Talking Business With Academics

Tuesday, March 19, 2019

Delray Beach, FL.- CJ, my partner in the effort to free wrongly convicted felons, and I had a meeting today with a California college that has offered to help us by providing student interns from its Law and Criminal Justice departments.

There were about eight people at the video conference. Although I had been told that the meeting would be about the prospect of doing a documentary on the project, I quickly discovered that nobody quite knew what we were going to talk about. I felt the need to get things moving, and respectfully suggested that we define our objective and set a time (30 minutes) for ending the meeting. This had an immediately positive effect.

Aside from unofficially leading the agenda, I realized that I had to do something else: I had to sell everyone on the value of contributing their time and effort to this cause. So I did my elevator pitch. I explained that if we found the right candidate, someone that had been falsely convicted for a capital offense, it would provide the school with a community-related and altruistic mission that it could publicize. And it would provide its students with lots of interesting and challenging work.

Everyone expressed excitement at the vision. But then came the hard part.

In a business environment, once the vision is adopted, decisions about who does what are relatively easy. Each person is usually happy to play his part because the goal is exciting and because the payoff is in profits and bonuses. (Which is something everyone can understand.)

But in an academic environment, taking on responsibility for a project is a more complicated affair. One big difference is that academia doesn’t view revenue growth and profit as clear and comprehensible goals. What is good for the president (good will and endowments) isn’t necessarily good for the head of the Law Department (who may be thinking about his standing in the legal community) or the associate professor in Criminology (who may be thinking about what he needs to get tenure).

So I did my best to address these interests indirectly. (It’s not a good idea to be blunt when talking about ulterior motives.) And by the end of the half-hour, I felt like we were all moving in the same direction.

The next step is for CJ to turn over files on our top candidates to the law professors and have them opine on which cases have the best chance of success.

I realize that making this work is going to take much more than simply my willingness to pay for everything. I’m going to have to make it work for everyone involved. And that, of course, must include the exoneration of one wrongly convicted person.

Why I Can’t Read The New York Times Anymore

Tuesday, March 5, 2019

Delray Beach, FL.- First I read The New York Times because I believed it was the best newspaper in the world. Then, after my view of economics shifted, I read it for its cultural and literary articles. Now I can’t stand to read even those sections, as the NYT’s smart, independent critics have been replaced by very bad writers with very stupid ideas about – everything.

Take the paper’s coverage of the Academy Awards. The NYT’s film critics were upset because Green Book beat out Black Panther for Best Picture. The rationale: Black Panther was a huge box office hit. Green Book was Driving Miss Daisy II, simply another feel-good movie where two people, black and white, gradually discover their common humanity.

Never mind that Black Panther was a comic book movie with an immensely simplistic moral message, banal dialogue, a predictable plot, and nothing-special effects.

Another example: a review of a memoir about the author’s escape from poverty-stricken Appalachia. It wasn’t actually a book review at all. It was a compilation of complaints about the book’s depiction of and commentary on Appalachian culture.

According to the critic, the author had the audacity to suggest that one of the reasons Appalachians have remained ignorant and poor is because of bad habits like dropping out of school, drinking and doing drugs, teenage motherhood, and a preference for government handouts instead of working. Not only that, the author dared to suggest that the plight of these people is their own fault! (I don’t have the article in front of me, but those are nearly the critic’s exact words.)

Meanwhile, the critic has never set foot in Appalachia. But the author of the memoir lived there. Details like that, of course, don’t matter when it comes to politics. Any idea not coincidental with leftist ideology is bad art.

A Dinner With the Japanese -What We Don’t Know About Culture Matters

Friday, March 1, 2019

Delray Beach, FL.- I’d wanted to have a publishing partner in Japan since we went global 20 years ago. I’d gotten close once, with the country’s largest health publisher. But after several meetings and a trip there to meet the president, they demurred. I never understood why. And they didn’t explain. My liaison told me it would be impolite to ask. I should have.

So the dinner last week was important. I had been courting this company for more than a year.

I knew that they would be good partners for us. (They were marketing directly, online, so they had the knowledge and the resources to market subscription services.) I had to persuade them that we we’d be good partners for them.

