The Difficult and the Daunting

You may have heard recently that Amazon is pulling back a bit on hiring and warehouse space. With all their vast resources in strategic planning, the executive team there overshot on leasing square feet their forecasts no longer support. I suspect they will manage through this just fine in the long run with little impact on earnings, but it is a powerful reminder of how difficult it is to predict future business both when you’re in an up-market and a down one.

We all get this wrong now and again. It’s normal and usually navigable. The problems come when balancing present challenges heavily compromises a company’s future, or betting only on the future sours a company’s current performance to the point where no one cares about the future.

I am often humbled by the nagging paradox of making tough business decisions every day at the relentless pace of 24x7x365. Running a company in response to everyday circumstances in the present will always be difficult, Running a company for an opaque future will always be daunting.

We have to do both well to accomplish our current goals and set the table for the next generation of growth prospects. Favor either the present or the future too heavily and the question becomes whether you want to lose now or later. While that’s not an option any leader wants to consider, if we don’t see the delicacy in how one affects the other, our intentions can be undermined by our outcomes.

We often hear about the pressures of being a public company, how corporate leaders make choices to focus on quarterly earnings from which they financially benefit immediately over building strong companies for the long haul. I do think this happens at some companies where short-term stock performance can dramatically impact executive compensation. Too often those companies fall prey to what Clayton Christensen famously has called The Innovator’s Dilemma and allow their long-established norms of success to be fully disrupted by more nimble competitors.

There’s a more ironic take on this notion, where equity markets sometimes forgive emerging companies for failing to produce earnings at all in the near term in the hope that someday they will have gained so much market share that they will prove invincible. This all-or-nothing strategy has paid off handsomely for companies like Amazon that didn’t produce earnings for years, reinvested heavily in their growth, and today reap the benefits of that bet. Sadly, this example has been exploited by too many newly public companies that don’t even consider near-term profitability a goal, allowing lazy business models to overshadow unfounded optimism that someday their customers will reward them with enviable positions.

A company that bets only on the future, never becomes economically successful, and runs out of cash can be train-wrecked just as decisively as a once successful company that fails to address The Innovator’s Dilemma. If the executives steering either of those failures happen to be selling shares along the way to a company’s demise, a feast of lawyers will follow.

Inflation and rising interest rates make the cost of doing business higher for everyone. We painstakingly decide how much of these costs we pass along to customers and how much we absorb. The benefit of preserving current operating margins is always tempting, but the rewards of long-term customer loyalty and lifetime value speak for themselves. How do we decipher the balance between current and future financial results? Data will often shine a light on the path, but there are no conclusive textbooks with clear answers to these calculations.

It truly is hard to run a company both for today and tomorrow. We have to consider the staff sizes we need, the leases we’ll require, the stability of our supply chains, price elasticity, and the promise of our brands. We also carefully must watch cash flow, our balance sheets, compensation, incentives, technology advancements, and investments in future product cycles. What works today may or may not work tomorrow. It is seldom that what works perfectly in one set of conditions works just as well in another.

There are no perfect answers, but the fluidity of making a decision now for its short and long-term impact usually weighs heavily on those who wrestle with the impossible crystal ball.

Covid-19 has been a good reminder of how difficult and daunting decisions can be. We were all blind during Covid and it was easy to misread fluctuating data. No leader had substantial experience with stay-at-home working conditions. No one knew how long the pandemic would last, how it would impact supply and demand, or how it would impact investor sentiment. If that wasn’t enough of a challenge, most of what we thought going into Covid proved to be wrong, and most of our assumptions about how employees, customers, and investors would behave post-Covid have been equally wrong.

If you want to be humbled, try making decisions that address the unknown with this level of frequency. You’ll likely realize you’re wrong more than you’re right, but the less tangible skill we develop is how to rethink and react quickly when we discover we are wrong. That’s why the rewards for creating a company that is “built to last” are immense, but the odds of lasting fifty years are long.

When it comes time to decide short or long, know you have to do both, and do your best you to keep dialogue and debate flowing among diverse opinions. The decisions we make have an impact we might be able to see today, but unless you know someone who has a gift the world has never seen, we are almost always speculating on the impact a year or more from today. Sometimes it’s decades before we find out if we were right or wrong.

