of incomplete information.)
I knew of several portfolio managers who were red-faced screamers. I worked with them as well as the analysts who reported to them. In every case, it was a fast money fund and the portfolio manager, though behaving horribly, in my view had a lot of public face on the line: In every case, he was managing the assets of people in his own social group. It’s one thing to lose your own money. It’s quite another to lose all your friends’ money.
(And while I think there is never a good excuse for treating someone wrong, I know during the most intense periods, I was not always the kindest -ahem- to my own junior analysts. Reputation, ego, perfectionism, winnersville versus losersville, tight deadlines, seconds mattering — it all played a role. I was not above completely losing my shit over a misplaced decimal point in a financial model. And unlike the buy side, I never actually had any money on the line.)
Here are some sample ways to be wrong:
Be sort of right and sort of wrong = Wrong.
Be right on what happened, but wrong on how the stock reacted = Wrong.
Be right on how the stock would react, but too early on the timing = Wrong.
Be right on how the stock would react, but failed to convince the portfolio manager to adjust the position = Wrong.
Be totally right on the events that would happen and how the stock would react, fail to trim the position and lock in the gain, the next day something crazy happens and the gains are wiped out = Wrong.
Be totally right on the events that would happen, trim the position to lock in the gain, the next day it gets even better and the stock’s up another 15 points = Wrong.
Freak out and sell the position when its down 20 points, and it moves upward another 15 the next day = Wrong.
Be completely right but lose the trust of the PM and nobody acts on your recommendation = Wrong.
Be right but fail to pound the table hard enough = Wrong.
Learn from that mistake, next time make a high conviction call and pound hard, and this time, get it wrong = Wrong.
Have a great year but still under-perform the general market = Wrong.
Be right on nearly minute detail but fail to anticipate that demand for copper in China is going to compress the gross margins of this US industrial by 2 points, causing the company to miss EPS by $0.01 when the Street was expecting a beat and raise = Wrong.
You see? Infinite ways to be wrong. Entropy.
It’s never dull. It’s all-consuming. People use all of their energy to not go nuts. And everyone is dropping fucks like dollar bills
Most hedge fund employees I know — from the folks at the top to the n00bie analysts — take the job seriously. They want to do the best job they can, make a good living, and go home and kiss their kids at night. (Or, if they’re single, party.) They love the money (who wouldn’t?), appreciate the meritocracy, crave the intellectual stimulation, and treasure having some power. There are cheaters and losers as in any industry. I never met anyone shifty or dishonest — that’s my honest truth.
The deeper I get into being a coach for executives and high-performing professionals, the more I learn about the importance of being calm and differentiated — of knowing where one person stops and where another begins, and of the importance of a confidential and trusted space to think. I realize that in many ways, it is what I’ve been doing all along.
You’ll never eliminate anxiety — you’re paid to be anxious.
But, you can manage your anxiety and with enough self care and awareness, channel that energy into making better investment decisions.
**HUGS**
—–
*For non Wall Streeters reading this blog, asset management refers to the profession around managing money. That money is managed in sums so large that it’s not even called money any more, but rather, assets, or capital. Thus, when we say the capital markets, we generally mean the stock market and the bond markets, where large sums of capital change hands every day.
If your retirement account is held in a managed fund, then there’s someone on Wall Street managing your money — either working for a mutual fund, a pension fund, or a hedge fund. And, since many pension funds outsource some asset management to hedge funds, there’s a chance that your retirement account is influenced by the hedge fund community.
The PM acronym is for portfolio manager, the person who has the job of making buy or sell decisions, and the one who usually bears the brunt of the credit, blame, and stress.
The Atlantic has an article, The War on Stupid People, that provides a great starting point for a discussion on innate ability versus hard work. It brings up several thoughts for me.
One, it’s profoundly difficult to be low IQ in today’s economy. All the low IQ jobs are being outsourced to robots. And to be low IQ is to be mocked. To be medium IQ is to fit in with the majority. To be high IQ is to often feel isolated and to create systems and companies and fill them with one’s own kind.
