When in Rome

I grew up in Silicon Valley, at the very beginning of the personal computer revolution and its attendant startup boom. So perhaps it was inevitable that I’d start some tech companies, or spend my life in various entrepreneurial pursuits.

But I grew up in Silicon Valley also largely by chance. My parents, born and bred New Yorkers, headed out West only after my father matched post-med-school at Stanford’s residency program. Just as easily, he could have ended up at a hospital here in New York, or in Boston, or down in DC. And I always wonder, had I been born in any of those places, might I have been more likely to follow a different path?

Would a childhood in DC have pulled me into politics? Would Boston have kept me in the world of medicine? Here in New York, would I have leaned towards banking and the public markets?

My best guess: definitely.

As Malcom Gladwell points out in his (admittedly less than stellar) Outliers, it’s all too easy to overlook the power of place. Which is something I’ve been thinking about of late, as Jess and I still, slowly, mull over where we’d like to live, in both the short and long term.

In theory, with technology of all kinds flattening distances, physical location should matter less and less. But, in practice, that hardly seems to be the case. In just the past few days, I’ve met a dozen or so people at events around the city, all of whom intersect in some interesting way with my work at Cyan, or Jess’ work in the fashion world, or with CrossFit NYC, or with something else somehow relevant to our life. And, indeed, those serendipitous meetings, the building of new weak ties, is exactly what you lose in absenting yourself from a physical community.

The problem is, those communities are also quite specific. So far as I can see, the only place where substantial pockets of fashion, film, and finance people intersect is right here in New York City. So, toy as we might with fantasies of complete escape, Portland, Maine becomes practical only if I’m ready to switch careers to lobstering.

Still, there’s an upside to this line of thought. After a decade of life in Manhattan, and as a relative newlywed, it’s all too easy to lapse into eating lunch in the office, into spending the evening at home with Jess on the couch. So it’s good to be occasionally reminded that the only way we can justify the crazy rents, small footprints, and booming street noise of our New York offices and apartment is to get out of them, and to meet the slew of smart, interesting people all around this city.

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November 2, 2010

Listen

Back in college, I had a number of friends who regularly drank until they tossed their cookies. At Yale, this was referred to as ‘booting’, and was often used in the context of a much admired tactic, the ‘boot and rally’ – tossing your cookies, then going on to drink more.

Admittedly, I had my fair share of Yale’s liquor. But, even so, I could see that drinking to vomiting – much less keeping going after – was a patently bad idea. It smacked not only of poor judgement, but of poor kinesthetic sense. By my experience, a few drinks before the boot-inducing shot, I was always struck by a stomach feeling I can only describe as ‘reverse the engines!’ Which, in short, I took to be a sign that I had probably had enough to drink, and that having a few more drinks was unlikely to help matters.

I must admit that, once every few years, I lose sight of this simple truth. I vividly recall, for example, an early morning ride on the Metro North back from New Haven, on my way home from some alumni or business event. I don’t remember any longer what I drank the evening before, or how much, or even what the event itself might have been, but I can clearly picture standing in the swaying platform between cars, still wearing the suit I had trained up in, heaving my guts onto the rapidly moving rails below.

Which is to say, I’m not perfect. But I do try to listen to my body. I eat when I’m hungry, and I stop when I’m full. I exercise when I’m restless, and I stop before injuring myself. I drink water when I’m thirsty, and liquor when, as George Jean Nathan said, I need to make other people more interesting.

In short, I try to let both kinesthetic sense and common sense be my guide. Try it some time. You might be pleasantly surprised.

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August 15, 2010

Inequilibrium

Early this week, struck by a slew of business insights, I spent three or four straight hours madly scribbling on yellow pads and wall whiteboards.

Certainly, this was a longer stint than most, but nearly all my good ideas, business successes, and small victories trace back to just such frenzied sessions of ‘Eureka!’ idea capture.

These bursts of thinking leave me energized to the point of manic, and I want, more than anything else, to share them. I want somebody else to get equally excited. And, unfortunately for her, the person who usually bears the brunt of that ecstatic, high-speed explaining is Jess.

Though Jess is the realist to my optimist, she’s kind enough to listen supportively, ask interested questions, and only later tell me the full list of problems she immediately sees that I haven’t even begun to consider.

Still, I can’t imagine it’s an easy task. Which might explain why, when Jess walked in to the office, and found me scrawling elaborate diagrams and flow charts on the wall, her first reaction was to roll her eyes, and say, “Beautiful Mind time, is it?”

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August 14, 2010

Regress to the Mean

People spend a lot of time wondering about celebrities, about what they’re like in real life – just witness the success of People, Gawker, or TMZ.

But, from my experience, they could save a lot of reading time. By and large, if you average out the characters an actor plays, that average is the actor in real life.

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April 25, 2010

Cheers, Count ‘Em

Last night, I attended my friend Nic Rad’s gallery opening for his awesome PeopleMatter series of blogger and media personality portraits.

