The Haiku of Finance for 12/31/17

Ending one more year
Measuring progress so far
Still some way to go

Alfidi Capital at Project HeHa Super Happiness Challenge 2017

The world needs to get happy. Project HeHa has a plan to make that happen. The project held a Super Happiness Challenge in late 2017, so I had to trek down to Silicon Valley and see what it was all about. Tech types are certainly competitive, and the whole point of the challenge was to compete to get happy. There may have been some really happy people in the room by the time this was all over.

I see huge liability issues with so-called "increase your happiness" sites and apps that are not part of wellness programs vetted by board-certified psychologists. These apps are prescribing behavioral changes in the absence of clinical diagnoses. Tech should only go so far in adjusting someone's psyche without expert human intervention.

Project HeHa brought its happy sign.

The Director of the MIT Media Lab gave the keynote. I had a lot of respect for that lab during the 1990s when its then-director had a regular column in Wired magazine. Alas, the lab and Wired bear their fair share of blame for hyping the dot-com craze. Anyway, I grokked the speaker's point about how true happiness thrives in a healthy ecosystem that one person's material success will not destroy. It's easy to say that in Silicon Valley, where thousands of multimillionaires have built an ecosystem completely devoted to solving their unique problems. These are serious problems, like how to get around town without touching poor people on mass transit (Uber), how to get high-quality meals delivered to the office so managers don't have to wait in line with workers (meal kit services), and how to meet like-minded high-powered singles for fun times (dating apps). Yes indeed, the ecosystem must enable everyone's happiness, especially if it prices out unhappy lower-class people.

We must have hard metrics that tell us how happy we are becoming. The World Happiness Report asks people how happy they are for the UN's International Happiness Day. It may or may not have something to do with the UN's sustainable development framework. The Happy Planet Index is a UK-based effort to redirect the global economy from making money to getting happy. Its sponsors want a "new economy" driven by a hodgepodge of philosophies other than capitalism. Gross National Happiness (GNH) is a nascent thought trend originating in Bhutan, with support from the Happiness Alliance. It sounds to me like a slogan for Bhutan's tourism sector, or perhaps a distraction from Bhutan's ethnic cleansing of its minorities. The idealistic, sensitive, progressive people behind all of these concepts should ask Bhutan's displaced Lhotshampa if they are happy to be refugees.

Project HeHa brought lots of happy books.

The startups in the Super Happiness Challenge pitched their tech ideas to the assembled expert panel. They all looked happy to be there. This event was the first time I have ever witnessed a panel of judges emphasize a startup's culture as a key to success. Uber's well-publicized problems must be waking up every VC in the Valley about culture. Someone remarked, "Culture is what's left when the CEO leaves the room," and left unsaid is that the CEO's personal example sets that culture. The praise on hand for diversity was another effect of wake-up calls, or it may have just been more lip service and slogans. Folks, I have been under bad supervisors of both genders and several ethnic origins. No one demographic has ever cornered the market on behavior that destroys happiness.

I am not sure what to make of this HeHa thing and its sponsors. I am quite familiar with the format of US-based startups pitching to renowned investors. I am not so familiar with this particular project's creators and backers. I think the people behind Project HeHa have their hearts in the right place, but I have no further curiosity about their mission. Tech gurus all think they can change the world. The hubris of Silicon Valley is that tech has a cure for everything, even what ails human emotions. I am part of Silicon Valley's culture to find fellow Americans who want to grow the US economy. That makes me happy.

The Haiku of Finance for 07/20/15

Portfolio skill
Combining asset classes
Generate alpha

The Haiku of Finance for 05/27/15

Mentor for success
Protege needs honesty
Follow tested rules

The Haiku of Finance for 05/13/15

Two paths to success
Raise revenue or cut costs
Nothing else matters

The Haiku of Finance for 05/06/15

Seek experience
Build judgment from long patterns
Serial success

USF Redefines Success In Angel Investing

I was privileged to attend a talk tonight at USF's School of Management campus in downtown San Francisco.  My own USF MBA has proven totally worthless but sometimes these talks are entertaining, and they always offer free food.  That's the only value I will ever obtain from my education.  I went to hear USF Prof. Vijay Mehrotra describe his "Confessions of Angel Investing."  He had five main lessons to share.  Here they are, verbatim.