Two, what creates IQ? Is it inherited or learned?
People have value and worth no matter their intelligence level, so how does everyone participate in the economy, and thrive?
It’s difficult for Americans to realize that we aren’t all equal in terms of ability. We want to believe that anyone can do anything if they just try hard enough.
I was guilty of “equal thinking” myself when I was younger, looking at peers who could not perform complex math or physics, as I could, and wrongly concluding that they weren’t trying hard enough. Yes, there is something to be said for effort, but there is also natural gifted ability that was not earned, not a factor in human worth or deservingness of good things.
(My own ‘aha’ that some brains simply cannot do everything well came from taking a hard look at my own poor spatial awareness and sense of direction. This personal mental weakness broadened my empathy for others considerably! My poor spatial awareness means I’ll never make a living driving a car, but we all find different ways to thrive.)
The Atlantic article posits that not everyone has the mental fortitude to complete four years of university study, and what then? Some human brains cannot do the mental heavy lifting the same way my spindly human fingers cannot grip heavy objects, and no amount of trying is going to alter the underlying biology.
Inequality of ability leads to inequality of outcome. The really hard part is recognizing that ability is both *inherited* and *cultivated.*
I think the answer is in helping each unique person discover his or her gifts and strengths, and to play those cards as best as they can. And also helping people to understand that hard work and determined effort can close a lot of the mental gap.
I also think that mathematical thinking needs to be recognized, early on, as a non-negotiable core strength to be developed and cultivated the same as reading and writing.
In the end, raw intelligence makes life a lot easier on a person the same way beautiful bodacious breasts make life easier on a woman and having a strong jaw and being tall makes life easier on a man. But inherited traits do not equal self-worth. A person might be a bit dim, but his divine spark shines just as bright.
This is not meant to be a political discussion – though I can see how it would be interpreted that way – but a personal growth discussion. A chance to deepen one’s personal insight about the economy, ourselves, and our abilities.
What do you think? What are your natural gifts and how do you play to your strengths? If you happen to be intellectually gifted (probably most of this blog’s targeted audience), what steps can you take to get a bit more humble and empathetic?
By now, most of us have heard the tragic story of Harambe the gorilla.
In case you missed it, the gist of what happened is this: A toddler fell into the gorilla enclosure at the Cincinnati zoo. Harambe, a 400-pound gorilla, saw the boy sitting in the water and stared at him for a bit. A few times, Harambe pulled the boy through the water quickly, moving the boy to a different location. A full video shows the encounter. Forced to decide quickly, zoo officials killed Harambe with one shot to the head and later said that a tranquilizer dart would have agitated the gorilla and would have taken too long to kick in, putting the boy’s life at risk.
Beyond being sad for everyone involved and wondering how much a new gorilla would cost the zoo ($100,000 to $200,000 it turns out), I had mostly put this story from my mind.
But as is usually the case when animals get killed, mob mentality went wild. People saw themselves in the event and felt invited to share a conclusive opinion on who is to blame. The media took the ongoing interest and ran with it.
And this is where the story gets interesting for me again — not the event itself, but the reaction to the event and the questions that people are asking and not asking about it.
Consider the analysis of the mob. The dominant themes on social media seem to revolve around the following:
An excoriation of the mother of the child as negligent, complete with threats against her life
A debate over whether the gorilla was attacking the child, protecting the child, playing with the child, or something else.
The fact that the mob’s blaming questions and conclusions all focus on the immediate actors — the boy, the mom, the gorilla — reveals a lack of critical thinking. The mob is often narrow-minded and can’t see past the end of its collective snout.
There are smarter, bigger, more illuminating questions to ponder. Questions that evolve us even farther from the apes.
Personally, I’ve always liked the follow the money approach to analyzing any situation.
I present the following questions without judgment, and without any real conclusions myself, for the sake of a more rational, intelligent societal discussion:
What is the risk / reward profile of operating a zoo, and is it worth it?
