For a broken national entitlements that ensure my generation won't see full benefits after
a lifetime of contribution? Thanks, Baby Boomers.
For public policy like Prop 13, the cornerstone
of your barely-taxed real estate wealth, even as my generation can't afford to rent closet-sized
apartments. Thanks for that, Boomers.
The subprime crisis of your making, which lined the pockets of your generation's mortgage
brokers, real estate agents, investment bankers, homebuilders, and flippers, even while my
generation was scarred for life with
For tax cuts
that push our deficit to record levels, ensuring we have the highest debt load the US
has ever seen in peacetime? Thanks, Boomers. We'll pick up the check.
For generous pensions that let you retire at 55—
letting you "make it" without paying for it—leaving my generation with the bill? Thanks,
Boomers. We have a lot of practice with this.
For mortgage-sized student debts, which my generation is still paying well into its
30s, because we decided higher education should cost $50K/year? Thanks, Boomers.
A girl tried to sell me a candy bar in the parking lot of Home Depot on Saturday.
I've sold a lot of things to strangers over the years and it made me smile. Sales is hard,
uplifting work. But what made me smile most was remembering something I did almost every
year for a decade: the pancake breakfast.
The event was a major operation: doors opened at 6:30AM, things didn't stop until mid-afternoon,
usually around 1 or 2pm. And people showed up: the event drew around 1500 people over Saturday
and Sunday. The pancake breakfast was produced through a long-running partnership of two
Homewood scouting organizations, Troop 342 and Pack 304; a whole-group effort of 30-40 families
with everyone pitching in.
Once the date was set and venue secured (traditionally early February, in either the village hall
basketball court or the basement of St. Andrew's church), the pre-sale began. Weekly meetings in
warm, heated rooms went on hiatus, replaced by an outdoor territorial sales campaign that ran eight
weeks and covered every house in Homewood. I remember getting my brown envelope: details of the
event with a goofy picture of a guy flipping pancakes on the front, inside, my quota: 40 tickets
from the time I was eight years old. We walked in groups of two, ringing every doorbell, block
after block, once/week for eight weeks. I did this from the time I was eight or nine to when I was
maybe 16 or 17 years old.
In some respects, it wasn't as bad as it sounds. For one, ten-year-olds going door-to-door when
it was 20 degrees and snowing does command a certain respect. And scouting in Homewood was a
known quantity: you might not participate, but you or someone you know had been to that pancake
breakfast, and we'd been doing it some 40 years. ("Would you like to buy a ticket to the 41st
annual pancake breakfast?") We weren't asking much; the tickets cost only "$2.50 during the
pre-sale, $3 at the door". If you were really good, you'd start to get inbound deal flow from
local businesses: I still remember the time Bill Frank, who owned a travel agency, asked my dad
for something like 10 tickets. Handing out tickets was a cheap, civic-minded way to comp good
customers; people knew that. By the time I was 15 or 16, I regularly sold double or even triple
the tickets I was originally assigned.
That didn't make the early years any better, though. I have a lot of memories going door-to-door
with my friend Dan, who I still talk to today, trudging through the 12 degree cold with snow on
your heads. Go ahead and complain; it won't change the fact that there are icicles hanging from
gutters, and you've got a stack of tickets to sell.
I'm glad I learned that lesson when I was young. That, and some things about sales:
Prospects want to know you're reliable and not a fly-by-night; I always asked, "Would you
like to buy tickets to the 41st annual Boy Scout Troop 342 pancake breakfast?" Who can
say "no" to that?
Rejection doesn't hurt that much, and is even funny. The best was when someone came to
their door after we rang the bell, then tried to act like they weren't home. We'd pitch
them right through the door! I don't care, not like I've got anything else to do.
Everything got easier with practice: the awkwardness of knocking on doors, the pitch,
learning how to handle objections.
Repeat business is much easier than cold-calling, but everyone has to cold-call at first.
Your attitude matters and people pick up on that. Someone who's enthusiastic will have a
much easier time than someone who clearly isn't enjoying it. Though paradoxically, sometimes
people took pity on us if we looked miserable, especially if they were out shoveling their
driveway or walking their dog and saw us coming down the entire block.
I realized while writing this, it's going to take multiple parts to tell the whole story.
Next Monday I'll detail the setup.
I believe Elon Musk is out at Tesla in the next 3 months and will bet a six pack of good beer on it.
I haven't gotten the six pack yet, though I know he's good for it. I'm more interested in
what made him see it that way—why did he believe what he did, and how was he so certain?
His mistake is one I've made myself, countless times: forgetting that, more than anything else,
journalists are storytellers.
