More on Micro-Cultures, Financial Success, and the “Nature vs. Nurture” Question

Friday, November 9, 2018

Delray Beach, Florida.- On October 18, I posted an essay about the relationship between success in life and something I call “micro-culture.”

The main points I made in that essay:

* What matters most in human development is not one’s macro-culture but one’s micro-culture. Let’s call that the 40 or 50 people that surround you from birth to age, say, 16.

* Let’s make it 49 people, bringing in the social biological concept of the 7-person limit of influence. (7 x 7 = 49)

* Micro-cultures that value hard work, intelligence/education, and financial success produce financially successful adults. Micro-cultures that lack these values produce adults that struggle or fail financially.

Since then, I’ve had some further thoughts:

* Culture is not just about values but also about expectation. It’s not just that certain micro-cultures value hard work, intelligence/education, and financial success, it’s that their members are expected to live those values.

* Another factor in determining success is an individual one. I call it self-sorting (for lack of a better word). The idea is that within any environment – academic, social, or business – people tend to sort themselves along a line from the back end to the front end. This is their pecking-order comfort zone. They do this regardless of how active or competitive the environment is.

* I am not sure whether one’s pecking-order comfort zone is solely determined by individual circumstance or whether it may be one of the values of the micro-culture. I’ve got to do a bit of research on that. But it’s possible that it is a cultural value. And if it is, that’s interesting, right?

I’m still working on this. But the more I think about it, the more I think it is the seed of an idea that I should develop into a monograph. Maybe even a book.

Hmmm. Stay tuned…

A “Simple Question” With a “That Depends” Answer

Monday, November 5, 2018

Delray Beach, Florida.- “I have a simple question,” RS wrote. “How can you calculate the odds for losing your money before you start a business or invest your capital? I’ve read what you said about it, but I can’t figure out how to do it! (I can, though, tell you that the odds to roll a 6:6 with two dice is 2.77%.)”

I like the critique implicit in RS’s question. The answer is that you cannot mathematically calculate the odds of losing money in a business. But you can figure out if the odds are in your favor.

I told him to start with this:

* Have you ever started the same or a very similar business before?

* If not, have you worked as a senior person in the same or a very similar business?

If the answer is no to either question, the odds are against you.

If I feel the odds are against me, the only way I will invest in a new business is if I can do a series of marketing tests to identify its optimal selling proposition within a timeframe and a budget that I can afford.

That will be different for everyone. For me, the timeframe would normally be up to but not more than 2 years. And the dollar limit would be $50,000 to $100,000.

Life Is Good… How Did I Get So Lucky?

Saturday, November 3, 2018

New York City.- I’m at Club Macanudo on 63rd Street, in between Park and Madison in NYC. It’s a stately, turn-of-last century townhouse, not unlike Agora’s offices in Baltimore.

The doorman greets me as I enter… like I’m a regular customer. I consider sitting at the oak and glass bar, but it looks a bit busy. So I advance to one of the cigar rooms, past a dining room where men and women are enjoying steak dinners.

I sit down in one of the comfortable leather chairs and order a Smoke & Fire cocktail. “I don’t need the cigar menu,” I tell the server. “I’ve brought something special of my own.”

The lighting is soft. The air is surprisingly fresh, despite the fact that there are about 30 men in the room and they are all smoking. They are mostly middle-aged, but there are some youngsters and a smattering of older men like me. Everyone seems unusually relaxed. No one is working. No one is on the phone. They are smoking and drinking and conversing. I feel like I belong. I’m not an intruder. I’m not an imposter. I’ve earned this.

And there’s more…

Tomorrow morning at 8:30 I will have a private Brazilian Jiu Jitsu (BJJ) lesson from Marcel Garcia, one the world’s most celebrated world champions. I’m pretty excited about it. It’s not easy to get a roll with MG. I’ve known his head instructor, Paul Shreiner, for a couple of years. He hooked me up. I can’t wait to tell one of my BJJ buddies back in Delray Beach about this experience.

I’ll be back at the hotel by 10:30 and I’ll get in an hour or two of writing before K returns from her morning walk. We’ll spend the afternoon at the Met and visiting a midtown art dealer I’ve worked with in the past. He has a 1905 Andre Derain landscape that I’ve been jealously following for nearly 15 years. Maybe tomorrow will be the day I own it. Dinner will be at a favorite restaurant in Brooklyn Heights with Number One Son and Daughter-in-Law and their twin girls.

