Thursday, March 26, 2009

The Secret, Foolproof, 4-Step Way To Get To Know The Important And Influential

Just as I've recently realized that I've gradually evolved from a self-proclaimed child prodigy into a grey-haired voice of experience, I've also found that I've come to know a lot of important and influential people.

Just in the past week, seemingly at random, I've had friends who are spending the day with Bill Clinton, launching a new critically-acclaimed show on NBC, and helping to run some of the biggest enterprises in the world.

The funny thing is that I've never been one of those networkers who, a la Ferrazzi, uses a careful plan to climb the social ladder. I've just wandered the world in my usual haphazard way. But with hindsight, I can see that I actually did follow a few basic principles that seemed to be very successful.

1) Seek out situations with lots of smart, ambitious people.

There's a lot of talk about how elite educational institutions aren't worth the money. I'm here to tell you that's a load of crap. The main reason I know people outside the world of the Silicon Valley startup community is because I happened to attend both Stanford University and Harvard Business School. The folks I met and the friends I made during my (admittedly expensive) years in the hallowed halls represent an incredibly broad spectrum of achievement in different areas.

You should also choose your employers carefully. Because I worked for D. E. Shaw & Co., L.P. (see David, I'm still using the proper name for the company), which is even more selective than Stanford and HBS, I got to know even more interesting and talented people. I doubt the same would be true if I worked for a different company.

These kinds of institutions provide a target-rich environment, obviating the need for any carefully planned strategy or approach.

2) Don't limit your relationships to people who seem immediately "useful."

I see people make this mistake all the time. They gravitate towards the folks who seem immediately useful. They jostle and pit dive for the opportunity to speak to the already rich and famous. That's generally a waste of time. Instead, you should build relationships with as many smart and interesting people as you can, regardless of how immediately useful they might appear.

Indeed, the most important criteria for building relationships is whether or not you like a person and find them interesting. Expending effort to build a relationship with someone you neither like nor respect is an onerous chore that's unlikely to pay off.

3) Stay in touch, and stay genuinely interested in people's lives.

Naturally, once you find a smart and interesting person, stay in touch. Figure out how you can help them. For God's sake, don't be one of those people that only contacts someone when they need something.

By staying in touch over a long period of time, you build a solid, persistent relationship. That sort of relationship is far more likely to be mutually beneficial.

Some people think of relationships as a vein of ore to be mined..."Don't contact them too much, or you'll run out!" That's exactly the wrong way of thinking. A relationship is something to be nurtured, and each contact should increase its strength. If not, you don't have a real relationship.

4) Wait 10-15 years.

This is both the hardest and easiest part. When I was young, older alumni would assure me that someday, I'd be glad that I went to Stanford. Or Harvard Business School. I wasn't always sure what they meant. After all, doesn't simply being a member of the club give me a leg up?

Now I understand. The key alumni network are the people you already have relationships with, not the rich and famous (though I will point out that even as a student at HBS, Jamie Dimon was kind enough to return one of my calls--don't dismiss the power of the network!). Wait 10 years after b-school, or 15 years after college, and your old friends will be hitting the peak years of their careers. And guess who people always prefer to work with--the people they know and trust, especially if that relationship stretches out over decades of experience.

While it may prevent me from ever writing a best-selling book on this topic, I'm happy to share my secrets. But that's the thing--they're not secrets. There is no trick.

Just get to know smart, interesting people, keep building your relationships with those you enjoy spending time with, and wait for time to work its magic. Good luck, and get started!

Wednesday, March 25, 2009

Quote of the Day: "Seeking profit is what has always fueled our prosperity"

"At the same time, the rest of us can’t afford to demonize every investor or entrepreneur who seeks to make a profit. That drive is what has always fueled our prosperity, and it is what will ultimately get these banks lending and our economy moving once more."

--Barack Obama

Now if only people listen....

(via Fred Wilson)

Am I a horrible person whom children should jeer and pelt with dung?

I recently got embroiled in a bit of a contretemps on Matt Yglesias' blog about my post on Charles Murray's recent comments about the European model. Yglesias is a self-identified progressive, which means that many of his readers think of "capitalism" as a dirty word.

