In the past, when we looked back on historical events, we were able to decipher correlation from causation after the fact…but those with military, political, or social power controlled the interpretation that became widely known.

This power to determine history, in the short or even longer term, was made weaker by the invention of the printing press and later newspapers.

Now that we have digital media and any one of us can voice an opinion for others to hear, perhaps we will get closer to an ideal world where something approaching truth will emerge for our collective interpretation of past events.

A cynic might say that the masses will be more easily swayed by sentiment or the power of manipulative rhetoric, but it has been my experience that most people are smarter than we give them credit for and often they are limited by their linguistic training.

As our tools of digital interaction, translation and sharing continue to increase, I am excited about the potential for us to enter a more truly democratic world, where we learn from our past through a process of sharing, interpretation and learning through increasingly rapid cycles of feedback.

Perhaps through this process we will not only learn more about our past, but we might even be able to learn more about each other and eliminate some of the fears and misunderstandings that drive much of the negativity and violence that still unfortunately plagues our world.

This post was spurred by a discussion with @humbertomoreira and another non-twitter friend that overlapped this afternoon.

One of the things we are currently experiencing as a result of the explosion of Internet usage is at once both a deconstruction and an expansion of our conception of personal identity. And this is radically shifting our potential for human interaction - in a good way.

Deconstruction

I say deconstruction, or splintering, because we are now able to express and find meaning for various different aspects of our personalities like never before. For instance, if you are really into hollywood gossip, you can find great content on PerezHilton, and if you really like gadgets you can visit Engadget. Either on these sites or on the various social networks you participate in, you can then share and discuss content related to these interests in ways like never before.

In the past, you might have been unable to express a niche interest or curiosity due to its lack of popularity in your physical locale. However, due to the Internet and the increasing avenues through which we can express ourselves, we are able us to connect and express views with one another based on various different aspects of our personalities.

This changes the ways that people perceive us - or how our identities are represented - because people tend to associate personal identity with the things that people say or do. If you are a baseball card collector, it expresses part of who you are in some sense. Thus, as we express more stuff, our identities take different shapes in different forums.

Expansion

At the same time, the Internet also results in an expansion in the ways that we can express this personal identity through an increased number and kind of social interactions. As my parents always told me, no two people are alike.

Some people think the ability to connect on niche topics will create echo chambers, but they miss the point that individuals represent a set of complex combinations of interests, experiences and perspectives, and as we interact with an increasing number of people, we will by definition be exposed to more potential varieties of combinations.

In other words, in the “good ole” days, the “good ole” boys would connect in one club and discuss the same 5 topics. Today, the “new girls” meet in a variety of different online settings and discuss a variety of ideas based on their naturally varied interests (i.e. one day she may comment on a NYTimes article and the next day comment on a video posted on a FOAF’s blog).

These wider sets of interactions will produce more interactions and connections than the old model based on simple arithmetic.

Transparency and Openness

At the same time as the number and kinds of our interactions are increasing on forums of interaction like Twitter, Facebook, LinkedIn, YouTube, questions of transparency and openness emerge that may be difficult for people to manage.

The more that we discuss stuff online and express more parts of our personality, the more aspects of our personal identity become available for the world to see. I think of this as the modern version of “wearing your heart on your sleeve.”

2 Ways of Dealing With Transparency

Two speakers that I watched at SXSWi highlight two possible ways people try to deal with this increased transparency.

Embrace Transparency

Tony Hsieh, CEO of Zappos.com deals with this issue by embracing transparency and creating an organization that is aligned with his personal values. He interacts with people in a professional role and personal role through the same “persona” and represents himself and his company in the same way across settings. He also encourages his employees to participate on Twitter and to engage in personal discussions with the people who call Zappos with customer service issues.

This emphasis on creating a culture that promotes transparent personal identity and positive customer service interactions has reaped him huge success and personal happiness.

Managing Multiple Personas

Another speaker mentioned that she manages the challenges of transparency by creating two separate online “identities”. She uses one identity for her “professional” interactions and another for her “personal” interactions. To do this she creates multiple accounts and log-ins for her various conceptions of her social circles, and she shares some stuff in one context and other stuff in the other.

