All-In
My son-in-law emailed me yesterday with a business question. I am officially an advisor (compensated with some granted shares) to his start-up company, which he is launching on his own time while doing his day job. Therefore, I feel obliged to give him pragmatic business advice that tries to separate itself from my father-in-law role and the issues that might affect my daughter and two granddaughters. His start-up is like many of the things he enjoys, it is just beyond my normal realm of imagination and knowledge. Don’t get me wrong, I think he is a very smart guy, but his interests are the sorts of things I find out about several years later and find myself saying, “oh, yeah”, recalling that he was way out ahead of the curve. His idea is about digital animated art and creating a new collectible category using blockchain technology to certify its authenticity and scarcity. Digital art is not my bag. Collectibles are also a hard topic for me. I did put him in touch with a friend (all three of us are fellow Cornell graduates from different eras) who had run a big trading card company. I recall the time he orchestrated the controlled destruction of large amounts of inventory to reestablish the scarcity of his underlying product. It is a strange game-theory place that tests the limits of my ability to reason through it. Anyway, my son-in-law is in the fundraising mode for this new venture (now we are back in my comfort zone) and wanted advice.
Some guy in the venture game had bent his ear and spanked him on the topic of trying to do his day job while launching his start-up. This guy had told him that he needed to go all-in, quit his job, and stop dicking around. My first instinct was to tell him that free advice is worth what you pay for it (since I was a compensated advisor, my advice was obviously different). But I felt it was too common an issue to leave at that. The truth is that many venture investors think like this guy. Going all in is a typical VC view, since they think nothing is more important than an entrepreneur pulling out all the stops to get to success for them. They WANT the entrepreneur to do whatever it takes to make it work. I recall some friends who were part of a KKR buyout some businesses from an area I had created at my bank. They lent the people money to invest (after researching how much each could and couldn’t afford to lose), just to be sure they were uncomfortably overcommitted to the success of the venture. It didn’t work out for reasons unrelated to these people’s efforts, but they were still financially ruined. I have never been a believer in that approach to motivation. It’s what leads people to do things that conscience might otherwise prevent. The world is harsh enough, we don’t need to engineer desperation into people as a motivational tool. I’m not a fan of the stick as much as I am of the carrot. The organizational behavioralists call that Theory Y rather than Theory X management.
My son-in-law has a young family and a wife that, quite simply, is not wired for the kind of life risk this guy is espousing. There may be women that embrace that sort of risk (dare I suggest Elisabeth Holmes of Theranos infamy?), but I suspect most women with young children are more like my daughter than not. The question my son-in-law needs to consider is whether or not he is trying to become Jeff Bezos. I have assumed that being the smart guy he is, he was more trying to enjoy a challenge and maybe a next career for himself in an area that interests him more than the mortgage banking space he currently occupies.
In the derivatives world we used to say that you couldn’t be a good derivatives guy unless your mother didn’t love you. The joke was meant to imply that derivatives guys were very motivated and driven. They were perhaps working to heal a gaping wound of youth and salving it with lots of earned income. I suspect that this is what drives many entrepreneurs as well. This may be what causes them to think that going all-in is worthwhile and maybe even necessary. Risking one’s free time and discretionary income, as opposed to one’s family’s happiness seems forward-thinking, not foolhardy. That way, you can rationalize that you are young and can take some risk, but that you have other obligations that take precedent. You can see why I prefaced all my advice with the imperative to be objective versus just a cautious grandfather.
I recently worked a project for six years and was totally committed to it. I moved to an otherwise undesirable location (Staten Island, perceived by some as undesirable, but certainly distant to the center of our longtime lives in Manhattan) and was inclined to explain to people that I was all-in on the project. I moved and invested time, but I did not risk my future on the project. The project failed so maybe if I was willing to risk my entire financial life on it that wouldn’t have happened, but I seriously doubt it. I am far more inclined to feel that I was able to stay objective at the moment of truth exactly because I was more like the chicken at breakfast than the pig (eggs versus bacon vis-a-vis the issue of commitment).
I’ve been watching Jay Sekulow today after his great faux pas of misunderstanding Rep. Val Deming’s use of the term “FOIA lawsuits” and ranted for five minutes at the Senate podium about the managers, decrying “lawyer lawsuits”. If Deming’s hadn’t actually spelled out FOIA by defining it as the Freedom Of Information Act, and if Sekulow was not a lead lawyer for the President of the United States and deeply embroiled in FOIA issues every day, I might buy that he just made a silly attentiveness mistake. But that’s not what happened. Just like Pat Cipallone making bald-faced lies at the podium, both are clearly playing to the Fox News audience to get sound bites out there into the social media network that will somehow neutralize the devastating and overwhelming evidence against their client that Trump did, indeed, abuse his power and obstruct Congress, thereby placing himself above the law.
This is about the President’s counsel, and indeed the Republican Senate, losing its objectivity in the face of a huge challenge, a client that knows no bounds and has no ethical compass. They are, unfortunately all-in. They have all gotten themselves so deeply committed to Donald Trump and his cat-on-a-curtain effort to keep control of power for the conservatives. Trump is like KKR, he likes his team to have nowhere to go but upward and onward. He wants them all all-in.
My advice to my son-in-law is to stay a chicken and donate some eggs to the cause. Trump’s crew (Sekulow, the other lawyers and the Republicans in both houses of Congress) are already sliced up and in the frying pan sizzling like the fully committed bacon strips they are.