DVR Alert - HBO’s John Adams

Tom Hanks’ adaption of David McCullough’s fine biography of John Adams is approaching it’s final installment this Sunday. If you have HBO, this is a must see for anyone interested in what it means to be an American. For most of us, the stories of the founding fathers and an the American Revolution have been processed and mythologized into easily digestible factual McNuggets. Here is one view of the time that goes way beyond what you thought you knew and transports you into an uncertain world 200 years ago where many different outcomes were possible.

I have long been fascinated with this period and have read much about the founding fathers, particularly my intellectual hero, Thomas Jefferson. So, I thought I understood the times. My understanding was wholly incomplete.

Paul Giamatti is masterful in his portrayal of a courageous yet deeply flawed John Adams. But it’s Tom Hanks and his team that have really paid attention to achieving the full gritty detail of the time.

I had eagerly awaited this series, but it just keeps getting better with each episode. This Sunday night’s finale covers the post-presidency years and concentrates on the fascinating relationship between Adams and Jefferson based on the preserved letters of the two. The two started out as friends, became bitter enemies based on fundamental policy differences, then reconciled once again into a respectful friendship lasting to the end of their lives. They both died on July 4, 1826, Adams at his home in New England and Jefferson at his beloved Montecello.

HBO will be replaying the all the episodes leading up to the finale at 9PM. Crank up that Tivo. No HBO? Watch for the DVD release. You won’t be disappointed.

Nobody Knows Anything - Part III

I just have to laugh.  As a self confessed political junkie, I follow all the news and analysis on a daily basis.  From news sites like NYTimes.com and MSNBC.com to online publications like Slate.com to the various blog sites like HuffingtonPost.com, Politico.com, ABCNews’ The Note, and Time’s ThePage.  I also follow the pundits and columnists, especially David Brooks and Mark Shields on The News Hour, Kristol, Krugman, Gergen, Peggy Noonan.

In this presidential election year, NOBODY consistently gets it right.   Persuasive cases can be made for diametrically opposed yet equally plausible outcomes.  Even pollsters projections this year have been wrong more often than right.  Perhaps it is that there are just too many moving parts for anyone to know anything with certainty.

A larger factor here is the shear amount of data we now have available to us and the speed with which this data onslaught comes at us.  It’s far too much information for even the quickest of us to digest.  The result can be characterized in two forms.  First, journalists, columnists and bloggers primarily determine what information is important using the “herd instinct” method.  A colleague you respect declares a data point to be important and a bandwagon effect gets started.  Pretty soon, the media and blogosphere are in lock-step on which of today’s ten thousand data points stands out as  urgent and important.  It’s a bit absurd to think of the media as some kind of conspiratorial monolith.  It’s just a monolith that lacks journalistic rigor.  You can’t blame them really.  No one can analyze this daily broadband data dump.  You might as well try drinking from a fire hose.

Secondly, this information affluence exacerbates our natural tendencies toward confirmation bias.  Our brains tend to filter the facts and opinions we hear very selectively.  Our attention is drawn to those details that support our pre-conceived notions.  In the technology world, we have a word for dominant notions and constructs - we call them memes.  An example of a meme in the political world is, “Hillary Clinton mathematically cannot win the democratic nomination.”  The various memes that emerge may or may not be accurate, but once a meme is adopted by a populace such as journalists, they tend to focus on developments that support this meme.  This is why they get it wrong so often.  We all strive for certainty and, truth be told, we don’t want to really think too hard.  To a large degree, Bush’s success in 2000 and 2004 stem from his appeal that most issues really are black and white.  Gore and Kerry more readily acknowledged complexity and ambiguity.  Many voters interpreted this as being wishy-washy.  Barack Obama is more prone to this than either Clinton or McCain.  If he should be the nominee, it will certainly be interesting to see how he navigates this challenge.

So, now can I stop obsessively reading the political news and blogs?  I should, but I can’t.  The best I can hope for is to accept the inherent weaknesses in the system and indulge my curiosity about this phenomenon of herd instinct and confirmation bias and view it more for entertainment value than news or genuine insight.

