June 6, 2012 by Ken Goldstein - 6 Comments

Warp Factor Ten: The New Cruise Control

“Here’s a tune that’s really moving fast. When I say fast, it was recorded at 9 o’clock this morning. At 12 noon, it was No. 15. At 3 o’clock, it was the No. 1 sound in town. And now it’s a golden oldie!” — George Carlin, FM & AM (1971)

What a difference a month makes. A week. Even a few hours.

Prior to its first day of public trading, Facebook was pure glamor. Individual investors who could not get into the IPO were camped out in the lobbies of retail brokerages. Where they couldn’t get shares prior to the first day open, some were moving cash into their accounts ready to buy at the commencement of trading. We loved Facebook, all 900 million of us with an account. We may have heard a bit of light background noise about how its advertising wasn’t working all that well for some clients like GM, or whether the company was making enough strides in mobile, but few people listened. It was frenzy. We had to have it. Then it all changed.

The question is, what changed? Did the facts change? Did the market conditions change? Did the technology change? In 24 hours? Sure, there were analyst reports that didn’t find their way to everyone, but how many individual minds would those have changed, for the people who had to have it? Not many, I suspect. One Wall Street Journal story that especially caught my attention noted: “… a 30-year-old actor in Toronto, bought 15 shares of Facebook on its opening day. Before then, he had bought just one stock, yet saw the market as a place to make his savings rise in the long run. Now he feels burned.”This fellow is upset, yet his investment strategy was to own two individual stocks in minimal quantities to increase his net worth. As they say on SNL, really?

For my mind battle, Facebook was as exciting and pioneering a company before the IPO as it was after—the critical question was whether enough people considered what its stock was actually worth. We like to believe in fundamentals, until we don’t. What changed was the hangover. We sobered up and asked the questions we should have asked after we acted. Opinion reversed in this instance to an unprecedented polar opposite, a trend we now see too often.

Around the turn of the millennium, we experienced astonishingly rapid adoption of the commercial internet. The public couldn’t wait to buy stock in this emerging set of companies. Earnings be damned, this was the new economy! We used new online brokerage platforms at our fingertips to day-trade nascent listings on something called momentum. About a year later came the dot-bomb implosion and we couldn’t dump these equities fast enough. As soon as mass opinion declared most of them worthless, it was a self-fulfilling prophecy.

In the mid 2000s, popular opinion declared home real estate values going in one direction, to the stratosphere. Credit was easy, because with prices rising, properties could be flipped quickly, debt retired and profits tabulated with presumed certainty. When home prices crested and credit markets began to freeze, homeowners found themselves “underwater,” owing more on properties than they were worth. It happened that fast. People asked themselves how a home they bought for $600,000 could be worth less than $200,000 when only a year ago it was assessed at $400,000. How did prices go up so quickly, then down so quickly, then lock up without some form of fair warning?

JP Morgan Chase escaped the mortgage-backed securities meltdown and CDO liquidity crisis largely unscathed, only to follow-up this year with a series of disastrous derivatives trades that resulted in billions of dollars in losses. The company’s CEO, James Dimon, went on record saying the bank’s strategy was “flawed, complex, poorly reviewed, poorly executed, and poorly monitored.” Does that sound like a dependable financial institution gone temporarily astray, or a speculative gambling pit operating without normalized controls?

How do we make choices in a world where assessment can change this rapidly and radically? What is a grounded opinion?

Is the public manipulated? You bet we are. Witch’s brew opportunism is all around us. Are well-meaning individuals subject to baffling contradiction and confusion? To my knowledge it has never been any other way. The problem now is the fever pitch, the speed at which information and misinformation travels, the global pace of relentless throbbing that blinks and bubbles and burns and overwhelms our better judgment. We act because the parade is leaving town and the horns are blazing, not necessarily because we have decided it’s a good parade celebrating a cause we wish to trumpet. We don’t want to get left behind, until we too late discover there’s no place like home.