I believe that this second approach may be unsustainable, because as our online environments become more deconstructed and expansive, we will continue to have more coincidental overlaps with people we previously grouped in an unexpected bucket.

Serendipity Makes Multiple Personas Unsustainable

What I mean by this is that conceptions of “professional”, “personal”, “school-friends”, and “work-friends” will consistently be tested as we serendipitously come across people in unexpected ways as our deconstructed and expanded personalities are expressed in new ways across the Internet (and IRL for that matter).

For anyone who spends a lot of time traveling in physical or “cyber” space, you will be able to relate to the phenomenon of increased serendipity that we have collectively been experiencing over the last few years as our worlds increasingly collide in unexpected ways.

As our ability to express and connect on various different dimensions of our personalities increases, this “I didn’t know that you were X” effect will only increase in the future.

Embrace Transparency…It is Inevitable

The upshot of all of this is that I think one should embrace transparency ahead of time and be ahead of the curve in creating and maintaining your “online” persona. While doing so, I think you should also strive to be sincere and consistent because, just as in real life, juggling multiple personalities and personas can be draining and might ultimately be unsustainable.

This move - embracing authenticity and transparency - will not only increase the amount of connections and social interactions you create - which is just super-awesome, but it will also allow you to be sure people see you for who you really are rather than having an incomplete or skewed perception of you.

What Transparency Entails

The great thing about the world we are headed towards is that it implies a destruction of overly simplistic categorizations that are behind vices like racism and other bigotry.

In other words, as we interact with more people in more unexpected ways, we will realize that our old-school and overly-simplified conceptions of personal identity that drive such vices are just plain wrong.

This is why Facebook is old school and Twitter is a step, albeit an incomplete one, in the right direction.

People are a helluva lot more than what school they went to or where they happen to have been born…

And I can’t wait until a not-too-distant future when our online and IRL lives better reflect that simple human truth.

If we gathered the smartest financial and economic minds together and locked them in a room for a week I think we could solve the current economic conundrum…

But instead, our system of representative democracy forces compromise between brilliant ideals and half-baked social plans motivated by re-election cycles. Perhaps this is what the founders wanted - to keep the representatives tied to the local whims of the body politic.

However, in the context of social dislocation like that we are facing today, it seems that the benefit of coordination more than compensates for the potential abuses that might come from a republic led by disconnected philosopher-kings.

This trade-off: between efficacy and representation, is likely less stark in a society where the populous has the benefit of good education and therefore more wide-spread competence. But when a society allows its educational system to fail, when pop-culture and hollywood media replace civic awareness, and when party politics make any debate center around hot-button social issues rather than content, the trade-offs become dangerous.

Our President has sided with Mr. Cheney in attempting to address this issue by seizing more power for the executive. I see this as a rational market reaction to the tensions of our representative form of government in the context of our current challenges. If he uses this power to tap into the brain trust he has accumulated, we should likely look the other way…

But on the other hand, our framers set a system in place that has brought us through generations of war, conflict and change, leaving us standing in a position of strength. So perhaps we should resist urges spouted by intellectuals like yours truly and instead address the educational inadequacies that strain our representative forms.

Either way, I think talking about these civic issues is important in these strained days.

The Storm Is Back

You may have noticed that we are out of the eye of the storm.

As I mentioned in my last post on the economy (Rules of Nature), the current process of economic unwinding is going to be long and painful, and we are still in the early stages of the process.

The headline issues of the last few weeks - the “stimulus”, the “nationalization of the banks”, and Obama’s “housing plan” - do little to change this reality.

Primary Driver = The Housing Market

The primary driver of our current economic situation remains the housing market. I will not bore you too much data about  where we are, but this article indicative: Housing Prices in 20 U.S. Cities Fall a Record 18.5%.

Unfortunately, these declines are only the beginning.

We must remember that the record mortgage issuance of 2005-06 continued through 2007 and that this was at the end of a massive levering-process at the household level that had been going on for decades. In other words, there is a massive wave of people with underwater mortgages who will continue to default and be foreclosed upon unless something is done to facilitate rational pre-foreclosure restructurings.

Unfortunately, it appears this is not going to happen.

