Monthly Archives: November 2008

Giving Thanks

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.

On The Internet

Content Over Context

I am writing this message on a machine in a place and at a time, and that has little relevance.

What matters is that you are reading this message, and what would matter even more would be if this message somehow made you think something interesting or new.

We share and connect using this thing we call the ‘Internet’, but really it seems like just another iteration of the kinds of communication and sharing that has been going on since some Cave-dude first scrawled a writing on a wall.

We articulate our perspectives on the world and toss them out there in hopes that maybe the scratches and squiggles will create a bridge between my mind and yours.

One of the most powerful things about the Internet is that it allows us to take the act of message creation and sharing to a scale like never before. The cost of creation is close to zero, as is the cost of sharing and consumption…

And our distribution methods are getting better and more seamless. These words could theoretically reach a billion people within a matter of hours if the message resonated strongly enough for each of you to share it with someone else.

Sharing Is Human

Why do we share? Why did that caveman draw?

I think it has something to do with a human need to know that we aren’t alone here on earth, and also because we are naturally drawn to understand the world around us.

No matter how many times we connect with someone new, no matter how far along we scratch at the surface of the infinitely impossible problem of trying to understand our world, we will keep striving to make new connections and to explore the world around us.

This act of connecting and learning is one of the central pieces of what it means to be human. It allows us to create a common understanding and resonance with other people out there taking taking this same exciting journey.

‘Internet’ = ‘Equality’

One of the things I have been most excited about lately is taking the concept of sharing and connecting to the next level: our current social networking concepts are old-school, and most simply replicate our existing off-line relationships.

The democratizing power of this medium of sharing and expression is that the ‘Identity’ of the author is less relevant than the resonance of the message. While you are in the flow of reading the message, I could be a 47 year old writing in Calcutta as much as I could be a 29 year old writing in Cambridge.

Ultimately, I think sharing content in ways above and beyond our traditional social structures is what makes this next iteration of ‘social networking’ on the ‘Internet’ so exciting.

What is pretty rad is that this is simply an expression of the *Dream* of Dr. King, and it is something that the market is creating for us.

The Internet lets us hack-the-system to connect and share in ways that are revolutionary, and the fact that our natural tendency is to ignore creed and ethnicity makes me deeply hopeful about the innate nature of humankind – deep down we are more interested in the content of the minds and their ability to relate to us than we are about any of the other ‘filters’ on which people fixate.

By having a more accelerated and efficient filtering process between the various different in-person connections that we share, each of these moments can be more potent, rich, and more fulfilling.

As we continue to optimize these connections, our lives are are becoming more creative and ultimately more productive in ways that are fundamentally altering what it means to be human…and that is a pretty sweet thing.

Just what the next level of connecting and sharing will look like remains to be seen. In the mean time, thanks for taking a moment to ride along with me.

Walking The Walk

That one can accomplish entrepreneurial pursuits appears before us on an almost daily basis, but it is always cool when those materializations happen close to home.

This morning, my eye was caught by a TechCrunch article about an innovative company, EyeView, that just so happens to have been launched by a buddy of mine from HBS. (Here’s the article: EyeView Raises Seed Round For Flash Tutorials That Convert).

I first saw the presentation for EyeView last year at the HBS business plan competition, and it was clear from the second their video started that these guys knew what they were doing.

After getting to know the founder better, I can tell you that he has the drive and the passion to make this thing a success. It is a fun thing to watch, and I have no doubt that success will continue.

Check out the below video, highlighting their product which is helpful in navigating users through the sometimes-confusing introduction to a web-based product or service.

How To Be Happy

Here are my notes on a talk that I attended this weekend at Harvard Law.

The talk, entitled Positive Psychology: The Science of Positive Potential, was given by Shawn Achor, an expert on “Happiness”…sounds like a pretty sweet job to me.

The basic idea is that we can impact our own happiness with a few mental tricks. This newfound happiness should help our health, well being, how attractive people think we are, and pretty much every aspect of our lives.

Positive Psychology: The Science of Positive Potential.

He first got interested in happiness when he told his sister that she was a unicorn…and it worked to cheer her up.