Then, once the gallery kicked us out, a slew of us headed down to The Half King for drinks.

We started out with a dozen people at the table, and as folks bid the crowd adieu, they left cash on the table to cover their drinks and tips.

Eventually, the bill came, and everyone tossed dollars into the pile. And I said to Nic, “I bet we have $90 of cash here.”

I was close. We had $92. Which, including tip, was slightly less than half of the $190 bill.

My guess wasn’t based on eyeballing the money pile. It was, instead, based on the First Law of Large Groups going Dutch: even when all the people there believe they’ve put in more than their share of the bill, the total falls $100 short.

And, of course, the corollary: the person who counts the money somehow gets stuck covering the shortfall.

In this case, Nic and I split it. But, really, I’m not entirely sure why this always happens. Do people not factor in tax and tip? Do they just suck at math?

Or, perhaps, have they caught on to a cheap living secret I never did? That if you stiff the group a bit, and then pretend you can’t count well enough to collect the dollars, some sucker like me will essentially pick up your first round.

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April 4, 2010

Vindication?

For at least the last decade, I’ve been obsessed with lazy eyes. First and foremost, with celebrities who have them – Paris Hilton, Keri Russell, Tina Fey.

But secondly, and perhaps more terrifyingly, with the possibility that I might have one myself. And that, even worse, like the sufferer of persistent halitosis, I’d be the last to know about it.

Obviously, that’s a ridiculous concern. Which I know because I’ve both analyzed enough of my own photos to confirm eyeball alignment, and because, every time I tell someone about my ocular neurosis, they jump in to reassure me.

But fast-forward to a month or so back, when I’m picking out a pair of sunglasses from one of Jess’ client, Jordan Silver, owner of a high-end vintage sunglass boutique. I call in to my uncle (and optometrist) Robert, and ask his office to fax over my prescription.

Diopter. Astigmatism. Prism.

Prism?, I ask.

Yes, Jordan explains. Prism. Correction for a tendency of the eyes to try and pull apart in use.

As in, a lazy eye?

Well, technically, yes. Not the kind (like strabismus) that fascinates me most. But a form of lazy eye nonetheless.

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August 16, 2009

Slip into Something More

Here’s my best secret for pitching investors, picking up women, and speaking in front of crowds:

Look comfortable.

That’s it. Most people would say the secret is to look confident. But, really, what does confident look like? How do you fake confident?

Comfortable, on the other hand, is much clearer. And, it turns out, comfortable is much more powerful, a much better synonym for the elusive ‘cool’.

I’ve noted as much of late in the world of politics. Take, for example, the Alfred E. Smith benefit dinner a few weeks back, where McCain and Obama both presented self-deprecating standup. McCain killed, as he appeared completely serene while making fun of himself. Obama, on the other hand, read his jokes stiffly and with clear reservation, and more or less bombed by comparison.

Then, on the other hand, take the Presidential debates. Here, the balance shifted in the other direction. While McCain seemed stiff, angry and stressed, Obama seemed relaxed, in his element. Obama looked comfortable.

Or consider Saturday Night Live. On each of his passes through the show, McCain was clearly willing to play along. His running mate, however, wasn’t. Despite the hype leading to her appearance on Saturday Night Live, Palin ended up mainly serving as a prop, a wax statue of herself. She was so clearly uncomfortable that she became, arguably, the first politician in the history of SNL to seem less cool after her appearance.

Which, then, also yields the corollary to my “cool = comfortable” theorem, which I’ll henceforth refer to as Palin’s Law:

People uncomfortable with playing dumb in a comedy sketch are usually complete and total idiots in real life.

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November 3, 2008

How to Read the Market

Thoreau observed that the mass of men lead lives of quiet desperation.

Let that mass buy and sell on an open market, however, and their desperation seems far less quiet. Instead, as they panic and blindly follow each other around, we reach situations like our current, ridiculous stock market mess, with the Dow dipping below 8000.

Before we go on, let’s be clear on exactly what that means. Eight thousand points is just about half of this year’s highest price. Which means that everyone who’s buying or selling stock, collectively, has come to the agreement that the thirty companies that make up the Dow Jones Industrial Average – thirty of the largest companies in the world, like Walmart, Coca-Cola, ExxonMobil, and Pfizer – have just lost 50% of their long-term value.

Which, obviously, is ridiculous. Sure, we’re looking at some sort of recession ahead here. But do we really foresee a permanent 50% decrease in bargain shopping, soda drinking, gas buying and prescription medication taking? Certainly, the Dow should have dropped. But only by a relatively small amount – probably less than 10%. Which means that, if we’ve instead dropped 50%, we clearly have so many idiots involved in determining the price of the Dow that the price tells us a lot about panic and perception, but pretty much nothing at all about the actual state of the underlying market itself.