Change Is Not Coming

The primary reasons why proper reform is not happening are: 1) most people don’t understand how important this issue is, 2) most people who do understand the economics let half-baked moral arguments about “bailing out” homeowners get in the way while at the same time talking out of the other side of their mouth about how we need to keep the Banks and GM out of bankruptcy, and 3) when we finally do get a proposal that makes enough people happy to satisfy the lobbyists, it is watered down and ineffectual.

As a result, I am fairly certain that housing prices will continue their steep decline, that this decline will continue to spread to commercial real estate, that the balance sheets banks and other financial institutions (including the Fed) will be even more severely strained, that consumer spending will continue to fall, that consumer defaults will rise, that corporate bankruptcies will spike, and that these results will spur second-and-third order effects around the globe.

Call it a depression or a recession or whatever you want, but it is almost inevitable at this point. But this is nothing new. The writing has been on the wall about this for nearly two years.

Ineffectual Responses Don’t Help

There are so many bad ideas coming out of Washington right now, I am reluctant to even begin dissecting them in specific terms, but the TALF is a good example of governmental attempts to control nature and the markets.

The now $1T package is discussed in this article:
U.S. Tries a Trillion-Dollar Key for Locked Lending

That the credit system needs thawing is obvious, but providing below-market loans, funded by taxpayers, to encourage under-water risk takers to bet the bank in order to get these markets going to me is beyond the pale. And more than that, it just won’t work. It is too small and too late.

Real Hope

All of that being said: I remain optimistic about innovation and the long-term success of the American Economy.

There is a lot of exciting stuff going on in the world of social-networking, medical technology, biotechnology, clean tech and digital media. These and other areas will continue to drive the engine of innovation in this country and subsequently the world.

I am grateful to go to school with entrepreneurs who are taking the plunge to do something creative in spite of the dark reality in which we find ourselves.

But that is unsurprising.

A half-melted, rain-soaked, bloody-mouthed American Dream is still the best promise and hope that the world has ever seen. And years from now, that dream will continue to be worth fighting for.

In the meantime, keep your umbrella handy and be patient. This one will be around for awhile.

As Twitter grows in popularity, a number of my friends who have heard me talking about it have started asking me why I like Twitter so much. Although I enjoy chatting about the topic and am glad to do so anytime, I thought writing a post on it might be helpful.

Here are a few of the meaningful ways I have integrated Twitter into my life.

1) As a way to interact with and meet a diverse group of people.

I am able to do this on a scale that is impossible with other services - this comes from Twitter’s one-to-many structure (i.e. each one of my “Tweets” is seen by all of my followers). This also creates the ability to have semi-public “conversations” that others can “listen” in on or participate in.
In addition, by reaching out to new people on Twitter (primarily friends of friends) and through the new “followers” I get each day, I have access to an entirely new and diverse source of social connections.

2) As a way to get the News.

It turns out that if something is interesting, people like to talk about it with their friends. Thus, I share and receive all kinds of news through Twitter in a way like never before. The service has virtually replaced my other news services for everything but financial news (for which I primarily turn to mobile Bloomberg and blogs). In addition, Twitter usually has most news stories hours or days ahead of traditional news outlets, which keeps me ahead of the curve in terms of being in touch with the world outside of the HBS-HLS bubble.

3) As a way to keep in touch.

My mother is probably reading this blogpost and so are a number of my friends. In fact, many of you probably stumbled upon this post through Twitter. Thus, you know that I regularly post what I’m up to - ranging from relatively trivial stuff to the places I am traveling. Many of my friends on Twitter do the same, and as a result we are able to keep up to date on what is going on in each of our lives. That I can better stay in touch with my family and friends while maintaining a busy schedule is a great benefit of the service.

4) As a means of self-expression.

One of the things I have enjoyed most about blogging over these last couple of years is that it gives me the ability to express what is on my mind and share it with others. Twitter does the same but on a more real-time basis. As a result, I find myself opening up to an “audience” of friends about the way that I see the world. Of course opening up your life to a new level of transparency is daunting, but I think putting myself out there has brought more than enough good - in conversations, new friends, and insights - to make up for any discomfort that it might create.

If you are new to Twitter.

I suggest giving it a go for a month or so. Like most communities, you reap what you sow, so try to participate in whatever way feels right. There is no one “right” way to use the service. Hopefully my thoughts on it are helpful, and please let me know if you ever want to chat about it more extensively.