We choose to sign up for the difficult and the daunting. The longer I do this, the more humbling it is.

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Photo: Pixabay

Are You Smarter Than Elon Musk?

I’ve written before about Elon Musk. He’s impressive on many levels, but he needs a bit of humbling on behalf of his peer group. He knows what he knows. He doesn’t know more.

I don’t need Elon Musk to teach me about free speech. He doesn’t have the credentials.

I also don’t need Mark Zuckerberg to teach me about community, openness, or how we’re going to live in the meta future. He’s a guy who sells online ads. He’s not a futurist.

The opinions of these people outside their realms of expertise aren’t just conflicted; they are arrogant, self-serving, naive, and potentially dangerous.

Wisdom is not fungible. Insight is not fungible. A person can be really good at something and nothing else. They just don’t know it, or perhaps they choose to embrace a platform of pretension. Self-aggrandizement is often a spoil of war.

A thought leader with demonstrable success in one category has no de facto claim to distant adjacencies. A celebrity, even a business celebrity, doesn’t become a subject matter expert beyond their recognized success simply by claiming the public microphone and turning up the volume.

Knowledge is not transferable by sheer force of will or cult of personality. An ego like Musk would have you believe he can layer meaning where none exists. An agenda is not the same as a common belief set, or even a clearly defensible philosophy.

Your opinion of what constitutes the normal social limits or lack thereof around free speech is every bit as valid as that of Musk. He can spend billions and buy anything he wants, but that does not make him right, only influential. He can call himself a free speech absolutist, but he made that up. It’s a pithy expression meant to draw attention to himself, but consider Los Angeles Times writer Michael Hiltzik’s extrapolation of Musk’s mandate in a more chaotic application of the extreme unleashed:

“If that means that users will be able to post anything they wish on Twitter, no matter how redolent they are of ‘sexual harassment, group harassment, insults or name-calling, posting private info, threatening to expose private info, violent event denial, violent threats, celebration of violent acts’ or any of the other violations of Twitter rules that currently allow the platform to shut down an account, that would be bad.”

You may agree or disagree. You may say Musk has agreed to abide by the law, but his interpretation of the law may not be yours. Musk is a contrarian who finds delight in arguing against laws and has no trouble surfacing the means to challenge high court opinions in endless adjudications. As long as there remains an appeal to be had, Musk can prevail with his opinions despite the collateral damage of their impact. None of that makes him correct in the abstract, but too often the power of holding today’s authority is confused with ethical vindication.

Your point of view matters on the issue, because you have the same foundation and standing to express your own point of view. What you likely don’t have are the resources at his disposal or the same hidden agenda he is not going to publicly express. What you probably do have is a touch of measured humility, balanced perspective, and everyday graciousness for those around you.

You’re also likely not putting on a show. Healthy policy debate deserves better than purchased amplification.

Proclamations can be noise alone, or they can have severe implications. We get fooled all the time by the loudest voices in the room claiming an ask that is more than what it appears.

Rich is fine. Successful is fine. Neither offers someone transitive intellect.

In Fiddler on the Roof, Tevye sings, ”When you’re rich, they think you really know.” He wrestles with the irony of his dream. He wants to be sought by his fellow villagers as an all-wise sage and would gladly play that celebrated role in his community. Yet he knows from his deep faith he’s an ordinary man with or without money, not an inspired prophet.

We all have claim to an opinion. The validity of that opinion stands or falls on the credibility of its supporting argument and disciplined construct, not on the bank account or unaffiliated resume of its speaker.

If you think you know more about free speech than Elon Musk, it’s entirely possible you do. That would make you smarter than Elon Musk. I’m not sure it’s a compliment, but hold it in reserve should the foolishness you hear each day give you reason to stand up for your own well-considered belief system.

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Photo: Pixabay

My Will Smith Reflection

So much has been written about “the slap heard ’round the world” in such a short time that it already seems a tired target. It is all of that, but I would feel I missed a moment if I didn’t share my own reaction.

For me, it has almost nothing to do with Will Smith, Jada Pinkett Smith, Chris Rock, the Academy Awards, or any of the specific elements that surrounded that night. I stopped watching the Oscars years ago, mostly because I love the craft of storytelling far too much to see it devolve into a compromised, increasingly irrelevant dress up pageant.