Dogs and Learned Helplessness

  • Authors gave a shock to dogs thinking that rewards and punishments will predict behavior.
  • However, after the training, 2/3rds of dogs just sit there when shocked.
  • They accidentally taught the dogs helplessness…behavior has no effect on negative consequences.
  • People do the same thing: why put effort in if nothing will change?
  • However, we should notice 1/3rd of dogs kept jumping. They were animal optimists.
  • Optimism can be *learned* just like other stuff. We can shape our lens.

Importance of A Positive Lens

  • Happiness makes is more intelligent, better perception of success, career opportunities, attractiveness, etc.
  • Harvard Undergrads are sad: They have less than 1 romantic relationship and less than 0.5 sexual partners…24 percent don’t even know if they are in one.
  • Lawyers are more alcoholic, fat, and likely do drugs. 53 percent are clinically depressed.
  • At Harvard Law: Upon entering – no depression. Months later up to half.
    Symptoms: start none…pessimism seeps in within 2 months.
  • As students we should change the dialogue – don’t talk about stressful stuff all the time. Instead talk about making positive changes in our life.
  • We have a negativity bias. We look at the stressful view of the world.
  • Data shows that happy students are not determined by grades and performance. GPA does not correlate with happiness.
  • It is the lens through which we see these evaluations.

Why are you smiling?

  • People have a positive lens have greater endurance and more success.

Why so serious?

Negativity bias.

  • Brain causes a natural reaction, chemicals released.
  • We process fear at a high level. News highlights this – always a crisis. No one wants to hear good news.
  • Relationships. A famous observer could predict up to 90 percent accuracy whether the relationship would succeed after 5 minutes of watching – based on the positive or negative vibe
  • We need 5 positive things to weigh out every 1 negative things.
  • We start to bring in a number of negative things to reinforce negative thinking.
  • No matter what, we have a deluded view of the world – either too positive or too negative.

Happiness is relative.

  • Delayed planes, sometimes over-stare at bad stuff…but all other flights got cancelled.
  • You could have Paranoia – fear of everyone conspiring against you or Pronoia + world is conspiring in your favor. The key is comparison point.
  • We need an anchor point to determine our current state.
  • Counterfactual of dying makes shot in arm good.
  • Is positive psychology lying to yourself? You *pick* your counterfact.
  • But what is reality? We can choose what to see. Like in the beginning of the movie Love Actually…people in the airport could be seen as rushing around, or as smiling and making connections.

Affective forecasting.

  • We predict how happy we will be.
  • If I just get X done, *then* I will be happy.
  • We are terrible at predicting our future happiness.

Emotional immune system.

  • We should strengthen this as well.
  • What are you *doing* about it?
  • Our immune system moves us back to our baseline of happiness
  • Having some stress and failure is good. Like an innoculation.
  • Why will stress make me better? It will build me up for the future.
  • When you step on campus, you feel the stress. We pick up on non-verbals all the time
  • When you look at someone smiling. You can’t help smiling.

The Soprano Effect.

  • Mirror neurons…we react when dude gets hit hard in a football game on T.V.; same thing when u see needles on tv.
  • Our brains are dumb – put a pen into your mouth – it will make you happier.
  • Being happy and positive makes u more attractive and trustworthy.

2 parts of nervous system: Sympathetic and parasympathetic.

  • Sympathetic – adrenaline rush – super-human for a moment. We want it all the time.
  • But these rushes are catabolic – very hard on your body.
  • Parasympathetic – calms you down
  • Activated when you are happy
  • We are addicted to sympathetic.

Tony Soprano.

  • He is forced to break down. Having panic attacks. Chronically activating sympathetic nervous system.
  • We do this to ourselves: I have way too much to do, I’m way to stressed and busy, etc.
  • Our challenges become a threat.
  • Challenge: we think we have resources, our breath is deep, our bloodflow is better, etc.
  • Threat: we don’t, the opposite happens.

What Should WE Do to be Happy?

  • Smile and laugh
  • Exercise
  • Stop playing broken record of job stuff, etc
  • Self-control/self-discipline is a muscle.
  • If we keep saying: I’m so stressed, I’m so tired, etc – it impacts us.
  • Our self-discipline is a muscle. We only have so much effort to expend. You need to rest this muscle as well.
  • Have variation. Write in a journal 5 minutes a day. Write down 3 things you are grateful for.

Training your brain

  • Change the way you *talk* about it.
  • Talk about the positive things.
  • Tiger Woods: I think about the times when I got through it. Focused on the positive.
  • Consciously talk about the positive stuff all the time
  • Give up complaining for 7 days straight.
  • Introduce positive counterfact.
  • If someone taps their foot and looks at watch other people will.