Wow! How did I get so lucky?

I remember what my partner said to a young man who came up to him at a business event and introduced himself. “I so admire everything you’ve achieved in your life,” the young man said. “Someday, if I’m lucky…”

Smiling, my partner interrupted him. “You get to work at 7 a.m. and go back home at 7 p.m.,” he said. “You do that six or seven days a week for 40 years and the luck takes care of itself.”

Show Me Your Freak Card

Tuesday, October 30, 2018

Delray Beach.- I liked him the minute he introduced himself. Poised, intelligent, and energetic, he wanted to interview me for his podcast. We did a short, extemporaneous bit on entrepreneurship. Afterwards, I sat down with him for a chat.

We talked about his career. He started from scratch, prompted, he told me, by reading Ready, Fire, Aim. (He could recite passages from chapters I’d forgotten that I’d written. I was flattered.) Little by little, he built a company that was now making nearly $20 million a year. I was impressed.

Then he told me a story about how, when he was starting out and still living at home and working for his father, he had tried to create a competing business by stealing his dad’s employees.

“But he found out what I was doing and put a stop to it,” he said.

I looked at him skeptically. He wasn’t joking, although he seemed to think I would find the anecdote amusing.

Because he was otherwise likable and even admirable, I decided to hook him up with our global CEO. Before making the introduction, I briefed her on his many positive qualities. But I also told her what he had told me about trying to knock off his dad’s business.

“That freaked me out,” I said.

“Good!” she replied. “That means you know what his ‘freak card’ is. Everyone has one.… well, most people do. It’s a personality quirk that could eventually freak up the relationship. And when someone shows you their freak card early on, you know what you are up against… and you can assess whether or not you can handle them.”

I thought about that. I thought about all the business relationships I’ve had. Most were good to very good. And most of my counterparts in those relationships were people with quirks. Their quirks were more often comical than annoying (as I presume my quirks were to them). But the bad relationships? Those guys? Their quirks were serious. And damaging. I do wish I’d gotten a look at their freak card a lot sooner.

The Perfect Partnership Formula

Saturday, October 27, 2018

Delray Beach, FL– Talk about teamwork… In 1995, a young man named Howard Marks got together with another young man, Bruce Karsh, and the two of them built a $100 billion asset management firm from scratch.

Tim Ferriss asked Marks: “So what was the secret to your partnership?”

Marks had an interesting answer, one that made a lot of sense to me. He said that the best partnerships are those in which “the partners have the same values but complementary skills.”

In their case, they had the same idea of the sort of business culture they wanted to create and they had the same ideas about how to treat clients. But they differed in skill sets. Karsh was a slow thinker, Marks said. And he was a fast thinker.

The combination of intuitive and analytical thinking, Marks said, made their decision making stronger.

But, he added, it “couldn’t have been done without trust and humility.” You need to trust that your partner has the firm’s best interests at heart and you have to trust his judgment. “You also have to understand the limits of your own capabilities. You have to accept the fact that you may be wrong about almost anything.”

I’ve often said that you can’t entirely trust what successful CEOs say about what did. You’ve got to wonder whether they’re telling you the truth or a burnished version of it.

Still, the Marks/Karsh formula rings true for me. I’ve had many successful partnerships in my business career and a few that went bad. Those that failed did so precisely because somewhere along the line we realized we had different values: different ideas about product quality, treating employees, and making deals.

And the successful ones were all unequal partnerships – unequal in terms of our talents and knowledge and skills, so that the sum of our two heads were better than two.

If you are in a partnership now or thinking about getting into one, it might serve you to think about whether you do, indeed, have similar values and different talents and skills.

A Fun and Clever Way to Build an Art Collection

Thursday, October 25, 2018

Delray Beach, FL– If you ever want to develop a really great art collection – on the cheap – here’s a clever strategy you can use. I picked it up from an elder statesman in our industry that lived for years in Mexico and then in Paris. As far as I know, he never spent more than a few thousand dollars on any individual work. He enjoyed his collection during his life, and when he died it was worth millions.

