Last Thursday I…

Aside

Last Thursday I found myself staring out of the enormous floor to ceiling windows in the penthouse skybar of Ion at Orchard, one of Singapore’s flagship commercial/retail luxury skyscrapers in the heart of the city center. I could see the entire city from there, like a diorama. Singapore is bigger than I realized, with many neighborhoods and many little districts all seeming to teem with so much life and activity. To me, it is still a city very full of wonderment and secrets.

I had come for a special meeting of the Johnson Alumni club of Singapore. We would be hosting the core Finance teacher, who was in town lecturing professors at different universities and defending his research on the relationship between institutionally owned equity and leverage. He had been one of my favorite professors, he had stuck up for me when I was going through some difficult times, and has a no-nonsense air to him that perhaps reflected his time in the Israeli Defense Forces. He was very much a man’s man, he had style and he was warm, kind and intellectual without being puffy or effete. He isn’t the kind of guy that has to run his mouth every second or use a lot of big words to try and show his superiority. I was looking forward to seeing him, and hoped he’d draw out more members of the Johnson Alumni group I could network with.

We had coincidentally met at the elevator on the way up got to walk in together, which made me feel cool. The first two people we saw were co-presidents of the club, who had both met with me in the last few weeks to offer contacts and advice. One was a female, ABC or American Born Chinese as she called herself, who works in new product marketing for a major consumer packaged goods company. She is a thin woman of medium height with a brilliant and generous smile and bright sparkling eyes. Her feminine appearance and dress is often playfully at odds with her raspy voice and tomboyish mannerisms. She originally moved here with her co-president, neither of them having jobs. Their story is inspirational to me.

Her co-president is a mountain of a man, 6’4″ and built like a football player. He has short sandy brown hair and large, warm features. He is soft spoken and gentlemanly and gives the impression of a guy who knows a lot more than he is letting on. He arrived late to the first Johnson Alumni club social, but before he arrived everyone insisted I meet him. We chatted briefly then and seem to get each other’s sense of humor a bit and had many of the same reasons for wanting to be in Singapore. When we met for coffee when I begun looking for new work, he had a ton of advice for me and contacts and just genuinely seemed to care. Ivy league MBA types are not known for their warmth. A classmate once elegantly described this special class of type-A’s as “not inherently mean, just having a narrow threshold of sacrifice when considering the needs of others.” I can say that my impression of the male president of the Johnson Alumni Club of Singapore is as someone who really cares deeply about other people and I already consider him a friend.

Only a few people ended up showing up, but no one seemed to mind. I remembered that one more thing I had in common with the finance professor who was our guest, a highly polarizing personality. He was easily the most hated and most loved one of the core professors. He would often push students to think harder about their answers and was known to isolate students in class with flurries of questions that would leave them feeling embarrassed. Perhaps worse, he was known for giving his opinion easily and crushed the dreams of many a student when he would let them know point blank that they were not cut out for the career that they had in mind for themselves. He alienated a lot of people this way, but for those of us who weren’t quite so thin skinned or easily embarrassed, we were hungry for his realness. Watching him speak to the group, I wondered if one day I would be invited to travel the world, lecturing on my research, or some parallel honor in whatever field I find myself in 20 years.

Just last week, a young entrepreneur asked me to join his team at Unreasonable at Sea, a 100 day start-up accelerator taking place on a ship as it circumnavigates the globe, stopping in port cities to give lectures and presentations on our design. On Friday night I met him and one of his colleagues in Clarke Quay, the night life district to chat over the idea. There is no doubt that the technology they have in hand is remarkable and their potential is significant – they have received more unbelievable honors than you can imagine, MIT’s TR35 award for top global innovators, Forbes Magazine calling the founder one of 30 people under 30 most likely to change the world. Where I fit in at this point is somewhat unclear however. I am a lot older than most of the people on the team and my priorities in life are different, despite how exciting their work and their opportunities are.

Whatever the next opportunity to come my way is, I can say that I look forward to it.