My favorite journalism is the kind that has no obvious precipitating event. Take this recent story,
from The Economist,
"Teenagers are better behaved and less hedonistic nowadays":
AT THE gates of Santa Monica College, in Los Angeles, a young man with a skateboard is hanging
out near a group of people who are smoking marijuana in view of the campus police. His head is
clouded, too—but with worry, not weed. He frets about his student loans and the difficulty of finding
a job, even fearing that he might end up homeless. “Not to sound intense,” he adds, but robots
are taking work from humans. He neither smokes nor drinks much. The stigma against such things
is stronger than it was for his parents’ generation, he explains.
This isn't a story that "breaks". And yet, it talks about a deeply important trend: across many
countries including the United States, teenagars are drinking, smoking, and having sex much less
than their parents.
You wouldn't know it, reading a lot of what passes for journalism today. Across countless
topics—violent crime, poverty, literacy rates—the most important trends rarely appear
in the news. How does one write about falling suicide rates? Where's the story?
But it's actually worse: the important long-term stuff gets left behind, but in its place,
a series of articles written about what's breaking today; not only is that irrelevant, but much
journalism tends to grossly overestimate both the frequency and severity of major events,
everything from recession to impeachment.
I've seen myself fall into the trap too many times: I read too much print journalism and
find myself dramatically overestimating the likelyhood of non-status quo outcomes. I dramatically
overestimate the probability of a revolution, versus things basically staying the same. Because
the fact is, the world doesn't change much day-to-day.
But that doesn't make for great journalism.
I've gotten better at predicting things over the past years. It's a combination of a few things,
both intentional and accidental:
I'm older. Each day is sort of a generalized training set, as I've written before, everything
gets less surprising
I'm a better consumer of the news; I've watched politics and current events particularly closely
since I was about 16, reading Newsweek cover-to-cover and doing debate throughout high school
I'm not a heavy user of facebook and follow people pretty selectively on Twitter; that puts me
in my own little bubble but I tend not to mind. There's too much selective editing, vitriol,
and straight-up trash getting shared.
I've tried hard to follow Paul Graham's advice: "This is isomorphic to the principle that you
should prevent your beliefs about how things are from being contaminated by how you wish they were.
Most people let them mix pretty promiscuously."
I've read a good number of books specifically on the topic of judgment and behavior:
Thinking Fast and Slow, by Kahneman. This book taught me what's perhaps the most important
general rule of judgment, the base rate fallacy:
focus more on base probabilities (the right thing to do) and less on situational specifics (the
fallacy). Example: many are certain Trump will be impeached. The historical odds of that are
perhaps 4% (2 in 40-60 depending on how you count it). Even at 5x likelyhood, that's only
a 1 in 5 chance; that seems far from "certain" to me.
Jonathan Haidt's work on decision-making, particularly relating to morality
Many others: Ariely, EconTalk, Farsighted, Emanuel Derman, Moneyball, Dalio's Principles
and Big Debt Crises, some of Tetlock's work on prediction
I'm not saying I'm perfect, but I've found the above helps.
Person/company gets into bad situation, usually of their own making: too much credit
card debt, bad diet, behind on collections, manufacturing quality problems.
It's often the "little people", the night manager or the people in collections,
that see these things coming.
Nobody really wants to hear about problems, so they get ignored.
Until one day, a crisis strikes "suddenly": a heart attack, foreclosure, losing a key
customer. Everyone sort of knew it was coming, but acts surprised.
An urgent search for "the cure" is started, identifying a range of options to "cure
One solution is slow, incremental, and doesn't cost much (daily exercise). It
works over time through long-term, gradual change.
The other solution works immediately and doesn't require any behavioral change. It's
often expensive and comes in a fancy box with a bow on top.
Without fail, the second solution (fast and somewhat expensive) is chosen. The
symptoms go away, but the root problem isn't really fixed.
A few years later, everyone has forgotten what happened, and the cycle repeats.
I've probably seen more than my fair share of this stuff; I grew up watching my mom teach
people to eat smaller portions as a clinical dietician, even as my dad worked tirelessly
for 1% reductions in scrap and work-in-process in complex manufacturing environments.
They weren't "businesspeople" as such, but both really grasped the importance of small
changes, applied consistently. That's why, from a very young age, my dad taught me a great
deal about compounding, and the stock market.
These days, whenever someone tries to convince me making a big change is easy,
Perhaps too much so—there are times when things are as easy as they seem. Quick wins
matter; "in the long term, we're all dead",
But be wary. Whether it's debt consolidation, hiring a consultant, doing a big M&A deal,
firing the CEO, losing weight, cleaning up the codebase, straightening up your house,
pension or entitlement reform—whatever the challenge—slow and steady wins
the race. Not "silver bullets".