In fact, as we’ve all heard countless times, the real problem to fear isn’t even the price of stocks in the first place – it’s the potential seizing up of world credit markets. Companies large and small depend on short-term credit to smooth out their inherently unpredictable day-to-day cash flow; individuals need it to buy houses and cars, to go to college, or to simply charge groceries. All of which is to say, while a low-priced Dow might reflect something about the economy (or not, in our current case), a lack of credit would cause something in the economy – namely, to cause it to grind to a halt.

So, if that’s the problem, how to monitor it? And, if not the Dow, which numbers to follow obsessively from day to day?

In short, LIBOR and short-term Treasury yield.

Allow me to explain.

The first thing we want to know is, are banks willing to make loans? Do they trust that people can pay those loans back? And, most crucially, do they trust each other? Because, basically, the credit crisis kicked off when banks started to realize that, after a string of bank defaults, any number of other banks might similarly be teetering near collapse. So, reasonably, they simply stopped loaning money to other banks. If you don’t know what’s on any other bank’s balance sheet, don’t know if they’re healthy or exceedingly sick, probably better to play it safe and simply not lend to them at all.

So the number we’d want to know is, how much would banks, on average, charge to lend to other banks? Much like with an individual credit card, where banks charge people with bad credit much higher interest rates than people with good credit, so would banks charge higher interest rates to other banks if they thought that most had potentially bad credit.

To measure that, you’d probably have to call around from bank to bank, asking how much they’d charge to lend to other banks. Fortunately, a couple of blokes in the UK do that for us on a daily basis, then publish that number as the London Inter-Bank Offered Rate, or LIBOR.

If LIBOR goes up, banks are trusting each other less, and the credit crisis is getting worse; if LIBOR goes down, they’re trusting each other more, and things are getting better.

You can follow LIBOR data in the first chart on this page. But, in short, the three-month LIBOR is currently at about 4.82%; a month ago, it was 2.82%. A trend, again, in the ‘not good’ direction, though one I suspect to see reverse itself this coming week.

But LIBOR only paints half of the picture. It gives us a sense of what banks think about the state of other banks, and therefore of the credit market as a whole. But it doesn’t tell us how they’re acting on that information. Are they actively making loans, investing in stocks, and generally putting capital into the market in a way that will ease up the credit crunch? Or are they playing it safe, and hanging on to their cash?

Fortunately for us, there’s a good metric here, too. Because when banks hold on to ‘cash’ what they actually do (at least the lion’s share of the time) is buy Treasury Bills. Treasury Bills are exceedingly safe – since they’re backed by the US Government, if T-Bills start defaulting, we don’t have a US Government, and dollars themselves aren’t worth anything anyway – but they also pay out at least a small amount of interest, and are therefore better than simply stuffing money under a very large bank mattress.

So, in short, banks put unused cash in Treasury Bills. And, much like with any other kinds of lending, the more people willing to make a loan, the less interest any of them can charge. Since a Treasury Bill is essentially a loan to the US Government, if lots of banks have lots of cash, and are willing to make such loans, the interest rate the US has to pay out on those Treasury Bills – the ‘yield’ – goes down. Conversely, if banks put their money in other, more lucrative places, the government needs to pay more on their Treasury Bill loans to compete for that money, so the yield goes up.

In other words, if banks are still freaking out and holding money in cash, Treasury yields go down. If the credit market starts to thaw out, and they start to make the wide array of loans we need to power the economy, Treasury yields go up.

Fortunately for us, the US Treasury tracks these numbers themselves. Currently, the 30-day Treasury Bill yields just 0.06%, down from 3.98% one year ago (a 98.5% drop!), and a price so low it’s basically equivalent to giving money to the US Government for free.

Here, too, I expect at least some degree of turnaround this week, but it certainly paints a picture of how bad the credit mess actually is.

So, to recap:

1. The Dow is a worthless number to follow at this point, because too many idiots panicking have made it excessively low, and mindlessly volatile.

2. LIBOR is a better measure, as it shows how much banks trust each other. If LIBOR is going down, things are looking up for the global economy.

3. Similarly, Treasury yield is a better measure, as it shows whether banks are actually making loans and investments, or just sitting on cash. Treasury yields going up would be an excellent sign for a credit market thaw.

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October 12, 2008

Avast

Ahoy! It be International Talk Like A Pirate Day! Shiver me timbers!

And what better time be than this to recall the greatest pirate of all time, and the patron saint of all entrepreneurs, Blackbeard.

Ay, Blackbeard. And if ye don’t believe he was true an entrepeneur, observe the only records recovered from the Adventure, his fine yet sunken craft:

Such a day, rum all out- Our company somewhat sober- A damned confusion amongst us !- Rogues a-plotting – Great talk of separation- so I looked sharp for a prize- Such a day found one with a great deal of liquor on board, so kept the company hot, damned hot, then things went well again.

Arrr, that be running a startup indeed! Yo ho, yo ho, a pirate’s life for me…

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September 19, 2008