After an initial meeting in Delray Beach and a lot of follow-up by our team, a rough joint venture agreement had been worked out. They were now in Baltimore to seal the deal. We were going to give them a tour of our offices, have them attend a company-only marketing conference, and then host a final dinner. I wanted that dinner to go well.

It was scheduled for 6:30 at The Maryland Club, a private membership facility housed in an old mansion, one of several in the city. I got there early and chatted with our CFO while waiting. Our team arrived a few minutes later. And the Japanese delegation – the founder, whom I’d met twice before, two of his top execs, and a translator – arrived on time.

The agenda, arranged by our global CEO, began with a half-hour of cocktail conversation, presumably to warm everyone up. Their founder asked for club soda. I asked him about that. I don’t know why. He said alcohol didn’t “agree with him.”

“Well,” I thought, “it agrees with me.” So I had tequila.

Our team had sort of sequestered themselves, so I ended up taking on the burden of cocktail talk solo. I wanted the Japanese to feel comfortable, so I did what I would do with Americans. I told them self-deprecatory stories. They seemed to understand the message, but I didn’t feel any warming up going on.

I was not exactly surprised. I had learned long ago that my very American style of communication isn’t always appreciated. Japanese culture, in particular, is very different from ours. For one thing, the Japanese are generally more reserved than we like to be. My frankness – I could feel – was a bit too much for them. They responded courteously, but with some emotional distance. I felt like I might be getting myself into trouble.

Then it was time for dinner. My colleagues seated themselves at one end of the table, so, once again, the burden of the cross-cultural conversation was on me. As it happened, I had been reading a book about cross-cultural differences: The Culture Map. (See “What I’m Reading,” below.) And so, for lack of anything else to talk about, I spoke about the book.

One of the book’s primary theses is that communication patterns differ in every culture in terms of how direct or indirect meanings are expressed. High context cultures (of which Japan is an example) favor formality and subtlety. They don’t like bluntness. They find it rude. Low context cultures prefer frank and direct conversations.

Not surprisingly, the book argues that US culture is low context. We like to get to the point as fast as we can, express it clearly, and then memorialize it so there are no misunderstandings afterwards.

But this sort of expression can feel rude to people from high context cultures. Bluntness is not at all a virtue. Getting to the point is unnecessary. It insults the intelligence of your interlocutor. You should give him the credit of being able to understand your subtlest comments. You should have faith that he understands what you mean.

As I said, I was not unaware of this before I began reading The Culture Map. After 20 years of doing business with a dozen different cultural groups, I knew that I needed to restrain my impulse for directness with my Japanese guests. But because I was anxious, my instincts overwhelmed me.

The more politely they responded to me, the more frank I was in making comments that were either self-deprecatory or complimentary to them. I even told them that I thought the Japanese culture was superior to ours, which is something I have long believed. But even as I said it, I felt I was missing the mark.

When my colleagues at the other end of the table joined in conversation, they were even blunter than I had been. In an effort at familiarity, one of our top execs began kidding one of their top people about hearing that he was a playboy. It was (to me) an obvious attempt to have a little lighthearted fun with them. But I knew it was a mistake. I doubled down on my compliments.

Remarkably, the dinner ended gracefully. Three of their people even asked to have photos taken with me. But not the founder. He stood there with a polite smile on his face.

I went home wondering if our American frankness had completely turned him off. I wished our team had taken the time to talk about our cultural differences before we’d scheduled that dinner.

I’m going to ask my colleagues to read The Culture Map. And I’m going to keep my fingers crossed. This is a relationship I don’t want to lose.

I Almost Forgot This Important Truth About Buying Land

Saturday, February 23, 2019

Amelia Island.- Last week, after years of pondering the issue and several weeks of negotiation, we bought the ten-acre lot that is just south of Paradise Palms (my botanical garden in West Delray Beach).

You could say it was a foolish move. The ten acres we already have for Paradise Palms is quite expensive to maintain. Doubling the size of the place will increase that cost — and for what?

You could answer that ten acres is really too small for a botanical garden that might be open to the public one day. Twenty acres, though — that’s a nice size. It would take visitors two full hours to walk all the paths, and that’s assuming they didn’t linger at the koi pond or the Asian teahouse or any of the other features.