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Risk and Recovery

Greetings my delightful readers. I am happy to report that I am in one of the finest moods I have been in, in months and looking forward to sharing with you some of my thoughts on Risk and Recovery.

Don’t you mean Risk and Reward, Lawrence of America, you ask?

No, risk and reward has been covered to death and I will be discussing it only briefly here today. We all take risks in hope of achieving some reward in return, what kind of risks we take in return for what kinds of reward does merit a short discussion, but I think the more interesting and less talked about issue is how to recover from those risks that inevitably do not work out favorably and how to return to one’s optimal risk taking position from there.

What is the optimal risk taking position, you ask?

That’s a fine question, reader. May I say you are quite sharp today and looking good as well.

Most everyone is familiar with the concept of risk/reward. It is the cornerstone of the Capitalist economic system, it is what allows entrepreneurs to become disproportionately wealthy, it is what drives trade in the capital markets and fosters innovation around the world. Anyone who has ever been to a casino is intimately familiar with this phenomenon in it’s crassest form, but risk/reward plays out in almost every area of our lives, from our careers to the people we give our trust and love to.

When I was a Financial Advisor at Merrill Lynch, part of my job was to accurately assess the risk tolerance of a particular client, and construct a portfolio of investments for them that maximized their returns at that particular level of risk. Stocks are riskier than bonds, treasuries are even safer than bonds and by combining different types of securities you can create a portfolio of any almost any level of risk/return that you can imagine, with one important exception. You can never do better than the risk/return optimal curve. You see, at any given level of risk there is a maximum potential return that you can potentially receive, as well as a maximum loss.

For example, if I invest 100% of my money into ultra-high risk junk bonds, the best I could possibly do is get the high yield returns these risky securities offer, and have none of them default. That is the best possible case scenario, and it is quite unlikely because these bonds wouldn’t offer such high returns unless the risk of default was proportionately high. So perhaps, by creating a combination of other high and low risk securities, I can achieve the very same level of potential return, at a statistically lower rate of risk.

Does this make sense? I hope so, I fear I am possibly not explaining this as well as I could. The point is, at any given time, one should always seek to take risks that will give the most bang for the buck. OK let me simplify.

There are three basic types of people. There are those that despise risk and avoid it at all costs. There are those that seek to understand and master risk, and there are those that get high on the thrill of risk. These groups are not necessarily mutually exclusive as all of us are likely to fall into one category or the other in different areas of our lives, but for the most part the majority of people fall into the first category. The average person despises risk. Studies have shown that the average reward:loss ratio that will induce a person to take a risk is 2:1. That means if you give them a 50/50 chance of either gaining $2 or losing $1, most people will take that bet but not if you offer them the same probability of gaining $1.50 or losing $1.

This is, of course, ludicrously unproductive behavior. It is well documented human instinct to place a greater importance on the avoidance of pain than the seeking of pleasure, and yet those people in society we so often admire most have achieved their success by flipping this notion on their head. The technically correct answer is to take any bet that offers a positive expected value, that is to say that the probability of success multiplied by the reward of success is greater than the probability of failure multiplied by the punishment of failure. The popular game show, Deal or No Deal is a gorgeous example of just how out of touch with this very simple rule of success the average person is. People like Warren Buffett, however, have made careers out of taking any bet that will produce a positive expected value, analyzing which bets those are very carefully and doing so over and over and over. In fact, repeating the activity is the key to this strategy working, as losses only get averaged out in time. As is so often the case in life, a half-hearted commitment is a guaranteed failure.

So, if you were to ask Warren Buffet to take a 50/50 chance on losing $1 or gaining $1.01, he would take it, any day. Of course, this also operates under the assumption that your losses do not compromise your survival, an important distinction explored in the landmark finance article Beyond Markowitz.

