Taleb's Top 10 Life Tips

Taleb's top life tips

1 Scepticism is effortful and costly. It is better to be sceptical about matters of large consequences, and be imperfect, foolish and human in the small and the aesthetic.

2 Go to parties. You can’t even start to know what you may find on the envelope of serendipity. If you suffer from agoraphobia, send colleagues.

3 It’s not a good idea to take a forecast from someone wearing a tie. If possible, tease people who take themselves and their knowledge too seriously.

4 Wear your best for your execution and stand dignified. Your last recourse against randomness is how you act — if you can’t control outcomes, you can control the elegance of your behaviour. You will always have the last word.

5 Don’t disturb complicated systems that have been around for a very long time. We don’t understand their logic. Don’t pollute the planet. Leave it the way we found it, regardless of scientific ‘evidence’.

6 Learn to fail with pride — and do so fast and cleanly. Maximise trial and error — by mastering the error part.

7 Avoid losers. If you hear someone use the words ‘impossible’, ‘never’, ‘too difficult’ too often, drop him or her from your social network. Never take ‘no’ for an answer (conversely, take most ‘yeses’ as ‘most probably’).

8 Don’t read newspapers for the news (just for the gossip and, of course, profiles of authors). The best filter to know if the news matters is if you hear it in cafes, restaurants... or (again) parties.

9 Hard work will get you a professorship or a BMW. You need both work and luck for a Booker, a Nobel or a private jet.

10 Answer e-mails from junior people before more senior ones. Junior people have further to go and tend to remember who slighted them.

Nassim N. Taleb, TimesOnline, 6/1/08

VC/PE Readings

• How PE could Rev Up the U.S. Economy, BusinessWeek, 5/7/09
  
• Super Angels, BusinessWeek, 5/21/09
  
• LPs Get Tougher on Due Diligence, SVB Capital, 5/09
  
• What's Broken - VC or Venture Perception?, EarlyStageVC, 5/09
  

10 Ways Your Job Will Change

1. High Tech, High Touch, High Growth
2. Training Managers to Behave
3. The Search for the Next Perk
4. We're Geting Off the Ladder
5. Why Boomers Can't Quit
6. Women Will Rule Business
7. It Will Pay to Save the Planet
8. When Gen X Runs the Show
9. Yes, We'll Still Make Stuff
10. The Last Days of Cubicle Life

"The Way We'll Work," Time Magazine

Home Ownership in America

No surprise, today the S&P Case-Shiller home-price index showed that nationally home values continue to decline.  NPR's Marketplace also had this report:

In it, they report the following:

• On average, nationally prices are back to late 2002 levels
• Gains made from 2002 to 2006 have been lost
• Declines are not over
• Foreclosures will continue and will hit all elements of the market (prime and sub-prime)
• Job losses will make it worse
• Going forward, the "go-go" days are over; even when home sales turn around we can't acount on the gain in home values like we used to 

The last bullet point is what I wanted to focus on because it relates to what I hear people say all the time, and I am sure you have too: "Prices are low, its a great time to buy."  I have long advised friends to NOT ignore the non-financial aspects of their decision.  While it could be a great investment, you are making a major purchase that comes with significan lifestyle changes.  For example, buying a house roots you into a community and makes you less mobile.  In April, I read the articles listed below from the economist that speak to the bigger picture of home-ownership and how govenments play such a big role in pushing home buying because of the presumed positive social side-effects.  I encourage you to rea them, but here are two quotes that I like:

" ...until the crash in 2008, Americans were coming to see their homes as financial investments rather than as places to live." 

"a dwelling house, as such, contributes nothing to the revenues of its inhabitants.  -Adam Smit"

Shelter, or burden?, The Economist, 4-16-09

Building castles of sand, The Economist, 4-16-09

Business Environment Ranking 2009 - 2013

According to an Economist survey released today, the following countries will fair better the next 5 years.

• China
• Saudi Arabia
• India
• Cuba
• Iran
• Angola

Is there a pattern here?