Right now, as I write, I hear the soft sounds of a piano through an air duct. The duct is
shared with our neighbors; the kids next door are practicing the piano.
I love that. It's a nice human touch over the din of traffic two blocks away, on 880.
I graduated from college in 2009; since then, it's been nonstop city life, first
Seattle, then the last seven years in the Bay
Area. That's nine years—almost a decade—of easy access to airports,
public transit, and the best food in the country. It's
after Thanksgiving, but still, it's hard not to feel grateful. I've lived well.
Even so, something was missing. I first noticed it in Seattle. I tried to ignore it, but
couldn't help feeling something was just a litle off.
I felt it when I got on the 550 bus to Redmond with a different group of people every day,
all heading to our jobs at Microsoft. "Who were these people?", I wondered, all of them glued
to their phones and Kindles.
The feeling came back every year as the winter holidays approached. Putting up Christmas
lights is a huge production in Chicagoland; in Seattle, it felt like nobody had time.
I went to church almost every week growing up. My dad knew everyone there; he'd gone to
middle school with half of them, in the working-class neighborhood where he'd grown up. We
knew everyone on our street, their jobs and where they worked, even the names and aspiration
of their children. When I was five, my elderly next-door neighbor occasionally invited me
over to play with his model train set, or swim in their in-ground pool when his grandkids
visisted. For seven years in Seattle and San Francisco, I couldn't even tell you the name of
one other person in the apartment buildings where I lived.
Living in a condo building (and getting married) has given me many of the things I missed. It's
been great. Where I live now, people hang Christmas decorations. The building's board, which
I'm on, is throwing a Christmas party. I know my neighbors.
It's a small town in a big city.
As I thought more about it, I realized this is what people mean when they say a place has a
"neighborhood feel"—places like Manhattan's upper west side, or London's Notting Hill.
Places like these combine the cosmopolitanism and access of a large metropolis with the
human-scale intimacy of small towns.
I see why people love these places so much; they're awesome.
I think of the financial markets as a sort of newspaper. Some days I read the SF Chronicle,
others The Newspaper of the Markets.
The Newspaper of the Markets is less "curated" but vastly more factual than others. It takes
more training to read, but has the benefit that it's updated continuously, and there's
no editorial bias or journalistic mistakes. The Newspaper tends to be more forward-looking
than other papers, but oddly enough it's usually right.
Here are some recent things I've read:
There's been a huge selloff in tech stocks; valuations got a little high, but the
selloff is part fundamentals (facebook), part shifting opinions on growth.
On growth: the markets preceive a huge risk of damage from ongoing US-China trade tensions.
Many think interest rates are headed upward; the yield curve is approaching inversion.
Nobody's sure about urban real estate; people seem to think it's valuable but
young people really can't afford it.
What I don't do: trade, move money, or panic based on any of this. That part is hard if you
aren't used to the daily ebb and flow. I'm just starting to be able to sort out what's
important versus what's not and I've been watching this stuff closely for 15-20 years.
In San Francisco, everything from sexuality to product strategy is treated as a giant
experiment. That experimentation spilled into HR practices starting around 2011-2012,
and we got everything from remote work
to catered food…the so-called "talent war".
Then things changed. A bunch of factors—#MeToo, a few
wild parties that
got too much press—forced a rethink around 2015-2016. The sentiment seemed to be,
"Maybe a more traditional approach to HR isn't so bad". I started noticing fewer ping-pong tables
and kegerators, more paid parental leave and non-gender binary bathrooms.
One thing that seems to have held on is the so-called "unlimited vacation policy",
which is a shame, because I wish it would die. Thus the state of tech HR today: eight
weeks paid parental leave (thanks), no vacation days.
I'm fairly libertarian overall but this is an area where I'm firmly on the side of the employees.
Some review: paid time off (PTO) is a privilege given to employees by employers. Not everyone
gets it, but if they do, it is subject to a large body of law intended to protect employeess,
such as the right to take time off you've been promised (read your employee handbook),
and "encashment", the right to be "cashed out" for unused time off when you leave a job.
Unlimited vacation never quite feels like it's yours, because it isn't: it's not encashable,
and there's no guarantee you'll get it. Asking for it feels like asking for a favor.
Asking for a favor isn't how it feels when you use something you've earned. And if you ask
HR people, they'll tell you people in these "unlimited vacation" offices actually end up taking
less time off, not more.
The whole mentality is different.