(I wrote this a few weeks back in the cab on the way to the airport leaving Shanghai…)

I am wrapping up what has been a phenomenal trip to Shanghai and Beijing. I finally made the trip I have been wanting to make for a decade, and I’m so glad that I did.

A Nation of Capitalists

The reflections an observations of these past days are far too many for a post or likely my words at all, but one observation that struck me was just how capitalist China seems.

It seems to be a country of scrappy, hard-working dreamers. Everyone I met in their twenties had plans for bigger and better things - new careers, new cities, new adventures.

It also showed up in day-to-day life from the taxis to the stores to the mega-nightclubs. Everyone was reaching for that edge - like a game of poker with no cards and all bluff - posture was everything.

But rather than being put-off or intimidated my the melee, I dove into it and started smiling. My poker face was no match, but it was fun to play along.

Did I get “ripped off” a few times in the process? Sure. I definitely spent few extra dollars over the last two weeks because I pushed the envelope and took chances. But it was well worth it.

Tension Between Ethics And Profit

Seeing people push that line of ethics beyond the breaking point in the pure pursuit of profit is something I have seen in worlds from high finance on Wall Street, to the competitiveness of Harvard classrooms, and now on the streets of China.

It is the same fundamental strain: What are you made of when the chips are down? Are you willing to sacrifice your character for a few dollars or points or yuan? Or do you believe integrity is worth it?

We have seen the results of a collective group of decisions to put the game ahead of integrity, and we will be picking up the pieces for the next few years if not longer. Yet when a market-mentality replaces morality and values in people’s decision-making processes we should expect nothing less. This is a symptom of a broader social problem.

Striving For Integrity

I would be lying if I said I have never crossed the line. Sure I have…we all have. But I have sincerely tried - especially in the last six months or so - to put my integrity, character and transparency high on my priority list.

Maybe that makes me a sucker in some sense - but consciously choosing to take the high road when you see the alternative in front of you seems different than being duped into naivete.

In other words, I have seen the demons and know that dark path exists, but I’ll keep trying to resist it and instead keep trying to walk with my head held high and with honor. I know that it will come in fits and starts, but I am grateful to have many of you out there walking along with me.

In the mean time, I think I may have paid too much for some souvenirs…

Social Networking in My Life

I have recently had the rewarding experience of meeting a few people IRL (in-real-life) that I had only previously “known” through Twitter and the Interwebs.

This experience caused me to think back to how social-networking has changed the way I meet people.

Upon reflection, I realized that I have been “social networking” on the Internet for a really long time. When I was in high-school (in the mid-nineties!), I spent time in the “metaphysics” chat-room on AOL because I had briefly been exposed to Philosophy, and for some reason my football buddies weren’t that interested in chatting about it.

As time has progressed and my life has included time spent living in Texas, on both Coasts, in the Midwest, in England and now in Boston, I have accumulated a group of people that I can connect with on most topics…

Twitter is Different

But now thanks to Twitter, I have the ability to meet new people around the world and interact with them on a variety of topics, primarily around technology, but I also to get to “know” them in a way that wasn’t possible back in the AOL days.

Watching people’s Twitter-streams flow by is almost like listening to a series of radio-stations featuring the contents and interests of a couple hundred interesting people all around the world. By briefly tuning into these streams, I get a glimpse into their thoughts, experiences, and passions, and I start to develop a picture of who they are.

Especially for those who are more active participants, I feel a sense of ambient intimacy with them as we react to the various different shared and unique experiences we talk about on Twitter.

Why Meeting IRL Can Be Awkward

Whenever we take this stream of communications and collapse it into a traditional social setting, I must admit that it is a little unsettling at first.

I think part of the reason is that because of Twitter we have put the cart before the horse.

Ordinarily, when you first “meet” someone, you make judgments about them based on a brief introduction…maybe you judge them by how they look, what clothes they are wearing, how clever they are, etc.

You get to know them gradually over time, and maybe after a month or so you can figure out what kind of music they like, what their temperament is like on a Sunday afternoon, and how they feel about relationships.

But thanks to the Interwebs and Twitter, I have been “meeting” people that I already “know” on a more extensive level than some of my acquaintances from work and school.