1.  Invest in entrepreneurs who are sufficiently obsessed with their business success.
2.  Invest in those companies and founders who have a strong idea of who their customers are, and why they do (or do not) spend money.
3.  Invest in companies that have some kind of unfair advantage.
4.  Invest in and with people where your value to one another goes beyond money.
5.  Invest only with people who you deeply trust and share your values.

Those five lessons reflect a lot of the wisdom on display at countless tech conferences and VC panels I've attended since 2011.  I totally agree with Prof. Mehrotra that worthwhile startups should make the world a better place and that exceptional customer knowledge is tough to obtain.  His qualitative insights into the value of experience should include the one thing that I have come to understand as crucial for a successful startup.  That one thing is the presence of a serial entrepreneur on the team.

Serial entrepreneurs bring obsession as a habit because they've done it all before.  They have exceptional customer knowledge from launching and growing several startups in the same vertical.  The seasoned executive brings that "unfair advantage" of anticipating routine problems that rookie entrepreneurs don't see coming.  The remaining Big Data challenge is to somehow collate the quantitative results of serial entrepreneurs running startups.

Prof. Mehrotra shared some stories of acquaintances who succumbed to ethical lapses in their lines of work.  Even experienced angel investors can miss red flags in the character traits of founders.  I would add that due diligence requirements increase with the cash commitments startups need as they mature.  A few background checks on the founding team are cheap to perform.  Checking for fraud can save a lot of invested capital from entering the valley of death.

The good professor asked his audience to write down what "success" meant to each of us.  I did not have to think at all about what I needed to write, and I'll share it now.

SUCCESS
- Living with honor and integrity
- Having a small number of high-quality friends worthy of trust
- Achieving maximum possible self-actualization
- Sharing love and wisdom with others, especially the close circle of friends
- Having a clear understanding of one's place in the world

You may recognize some of these concepts from ancient Stoic philosophy.  Marcus Aurelius' Meditations helped me understand why these things are important.  Immanuel Kant's Categorical Imperative reminds me to always act in ways that support these beliefs.  Notice that I didn't mention money or worldly power in my success definition.  Those things should follow naturally once the above qualities are evident.

I left the lecture early due to a schedule conflict, so I missed the other experienced investor following Prof. Mehrotra.  I would like the angel investing community to take serial entrepreneurs and ethics more seriously.  Long years of varied experiences build the kind of intuition that serves executive judgment well.  Success should follow naturally.

The Haiku of Finance for 01/31/15

Dreaming is lazy
Action beats a worthless wish
Get off the lame meme

Achievement Requires Action Beyond Sharing Lame Memes

It's cute to see people spread motivational sayings around as social media memes.  Toms of Twitter feeds are devoted to squeezing out daily dozens of comforting aphorisms.  It takes zero effort to click a like button.  Unfortunately, real accomplishment always requires far more work than passing a quote around among bots.

Modern Americans have gotten fat, lazy and stupid.  Three generations of expanding middle class entitlement programs got the ball rolling.  Dumbing down public education to the lowest common denominator of what a unionized teacher finds palatable helped move it along.  Cultural worship of self-esteem over the stress of working toward a goal was the coup de grace.  Politicians and popular entertainers who pander to emotionally needy "tall adolescents" put the final nail in the coffin.

Cheap capital and energy make life easy.  Life throughout much of human history has rarely been easy.  Lazy Americans are in for a world of hurt when the the Federal Reserve can no longer accommodate their coddled lifestyles with costless credit.  I expect social media memes during the second half of this decade to reflect the bitterness of many newly impoverished Americans.  Lots of people are going to learn the hard way just how hard life can get.

Wishing on a star does take the wisher to the star.  The star does not care what a wisher thinks.  Goals are great to have.  Making a goal manifest in reality means work, focus, resilience, and perpetual repeats of a grinding cycle with no assurance of success.  Belief is not enough.  Achievement requires action.

Ethical Half-Lives In Finance

The few conversations I've had with people younger than me who aspired to finance careers always covered personal integrity.  I could not ignore this subject because it is the ultimate litmus test of whether someone belongs in a large corporation.  I use the term "belong" in a somewhat pejorative sense, as you'll see below.