The strategy is this: Find a location where young artists abound. It could be somewhere in the States. Or it could be overseas. Sponsor an exhibition/contest for up-and-comers, not amateurs but artists whose work has gained some recognition among gallery owners and local critics. Award three cash prizes. (Just big enough to attract a good number of entries.) It’s a juried show, and you are the judge. The rules require a contract, and the contract gives you the right to buy any of the entries at a predetermined price – a price you are happy to pay.

If it works the first time, make it an annual show. Rinse and repeat for 20 years. It will provide you with a large and worthy collection. If you have an instinct for judging, it may be a valuable collection, too.

I’m doing this in Central America. The idea is to bolster my current collection of modern masters with “emerging” talent. Suzanne Snider, my partner in Ford Fine Art, has been leading the charge. We began by sponsoring art events in the capitals of each country and got to know the players. Now we are commencing with the contests.

She recently wrote to me from Managua, Nicaragua, where Johann, our local partner, had just put on our first show:

Mark – The exhibition at the Cultural Center looks fantastic. Johann did an exceptional job… The works are significant and arranged perfectly. 

Tonight we met the new Ambassador of Spain. It was packed. At least 150 people. All the artists were there except one who is considered an activist and had to leave the country. Lots of press and lots of compliments and good feedback.

I am cutting the budget by staying in Johann’s family home… I have the upstairs master suite, the roosters crowing and the birds singing this morning. Thinking about a nice bath in the jacuzzi.  

This is fun stuff. I’m jealous of my partner. But I’ll attend our next show. If you fancy yourself a speculator and you are interested in collecting art, this strategy could put the odds in your favor.

Here are some images from the show:


An Unexpected Gift From My Father

Monday, October 22, 2018

Delray Beach, FL– My friend Steve Leveen and I once had an enjoyable exchange on the question of whether you should write in the books you read.

There were good arguments on both sides. If, for example, you are reading the first edition of what might, one day, become an important book, it would be foolish to mark it up. If, on the other hand, you are reading a non-fiction book on a topic that’s important to you, underlining and marginalia could be very helpful when you want to refer back to it.

And here’s another argument in favor of marginalia: My brother Andrew just sent me a coverless and battered early edition of James Joyce’s Ulysses. “I ran across Dad’s annotated copy,” he said, “while cleaning out his basement. You were always the modernist. So I thought I’d pass it along.”

I looked through the book and, sure enough, there were notes on almost every page. Notes that he wrote in preparation for teaching. Some were scholarly (i.e., “See E Pound re this”). And some were personal (i.e. “Beautifully put!”).

I’ve sent it out to have it bound in leather. When it comes back I’ll read it. But I ’ll be reading it not for the story or to better understand Joyce but to hear my father speaking.

What Am I Doing Here? What Can I Say?

Saturday, October 20, 2018

Bermuda –I’m in Bermuda this weekend, speaking at an investment conference. I’m here to talk about money — making it, growing it, protecting it.

I came in Thursday night at about 10:00 and taxied to the hotel in the dark. I hadn’t been here for 30 years and had only a few very fragmented memories — pretty, pastel-colored buildings and a beautiful sea. In the morning, those images were confirmed by a look out my balcony.

Indeed, Bermuda is an attractive place to spend a few days. As you can see, the scenery is beautiful in the usual tropical island ways. But Bermuda has its unique architecture and it has rolling hills and little cliffs and thousands of tiny islands along its shore, which gives one the feeling that there is more to be discovered here as opposed to, say, Grand Cayman or the Bahamas.

I wasn’t looking forward to the two presentations I was scheduled to make on Friday. I was exhausted after a week of meetings in Berlin, the Liverpool film festival, and three days of crushing attention at AWAI’s “Bootcamp.” (This year, there were more than 500 attendees.) I hadn’t prepared my comments and I didn’t want to. I felt like I didn’t care about investing anymore. The only thing I wanted to tell these investors was to stop worrying so much about money and spend more time with their grandkids.

So I spent the first part of the morning writing an essay on a new idea I’m working on: that the greatest danger we face in the USA today is not an economic one but a cultural epidemic. I am tentatively calling it the “culture of blame.” I haven’t yet looked that up yet to see if it’s an idea that’s already out there. It probably is. But I wrote the essay anyway. (You will see it here soon.)

My first obligation was at 10:00, a panel presentation on “investing outside the stock market.” It was me and two financial specialists and an economist. The emcee started the discussion by asking me for my “general thoughts” on diversifying.