The Cincinnati zoo brought in $40 million in revenue last year, 16% of which, or $6.5 million, came from taxpayer subsidies. Is the zoo something that the taxpayers believe enhances the city? Are taxpayers happy with the subsidy? Are they paying the right amount?
Did you know that zoos have dangerous animal response teams tasked with keeping the public safe? Can we accept that if we are going to cage animals and charge people money to look at them, there is inherent risk to that? Are the risks worth it?
Can we accept and understand that all activity carries risks and that the only way to eliminate risk is to eliminate the activity, and even then, you might introduce a new set of risks? Accepting that, how does the discussion evolve?
The Cincinnati zoo has $17 million worth of notes payable and bonds payable. Does the tragedy put that debt at risk? What assets secure that debt?
What tradeoffs were made between having a clear line of sight to the animals and having an enclosure that could be fallen into, in the first place? Was that tradeoff worth it? Would a giant piece of plexiglass, or metal bars have been better, or would such a design ruin the public’s viewing pleasure?
How much would it cost to have a double moat enclosure, or a better design that would prevent anyone from falling directly into the gorilla area? Is the cost worth it?
What’s the elasticity of demand on admissions pricing? Would you pay an extra $2 for your zoo ticket to have a space where it isn’t physically possible for kids to fall into enclosures? Would you pay an extra $10?
A tragedy happened and cannot be reversed. Now what? What other questions should zoo officials ask themselves? Taxpayers? Zoo goers?
Ask more questions and poke holes in the conclusions of the mob — that’s my take.
Edited to add:
A lawyer friend shares that my post reminds her of a legal formula used to calculate negligence. The formula is as follows:
If (Burden < Cost of Injury × Probability of occurrence), then the accused will not have met the standard of care required.
If (Burden >= Cost of injury × Probability of occurrence), then the accused may have met the standard of care.
Wikipedia link to the concept of the calculus of negligence.
Wikipedia link to the judicial philosopher, Billings Learned Hand, (what a name!), who came up with the standard.
Did you ever notice how people are always solving for something?
Successful people are constantly solving for X.
And X can be lots of things — more time to pursue one’s passions, it can be more money, it can be negotiating a raise, it can be finding more meaning out of one’s career.
From more than a decade experience as a financial journalist and a Wall Street stock analyst on tech companies, I’ve come to believe in the power of solving for X.
If you’re reading this page, you might be what I call an “optimizer.” Satisfied with some parts of life, but always optimizing a part, always engineering a fix. I know the type because I am one!
Two of the most common constraints on modern life are money and time — we often find ourselves solving for one. Some leaders want to be better communicators. Maybe you have a novel in you, but you don’t know where to start.
Burnout, disorganization and stuckness are not inevitable — we can solve for those, too.
As a professional coach, I come alongside you to support you and help you make sense of all the moving parts when you’re solving for X.
It is helpful to talk with someone who doesn’t have a stake in the outcome. I want to see you be a success, however you define it. Particularly in times of transition, it helps to work with a coach.
This life is all we’ve got. Professional coaching can help you to move into a dynamic career that you love, to be your best self and to live your best life. Let’s give it our best shot.
…Solve for X coaching services and blog content — coming soon …
My old alarm clock went off this morning before my mobile phone did. That’s odd, I thought as I scrambled over to shut the thing up.
The dumb alarm clock — as in, not smart like my phone — is the backup alarm, the one that will faithfully and annoyingly beep at me at 3:30 a.m. no matter what, and has zero risk of downloading a faulty software upgrade at midnight.
Why didn’t my mobile phone wake me first, as it was programmed to? And then I realized: It’s an hour earlier than I thought. My mobile phone knew that today was time change day. And so did all of my laptops.
I was left to marvel at two things.
1) My time-keeping technology can be broken down into smart and dumb depending upon whether they know to adjust the time. (Darn you microwave!)
2) Does it amaze you that nearly all of American society adjusts the time by one hour twice per year? And the fact that a couple of states have chosen to opt out makes it even more hilarious.
Can you imagine how this would appear to an outsider? Humans are such kooks.