Nobody Knows Anything - Part II

Entrepreneurs are inherently optimistic.  It’s embedded in our DNA.  To get past dozens of “experts” cataloging the reasons why your business will never work we interpret it as a challenge.  So I might be a little biased when I speak of shortcomings of angel investors and venture capitalists.

All of us hear the stories of the prescient  investors whose brilliant insights led them to fund the likes of Google, MySpace and Facebook.  These investment decisions have earned them millions and sometimes billions of dollars.  They also earned them a reputation for picking winners, which in the startup community is akin to being revered as a god.

But here’s the problem: a few successes under their belts leads them to believe that they really have discovered the secret sauce.  They begin believing their own press.  They begin to develop rules for picking winners based on what has worked in the past.  And, to a certain extent, it seems to work.  But does it really?  Think about it.  Because of the reputation they have created, these investors are at the top of the pitch list for every new startup.  They will see all of the best new opportunities.  Every new venture dreams of being funded by Kleiner Perkins. Because some of these startups are actually quite promising, it becomes a bit of a self-reinforcing mass delusion.  As Tevye said in Fiddler on the Roof,  “When you’re rich, they think you really know.”

But when it comes to startup success, nobody knows anything.  Even among the most successful investors, nine out of ten investments fail to provide the hoped for returns.  If a baseball player only struck out ninety percent of the time, it really wouldn’t matter that the one hit was a home run.  Granted, the metaphor suffers a little since that 10% success rate may  yield many millions of dollars and often more than compensates for the losers.  But still, even the best will only be right a small percentage of the time.

There are just too many unknowns in a new venture.  Will the company get the product right?  Will the  market be receptive?  Is there an unseen competitor lurking with a better, faster, cheaper solution?  The simplest and most unpredictable things often determine the ultimate success of a new venture.  And since, by definition, these things are “unpredictable” they are wild cards.  Adding one small feature to a product could ignite a firestorm of user enthusiasm.  Conversely, missing a phone call from a potential business partner could ultimately lead to the company’s demise.  Seemingly random occurrences.

Almost every successful company I know found success on a product or business model that differed radically from what was initially conceived.  The survivors know that the odds of winning increase by learning and adapting quickly.  The mantra for success revolves around living to play the game for one more day and being courageous (or foolish) enough to course correct continuously.

The truly exceptional angel investors and venture capitalists embrace this notion of unpredictability.  They know that their chances of success are substantially increased when they invest based on how well an entrepreneur and his team are able to learn and adapt to rapid changes.  These are the investors that get it.  They know that they don’t know.

The mass of investors are either filled with the hubris that derives from recent good fortune or followers of the herd.  They are predisposed to say no.  They don’t know that they don’t know.

72 Hours ’til Opening Day

The rites of Spring??? With a mere three days before the first pitch at Safeco Field of the Mariners 2008 season opener, we are getting SNOW here in Seattle. Now I know we’re pretty far north, but this is just wrong. Just wrong.

Nobody Knows Anything - Part I

Screenwriter William Goldman is famously quoted as saying of Hollywood, “nobody knows anything.” He didn’t mean that the town was filled with morons. What he meant was that with all of the experience, talent and expertise in the entertainment industry, still no one knows how to pick a winner. Why? It’s because chance, randomness and just plain unknowables play so huge a role in determining winners and losers that all this expertise matters little.

This is the first of three posts on the topic of “Nobody knows Anything.” Today we’ll talk about this crazy financial mess we’ve gotten ourselves into. Future posts will address entrepreneurship and politics in the context of unknowables.

The fact is nobody knows anything. No matter what you hear, or who you hear it from nobody knows anything. There are smart people out there in every field of expertise. Lots of them. They study the minutiae. They analyze the details. They theorize broadly. Their pronouncements carry an air of confidence and they sound both plausible and convincing. They have become masters at the illusion of certainty. They are not, for the most part, intentionally misleading.

This week, the failure of Bear Stearns further drove the point home. One of the world’s premier financial institutions saw all but a fraction of its value evaporate overnight. Here’s the thing: Bear Stearns did not lack expertise. They were packed wall to wall with some of the best and brightest from around the world. They weren’t even particularly greedy. But after crunching all the data, the experts at Bear Stearns chose to invest in exotic debt instruments to earn a return only slightly higher than average. They were certain it was safe. After all, these were some of the most revered financial minds in the world. Author Nassim Taleb would say that Bear Stearns was, “picking up pennies in front of a steamroller.” In the end they didn’t know anything, and it cost Bear Stearns nearly everything. In fact, were it not for the Fed stepping in with unprecedented steps, this one simple failure could have had a domino effect that would have seen US financial markets collapse.