How fast is fast? In the original Star Trek series which debuted in 1966 and was set in the 24th century, Gene Roddenberry envisioned Warp Factor One as travel at the speed of light. Any kid who had taken high school physics got the joke, but for sheer late night discussion it seemed a decent enough way to talk about speed in the extreme. Warp Factor Ten was considered unachievable, a “purely theoretical” value, yet in the later sequels, Warp Factor Ten was used all the time, no big deal. I don’t think stretching of the metaphor over time was accidental. When fantasy portrays the speed of light no longer as a milestone, any definition of fast requires new parameters. I think we’re getting there, or at least the hyperbole is catching up with our perceived experiences that don’t involve beaming up our bodies, just harnessing some constancy in our opinions.

The 24 hour news cycle is well understood by those who create it, so much so that top public relations firms often suggest just waiting for a worse story to wipe out your current bad news. Rapid and seismic change has been a recurring theme in this blog since its launch, where the patron Pre-Socratic philosophers Parmenides and Heraclitus now have us wondering if you can even step in the same river once.

We like, we don’t like. We know we are fickle, but we allow conflicted voices all around us to vacuum us in one direction, then whiplash us in another. We become certain something is worth our hard-earned money, then we see our money vaporized and want it back. With all the experience we have around vast shifts in sentiment, why do we still allow ourselves to act before we have enough facts to make a reasonable judgment?

Robert Burgelman, one of my former board members who teaches business strategy at the Stanford Graduate School of Business, likes to define the shift between strategic thinking and consequence as the moment when valuable resources are committed to action. In a company, that’s when you move from the planning and consideration phase of a project to the substantial deployment of capital—financial, material, and human. These decisions are not trivial. There are experts involved, and even then, too many times they are wrong. In your own life, it’s when you go from liking a company for what it does to investing your savings in an equity stake. That too is a big leap, one you want to think about very hard.

Indeed, creative destruction is a norm, we know we have to move fast or risk missing opportunity. How do we apply the essence of urgency, the realities of internet time, to factor out hype and not be shifted into a higher gear than makes sense?

For starters, don’t be afraid to take an extra breath. Be appropriately careful with your convictions. It’s admirable to be resolute, but if facts are going to be relative, how really certain can you be today when someone else with a vested interest is bound to change the story tonight? Living in a world where unformed argument too convincingly sells itself as conventional wisdom can make skepticism a virtue. I am not one to resist change, but when I listen to opinion, I want convincing debate, not anxious pressure. Opinions can be interesting, facts are better. When you don’t understand something, never let others make you feel inadequate because “You Don’t Get It” and the clock is not on your side. You might be getting it just fine.

Your pace of decision should be your own. If you don’t like the story, don’t buy the book solely because someone stacked the deck with a stockpile of boilerplate reviews. Opinions will keep changing at lightning pace. Anticipate change in the assessment of change; you can bet on that because you have evidence. Beyond that, there’s a reason they call it the cloud.

Facebook just might beam itself into a valuation you wish you could have seen coming. Mortals like us can no more see the future than travel at the speed of light. If you want to win long-term in a race against noise, listen more closely to what’s under the noise. Cruise control at top speed will never be as comfortable as the manual suggests.

January 3, 2012 by Ken Goldstein - 8 Comments

Do Books Matter Less?

The pre-Socratic Greek philosopher Heraclitus was an early observer of the ever occurring change in our universe. About the same time in the 5th Century BC, Parmenides pondered the notion of permanence, what we could presume in nature to be essential. Between the two of them, we have a thesis and antithesis that have yet to reveal a synthesis beyond argument some 2500 years later. We see change all around us in almost unfathomable complexity, while we wonder what we can hold onto as firm. For me, it’s a good problem to have, as contemplation of the unsettled forces us to chew harder and argue better.

Then there are books.

In a recent Wall Street Journal piece with the header “Books That Are Never Done Being Written,” Nicholas Carr contemplates the far-ranging impact of digital distribution on long-established but fluid notions of traditional publishing:

An e-book, I realized, is far different from an old-fashioned printed one. The words in the latter stay put. In the former, the words can keep changing, at the whim of the author or anyone else with access to the source file. The endless malleability of digital writing promises to overturn a whole lot of our assumptions about publishing.

