Reversal of Fortune
The 1990 Jeremy Irons, Glenn Close story about the von Bulows of Newport, Rhode Island was a great movie that told the tale of two extremely wealthy and privileged people whose money did not bring them happiness, but quite the contrary. People love stories where wealthy people get their riches to rags just reward for leading puerile lives not caring about anyone else. The only thing better are stories of rags to riches where the worthy have good fortune thrust upon them. One of my favorite old stories is The Count of Monte Cristo by Alexandre Dumas. To begin with, the Nineteenth Century European swashbuckling times are one of the more romantic times in modern history. But then, the fall and rise of a noble man who is unjustly put upon for reasons of jealousy is very fulfilling and then turns even more interesting as he battles to not let recovery and redemption get overtaken by revenge and loathing. It is the human condition that makes us all root for the underdog where every pauper can transition into a prince. But Dumas, as a better than good storyteller, knows that man’s ability to regulate himself to throttle back when redemption is achieved and avarice and pride have yet to set in, is a challenging and delicate balancing act.
There are enough stories all around us of people who fall from grace and let envy get the better of them. Not to be too biblical, but as it has always been, so shall it always be. What I like are the stories of worthy people who make good after years of toiling in the wilderness. There is something so heart-warming and satisfying. In the same way that Kim is oriented to Hallmark movies about people who have not found love and then find it at the holiday season, I guess my success orientation makes me gravitate to the stories about people who swing and miss at success and settle in only to have it all find its way to them later on.
This week I have spoken to two friends that come at this issue from two different directions. The first is a friend I used to work with (technically, he used to work for me, but in a later iteration he joined a venture I was working, so I guess in that case we worked with each other). He is a finance guy by training and he has functioned for the past twenty of so years in a CFO/COO capacity at one smaller company or division or another. He is smart and diligent but perhaps has been more anxious about making money than he needed to be. I, on the other hand was never really motivated by money and was always driven by accomplishment. I have been accused of wanting to be loved and patted on the head more than paid well. I’m not 100% sure that defines me well, but I clearly always thought of money as very desirable and useful byproduct of accomplishment, but certainly not the raison d’etre of my work experience. While I think that is a healthier way to approach work (at least for me), it is hardly the way most people approach their work life. The other friend is an old college buddy who spent life as an industrial engineer working in the purchasing and sourcing arena in the cosmetics industry. Unlike my other finance pal, my engineering pal always knew that he didn’t do what he did well in order to maximize his earnings. He cared about money as much as any of us, but he was almost resigned to the reality that his arena simply didn’t naturally lead to high earning potential.
While my finance pal went about beating his head against the wall at one company after another, always making for angles from which to earn more, my engineering pal cared about being in a solid place and making as much as his middle-management perch would allow. Those of us on Wall Street (this would be about thirty years ago) worked for our annual bonuses with salaries being OK, but not exciting. There were some minor equity perks, but those really came only at the highest levels of management in those days. One year, I ran into a year-end buzz-saw that, while deemed an error of omission rather than an error of commission, caused me to watch my bonus expectations evaporate before my eyes. I was, at that point, getting more of my compensation in equity, but the bonus was still about 4X my annual salary. That buzz-saw caused my bonus expectations to shrink to 1X, which was a clear sort of a minimum level to keep a guy in play rather than showing him the door. None of that was either surprising to me or something I thought was unfair, given my firm belief that we all lived in a performance and results-oriented world. I expected no charity. I would take my 1X and do better next year. When I commiserated with my engineering pal about my buzz-saw outcome, he paused and told me that I needed to rethink my perspective. He said I needed to realize that many people, including himself, could never even dream about making as much as 1X, so I should dry up my crocodile tears. It was like throwing a glass of cold water in my face. If I had ever wanted to say, “Thanks, I needed that!” that was the time.
My finance pal was very conciliatory to me when he learned that my annual bonus was so impaired. I could see it in his eyes, he was thinking that I must be on suicide watch. But I wasn’t. This all came at a moment when my personal life was also in disarray, so while theoretically, I needed the money more than ever, I didn’t find myself caring enough to let it disrupt my psyche. My engineering pal’s words helped me also adjust perspective accordingly.
When I happened to speak to these two friends for completely unrelated reasons this week, I was not entirely surprised to learn about where they both stood on the success spectrum. I will take a bold guess that they both have an equal amount of money as they approach retirement, but they both think of it in very different ways. The finance pal confided in me that he has a great deal of angst and feels somehow put upon and inferior to others who have made more. He rationally knows that’s not the case and that he has plenty, but he still senses that he has underperformed and is not worthy. I told him he is crazy to think that way and that he has done extremely well and should have condense and be proud of his accomplishments.
A few years ago, the engineering pal did something rod out of character. He quit his job and started his own company in the cosmetics procurement arena. He bootstrapped it and took no outside money, so he owns it all and has basically lived off that business. He also has a small staff that carries the business forward as he works his way out of the day-to-day. He has made more from that business in the past few years at the end of his career than he did all during his career. He now has the money to buy the things he would never have dared to before, like a nice car (the kind I have driven for thirty years). He has bought a vacation house (I bought my first of those thirty-five years ago and am happily over that game now). He told me that he is thinking of selling his company now and putting that money into an even bigger retirement cushion so that his kids can inherit it all after he is gone. He and his wife otherwise live their normal middle-class existence in a modest home near his grandchildren. Meanwhile, my finance pal is moving from one upscale community to another, worrying that he isn’t good enough.
We used to say in the derivatives business that to be a successful derivatives guy your mother had to not love you. There is some truth to that. What I will say about my two pals is that the one could have used more love from his mother and the other was lucky to be as loved as he was because it served him well. What really warms my heart for both of them is that whether they recognize it or not, they have both benefited from a reversal of fortune and the ball has bounced their way in life. The trick now is for the one to learn how to accept that and for the other to learn how to put it to work.