But in addition to the potential loss of one’s ability to survive by risking more than they can really afford, what about the emotional difficulty of recovering from a loss? There are very few risks in life that are so clearly delineated as to be absolutely certain. The market of life snaps up these inefficiencies as quickly as hedge funds do on the Nasdaq, so the best we can ever do is make a sober assessment of our risk and then proceed boldly and with confidence. The downside is the maddening questioning upon a major loss of whether the system we use to assess our risky behavior is itself flawed. This is why Warren Buffett is famous for saying that the best investors are not necessarily that intelligent, but they are emotionally stable people.

Emotional stability is something that seems to come easy to Warren, and yet has never come easy to me. Like the athlete whose genetics are less than ideal, I have to put in a little extra effort to make sure I am making decisions from an objective and logical viewpoint, that also includes an introspective understanding of my own emotions and how those will play into the game. For me, it’s always been difficult to not take failure personally, or for that matter, success as well. I think such a key mentality to have is one of feeling blessed at all times and realizing that those things we lost are usually things we never really had, and those things we’ve accomplished are often more gifted than earned, if we are really honest with ourselves. And yet, we have to feel empowered to make our best efforts whenever we can, psychologists call this Locus of Control. A higher locus of control indicates a greater belief in your ability to influence your surroundings, which is a self fulfilling prophecy, but only up to the point that you are able to manage the disappointment of recognizing that there are some things that are truly and completely beyond our control.

For me, recovery occurs in a few stages:

1. Grieve

First of all, I think it is important to allow ourselves the time to grieve. Others will say that getting back in the saddle as quickly as possible is ideal, but I would add the caveat that you must be ready, otherwise getting back in the saddle too early will only slow your progress overall. We live in a culture that so often disregards the need for people to grieve, I happen to think there is absolutely nothing wrong with locking yourself in your room for a few days with all the lights off and eating nothing but ice cream until you actually feel like rejoining the world. The key is not to overindulge in this behavior, but to deny it entirely is also, I think, a mistake.

2. Think

At this stage I will start doing activities that are positive, but do not necessarily have anything to do with the loss or “repairing the sytem.” The key here is to allow myself time to think and regroup. Reflect. Reflection is being pushed hard by the leadership and management community as an often skipped step in learning and growth and I am inclined to believe them. Non-stop action is not always the way to go and sometimes it is important to take a step back and consider carefully what has occurred and what it means.

3. Destroy

I am not, necessarily, referring to literal destruction, but rather the destruction of expectations and a reality that did not come to pass and is not the actual reality. Destruction is a critical step to growth and creates space for new things. I think that after you’ve had the chance to grieve and reflect on a loss, the first step towards acting in the new you (as every loss creates a new, better you) is to destroy those parts of the old you that are no longer necessary. Notice that his must be done BEFORE you can rebuild anything in their place and often before you even know what you will be building in the new space you have created. The point is just to take a sledgehammer to the parts of yourself and your life that you don’t like anymore and be done with it. This is a humbling stage and often the most difficult for those around you, but it must be done.

4. Create

In this stage, you have the emotional capacity to act from your optimal place – that of gratitude, compassion and humor – the three forces that are the greatest tools of internal and external influence known to man. You can now freely accept new options and already you are starting to feel the power of the new you and see the loss as a great gift that will deliver many more rewards in the future by the improvements it forced you to do the system. That is not to say that the bet was ever a bad one or that the system was ever broken, but you have improved it anyway and now you are in a better position to make even better bets in the future.

Unfortunately, there will be another loss before long. Such is the life we are given, and for those of us that choose the path of excellence, even more so because we deal with a heavy burden of self imposed expectations. So keep in mind that your last loss is never your last loss, but open your heart and be free to act, live and love from the very best parts of yourself and know that you will be rewarded.

A good place to start

Last Saturday night I found myself staring into the etchings of an original Dali, contemplating whether the painting or my own life were more surreal. I developed a rather cliche appreciation for the Spanish artist during college (as one does), and while I have seen Dali’s (with whom I share a birthday) works in person before, never in such an intimate setting.