Taleb (whose two books, Fooled by Randomness and The Black Swan I cannot recommend highly enough) writes eloquently of this cult of expertise. We simply don’t take into account how unpredictable, seemingly random events can have disproportionate impact. Sometimes these events produce catastrophic results (as in 9/11) and others change all of our lives for the better. Taleb’s views are summarized in this article.

The inherent complexity of today’s financial markets increases exposure to these random and seemingly unrelated events. And the highly leveraged and interconnected nature of world markets tends to magnify their impact. It seems bizarre that a few hundred thousand homeowners defaulting on loans could even conceivably throw the worldwide economy into a recession. The experts didn’t see this coming. In the end, they didn’t know anything.

As you listen to economic experts today you will hear the full range of prognostication. From dire predictions of a 1930’s style depression to a mere blip in the ever growing growth chart. How do we know who to believe? We don’t. We can’t. Some will be right in their forecasts and will be hailed as the best of the best. The ones who get it wrong will equivocate. At the end of the day, nobody knows.

Taleb tells the story of a foolproof method used by new brokers to build their practices. It’s instructive in context of the current times.

The new broker purchases a list of 8,000 names of prospective clients. To half of them he sends an introductory letter that confidently predicts that over the next quarter, the market will go up. To the other half, he confidently predicts that the market will go down. At the end of the quarter he will have been wrong for 4,000 of those potential clients. He throws those names away. Of the remaining 4,000 he again sends an up projection to half and a down projection to half. Once again focusing only on those prospects for whom he was right. After repeating this for one year, he is left with 500 people who are now convinced that they have found the next Warren Buffett. The point is that economic forecasting is done by those who have been lucky enough to have been right. There were at least as many who confidently projected incorrectly. It’s just that now they are managing departments at Best Buy instead of forecasting for Bear Stearns.

My personal belief is that while being optimistic may have no more basis in fact that being pessimistic, you sleep better and worry less. If the worst happens, we’ll all get through. But until then, I’m planning to enjoy the sleep of the ignorant.

If I have to believe one economist over another, I think I’ll choose Ben Stein, who admonishes us, “not to worry. We’ll all be living and spending like drunken sailors again real soon.”

The Promise of Spring After an 8 Year Winter

An ever so subtle mood change has come over me lately. I’ve found myself being more amiable with strangers, slower to anger and and just generally more, well, chipper. And it’s not just me. People all over are quick with a smile and a friendly “hello.” No, they haven’t spiked the Seattle water supply with Prozac (have they?)

Here’s what’s happening. A few sunny moments have begun to pepper in to these February afternoons in Seattle. The temperatures have occasionally reached into the mid-fifties. Don’t laugh, all you southerners. This is a really big deal for us in the Northwest. Certainly, it’s only a teaser. We have plenty of chilly, damp and overcast days ahead. But just the promise of a new season has been enough to brighten spirits all over the region.

Before you start thinking that I’ve sunk low enough to begin blogging the daily weather report, I suppose I should get to my point. My outlook on the world has brightened considerably over the past several months as well.

For the past several years, my anger and frustration with the misguided administration in Washington has been a big chip on my shoulder. Bush/Cheney policy decisions across the spectrum have repeatedly fanned these flames of discontent. Add to that my certainty that many of these policies were born of cynical attempts to manipulate public opinion and throw “red meat” to their core constituency. The unilateralism of the Bush administration extolled the virtues of a divisive political method that I despised.

The cumulative result: Anger, Frustration and a sense of Hopelessness.

The Democratic victories in the mid-term elections of 2006 mitigated these feelings somewhat. Perhaps, the American people had had enough. Perhaps they saw the folly of this administration and were standing to declare that it was time to put and end to it. But the Dems have squandered this mandate. Instead of rising above the divisiveness, they have chosen instead to play the same game with a stronger hand.

But two interesting things have happened in the run-up to the Presidential election of 2008.