The realization that books are no more permanent than this year’s understanding of medical treatment is hardly shocking. The very paradigm of printing on paper and binding a work has throughout its history adopted the notion of editions and revisions. Where would the school textbook industry be without an excuse to update a classroom volume rather than allow you to feel comfortable buying a dog-eared half price two-year old version? If we only needed one unabridged edition of the Complete Works of William Shakespeare, think of how many academic preface summaries we would have been denied annotating discovered corrections in the core text.

Yet in the worlds of literature and even political theory, we do seem to maintain an expectation that the version we read of Charles Dickens or John Stuart Mill is largely the same as the draft the author called final. “A Tale of Two Cities” even when presented in its initial serialization was eventually finished, as was the essay “On Liberty,” and when we buy a copy of one of these today either in paperback or download, we do believe in the authenticity of replication representing if not a fully steady state, a pretty firm slice of life. That is helpful not only in getting us all on the same page for discussion and critique, it offers us grounding in history and social evolution, the ceaseless churn emerging from deliberately placed bricks in the wall.

I have a hard time thinking today is much different, and no matter the short attention span theater that victimizes so much of our patience, my sense is our books have never been more important — no matter the brevity of their life-cycle, no matter their imposed truncation or expansion, no matter their delivery format or storage means on wood shelf or cloud server. Our books will change as they must, but their timeliness and meditation as collective might be the primary permanence we retain, even if it is more spiritual and metaphorical than natural or physical. The means of delivering the book does not define the book, it is largely irrelevant, itself a timely convenience worthy of disruption. The material of delivery is subordinated to the material of substance, it is the content that matters, not the media. The Platonic form is the ideal, and that cannot be taken from us by technology.

However we acknowledge its consumption mechanism, the book as ideal is a bridge among scattered coordinates. We learn to read an organized set of drawn thoughts to see what is meant by change, and those who have the gift and discipline to construct a book add to the global library of permanence by carrying the torch that challenges all that came before. Historic observation is clear and consistent: the buildings decay, the land can be conquered and utilized anew after wars and governments are gone, but the ideas underlying arts remain for examination. The composed book is the codification of the idea however it is presented, that does not change.

My amazing wife, who is also an amazing teacher, enters her classroom on the first day with a simple statement:

“Our books are our treasures.”

Her specialty is English as a Second Language, and whether she is teaching adults or children, this mantra is always the same. Books are precious. If you look around our house, you might see why this is our chorus. Books are everywhere. That is what we want to be surrounded by. We also have a Kindle and an iPad. They are filled with books as well.

Another recent story in the Wall Street Journal discussed how the price of e-books was sometimes dropping below the price of “real” books which I guess means paper books, but to me, one is no less real than the other. The broader question remaining is whether the great majority of people should still find the time for long-form written expression in a world cluttered with half-baked tidbit social media posts like this one. The answer has to be yes, because if we are going to allow character count to trump in-depth inquiry, we condemn our more severe concerns to being adequately addressed by less than substantial narrative. Our pace of change is only becoming more frantic, and the hope for some form of understandable permanence all the more desirable in addressing unending anxieties. Committed writing and reading gets us a good deal of the way there, because the acts of reading and writing might be one of the few forms of permanence we can share.

I say this as someone who just spent the better part of a year writing my first book, which is now in first draft and undergoing edit. I haven’t talked much about the book, and won’t until we get closer to publication, but let me just say that whether anyone reads it or it sells a single copy, it will remain one of my proudest achievements. Right now it is a long book. It will get shorter to accommodate marketing concerns, but hopefully it will still be a substantial book. I couldn’t have said all I needed to say in a blog post or I would have. Believe me, I would have!

In our world of constant and increasing hyper flux, books can be thought of as a noble but flawed exercise in establishing some sense of the enduring. Now that digital publishing allows current authors easy access to further disturbing permanence, any foothold in establishing the concrete may remain even more illusive, but the stepping-stones of thought that bridge us from there to here can certainly maintain significance if we view thought as continuum, a timeline. In that regard, as a roadmap or even a set of breadcrumbs, books for me have never been more relevant, nor the mission of authors any less permanent. Some books are good and some are bad, some certainly more ephemeral than others, but the connectivity of books is ongoing. Apps or facings, that is as it should be, as long as I can read.