My take is more personal, a series of artifacts stored deeply in my mind that have molded me over the decades.

I began my career in entertainment, both as a writer and on the business side. I was even in the legendary William Morris mailroom for an abbreviated sequence of heartbeats.

Here’s what I discovered in the entertainment business: wealth + fame = the equivalent of royal privilege.

Most of my observations of high-ranking talent—creative or executive—encompassed abysmally bad behavior. There were exceptions of course, but most of what I encountered involved arrogance, rude backbiting, uncontrolled spending of other people’s money, and a tone of disdain fearing ordinary competition might unseat an incumbent player.

I discovered the novel phone etiquette of “Please hold for so and so … ” when someone calls you, where that someone is rolling calls and can’t be bothered to dial. On my very first round of job interviews out of college, I asked a producer at the top of his game for his business card; he laughed at me and told me everyone knew who he was, he hadn’t had a business card in 20 years (his name wouldn’t even make a good Jeopardy question now).

I saw a celebrity at the top of her game order a bottle of Dom Perignon at a lunch meeting, take one sip from her glass, and the rest went untouched. I had a stapler thrown at me, not because of anything I did but because I was in the room when a big deal went south.

Small stuff? Sure, but the message was clear. They weren’t like us. They were different.

Later came Harvey Weinstein, Bill Cosby, and MeToo. But it didn’t really come later. It was happening all along.

I migrated my career to technology, which was an open door in those days. I figured as an emerging platform it would be more egalitarian, a level playing field, and I was sort of right, that a piranha-filled moat was not yet evident in the entrepreneurial community. Multiple times I called the CEOs of newly public companies and thought I would get their assistants, only they had no assistants and actually picked up the phone.

That was before I met the financial community that surrounded technology.

Here’s what I discovered in high tech: wealth + fame = the equivalent of royal privilege.

I was invited to a backyard party in Silicon Valley, then called to be told I was uninvited because there were too many other more important people coming, then called the day of the party and invited again when apparently not enough people showed up. I was told my wife was not invited to a dinner, because the money people involved didn’t want to get too close to me or know much about my family in case I didn’t work out and they had to dump me.

I was invited by multiple blue-chip funds to pitch for backing, left in the waiting room for 45 minutes of my scheduled hour, then given 8 minutes to run my deck to people staring at mobile phone screens. I was promised substantial equity financing and told to move ahead with major hiring plans, only it never emerged and I had to let go most of the people I had hired.

What does all of this have to do with Will Smith?

As F. Scott Fitzgerald so eloquently observed: “Let me tell you about the very rich. They are different from you and me.”

He was right. The consistent theme I have observed is that somehow, some way, when too many people get to a certain level of reward (note that I say reward, not necessarily accomplishment), something in their thought patterns is altered. Outlandish acts that would never occur to normal people—you know, like walking on a stage during a global broadcast of a once glamorous awards show and smacking a presenter speaking into the camera—somehow even for a millisecond sound survivable. Of course they almost immediately regret it if they are at all partially sane, but the momentary lapse of reason is not curbed in real-time by the same filters that are applied to the rest of us.

Do the same rules apply to everyone? It would be naive of me to say yes when we observe so much to the contrary. Only on some occasions is bad behavior of the elite so bad that the consequences are unavoidable. We see the edge cases where hubris is called to the carpet, but that remains a fraction of the enforcement necessary to remind us that civility in public discourse is not an elective, it is expected for unsupervised social engagement to be a constant.

Very early in my career, one of my wisest and most conflicted mentors said to me: “Be careful with what you think you are achieving; if you live long enough, you might become what you most fear.” I barely had a clue what he meant at the time, but I never forgot it, and each year that has gone by it has meant more to me.

What do I take away from the Will Smith fiasco?

None of us are very important in the broad scope of things. Should you disagree, have a look at the obituaries of the most successful among us published even 30 days ago and try to recall most of their names.

Delusions are most famously reversed at the most inopportune times.

If you wish to maintain your admiration for a celebrity, try very hard not to meet them in person.

Life is too short and precious to let success of any kind go to your head and reshape your humanity into something you as a child would have abhorred.

Humility is a choice.