Twitter Is Making Me More Open-minded

Probably the coolest thing about this experience is that my IRL interactions have become more open-minded as a result.

People I might have previously excluded from my interactions based on some immature judgmental part of my nature, I now embrace.

As a result, I think my horizons have been broadened, and hopefully that means I will have more extensive, exciting and interesting relationships. Creating the possibility of meeting people from different walks of life and backgrounds has a ton of upside.

Living A Public Life Is Hard

Even though Twitter creates the upside of meeting new people, it is not always easy being so public and open with your interactions. The whole experience of living a public and open life on Twitter and on this blog has changed my life in many ways.

From potential employers to potential friends, people now have much more fodder with which to form their initial judgments about me and my personality.

Hopefully, with more nuanced data we can come to more nuanced conclusions. I think we should, and I am optimistic that we will.

In the meantime, I am looking forward to meeting more of you Tweeps IRL sometime soon.

The Eye of The Storm

Have you ever been in a hurricane? I have, and one of the strangest things about it is the phenomenon that happens right in the middle of the worst of the storm – the eye.

You can walk outside and literally see the stars and the branches lying askew all around you…the air feels eerie and a sense of anticipation for what is left to come fills the air.

I can’t help but think we are witnessing a similar occurrence in the markets over the last couple of weeks.

Every now and again, I will glance at the screen and see the Dow up a few hundred points, followed by an irrational headline like: “Market Rises on Hope for Shorter Recession” or some such nonsense.

But, we all know that we are only partially through the natural consequences of what we have witnessed already.

Rules of Nature

For those of you who have been reading Paranoid Bull for awhile, you probably are tired of the “shoe-to-drop” metaphor, or before that the “trainwreck in slow motion” ones, so I’ll go for another one.

We are witnessing something like the end of an Ice Age. There has been a fundamental shift in the temperature of the environment which was previously calm and unrealistically muted to risk. The molecules and atoms moved more slowly at the lower temperatures, and the over-confidence of false-statisticians suggested that this temporary cold-chill was indicative of the indefinite future.

However, as we see in the weather, one of the few things that can be certain about the future is that it will look different than the present. Also like the weather, most systems in the world move through a wide variety of states: cold, medium, hot…slow, fast, zooming.

Right now our system has gone from cold to hot, from an appearance of risk mitigation to a reality of correlated, levered and volatile risks.

As the temperature rises and glaciers melt, this has an impact throughout the ecosystem: entire landscapes are transformed as water rushes with such velocity that it crushes anything in its wake.

And once the melt has begun, there is no going back.

The People Factor

The problem with our financial system is that unlike the natural order of a post-glacial natural ecosystem, our world is inhabited by human beings who are smart enough to have some semblance of an understanding of the world, but not smart enough to recognize their own limitations.

In addition, they are driven by passions and irrationalities that cause them to build cities on piles of snow…because if it hasn’t melted yet, it won’t.

These quirks of humanity also cause us to run with the crowd, and as the chaos of the system has emerged over the last couple of months, the emotional side of human behavior – especially that of fear – has set in.

People don’t know what to do, what to expect, which direction to run, and they surely don’t know what the landscape will look like once the ice has finally completely thawed.

As a result, we are caught in a state of fits and starts, with each pundit and pseudo-intellect looking over his or her shoulder at the next quasi-intelligent one wondering what the other one is thinking.

Keep Running

In this game of chicken, however, the one who stops running first will likely be caught in the flood.

I wish there was better news, and given the stars in the sky, one can almost believe that we are through the storm.

However, don’t forget that the patterns of nature are much more powerful than any we could hypothesize…and I haven’t heard of a one-sided hurricane or a partially melted glacier yet.

But Play

But don’t run in fear. Run because it is exhilarating, and enjoy the scenery and lightness in your step as you go.

A friend of mine recently highlighted the importance of ‘play’ in life…and I think even in moments like these, while we are reacting to a change in the landscape, we can find these rose-colored lenses in all that we do.

I for one am going to try, as I stop to catch my breath before the next leg of the marathon.

Flying Is Inspiring
For whatever reason when I find myself on a plane far above nowhere, I feel like the creative impulses become more uninhibited.