But the new piece of land wasn’t cheap. At $175,000 an acre, it was way too expensive to be commercially viable. I had paid about $140,000 an acre for the original ten acres. And that’s why I felt, during those weeks of negotiating, that the price was too high. Until I remembered one of the most basic rules about buying land: The cost of the raw land is not what matters. It’s the final cost of the developed land… that’s the number that counts.

The first ten acres was essentially a swamp. Landscaping it with thousands of plants and hundreds of palm trees about tripled the cost per acre. But the ten acres I just bought is already a jungle of palm trees. Our work there will be a simple matter of pruning and cutting paths and planting perhaps 100 shade palms. And the cost of that will be de minimus compared to what it cost to develop the first ten.

So although the initial cost of the first piece of land was $35,000 an acre less than the piece we just bought, the developed cost of the new acreage will be much less.

That’s something to think about whenever you buy raw land.

A Morning Prayer for Non-Believers

Thursday, February 21, 2019

Baltimore, MD.- I was reading about prayer. I don’t remember where. A chapter of some book. Maybe Sapiens. Virtually every religion and creed since the dawn of man, the book avowed, has practiced praying.

That may be true, but I wondered how many people actually pray. Polls of Americans project that about 55% pray every day and another 20% pray weekly. About 20% never pray.

And why do people pray?

According to Wikipedia, the big three are:

  • To ask for things
  • To give thanks
  • To commune with the divine

I’d add two more: Prayer can remind you of what you believe and/or value.  And it can remind you of how you want to live your life.

I used to pray. As a young child. But in fifth or sixth grade, I stopped believing in a god. It didn’t seem credible. So when I gave up god, I gave up praying.

Or did I?

Isn’t meditation a secular form of communing with the divine?

And each morning when I journal “three things I’m grateful for,” isn’t that a kind of praying?

And what about spontaneous victory dances? Shouting at the sky?

No, you don’t have to be religious to pray. Nor even to believe that praying can be beneficial.

I woke up last week thinking that I should add prayer to my ritual. Perhaps a morning prayer to remind me of what I value and to prompt me to behave in a manner that supports those values. I spent an hour looking at morning prayers from dozens of religions. None struck a chord. So I decided to write one myself.

My first draft was a bit messy. So I rewrote it, cutting out a few words every day. Here it is as it stands:

My life is a gift I didn’t earn and cannot claim a right to. I am amazed by and grateful for it.

It is a temporary gift that I will one day give up, but it is also a flexible one, whose dimensions can be deepened and broadened by the conscious experience of its moments.

  • Some of those moments will be new. Those I will welcome.
  • Some will disappoint. Those I will ignore.
  • Some will be hurtful. Those I will forgive.
  • Some will be threatening. Those I will respect.
  • Most will be ordinary and invisible. Those I will see.

The Stock Market Is Getting Dicey -Here’s What I’m Doing About It

Sunday, February 17, 2019

Delray Beach, FL.-The US stock market gave investors a good scare late last year, with the DOW dropping from a high of 26,562 on September 24 to a low of 22,445 on December 18. The newspapers were full of good reasons. On the top of the list were rising interest rates and the fear of a trade war with China.

But by the end of the year, it had climbed to 23,327, ending the year with a loss of 5.63%.

Thousands of investors abandoned stocks during that last quarter. Dominick and I did not. Our investment philosophy is long-term, big-cap, and value-based, so we look at price drops as buying opportunities. And we took advantage of the drop to buy some additional shares (of PG, IBM, BUD, MSFT, GOOG, AMZN, AAPL, MMM, ORCL) with the cash I’d accumulated from dividends in 2018.

Of course, ending the year with a loss never feels good. And that was especially true for us since my portfolio had made a ton of money in 2017 and good profits consistently since setting it up in 2012 (even in 2015, when the DOW closed down 2.23%).

This year, the DOW is up about 9%, as is the Legacy Portfolio. So you’d think I’d be feeling good about staying in the market. But I don’t feel good. I feel nervous.

There are lots of reasons to be concerned about not just another dip but a crash. And not just an ordinary crash but one that could last for a long time.