I was at a private art exhibit put on by the good people of the Harvard Club of Singapore, where the curator was displaying her private collection of human body themed art to a group of no more than 20 members of the Distinguished University Alumni League. I looked sharp and my date looked stunning. I made strange, quirky friends, in strange, quirky lines of work that I have already seen again.

Later that evening I met up with the CEO of a South African marketing company who had flown to SE Asia to pursue a business interest I had introduced him to. We had dinner and drinks on Arab Street, a very hip, sort of low key area of Singapore. Among the topic of conversation was how my previous situation unraveled, how Asia and Africa could do business together and how great it was to have great friends.

At the end of the night, I walked into the dorm style apartment I have since moved into and hung up my Hugo Boss slacks and my Ralph Lauren sports jacket, relics of a richer time, almost hilariously out of place in my new setting. I lay in bed and contemplated the meaning of my life and could not help but smile a bit.

I guess I am a guy who is ok not being where he wants to be. It’s commonly preached that one should always be happy with where they are in that very moment, that each moment is a perfect gift in time. I believe this is true, but I also believe that in the real world we cannot always be happy, but if we can at least be happy with sometimes being unhappy than that is a pretty damn good place to start.

It’s late now, and writing helps me sleep. Maybe I will create another blog for the mix of academic/intellectual pieces and unique business/travel reviews this blog was meant to be. Maybe I was never meant to be that kind of writer. Maybe that will come later. In any case, my readers (of which my tracking statistics tell me there are quite a few), are surely curious as to what happens next, so here goes.

I took a cab home from my firing meeting and called British Airways to see what the procedure would be for me to change my ticket date. They said it could be done, and I double confirmed that the purchaser of my ticket could not cancel the ticket if he found out I changed the date, and had not promptly run away tail tucked as he desired. The next move was to figure out what my next move would be. I called a close friend and mentor at Cornell who had been my career coach throughout my time there to get his take.

I won’t use names without permission in this blog, but my friend is a silver haired man in, I would guess, his mid-50s. A ruddy sort of a face with keen, skeptical eyes, a full clear voice and a spry step. Both salesmen, charmers, fast talkers, jokers, big lovers, we had a lot in common and hit it off immediately. He likes to talk about how Cornell is the working man’s Ivy, and loves to champion the underdog, which I was upon my arrival at Cornell.

Before I could say a word, he told me he knew it was going to be bad, because I was calling too early. I told him briefly what happened and you could almost smell the rage coming from the other side of the phone. He asked me many questions and I gave him my answers. He advised me to write my manager’s manager a letter and request severance, which I did. His anger was healing for me. Although my greater concern was for my survival it meant my feelings of outrage were justified and more important than anything it was great to know that he cared.

Next was to find a place to live. I scanned my mind for potential options. I knew that if push came to shove, there were a number of places I could stay. A handful of couches in Florida I could crash on, but my plane ticket was to NY and I’d have no way of getting there. Not to mention that a freshly minted MBA trying to make it in Florida is like an aspiring actress trying to become the next big thing from Omaha. Maybe not that bad but you get my point. Staying at my dad’s apartment in NYC was a very short term option at best, but in a worst case scenario I know he would kick in some cash to get me on my feet somehow, maybe a move back up to Ithaca where at least I have a network, or DC. While all of this reeled in my head all I could think was that I was not ready to leave Singapore. My work here was not done. There was opportunity here and here was where I wanted to be. I fought so hard to get here, was I really going to be beaten so easily?

I called an entrepreneur who I had first met pitching a business plan to my bio-renewables company last summer. His work was like nothing I had ever seen before. It was exciting, fresh, new, full of life. It was like someone had taken the MBA skillset and breathed life into it and used it to create something new and astounding. All the EBITDAs and the WACC’s and the market segmentation and the operational throughput and the five forces strategy was all there, but there was something else in there that I had not seen before. The unmistakable touch of the artist. I was deeply inspired, and I can say honestly that most of my work for the next year was based on that short presentation. We kept in touch during that time but I think I could say honestly that our friendship was still very much in a budding phase when I called him for advice and could not have expected what happened next. “No problem,” he said. “You stay with me.” He was in Helsinki at the time, closing a sweetheart deal with Finnish investors and said we would confirm soon. Nervous that he could change his mind as quickly as he made it the first time, it took an incredible act of faith to change my plane ticket with the last bit of money I had and pray that everything would work out.