5 Ways Leaders Motivate Themselves

1. Look in the mirror every morning and gear yourself up
2. Step back from the block-and-tackle to dwell on the big picture
3. Fight to stay connected to your people
4. Envision your challenges not as intractable problems, but as exciting puzzles to solved
5. Let others inside, reach out to supportive friends and colleagues

The Welch Way

Solving Problems with Pictures

I just read Dan Roam's book "The Back of The Napkin" and highly recommend it.  It's about how to solve problems with pictures by using your "visual thinking" abilities.  It applies to any sort of problem.  Your drawing/creative abilities are irrelevant, if that's a concern to you.  I am a center-left brain person (i.e. more analytical), and can't really draw at all, but I do understand the power of images as a communication tool and am always looking for opportunities to draw business concepts on a whiteboard.  In fact, I have dreams of being a probessional "business artist."  But it doesn't matter which side of the brain you are in, the best thing about this book is that it gets you thinking towards both ends.  It's a quick and simple read.

Below is an example of one of Dan's pictures from his blog where he, in just one sketch, shows Twitter's position in the online world.  Coincidentally, the same day I read an article about Clique, a Japanese company that allows you to twitte based on Morse code, could that be what comes after Twitter? 

Also, here is a presentation by Dan at the Commonwealth Club in San Fransisco, where he explains his book.  It's 1 hour in length.  But I recommend you read the book too.

Money and Morality

Dan Ariely's research offers some insight into how and why so many on Wall Street and Main Street kept on giving and taking on all those sub-prime mortgages that largely led us to our current economic crisis.  The bottom line is that the farther you move people away from money, the more likely they are to do something that is generally considered wrong and not feel bad about it. 

On Wednesday's NewsHour, Ariely talks to Paul about morality and money in the current economic crisis. Ariely has designed and carried out dozens of experiments all over the world dealing specifically with the concepts of stealing and cheating. His conclusions: People cheat just about the same way all over the world -- with one exception.

H2O

In my earlier post about the next big thing I mentioned "water" as one of the burgeoning areas of interest to meet the needs of our expanding population and urbanization.  Here's an excerpt from an Economist article (see below) concerning the topic which might further pique your interest. 

"It takes 2,000 litres (530 American gallons) of water to grow a kilo (2.2lb) of vegetables but 15,000 litres to produce a kilo of beef—and people are eating more meat. The problems also have global implications. Without a new green revolution, farmers will need 60% more water to feed the 2 billion extra people who will be born between now and 2025.

Yet there is, globally, no shortage of water. Unlike other natural resources (such as oil), water cannot be used up. It is recycled endlessly, as rain, snow or evaporation. On average, people are extracting for their own uses less than a tenth of what falls as rain and snow each year.

The central problem is that so much water is wasted, mainly by farmers. Agriculture uses three-quarters of the world’s water (urban use is trivial: most people drink two or three litres a day, on average, but 2,000-5,000 litres are used to make the food they eat). Because water is usually free, thirsty crops like alfalfa are grown in arid California. Wheat in India and Brazil uses twice as much water as wheat in America and China. Dry countries like Pakistan export textiles though a 1kg bolt of cloth requires 11,000 litres of water."

Later on I will post more comprehensively on renewable energy topics.  But today I was motivated to make you aware of these articles regarding the global water problem because I heard Daniel Goleman talk about his new book "Ecological Intelligence" where he speaks in detail about "how knowing the hidden impacts of what we buy can change everything." [listent below]

"Sin Aqua Non," 4-8-09, Economist

"Awash in Waste," 4-8-09, Economist

"Shaved Heads Keep Barbers Idle as Drought Sears CA," 5-6-09, Bloomberg

Cognitive Cash

Multitasking is a myth.  According to researchers and to Winifred Gallagher's recent book, your brain can only truly perform one task at a time.  Otherwise, it is only switching from task-to-task, making it less effective and prone to errors (remember that email you sent with a typo while you were on the phone?).  Cognitive cash is the notion that our attention is finite.  We only get 173 billion bits of information to process in our lifetime.  Like cash, we have to spend it wisely.  How are you spending them? Read more here or listen below.  

Who sleeps the most?