It’s kind of whimsical though — so much of America has been homogenized for maximum efficiency. This is a ridiculous tradition that continues because we lack the ability to fight the inertia to change it.
Season changes are delightful. The time change is silly, but somewhat delightful in its whimsy — an aberration more reliable than a snow day. They remind me of this passage from C.S. Lewis’s “The Screwtape Letters.”
Here, one of the devil’s minions is educating a junior minion about human kind. Their purpose is to destroy joy and promote anguish, but to do so, the junior minion must first understand how humans are created. In the context of this book, “the Enemy” is God.
The horror of the Same Old Thing is one of the most valuable passions we have produced in the human heart — an endless source of heresies in religion, folly in counsel, infidelity in marriage, and inconstancy in friendship. The humans live in time, and experience reality successively. To experience much of it, therefore, they must experience many different things; in other words, they must experience change. And since they need change, the Enemy (being a hedonist at heart) has made change pleasurable to them, just as He has made eating pleasurable. But since He does not wish them to make change, any more than eating, an end it itself, He has balanced the love of change in them by a love of permanence. He has contrived to gratify both tastes together in the very world He has made, by that union of change and permanence which we call Rhythm. He gives them the seasons, each season different yet every year the same, so that spring is always felt as a novelty yet always as the recurrence of an immemorial theme.
. . . If we neglect our duty, men will not be only contented but transported by the mixed novelty and familiarity of snowdrops this January, sunrise this morning, plum pudding this Christmas. Children, until we have taught them better, will be perfectly happy with a seasonal round of games in which conkers succeed hopscotch as regularly as autumn follows summer.
May we never get so tired of life that the seasonal changes fail to delight us.
(This post is filled with photos taken by me in the past month in Seattle and its environs. Click any photo to see a larger version.)
In case you haven’t heard, the United Nations is saying that the world population will reach 7 billion today.
Happy Halloween?
Of course, the number and date are symbolic rough estimates, since there’s no way to count everyone on the planet down to the person. The UN is using the figure to create a news event, or call to action, for fighting global injustices. (More.)
I’m wondering, what the heck are the rest of us supposed to do with this information? Worry? Duly note it?
Tuck it away for sarcasm purposes later?
“Seven billion people on the planet and I’m the one who (insert unique problem and eye roll here.)”
(Whatever you do, from this day forward, do not get caught saying “six billion people” — you will look woefully behind the times.)
Does population matter? Is the Earth over populated? How would you even talk about such a thing from a religious world view?
Population is the unspeakable missing factor in a lot of dinner party discussion topics — the consumption society, rising global living standards, immigration, the state of U.S. education, anthropomorphic climate change, agricultural progress and food shortages, liberal versus conservative world views. (What’s that? You stick to sports and movies? Need to try that!)
Maybe polite company could discuss population growth, but who wants to be the first to go all Ebenezer Scrooge on the party, talking about decreasing the surplus population? The closest thing I ever hear to the “too many people” assertion is usually regarding California highway traffic.
Population discussions are uncomfortable. They go straight to the heart of the debate over individual versus collective freedom.
If “7 billion” as a news topic makes you uncomfortable, you’re not alone.
Bill Gates intellectually struggled with the idea of overpopulation in relation to the work of The Bill and Melinda Gates Foundation, which promotes programs that improve health care and lengthen life. He knew that improving health was good on an individual level, but what about on a collective, global level? Gates has said that he was relieved to learn that better health leads to economic improvement, which eventually leads to lower natural birth rates.
“I believe it is in the rich world’s enlightened self-interest to continue investing in foreign aid. If societies can’t provide for people’s basic health, if they can’t feed and educate people, then their populations and problems will grow and the world will be a less stable place,” Gates said in his 2011 annual letter. “. . . The second great benefit of vaccination is that as the childhood death rate is reduced, within 10 to 20 years this reduction is strongly associated with families choosing to have fewer children. While it might seem logical that saving children’s lives will cause overpopulation, the opposite is true. I mention this amazing connection often, since I remember how I had to hear it multiple times before the full implications of it became clear. It is the reason why childhood health issues are key to so many other issues, including having resources for education, providing enough jobs, and not destroying the environment. Only when Melinda and I understood this connection did we make the full commitment to health issues, especially vaccination.”