One reason: Half of all investment-grade debt is “teetering on the edge of becoming junk,” a colleague pointed out recently. “And more of these risky loans are being owned by mutual funds than ever before.”

Worst of all, he said, “They’re being held mostly by your average mom and pop investor. When these risky companies become unable to pay their debt obligations, it will send shockwaves throughout the debt market, then the stock market. And it will be disastrous for most individual investors.”

And then, of course, there’s that ever-growing elephant in the room: the national debt. In 2,000, it stood at $5.6 trillion. Today, it’s estimated to be $22.7 trillion.

But those aren’t the scariest numbers. The scariest numbers are ratios – the debt as a percentage of our country’s gross domestic product. (Think of it in terms of personal debt compared to personal income.) In 2000, that $5.6 trillion in debt represented 55% of our GDP. Today’s $22.7 trillion represents 108% of our GDP.

And it’s not expected to get better.

Younger investors today tend to be optimistic because they haven’t had the benefit of living through a period of high inflation. And their only experience with a serious recession was in 2009, which has been followed by this long bull market.

Young investors may, therefore, keep investing.

Older investors may take the opposite course. They may get out of the market in part or in whole and wait for good weather.

I’m nervous because I feel like we are in for a drop and possibly a sustained drop. But I’m not going to change my investing strategy because it was designed for the long-term and because I can wait it out.

I can wait it out because (1) I never fully retired (i.e., gave up my active income), (2) I have multiple passive streams of income from different asset classes, and (3) my stock portfolio represents only about 20% of my net worth. So if the DOW drops by, say, 50% for 10 years, I’ll be okay.

I’m not saying this to boast, but to explain that the only way you can possibly avoid being devastated by a stock market crash and a long recovery is to take a comprehensive approach to wealth building – one that includes multiple streams of income, stores of wealth in at least a half-dozen asset classes, and “plan B” strategies for limiting losses.

Advice From J. Paul Getty on “How to Be Rich”

Monday, February 11, 2019

Delray Beach, FL.- “Contrary to popular modern belief, it is still quite possible for the successful individual to make his million – and more.”

Paul Getty wrote these words in 1986 in his book How to Be Rich. I read it first more than 10 years ago and liked it very much. I’ve read it again recently and was equally inspired. It is a quick and easy read. (It was written as a series of essays for Playboy magazine.) But it is loaded with practical advice for anyone that wants to build wealth: business owners, professionals, even superstar employees.

Getty was a very rich man. I’ve heard it said that in today’s dollars, his wealth was greater than Bill Gates’s and Warren Buffett’s put together.

He made his fortune by buying up oil businesses at bargain prices just after the Great Depression. A small portion of the book is devoted to telling this story. The rest of it presents his thesis: that the best way to become rich is to own or work for a growing business, and that business growth is dependent on following a dozen or so commonsense strategies.

“Although there are no sure-fire formulas for achieving success in business,” Getty says, “there are some fundamental rules to the game, which, if followed, tip the odds of success very much in the business man’s favor.”

Those rules include:

  • The best way to make a fortune is to own your own business.
  • The central aim of every business is to produce more and better goods (or more and better services) to more people at a lower cost.
  • A sense of thrift is essential for success in business.
  • Legitimate opportunities for expansion should not be overlooked.
  • The business owner must run his own business. He cannot expect employees to run it for him.
  • The business owner must be constantly alert for new ways to improve his products and services and increase his production and sales.
  • Nothing builds confidence and volume faster than a reputation for standing behind one’s product.

One chapter talks about real estate. Getty was a big believer in real estate as a secondary investment and made millions that way. He also talks about investing in fine art. In the course of his business life, he acquired one of the greatest private collections in his time. He left much of that collection to various museums, including the Getty Museum in California.

In discussing employee compensation, Getty’s ideas belied his reputation for being a penny pincher. He was a believer in paying his employees well – as well as or better than the competition. He also believed in treating his key employees as partners, by giving them incentive-based bonuses and, in some cases, shares of profits. More than a few of his key employees became rich as a result. I was delighted to note that Getty disputed the notion that entrepreneurs should “think big and take big chances.” His success, he says, came from “thinking small” (i.e., paying attention to details) and avoiding risk at every juncture.