According to a May 2009 report released by the OECD, the French sleep the most.  And then Americans, believe it or not (see graph).  The data showed that Americans on average sleepls 8hrs 40min.  Who has the most fun?  The Nordics, according to the survey.  Who has the least fun?  The Turkish and Italians.  Apparently high levels of trust in strangers leads to higher levels of satisfaction.  Who eats better? 1 in 3 Americans is obese versus 1 in 10 Japanese.  Hear more here>>.

Corp. America's Fight of a Lifetime: Tax Increases

The world has started to react to President Obama's proposed corporate tax increases or end to corporate tax breaks (Bloomberg).

In this discussion, KQED looks at how the changes may impact companies in Silicon Valley:

Spain and India where also quick to react.  Spain said "its short-term gains, for long-term pains" [listen].  U.S. companies make lots of money in Europe.  For example, in Spain, business generated by U.S. companies equals 8% of the country's GDP.  India has also expressed concern.  More than 60% of India's 2.2 million employed in IT outsourcing are by U.S. corporations.  United and Delta airlines recently terminated their contracts in India [listen].

The U.S. already has the highest corporate tax rate in the world after Japan (as illustrated below), but this is for "on-shore" profits.  The aministration aim is to crack-down on "off-shore" profits.  In 2004, U.S.-based multinationals paid $16 billion in U.S. taxes while earning $700 billion overseas.  But what will this do to "comparative advantages"?

Read-ings

• "VCs Dilemma," 5-1-09, Forbes
  
• "Japan VC Funds Face Mergers as IPOs Fade," 4-6-09, Bloomberg
  
• "The Loss Generation," 3-08-09, The Boston Globe
  
• "Jailed Billionaires Show New Face of China as Markets Unravel," 2-24-09, Bloomberg
  
• "VCs Have Flashbacks as Institutions Dump Stakes, " 11-14-08, Bloomberg
  
• "Unprecedented Biotech Bankruptcies Erupt Amid Finance Crisis," 11-21-08, Bloomberg
  
• "As Cash Stops Flowing, VCs Get Creative," 11-28-08, WSJ
  
• "A New Track for Private Equity," 11-27-08, WSJ
  
• "Harvard-Led Sale of Private-Equity Stakes Hits Values," 12-1-08 Bloomberg
  
• "Schwarzman Promises 'Wonderful Time' for Buyout Deals," 1-28-09, Bloomberg
  
• "Another View: VC Investing Not Dead, Just Different," 2-9-09, DealBook
  
• "With Jobs Tight, M.B.A.s Head for Home," 4-21-09, WSJ
  
• "Canada's VC Breakdown," 5-8-09, Globe & Mail

TED-ings

1. "Do schools kill creativity?," Sir Ken Robinson (TED, 19:24 min)
2. "How I'm trying to change the world," Bill Gates (TED, 20:17 min)
3. "Why we know less than ever about the world," Alisa Miller (TED, 4:29 min)
4. "The best stats you've ever seen," Hans Rosling (TED, 19:50 min)

Chart of the Day: Sell in May, Go Away

I wouldn't trade on this data, but it sure is interesting to look at. [Bloomberg] 

Happy Cinco de Mayo(factoring)!

In commemoration of Cinco de Mayo, I am posting a cover story by BusinessWeek from April 9, 2009 that highlights a Wave of Investment in Mexico's manufacturing sector.  Having grown up in Tijuana, I am fairly familiar with the up-and-down's of the "Maquiladora" business -- Tijuana was once known as the TV capital of the world. 

Amidst all the complexities of Mexico, BW does a fair and honest job of reporting on the situation in the country.  Of note are the observations that, compared to a decade ago, Mexico is a much more stable economy, has a much more sophisticated workforce, and never before have the benefits of being a "near-shore" partner been more important to its business partners.

However, the article was written before the swine flu outbreak.  Today, The World/PRI reported (audio here, 3:30) that Mexico's finance minister estimates that the swine flu will cost the country more than $2 billion dollars.  Mexico's three largest revenue sources are petroleum exports, tourism, and remittances.

Where are the next big tech breakthroughs?