I worked for three very large financial sector firms at various points in my career.  They all publicly held themselves out as putting the client's interests ahead of their own.  I observed their employees honoring this commitment more as an exception to general practices behind the corporate veil.  It is possible to make a decent living by genuinely caring for a client, meeting their expectations, and charging them reasonable fees.  Managers in large corporations often discount that objective by pushing their revenue producers (brokers, advisors, traders, loan officers, etc.) to make their department's growth numbers look good.  That's how managers get promoted.

The competition for promotions in finance is fierce and unforgiving.  A fast and loose approach to ethics is an easy ticket to the big time.  It is very difficult to have a long career in a large organization without resorting to unethical behavior.  The outsized rewards in finance tempt normal people to stray over to the dark side.  The ones who cross over often enough will never look back, and never realize where they went wrong.  Those rare people who climb ladders ethically and build business honestly deserve respect.  The rest of these people are clawing, grasping, vicious vipers who masquerade as humans to deceive clients.  They "belong" in a large corporation in the same sense that criminals belong in prison.  Society must keep its sociopathic predators under positive control.

I care more about my personal integrity than my career.  I performed very poorly when I worked in large financial institutions because I told the truth, followed rules, and executed my duties correctly.  My supervisors marked me for elimination after observing my behavior.  I wasn't fit for employment in their eyes because I would not lie or manipulate people.  I stand out as an oddball and I couldn't care less.  I dislike unethical people as much as they dislike me.

The half-lives of financial careers may be longest in corporate finance because incidences of temptation occur least frequently there.  It's always possible to falsify payment invoices but internal auditors can catch those instantly, especially if they're tied to the enterprise's supply chain.  There may very well be plenty of honest CFOs and treasurers around, and maybe this is why so many of them are sitting on piles of corporate cash rather than investing in overpriced assets.

Career half-lives are probably shortest in the financial sector's customer-facing roles.  I specifically envision retail brokerage, institutional sales, and investment banking rainmakers as the career paths that winnow out honest people very quickly.  The pressures to meet performance goals and earn bonuses are largest in those fields.  Opportunities to deceive investors appear daily.  The biggest liars and laziest trust fund babies win the retail production games.

Anyone who considers a career in finance should think very hard about the choice they will face soon after they begin work.  Personal integrity and career success in a large enterprise become mutually exclusive at some point during upward career progression.  Employees will choose one path over another.  Choosing personal integrity usually leads to unemployment.  Choosing career success usually means making ethical compromises.  Those compromises come with severe legal risks that cannot stay buried forever in an era of pervasive surveillance.  Having both integrity and success is possible with self-employment.  I have extended my career's half-life by working for myself.  

The Haiku of Finance for 11/08/13

Losers agitate
Envy Twitter deal success
They can all stay poor

Anti-Twitter Protesters Are Too Stupid to Understand Economics

I shake my head whenever brain-damaged San Franciscans do something to make The City look bad.  Protesters took to the street's outside Twitter's corporate headquarters after the company went IPO.  They object to the likelihood that the company's newly wealthy employees will bring prosperity and success to neighborhoods that were once hostage to check-cashing scams and flophouses.  The driving force behind this nonsense is a radical activist group named Eviction Free San Francisco.  They are part of the broad coalition of nutjobs in this town who believe profit is evil, property is theft, and every human being is entitled to unlimited free rides in life regardless of merit.  This crowd finds deficiencies in intellect or character to be especially attractive.

Here's a simple lesson in economics for these bottom-feeders.  When investors and inventors take risks to bring new technologies to the public, the free market rewards their foresight.  They also share their prosperity with the neighborhood by spending money on services offered by workers with less ambition and education.  Gentrification works by driving out scummy losers and replacing them with productive citizens.  Twitter's newly rich employees have every right in the world to enjoy themselves and spread their knowledge as they spend their dough.  Bidding up home prices encourages developers to build more housing to serve residents displaced by higher rents.  Displaced people usually have to move, but geographic mobility is a hallmark of a healthy economy.  They can always move back when their incomes are higher.  I couldn't always afford to live in San Francisco so I lived somewhere cheaper until I could afford to move up.  Idiots who refuse to live within their means have no business demanding subsidies from me.