Why “Best Books” Lists Are Sort of Silly… and My “Best Books” List for 2018

Wednesday, January 30, 2019

Los Angeles, CA.- When I first read Sapiens: A Brief History of Humankind by Yuval Noah Harari, I read it quickly. It was the selection of the month for my November book club – and by the time I got to it, I had less than two days to go through it.

No problem. I arrived at the Cigar Club, book in hand, with plenty to say. And most of that was a mixture of admiration and dismissal. Among other things, I said that it was “the best-written book that told me things I already knew.”

Two weeks later, I listened to it on Audiobooks, and I loved it. And now I’m reading it again…  and I’m thinking it may be one of the best books I’ve ever read!

Each chapter is a book in itself. And each section of every chapter contains at least one idea that feels big and new and important. This is a book that I will read over and over again.

I felt the same way about Pride and Prejudice when I first read it, which was 12 or 15 years ago. I’ve read it twice since then, and I’d be happy to read it again today.

But had I read  Pride and Prejudice as an undergraduate, I might have dismissed it as superficial and melodramatic. I know I felt that way about Henry James’s Portrait of a Lady and The Ambassadors when I read them for Dr. Powers at the University of Michigan. I pretended to admire them because he did, but they felt insignificant to me then. (“Brilliant writing about trivial human affairs,” is what I said in my journal.)

I don’t feel that way about those two novels now that I’m older and less cynical. Quite the contrary, I think they are brilliant and deep.

And that’s one of the problems with lists of the “best” books. The pleasure we get from books depends greatly on the level of intellectual and emotional sophistication we have when we read them. On the one hand, a book that strikes us as luculent in our youth might seem dim or even dimwitted decades later. On the other hand, a book that bores us in high school might thrill us in our middle age.

The same can be said of almost any aesthetic object. That painting of the young girl with the huge brown eyes that swept us away when we first saw one in Woolworth’s when we were nine years old now looks like the intentionally bathetic work of a commercial panderer.

I’m not suggesting that there is no such thing as bad, better, and great books. I’ve made the point elsewhere that I believe very strongly that the potential pleasure and elucidation we get from a book depends primarily on its intrinsic qualities. As a general rule, books that are broader and deeper and also subtler tend to get better the more you read them because they are better. They are better because they have complexity, depth, and subtlety, qualities that are enhanced by rather than diminished by repeated exposure.

What I’m saying is that best-books lists should be seen as what they are: the temporary feelings of one person – the list maker – at a particular time.

That said, here is my list of “best” books that I read (or reread) in 2018:

  1. Sapiens: A Brief History of Humankind by Yuval Noah Harari
  2. The Good Earth by Pearl Buck
  3. Brief Questions to the Big Questions by Stephen Hawking
  4. The Sheltering Sky by Paul Bowles
  5. Beyond the Grave by Jeffrey L. Condon
  6. For Whom the Bell Tolls by Ernest Hemingway
  7. Fox 8 by George Saunders
  8. 21 Lessons for the 21stCentury by Yuval Noah Harari
  9. Dress Her in Indigo by John D. MacDonald
  10. The Soul of America by Jon Meacham

No, You Didn’t Choose It… And, No, You Can’t Change It… So What Are You Going to Do About It?

Saturday, January 26, 2019

Los Angeles, CA.

You didn’t choose and cannot change the locale of your birth.

You didn’t choose and cannot change your ethnicity or your parentage.

You didn’t choose and cannot change the color of your skin.

But you can choose to change almost everything else.

Dwelling on what you didn’t choose and can’t change does you no good.

It doesn’t soothe your pain.

It doesn’t change the past.

It doesn’t lift you up.

It doesn’t give you hope.

And it cannot improve your future.

Feeling victimized by what you didn’t choose and can’t change actually hurts you.

It makes you angry,

Which depletes your energy,

Which makes you weak,

Which makes you less capable of moving ahead.

Ultimately, this way of thinking is a tragic waste of your precious time.

So why do so many supposedly smart and learned people promote it?

Read MoreNo, You Didn’t Choose It… And, No, You Can’t Change It… So What Are You Going to Do About It?