According to Tom Siebel in his speech (video, 1h) at Stanford, the next big technological breakthroughs will be in Energy, Water, Healthcare and Food.  He pronounces the IT sector nearly stagnant.  He says, "in IT we have pretty much done it."  True, how much more do we really need our phones to do for us?  It is amazing to think about what we can do on our phone today vs what you could do only 4 years ago.  What other "major" IT breakthroughs can come after the semiconductor and the Internet?    

But Tom points to the fact that our global population is expanding faster than ever, aging, and increasingly becoming more affluent.  There is a threatening need to be able to power, feed, and care for our growing communities.  What's more, we've not truely focused on the sustainability of these essentials (just ask Al Gore), and there is ample room for us to improve how we produce, use, manage and think about them.  For example, in the U.S. approximately 50% of all the energy produced from all sources (i.e. oil, natural gas, coal, etc.) is lost during transmission and distribution, according to LLNL. 

I wanted to put all of this into perspective.  I pulled the following population figures. 

In 1750 - 1 billion - it took a long time to get to 1b

In 1930 - 2 billion - it took 180 years to double

In 1970 - 3 billion - it took 40 years

In 1999 - 6 billion - it took 29 years to double

In 2020 - 9 billion - est., it may only take us 21 years to double

It gets even more interesting when you look at cities.  In 1750, only 3% of the 1 billion lived in cities.  By 2000, nearly 50% of the 6 billion lived in cities.  It is estimated that by 2020, there will be more than 500 cities with populations above 1 million and more than 20 mega cities (> 20 million).  

Two excerpts from the Wilson Quarterly report concerning world demographics: 

a) "...In 2050, according to UN projections, it is possible that nearly as many babies will born in the U.S. as in China." 

b) "...The world is aging in an unprecedented way.  A milepost in this process came in 1998, when for the first time the number of people in the developed world over the age of 60 outnumbered those below the age of 15.  By 2047, the world as a whole will reach the same point."  Hear more here>>

One last quote from Tom: "when I graduated, I came to Silicon Valley because that's where the action was; today if I was graduating I would be on a boat to Shanghai." 

Lastly, this talk reminded me of a quote from the scientist Jonas Salk.  It's a bit depressing, so be warned: 

"It's interesting to reflect," he said, "that if all the insects were to disappear from the earth, within 50 years all other forms of life would end."  "But, Salk went on, "if all human beings were to disappear from the earth, within 50 years all other forms of life would flourish."  - Jonas Salk

Small is the new big. Sustainable is the new growth. Trust is the new competitive advantage

So says Peter Bregman of Harvard Business Publishing in a recent blog post that discusses how small companies are beating out the big companies.  He mentions how the gap of confidence between small companies and big ones is growing.  While this notion is not new, never before has the playing filed been more leveled than in today's new economy.  It's worht a quick read.

Another Day, Another Entrepreneur Starts A Venture Fund: The University Funds

peHUB post about another new seed/early-stage venture fund: Another Day, Another Entrepreneur Starts A Venture Fund: The University Funds

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LP to VC: Won't some of you please go away?

Interesting post from Reuters Blog about a panel discussion at the recent NVCA conference where Rebecca Connolly, a partner at Fairview Capital (FoFs) commented that she hoped that several VCs went out of business.  But more interesting is Donald E. Tuttle's response to the post, where he underscores the ultimate importance of quality start-up CEOs in the first place in order to (ostensibly) maintain superior returns in the venture asset class.  Donald's comments made me wonder about the actual pool of second time start-up CEOs available (size and composition)?  What are the stats on moving from a 1st to 2nd time CEO?

Unemployed and not giving up on your dream job in a recession?

There's a recession, jobs are scarce, you're jobless, but you have a dream.  You have to determin your choices and decide which direction you really want to go.  It's a difficult decision, particularly if you have many non-financial and financial obligations, responsibilities and people that depend on you.  

I think Jack Welch summarized the alternatives pretty well in his recent post to "MBAs without a job."  There are essentially 3 options: (A) to settle for a job, and learn to love it, (B) to keep the dream alive (and keep going crazy), or (C) to start your own company.  

Alternative B is about not giving up on the job that is right for you, right now.  The benefit to this approach, to the extent that you can afford it, is that you would be starting your next job in the "right place" and that you would have experience the "hunger" needed to succeed (i.e. you test yourself again and further build character).  But it all depends on where you are in your career and what you truly feel like doing next.