It might simply be the fact that sitting in one place for so long allows the kind of self-reflection necessary for creativity, but I think instead it has something to do with the unfettered reality of being in the air - literally off the ground.

Going through the process of trying to figure out my first post-grad-school career move in the midst of the biggest market downturn in a generation has been a very intense process to date.

Even though failure is a necessary part of life and an even more understandable part of such trying times, having desired outcomes eliminated by others is never fun.

That this happens both in our personal relationships and in our careers is not a surprise - both are simply the interface of our hopes and expressions of commitment and the outside world.

Challenges Show True Colors
An interesting phenomena in the current environment is that peoples’ true character is being shown, for better or for worse.

Arguably an opportunistically minded employer should see today as a great time to find talent - even those with the most options are having this opportunity set constrained by the reality of a market downturn.

However, instead, many of these previously-shrewd types are hunkering for cover like the rest of the masses.

This might mark capitulation, but instead I think it highlights the danger of a human-driven economy: it is driven by psychology as much as any “reality of the matter”.

What I mean is that today even the even-keeled in the crowd have become part of the collective pessimism that is currently gripping our markets and economy.

That it has become the status quo is reflected in the experiences of my fellow graduates of Harvard Business and Law Schools, who arguably have a unique snapshot into the corporate psychology across our economy as we are welcomed into organizations for interviews, meetings and other gatherings.

The mood across these organizations is one of fear-of-failure at worst to wait-and-see for most.

Entrepreneurs Remain Optimistic
Thankfully, this is not a uniform experience, and unsurprisingly it is the entrepreneur-set that retains the most optimism. I have spoken to a number of venture capitalists as well as aspiring and current entrepreneurs over the last several months, and the outlook for this group remains upbeat.

Sure there is a sense of “cash-preservation” typified by the now infamous “Sequoia book” on the economy; however, this group also recognizes that there are likely an infinite number of problems waiting to be solved and a lot of really smart and creative people out there solving them.

This sense of innovation and optimism is what our nation thrives on, and it is what will ultimately inspire and drive the rest of the crowd out of the shadows and back into the eye-squinting light.

Social media, communications technologies, renewable energy, biotechnology, music, film…all of these areas continue to feature brilliant minds doing wicked-cool stuff.

Innovation Needed: Personal Finance
One area where innovation has only moderately occurred is in the area of personal financial management. Sites like Mint.com help people to manage their personal finances, but as too-many people are experiencing the current state of financial advisors is inadequate.

I think there is room for someone to create a service to help moderate-income people manage their personal finances and retirement accounts. With the out-flux of talent from the failed financial-services industry, a would-be entrepreneur has a legion of people to help with execution.

The cool thing about our country is that someone will solve this problem. And they will be another entrepreneur in a series of creative folks who have helped built our country and its ever-persistent economy. (Update: I met a guy from MIT last night who is working on a very similar idea…beautiful thing).

Landing
The plane is banking left and my batteries are low…until next time, be careful of the continuing-to-fall shoes and try to keep an eye on the sun.

America is a beautiful nation that gives you the freedom to sit on your chair, hold the device in your hand, and listen to your yuppie-like and defiantly-critical music.

But lately it has become far too popular to throw stones, and to point to others for blame.

Last week it was President Bush and The War, this week it is Wall Street and The Greed.

The maniacal thing about all of this is that you are happy…for the most part.

You have the stuff you want, a full stomach, a warm bed, a choice of profession.

By any historical standard you are one of the luckiest people ever born on this earth…and yet you defiantly pip-squeak complaints and critiques at every chance.

For this I blame your comfort. A human being needs a certain amount of controversy and challenge in her life. If life is good, where else can we find it but in creating an uproar in the world around us?

Now surely the world is not perfect, and surely mistakes have been made in Washington and on Wall Street that have negative repercussions for many - not you specifically - but many…they could-have-should-have done better! So you say.

I say stop whining.

This week we will stop to *celebrate* with our friends and families at full tables across the country. We will laugh and eat and enjoy moments of the pinnacle of human-living with full stomachs and warm feet.

In the afterglow as you watch the Cowboys on the TV through the one eye-still-open, take a moment to notice.

And say thanks to our country, our leaders, our parents, and our friends.

Happy Thanksgiving my friends. I am grateful for you and this Great Country on this Beautiful Day.