I don’t remember what I said, but the audience was engaged. They sat upright, asked questions, and even laughed at a few of my jokes. It went by, as every presentation I’ve ever done has, in a flash. It was over and I wanted to keep going.

I went upstairs to my room to actually prepare for the 2:30 breakout session. This time, I would be presenting all by myself, and I couldn’t just wing it. I needed to do some thinking. I needed to create note cards or, at the very least, a crib sheet of topics. But I decided to close my eyes for a quick rest before I got to work… and I nodded off.

The phone rang. I was “on” in 10 minutes.

I got to the room exactly one minute early. No one was there. “Cripes,” I complained to someone who looked like he was in charge. “I said I wasn’t going to come unless there were people that wanted to see me. “The general session is running late,” he said. “They’ll be letting out in a few minutes.”

I heard the doors open and a steady stream of people began walking towards us. There were three workshops scheduled for 2:30, mine and two others. I knew and liked the young analysts heading up the other two, but not enough to feel okay about it if they had full rooms and I had only a few people. So I stood in front of the door to my room, urging people to come in like a Greek waiter in front of a cheap Parisian restaurant.

Five minutes later, my room was full.

I began by telling them a story about how my advice cost a colleague of mine $15 million. “I thought you should know that before you take anything I say seriously,” I said. They laughed. I relaxed.

We talked about “investing” in gold. I explained that I don’t see gold as an investment but as an insurance policy – insurance against financial Armageddon. I told them that bought a lot of it from 2001 to 2005, when it was trading between $250 and $500. “Since the price is now $1,200 and has been at this level for some time,” I said, “I feel like I have too much of it. I’d like to get rid of about half of it, but I don’t know where I’d put the money. “I know what you can do with it,” a lady in the back said. Everyone laughed. I did too.

I talked about real estate, and I gave them my magic formula. “If you invest the way I do,” I said, “you don’t need to pay attention to the general economy or the state of politics or price fluctuations. All you need to do is buy in the recommended range, have someone competent manage the property for you, and then keep on buying.”

Then I talked about art and I explained my scheme for cornering a certain market. They seemed to enjoy hearing about it, though I doubt that any of them will ever do it.

They asked a lot of questions and I answered most of them by telling them stories. They liked the stories. Most of them understood the implicit messages.

Then it was over – faster than I wanted it to be. I signed some books, took some photos, and went back to my room.

I had come unprepared – except for 35 years of experience – and I had told them the truth as I know it. Once again, it was “ready-fire-aim.” And once again, it worked out pretty well.

I’m looking forward to the cocktail party tonight so I can keep on talking.

More On Caring Less: Losing the “Love” of Golf

Thursday, October 18, 2018

Delray Beach, FL– Golf is a miserable way to pass time. Of all the sports and games and hobbies I’ve tried in my life, none provided the level of frustration and self-loathing that golf gave me.

But it’s also addictive. So much so that you will hear golf addicts insisting that they “love” the game. They will tell you stories about how great it is to be out in the fresh air. But the truth is, no amount of sunshine will brighten the mood of a golfer as he rounds the turn realizing his yet-again hope of achieving his score has been dashed and he has another two hours of misery ahead of him.

My relationship with golf was relatively good. I avoided it for 50 years and was addicted to it for less than 10. I got up the strength to quit about four years ago. Rather than make the declaration (That’s it! I quit!) that the average golfer makes every dozen rounds, I vowed to play only “happy golf” from then on.

The rules of happy golf are three: You play no more than two hours, which means you cannot ever finish a full round. You cannot keep score, even in your head.  And if you take a shot you don’t like, you must take it over.

I have played several games of happy golf and I can avow that it makes me happy. But none of my golf-addicted friends or colleagues will play it with me. Why is that? Because the very essence of golf is self-flagellation. And when you play happy golf, you can’t do that.

Here’s the thing: I assumed that I would experience some sense of loss after I stopped playing. I was prepared for listless afternoons, wishing I were on the golf course. But it never happened. There hasn’t been a single moment since I quit when I’ve thought, “Gee, it would be nice to be golfing.”

What does that say about the years I spent golfing 8 to 10 hours a week?

They say that buying and selling the boat are the two happiest days of a boater’s life. With golf, you don’t even get the two days.