1. Democrats seem now to be rejecting triangulation and power-play politics of old. Hillary Clinton is the poster child for this brand of Democratic politics, as was her husband before her. Obama’s promise of turning the page on this ugly chapter of partisanship, I believe, is the primary reason his candidacy seems to resonate so well with so many. If nominated and elected, he will have to prove his commitment to post-partisanship, and that will not be easy. He may fail. But at least he is promising to try. The millions who have supported his campaign desperately long to see the day where Washington works together to solve our problems, instead of playing for news cycle advantage.

2. Perhaps because of this potential for a change of season, my view of George Bush has mutated. While he is still the same ham fisted cowboy he’s always been, his relevance seems to have been completely minimized. Even in his recent State of the Union address, no one cared what he had to say. Not even members of his own party. We are overcome with “Bush fatigue.” As he was famously quoted as saying, he’s now “quacking like a duck.” And the American people couldn’t be happier. Instead of being the object of contempt as he has been for many of us for the past seven years, he has become a “tragic” figure. Forgotten, but not yet gone.

So, the eight year winter of George Bush is not yet over, but we’ve glimpsed a few rays of sunshine. And we know it won’t be long now until a new season blooms.

Remember the Movie “Election”?

Slate.com has posted a hilarious mash-up highlighting the parallels between Hillary Clinton’s current predicament and that of Reese Witherspoon’s character in the 1999 film, Election.

(I tried to post the video here inside the post, but you’ll just have to click to it.)

Click the link below:

Upstaged by an upstart.

A Day Late and a Collard Short

We arrived in Mobile last night around 10pm only to discover that we had missed by hours one of the premier cultural events of the season. No, it wasn’t Mardi Gras. Nor was it the Gulf Coast Fishing Rodeo. I’m talking about the Fourth Annual Belforest Collard Festival.

Now, for those of you who lump collards in with hog jowls, fried pickles and chitterlins, allow me to enlighten you. Properly prepared and appropriately accompanied, collard greens are a true southern culinary delight.

These edible leaves pack in some powerful nutritional benefits. Widely considered to be healthful foods, they are high in vitamin C and soluble fiber and contain multiple nutrients with potent anti-cancer properties: diindolylmethane, sulforaphane and selenium.

Traditionally enjoyed on New Year’s Day along with black-eyed peas, collard greens are best when accompanied by that other southern staple, corn bread. We’re talking some good eats here.

The downside of this vegetable is the prep time and effort. While you can buy canned collard greens, nothing compares to the fresh cooked variety. These gigantic leaves must be meticulously shredded and washed. Slow cooking for hours with smoked ham hocks results in a very unique taste. Slightly bitter at first taste with a bit of a sweet finish. Try this recipe.

Collards are cheap in the south, as are most meats and veggies associated with “soul food.” Around here you can probably get all the collards you can carry home for about a nickel. Not so back in Seattle. I think I remember seeing them at Whole Foods where are few bunches of organic collard greens were being sold as delicacies next to about a dozen oriental vegetables whose names I can’t even pronounce. You may want to hit the ATM before heading to Whole Foods for collards. But, honestly, it’s worth it.

Obama’s Secret Weapon

We’ve come to expect little from the spouses of politicians (with the notable exception of Hillary.) When clicking through television channels on the eve of Super Tuesday I inexplicably stopped at CSPAN who was broadcasting an Obama rally from California. The event featured Caroline Kennedy, Maria Shriver and Oprah. At the time I tuned in, Barack’s wife Michelle was speaking. My immediate expectations were that she would be handling the perfunctory duties of introducing the mega-stars on stage. Was I ever wrong!! This is an intelligent, articulate and passionate woman whose oratorical skills rival those of her husband.

Like her husband, Michelle is a Harvard grad. Her style is a bit more blunt than that of Barack, but she can sure stir up the room.

Liz mentioned her in a comment on this blog the other day with the same sentiments. Today’s New York Times online has a feature story on her. I highly recommend it.

Here’s the link: http://www.nytimes.com/2008/02/14/us/politics/14michelle.html?hp

Michelle Obama in 2016? I’m just asking.

Dog is My Co-Pilot

This guy was parked next to us

at lunch today.