Granted, one never fully goes on vacation from a software job (especially with 24/7 cloud services),
but unlimited vacation is a sloppy agreement, like "friends with benefits": you never know what
you're getting into because neither side agrees to the terms, until one does something the other
doesn't think is acceptable and then there's a big fight.
Employees don't win fights with their employers.
Giving PTO is the traditional, responsible thing to do.
I don't mean to pile on with the office parties. Most tech offices where I've worked
have had the most polite, respectful people with whom I've ever worked. I'm tired of NYT
hatchet-jobs on the "evils of tech".
I've been watching Seinfeld—what a window into another time.
The episode above premiered in May, 1991.
In the scene above, Kramer is trying to convince Jerry he should let a guy
illegally wire his apartment for free cable. Jerry isn't sure the guy is
resourceful enough to get it done. Always the salesman, Kramer assures Jerry
he knows many happy "customers", but also, the guy must be tough because
English-language speakers also use the word "gulag" to refer to any forced-labor
camp in the Soviet Union, including camps which existed in post-Stalin times.
The camps housed a wide range of convicts, from petty criminals to political prisoners.
I'm not sure what the Kramers of today would use, but it wouldn't be the Soviet Union.
And so the democratic socialists
are getting traction.
Ronald Regan famously called the Soviet Union, "the focus of evil in the modern world".
That sentiment just doesn't resonate anymore.
I got onto a Quora post about farms the other day. I can't find it,
but it said something like, "Most farmers don't do well because they love
farming as a lifestyle, not as a business".
I'm still thinking about that a few days later.
That quote made me consider how people choose careers. For some it's money or status,
but for others, it's a sense of identity, of being. When kids are little, we don't
ask, "What business do you want to be in" when you grow up, but "What do you want to
One guy who really gets this is my friend Kurt. His family owns a hydraulic hose repair
business. They don't care a thing about hydraulic hoses; for them, it's a business first
and foremost. They don't run it because it's fun, or interesting, or part of their family's
identity. It's just their business.
That mentality is quite counter to the "do what you love"/"find your passion" narrative
you find everywhere in San Francisco.
I don't think someone with that approach ("It's just my business") will ever produce
an iPhone or make great art. They probably will run a successful business. They definitely
won't let anyone else take unfair advantage of them, making the other guy rich while they
subsist on table scraps.
I guess it comes down to priorities. But I think a little bit of disdain for your work is
healthy. It keeps you from wasting time on things that don't matter and getting exploited.
You remember there's more to life; I feel that more, now that I'm married.
The people who really amaze me are the guys who manage to get others to do everything
for them, in work and in life. That's not how I want to live, but I do think it's a good
trait of business leaders. There's a "healthy laziness" to that way of doing things that
emphasizes getting the most done with the smallest amount of effort, that people who work
to fulfill identity/passion needs too often forget.
Knowing what's next is easy; knowing when is much harder.
The video above, from the Big Short, shows Dr. Burry closing Scion Capital.
He was 100% right about what (huge increase in residential mortgage defaults),
but almost ruined by the when (it came later than he expected).
For all the talk about "how fast the world is moving" and how "technology
speeds things up", I'm shocked by how slowly things seem to change in real life.
I wrote yesterday that
remote work will dominate. The Basecamp/37signals guys wrote that
five years ago, after another 5-10 on their soapbox before they wrote the book.
We're at least 10-15 years into that, and it still feels early.
Everybody in tech has known things were moving to the
for 10 years. Maybe 15. And yet, the old guard of IT is still fighting it. Microsoft is
doing a great business with their "hybrid" story, letting you move to Azure without
the burden of fully committing to a cloud environment.
US healthcare is falling apart.
We can't afford the system we have, but it's going to take decades to reform. Meanwhile,
the man who has everything will
make tens of millions performing overpriced surgeries.
There are three revolutions happening in mobility currently. We're changing from
combustion to electric power, driven to autonomous, and personal vehicles to fleets.
It will take decades.
When you spend your life thinking about trends a lot, as I do, you sometimes convince
yourself they'll matter in your lifetime even when they won't. If I'm fortunate, I might
work another 50 years; that feels about right for when we'll reach full autonomy for anyone
who wants it, in cars (assuming it's not legally required by then).
I think the lesson here is twofold. First, be honest about how glacially things really
change. It's not that change is fast; people who say that just weren't paying attention,
and noticed it too late. Too much golfing, not enough hanging out in research labs.
And second, make bets that aren't time-sensitive—small-magnitude
That's one of the reasons I don't short stocks: unless things really are falling apart,
you're going to get eaten alive in carry. Dr. Burry almost did, and his cost of capital
is a lot lower than yours.