  1. Re-craft our conversations to focus on positive
  2. Rest, do other stuff
  3. Pick positive counterfactuals (ie worse options)
  4. Behavior for 30 days: Write down in journal for 5 minutes a day; Do 5 random acts of kindness, Write down 3 things you have to be thankful for every night

Dealing With Really Bad News

  • The Stockdale Paradox: “You must never confuse faith that you will prevail in the end — which you can never afford to lose — with the discipline to confront the most brutal facts of your current reality, whatever they might be.”
  • Admiral Stockdale, an American hero, discussed here: (James Stockdale)
  • The Key: Have a realistic assessment of reality with an optimistic outlook for the future.


  • If you view it as completely external, could be bad. But if it is internal, it can create power/happiness.
  • People with a high internal locus (it was my fault). Have more likelihood for success.


  • Our brains are scanning the environment all the time.
  • Gratitude brings your attention to the things you appreciate.

Is it lying to yourself?

  • Totally negative or totally positive are equally as pessimistic.
  • Positive people are better in almost every way. Its not what you do. It is your lens.

You can learn optimism.

Bull Prodded

A friend forwarded me this article (worth the read) highlighting some of the people and psychology behind the financial crisis in order to prod a response.

The End

The era that defined Wall Street is finally, officially over. Michael Lewis, who chronicled its excess in Liar’s Poker, returns to his old haunt to figure out what went wrong.

To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital—to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue.

Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud. Sooner rather than later, there would come a Great Reckoning when Wall Street would wake up and hundreds if not thousands of young people like me, who had no business making huge bets with other people’s money, would be expelled from finance.

Here is my response:

  • The human element of pushing the risk to the next guy.
  • Believing in the system.
  • Thinking someone else would ultimately make everything ok.
  • Being pigeonholed in one aspect of the system – a cog in the machine.
  • Having no imagination.
  • Thinking tomorrow would be like yesterday, just because.
  • Being afraid to lose your job.
  • Not wanting to stick out.
  • Fear of sounding stupid.
  • Arrogance of thinking you aren’t fallible.
  • Believing in the models because they are “sophisticated.”
  • Believing in physics dudes because of our worship of complicated jargon.
  • Disconnects between the securities and reality.
  • Lack of sanity checks.
  • The problem of building a tower on shaky foundations.

And then the walls began to rumble…the ceiling showed cracks and dust started falling on our heads. Even as the rubble became chunks and entire floors crashing down on us, we still could not believe what was happening. Our jaws were dropped, some ran screaming, but most quietly walked like zombies who were rudely awoken from a slumber into a light too bright for their untrained eyes. It took months for the fires to stop and for the rubble to clear. The world of Wall Street will literally never look the same.

What Is A ‘Bank’? Amex Is Now.

I just saw this article, and I realized that like many of our ordinary conceptions, the idea of a ‘bank’ has morphed significantly over the last few months:

American Express to Become Bank Holding Company

The Fed’s approval for American Express was similar to the decision it made in September to transform the country’s two biggest investment banks, Goldman Sachs and Morgan Stanley, into bank holding companies.

That move bolstered the two institutions after the collapse of another investment bank, Lehman Brothers, which became the largest bankruptcy filing in history. Goldman Sachs and Morgan Stanley gained the ability to borrow federal money and build a stable base of deposits in hopes of reassuring investors and other banks.

As I have mentioned, I am now unfortunately bearish in the short-term as the dislocations in the credit markets continue to wreak havoc on securities prices, in addition to the fact that the economic slowdown is only just beginning.

One stat that really jumped out at me during my meetings in NYC a little over a week ago was that 65-80% of all corporate borrowing over the last few years came from non-bank entities.

Granted, many of these entities were SIV’s which had the implicit backing of big banks like Citi; however, a good deal of this issuance came from CDO’s, CLO’s and other non-bank entities, which are no longer able to lever-up to buy the assets they have been gobbling over the last few years.

Unlike Amex, Goldman, and Morgan Stanley, these hundreds or thousands of entities will not be saved by the Fed, and as long as they continue to contract to deal with stiffer margin requirements and/or investor liquidations, the selling pressure in the credit markets should continue.