This train of thought is too difficult for many progressive San Franciscans to understand.  They would rather rail against successful entrepreneurs than examine their own shortcomings or relocate somewhere more affordable.  I would love to serve them with eviction notices myself and film their lame crying faces for YouTube.  Hey, "Mickey Ronin" would fit right in with these stupid losers.  He can't produce anything, lives off other people's generosity, and loves to play the victim.  Somebody call a waaaaaaambulance already.  Sheesh.  

The Haiku of Finance for 09/13/13

Rich country system
Rule of law is paramount
Right way for success

The Haiku of Finance for 08/07/13

Old stereotype
Get past bias for success
Grow up and move on

Voice and Gestures Enable World Domination

I've often wondered how successful people make it as far as they do on so little obvious talent or integrity.  I read tons of anecdotes about how leaders have learned from failures, sought mentors, etc.  That just doesn't cut it.  The missing ingredient is the ability to manipulate stupid people into thinking you're successful before you've accomplished something.  Steve Jobs had this magic with his "reality distortion field" propensity, and by golly you can have it too if you want to join the top 1% of our society.  Manipulating people through public speaking is one way to pull this off.

I've assembled some speaking tips from some local sources who seem to know what they're doing.  They practiced what they preached when I observed them live.  Here ya go.

Speak using solid tonal support.  This seems to involve using muscles in the lower abdominal region and lower back area, primarily the diaphragm.  Tenors carry farther in public than baritones by using these muscles.  I'm not a singer but I do enjoy yelling at stupid people, so I'll tighten my abdomen the next time I yell at a moron to ensure other people hanging around hear every insult I hurl at my hapless target.

Raising your pitch from 100 cycles/second to to 200 cycles/second makes public speaking more effective.  Serious public speakers probably use a spectrum analyzer (aka frequency analyzer) to measure their cycles.  I don't need no stinkin' analyzer.

Use your "outdoor voice" to raise your vocal intensity and pressure.  This may seem like common sense, but I look at politicians for confirmation.  The winners of elections do well in televised debates because they use their outdoor voices even while inside with microphones.

Keep your head up and face available so the audience can match your words to your facial expressions, and talk to the people in the back of the room so everyone can hear you.  That's probably good advice for candidates stumping for votes who have to speak unamplified in high school gymnasiums and hotel conference rooms.

Shorter points are better, probably because most people are too dumb to follow complicated arguments.  This isn't ancient Greece or Rome where educated people came to public forums just to hear philosophers expound on their pet theories for hours.  This is America, where the calorie-addicted lumpen proletariat has been trained to think in sound bites that expire before their sugar rush wears off.

Simple repetition is memorable and effective.  Keep hammering away at your main idea until even the dullest people can remember it and are ready to join your movement.  Beethoven's Fifth Symphony repeated four notes in seven minutes.  Martin Luther King Jr.'s "I Have a Dream" speech repeated four words nine times in seven minutes.  I think 4x7 is some kind of gold standard in making humans pay attention.  I'll try that by repeating four words, "you are totally stupid," seven times to the next person I meet at a high-end cocktail party.  BTW, MLK also sprinkled that speech with visual references that cued his listeners to imagine inspiration scenes.  Human beings are visual and need to be handed pretty pictures to help them understand things.

Those voice lessons are important but I don't think they're the total package.  Illusionists are known to distract audiences with sleight-of-hand while pretending to pull rabbits out of hats.  Successful leaders can use gestures and posture just as effectively.  The discipline known as neuro-linguistic programming (NLP) is one approach to defining and codifying non-verbal cues that alter behavior.  I've tried various hand gestures and body stances from NLP and other sources with varying degrees of effect.  I discovered years ago that posturing techniques such as mirroring have no effect on sociopaths because they are incapable of feeling empathy.  NLP probably works best in front of large crowds or on broadcast media because lots of empathetic suckers will be watching.

I will continue to broaden my knowledge of speech, gesture, and posture because I love impressing people with my genius.  My success in employing these techniques may very well determine the course of human history.  You people will be glad when you put me in charge.  I promise that world domination under the Alfidi regime will be benevolent.  Just listen to my vocal intonation and watch my thumb and forefinger to know that you can trust what I say.