He’s definitely treading on some controversial territory there, but I believe he presents his arguments in a scientifically compassionate way.
American author Jonathan Franzen addresses the topic of population control in his hit novel, “Freedom.” Two of the main characters — portrayed as liberals harboring excessive guilt over their own existence — adopt human population control as one of their secret pet causes, and find themselves slipping down a rabbit hole of ever-more absurd theories and slogans. Those bits make up some of the most awkward and infuriating sections of the book — if it was the author’s intent to make the reader gnash one’s teeth, he achieved it.
I’ll conclude this blog post the way many debates end in Paris: With the existential question about why we’re even debating it in the first place.
From Adam Gopnik’s, ever-quotable, “Paris to the Moon”:
In Paris explanations come in a predictable sequence, no matter what is being explained. First comes the explantion in terms of the unique romantic individual, then the explation in terms of ideological absolutes, and then the explanation in terms of the futulity of all explanation.
Population talk falls within all three paradigms.
Don’t just be one of the crowd, please feel free to share your thoughts. 🙂
My initial reaction to the #OccupyWallStreet protests is this: Our public schools are failing many of our kids.
This is not new and I’m not the first to say it. People know that to compete in a global, information-based and technological economy, education is more important than ever. Our nation has a huge mismatch of available labor skills and needed labor skills.
When I hear some of the protesters speak, I feel they don’t have the full set of tools — the language, even — to express themselves. They don’t know how the system works. And it’s ridiculous that they don’t, because the capital markets are ruled by some basic concepts that are not that difficult to teach.
(Here’s a start: The economic collapse of 2008 and 2009, from which we’re still reeling, was caused by too much debt. Did Wall Street play a major role in buying and selling that debt? Sure thing. Did consumer banks and mortgage lenders make loans to people who shouldn’t have gotten them? Yes. Could they have done it without borrowers? Nope. Would they have done it without government tax incentives and policies that promoted home-ownership, which guided capital to flow into mortgage debt, versus other types? Probably not. Read Michael Lewis’s The Big Short to learn more.)
It’s ridiculous that kids memorize the dates that Confucius lived but don’t learn a thing about consumer credit or compound interest.
One colleague recently told me that his grade school taught him weaving and knots. He didn’t learn the concept of supply and demand until after college. (What economy was he being prepared for?)
When I was in grade school, I learned the difference between a mitochondria and a ribosome. I couldn’t have told you one thing about debt or equity, a bond or a stock.
Don’t get me wrong — I love science, I love art, I love that my public school exposed me to Toni Morrison and Chaucer — I think these things are important, but there’s got to be a way to fit economics in.
Economics is the study of incentives, of money supply and flow, of consumption, of economies.
This economics stuff matters. Even if the Wall Street protesters don’t fully understand the system, they know it affects them. Because it does.
Business makes the world go around. And it can be richly taught. I took my first macro-economics as an honors colloquium, 15 students in an intimate group with a real economist. But the fun came in micro-economics. I had a high-energy professor — we did exercises on buying and selling, we were all to be “goods” in the market selling our labor, we played games that illustrated incentives. I never looked at a consumer product price tag in the same way again.
Earlier this year, I guest-lectured on business journalism 101 at a local university. The college kids, who are self described non-math types, got a lot out of it. For many, it was their first exposure to anything financial.
One student approached me after my talk and said, “When my boss cut back my hours at the coffee shop, he said that coffee bean costs were rising. I was like, ‘What does that have to do with me?’ I feel like I understand that now.”
Bingo! I’m sorry her hours were cut, I’m thrilled that she better understands how a drought in South America affects her personally. She figured it out after just 20 minutes of learning the principles of an income statement.
This isn’t a post that’s meant to blame or shame. I just think we should arm kids with the tools they need.