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Photo: Pixabay

Moments of Clarity

I just finished another trip around the sun (they seem to come annually for some reason), and to the extent it was a bit of a numerical milestone, it certainly got me thinking about things that matter.

I like living in this world, despite all its faults. When I am immersed in places like Yosemite Valley and looking up at Half Dome, I have less desire than ever to partake in meta. Learning how to navigate in this reality has never lost its appeal to me. Being an avatar in a virtual world has almost no appeal to me.

I find it deeply troubling that regardless of how technology has accelerated global interdependence, ruthless despots continue to pursue egomaniacal, territorial wars of vast destruction like we are seeing in Ukraine. I find it more troubling that in the 21st century, more humanitarian societies remain largely clueless about how to circumvent crises without accelerating conflict. I love our democracy, our nation, and the limitless opportunity this generational child of immigrants continues to experience, but the divisive politics of rhetoric and hyperbole leave me sleepless most nights and concerned about the reemergence of authoritarian populism.

I like our U.S. currency and monetary system. It is not flawless, but I understand it and trust it enough to park my assets in its floating value. I don’t have an interest in cryptocurrency, particularly those that began as jokes and trade in wide ranges on speculation. I am intrigued by blockchain technology and see its potential in future accounting systems, but I don’t think that has to be tied to flavor-of-the-day money brands. Similarly, I have no plans to purchase NFTs. Maybe if people like me sit out the NFT market, the price will be lower for others who see value here. Consider it our invisible gift to you.

I like trading equities on fundamentals. I like owning shares in companies that either generate earnings or are on a path to generate earnings. I want to understand traditional ratios and multiples that determine the price of stocks. I don’t care if a company has sextupled in current market value because “everyone” is buying it. I want to buy it at fair market value where I understand the valuation.

I also like companies that create products and services with a business model I understand, where technology is not just disruptive but improves process, where customer experience is highly valued, and where there is a path to future reinvention. I like leadership teams who are never satisfied with themselves. I don’t care if an IPO is oversubscribed because of hype if there is not a clear value proposition that is explicitly articulated. I am okay to miss out.

I believe in talent more than I ever have, that great things can happen when high-caliber people are assembled to address a meaningful and elusive task, but I have a very high bar when I think about what constitutes high-caliber talent. Part of my expectation in building a team has to do with a demonstrable track record of success, not just an energetic expression of possibility. Much has been written on the war for talent, and sometimes it is real, but excessive bidding wars to fill open positions in a company are not specifically nurturing or championing talent. Real talent in my mind is rare, precious, usually humble, collaborative, collegial, and views career trajectory over the long haul while building lasting relationships and selflessly mentoring others.

I think people need to read more. This has nothing to do with the fact that I work for a company that sells books (well, maybe it does). Reading helps develop minds. This cannot be substituted with truncated, silly videos, brief unpunctuated texts, misguided tweets, or pithy sound bites forwarded out of context. Reading is a gift, language can be a conduit of compassion, stories often reveal empathy, and books are forever our treasures.

I think excellence in the arts is exceptionally hard to achieve, and too often we confuse celebrity with extraordinary craftsmanship. Super-hero movies are fine for those who want to watch them, but the fact that they generate piles of money doesn’t increase my interest. If someone aspires to be a TikTok star that’s their choice, but that is not in the same class as being a brilliant playwright, painter, or musician.

I think climate change can never get enough attention, income inequality is a corrosive catastrophe we have no idea how to mitigate, and the ravages of woke mandates are shutting down dialogue rather than improving it.

I think working in a workplace rather than at home all the time is critical to collaboration, communication, and leadership development. I think in-person meetings when well planned improve human connection and help augment trust. I think phone calls should be returned politely and promptly.

I am feeling increasingly old-fashioned as I get older, largely because I have spent my life in technology and seen what helps us and what distracts us. I love innovation, I admire visionary change, I adore the notion of a Carousel of Progress. I’m also a lifelong skeptic and a fierce utilizer of a nose for bad-smelling dross. There are things I believe we can improve, things we can’t, and things that sound like we can even when we haven’t a real clue how. An idea pitched is not an idea proven. An idea proven can often be as subjective as it is objective.

And finally, to the extent anyone cares, as a result of the recently settled MLB lockout, I am okay with the universal designated hitter.

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Photo: The Author on His Birthday