Sure enough, my entrepreneur friend gave me his address and I shoved the few earthly possessions I have left into a cab and headed to the northern most tip of Singapore, where he lived. It was my first time seeing a house in singapore, as what they call “landed properties” here are very rare, but this house was unique in every way. My friend deserves a description. He is a tall, 6’5″, Swede with a warm, Tom Hanks kind of face and a charming sing-song Scandinavian accent. He is a self made man, from a small town, who has followed his passions around the world and had his fingers in many things. He has no shortage of stories and tells them well. He has, in more recent years I take it, become completely obsessed with climate change and sustainability and sees himself as a primary agent in the battle against this crisis. He has the wild innocence and eruptive temperament of an artist as well as the keen mind of a businessman. He is gregarious, generous and utterly bipolar.

For the next few weeks I lived with him and his Indonesian housemaid in their luxurious home while he regaled me constantly with stories of his conquests of every kind on every continent. His wife and young son had recently moved to Bali where his son would be attending a special school to prepare children for a sustainable future (not making this up, google “the green school”). He would be moving soon once some business in Singapore was finished up.

In the mean time I began to think about what I wanted to do. I thought about what was important to me, what I was good at, what I wanted to learn and be exposed to, and what I wanted my life to be about. I thought hard about these things and will probably discuss them further in a different post at some point. I also thought about my survival. I did get my severance pay, but it wasn’t going to last forever and most of it is already gone. I needed to balance what I wanted to do with what was achievable and would start bringing in money now.

To truncate the ending a bit, my entrepreneur friend kicked me out somewhat abruptly upon the return of his wife. I have been on and continue to go on a few interviews. My dad has offered to help me out, but it is pretty embarrassing how much financial support I have taken from my father in the last few years, especially since I used to be independently wealthy and drive a BMW (a fact which he loves reminding me of).

It all comes down to the BMW. How could anyone who ever drove a BMW ever need money for anything ever?

All pettiness aside, my dad has been an incredible source of support for me, financially and spiritually, my entire life and in a renewed way in the last few years. He deserves better than a son who would use him as anything but a last resort of financial support and that will be how it goes.

But if I’m going to make it on my own, I really do need to get some sleep now as it is very late.

Say nothing at all

Many of us, as children, learned that if we had nothing nice to say, we should say nothing at all. While the intention behind that aphorism was probably to discourage us from gossip and slander, an unintended consequence for many is the realization that most people really only want to hear nice things, and if you haven’t anything nice to share, you’re really best keeping to yourself. And so most of us learn to suffer silently during our painful times, which is not a terrible thing to do, but like all things can go to far.

Such is the logic behind my unusually long absence from updating this blog, and yet as I sit down to write I can think of so many positive things to share. Probably still best to start with the bad.

Just about a month ago, shortly after my return from Jakarta, I was driven to a special “meeting” with my boss that was in actuality him telling me I was fired, and left there. Although the relationship between that particular manager and myself had been deteriorating rapidly since I arrived, never in my wildest imagination would I have predicted the end to take such a form. Lessons learned:

1. A person’s perceived station in life is no accurate predictor of how petty, selfish or vindictive they may be.

2. As anyone who has dealt with addicts knows, despite your desires, intentions or qualifications; you simply cannot save a person, or a company, that does not want to be saved

 

There is probably something in there about teamwork and humility as well.

Whatever the case, after over a year of preparation, I was unceremoniously ejected from the company I had hoped to bring into profitability. What to do?

I was given a ticket to NYC for three days from that date, and given that my apartment was rented by my company, knew my lease would be terminated on the same date. Writing this is more painful than I can describe. I am going to stop here for now, but I promise that there are good things soon to come and even better things yet to come.