Another tool that may help in your decision is Suzy Welch's 10-10-10 method to decision making.  In it, she suggests thinking about the consequences of your potential decisions in the following way: the next 10 minutes, the next 10 months, and the next 10 years.  Try it!

When you are in a sinking ship, you are not necessarily thinking about what to take on your next sailing trip (you are thinking survival).  But don't neglect "the tomorrow."  The upturn will arrive - in 1, 2, or 3 years - and the business landscape will be brand new.  Will you be ready?  I suggest you consider your next move with the idea that you are shaping your future today. 

I embarked on option (B) four months ago and crafted a 6-month plan based on six key points of direction.  I'll share them here, in case they are helpful.  

1) Self-assessment.  Write down your value-add.  Take a hard and honest inventory of your most natural aptitudes, skills, interests, and your business network.  Given this, identify where you will most excitingly create value within a team and get rewarded for it.

2) Set a target.  Given the results of item #1, which industries / firms / jobs are the best match?  Keep an organized roster of prospective employers or people you would like to work with in excel.

3) Be known.  Set a plan to get into the firms that you are targeting (weather they are hiring or not).  Be creative and genuine when approaching these firms.  Remember, having connections is not so much about who you know, rather more about who knows you.  Be online (i.e. internet-working).  Use LinkedIn, Facebook, Twitter, Blogs, school career services sites, alumni groups, industry conference organizations, etc.  Build lists of potential contacts in the firms you have identified that might meet with you for informationals.  Have a website and blog everyday -- demonstrate that you have insight, not just knowledge.  Identify and meet with headhunters in the industry and your location, ask them for trends they are seeing and refer them other job candidates.

4) Be current.  Stay up to date with industry news, notice trends and opportunities.  List all the key conventional (and un-conventional) industry news sources and carve-out time every day to browse through the headlines.  Send relevant articles to people you meet in your networking trails.  Comment on other blogs.  Connect people.  Attend conferences and local industry events; offer to speak on a panels where appropriate.  

5) Be the job.  Your full-time job should be to find your dream job.  Truly treat it like a job.  Wake up an hour early every day. Have a plan and track your progress.  Use Outlook to have all industry events and meetings on your calendar, and use Excel to keep a spreadsheet of all the people you are meeting, where they work, who they know, etc.  

6) It's all about attitude.  Hype yourself up everyday.  Go get what you want and be in your element.  Talk to trusted and supportive friends so that you fuel your confidence and energy.  The worst thing you can do when you don't know what else to do, is to not do "a little bit every day."  Also, keep in mind that careers are non-linear in the 21st century.  Keep your "eyes and mind open" to new opportunities that open up in your path.

I'll end with a quote by Michelangelo: "The greatest danger for most of us is not that our aim is too high and we miss it, but that it is too low and we reach it." 

How to craft a truly meaningful life? You can learn it in class!

Yet another reason why I think Stanford is an "outlier" in the world of higher education.  Stanford has a required course that teaches students to think about questions such as "How does one craft a truly meaningful life?."  I wonder how many of us know the answer?  Maybe they should open this up to post-graduates.  Follow this link to hear the audio: The Art of Living: Forum | KQED Public Media for Northern CA

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Thinking of investing in emerging market equities?

I am.  In particular I've been eyeing Mexico's Banco Compartamos because of its business fundamentals.  As I put this in the context of the broader economy I thought about the usefulness of conventional tools to measure the health of emerging economies.

In this article, The Economist highlights the importance of looking at a country's "business and bank debt," rather than just "government debt" to assess it's financial vulnerability.  The table here shows the ranking of emerging markets as of February 2009 based on these broader rations.  If you are contemplating international equities, I suggest you read this.  

Charlie Rose has a cool job

This post is because I watch Charlie Rose regularly (you should too) and simply think that he has one of the coolest jobs.  Charlie gets to interview some of the most important figures and thinkers of our life time for a living.  Who are his peers outside the U.S., I wonder?

Silicon Valley buffs, checkout this interview with Marc Andreeseen on February 19, 2009.  I like his bold statements about the news-print business being dead.