The list of government interventions over the last few months has been too staggering to keep up with, but most smart people I know expect it will continue.

I continue to be a long-term optimist. But don’t be surprised if we have more bad days in the markets between now and then.

Looking back years from now concepts like ‘banks’, ‘hedge funds’, and many others will likely look very different than they did only a few months ago. Thankfully, our language is flexible enough to support these changes, and hopefully our decision-making will keep pace (On Language and Decision Making).

On Uncertainty And Creativity

Perhaps this will now sound redundant, I will repeat: binary thinking is dangerous and more importantly it is inaccurate.

What I mean by this is not ground-breaking, although lots of wicked-smart dudes like Godel and Sartre have pointed it out in revolutionary sounding ways.

Perhaps best conceptualized in the garb of quantum-mechanics, my point is simply we can’t quite put our finger on the “truth” in any important sense. We can’t know everything about where an atom is if we know its speed, we can’t know what our politics “should be”, and we surely don’t know where our stock market will go tomorrow.

The best we can know is some probable outcome. We can make good guesses and act accordingly.

Where we get in trouble is when we think we are better than that.

It is the overconfidence that statistics gives us about an improbable world that is potentially damaging.

“Knowing” something to a “confidence-level” of 95th percent is surely helpful, but as the statistics-obsessed pollsters showed us in this election, even when the questions are binary and we work really hard at answering them, predicting the “truth” of the matter is hard.

The cool thing is that such uncertainty creates the space not only for mistakes, but it also, importantly, creates the space for innovation, creativity, and improvement.

And it is in this space, in the midst of the abyss, that we should seek to find in ourselves the inspiration to make a change in our worlds for the better.

Just what that picture looks like for each one of us will be different. I am surely still working on mine. But that is part of the fun of creation – it looks different every time.

Hope Is A Long-Term Investment

The Short-term Outlook is Dark.

The unfortunate reality is that we are going to face tough economic times in the short term.

Furthermore, certain “structural” factors in the credit markets have led me to believe that the market prices of assets (including most stocks) have more downside risk than upside potential in the short term.

The key data point here is one of supply and demand. Anywhere from 65-80% of demand in the corporate bond and bank debt markets came from highly-levered entities including CLOs, CDO’s and SIV’s over the last few years. These entities no longer have leverage available, and thus are not buying assets. Until this problem is mitigated, prices will continue to fall in the credit market even if we ignore the weakening underlying fundamentals.

Add to this the facts that: a) the economy has only just started slowing down, b) job losses have been relatively muted to date, and c) the key to this whole puzzle – the underlying housing market – is still facing massive challenges the foremost of which are homeowners underwater in their mortgages, and it is easy to see why things don’t look good in the short term.

However, *if* you are willing to keep a long term focus there is light emerging on the horizon.

Reasons For Hope.

1) Barack Obama is the President-elect.

I want to point out that I am not a Democrat. I am not a Republican. I am an American who finds it equally deplorable to see the disrespect that people show our current President (discussed by the WSJ here: The Treatment of Bush Has Been a Disgrace) as I am optimistic with the election of our new President in Barack Obama.

He stands for something: the kind of optimism and hope in our country that is very important in times like these.

But don’t forget, President-elect Obama called for a sense of service and sacrifice. And he meant it.

2) We have a sense of solidarity again.

This is delicate. We can’t let the short term bad news over the coming months distract us from the momentum this election has achieved.

Voter turnout was the highest it has been in a century. You cared, and your voices were heard.

Last night people were literally dancing in the streets across the country singing God Bless America.

This patriotic spirit is essential for us to collectively overcome the challenges we face.

3) Our long-term economic prospects are strong.

We are the most innovative country in the world.

Trends such as in the success of web services like Twitter; the current adoption of the mobile internet on devices like the I-Phone, the Blackberry Bold and the G1; innovations in clean nanotechnology; and countless other great opportunities show that there are tons of great things happening in our country today.

Our economy is $13T and even if it declines by the greatest amount in history it will still be the largest and strongest economy in the world by a long shot.

Keep A Long-Term Focus.

Emulating great investors like Warren Buffett, we should disentangle the long-term value from the short-term “signal” and technically-driven prices.

The short term is murky, but the long-term truly is hopeful.

The sun has set and we are in the midst of a cool and dark night. The silence is almost deafening, but on the horizon rays show the Hope of a new day. And now we have a leader to take us there.