One of the commenters really disliked my concept of the miserly safety net.

Chris Yeh - you’re right, I was somewhat confused by your earlier comment. I thought perhaps you were, perhaps, somewhat misled or misguided - I stand corrected. You are, in fact, a horrible person, and in a just world beautiful women would look away from you in revulsion, powerful men would have you dragged away by hired security, and children would jeer and pelt you with soft pats of dung, possibly Murray’s.

The title of my post is a bit facetious; I'm pretty sure I'm not a horrible person. But I am disappointed that my polite attempts to engage with people of different beliefs are met with an excess of venom and a paucity of reasoned argument.

This is the sad thing about most of the policy dialogue in this country; our positions have been so hardened that real discussion seldom breaks out; instead we get talking heads yelling at each other on so-called "news" shows.

I am actually curious what progressives think about my proposals to address poverty and my other ideas. Know any would care to comment? Without calling for my disappearance?

The Thin Line Between Love And Hate

Sports Illustrated recently conducted a survey of 190 NBA players (the NBA has a total of 450 players) in which they were asked which current player they'd most want as a teammate, and which player they'd least want as a teammate.

The Lakers' Kobe Bryant tied for third in the race for least desirable teammate, behind Stephon Marbury (22%) and Ron Artest (9%), and tied with Stephen Jackson and Gilbert Arenas at 5%.

Kobe Bryant came in second in the race for most desirable teammate (13% selected him) behind only LeBron James (32%) and ahead of famously unselfish point guards Steve Nash (8%) and Chris Paul (7%) and super-teammate Kevin Garnett (7%).

He is the only player near the top of both lists

Would you rather be universally loved, like Steve Nash? Or loved and hated to a greater degree, like Kobe Bryant?

Monday, March 23, 2009

Brad DeLong Explains The Geithner Plan

Economist Brad DeLong weighs in with a brilliantly clear explanation of the Geithner Plan. The most interesting part is where he compares the economics of the plan to the costs of hiring hedge fund managers on the standard 2% management fee/20% carry system.

You should read the whole thing, but the first two paragraphs alone are worth the price of admission:

Q: What is the Geithner Plan?

A: The Geithner Plan is a trillion-dollar operation by which the U.S. acts as the world's largest hedge fund investor, committing its money to funds to buy up risky and distressed but probably fundamentally undervalued assets and, as patient capital, holding them either until maturity or until markets recover so that risk discounts are normal and it can sell them off--in either case at an immense profit.

Q: What if markets never recover, the assets are not fundamentally undervalued, and even when held to maturity the government doesn't make back its money?

A: Then we have worse things to worry about than government losses on TARP-program money--for we are then in a world in which the only things that have value are bottled water, sewing needles, and ammunition.

I hope that the Geithner Plan works. Just in case, I'm stocking up on sewing needles. I already have plenty of the other two items.

Sunday, March 22, 2009

The Danger Of Generous Safety Nets: Why The European Model Destroys The Soul

Charles Murray recently gave a thought-provoking speech at the American Enterprise Institute. Murray is best known for his controversial book, "The Bell Curve," which asserted that there were differences in intelligence between genetically different groups. That fact alone might cause some to ignore his speech, which would be unfortunately, since it speaks to the very real debate about American vs. European policy models that is going on right now.

The heart of Murray's argument is this:

To become a source of deep satisfaction, a human activity has to meet some stringent requirements. It has to have been important (we don't get deep satisfaction from trivial things). You have to have put a lot of effort into it (hence the cliché "nothing worth having comes easily"). And you have to have been responsible for the consequences.

Let me put it formally: If we ask what are the institutions through which human beings achieve deep satisfactions in life, the answer is that there are just four: family, community, vocation, and faith. Two clarifications: "Community" can embrace people who are scattered geographically. "Vocation" can include avocations or causes.

It is not necessary for any individual to make use of all four institutions, nor do I array them in a hierarchy. I merely assert that these four are all there are. The stuff of life--the elemental events surrounding birth, death, raising children, fulfilling one's personal potential, dealing with adversity, intimate relationships--coping with life as it exists around us in all its richness--occurs within those four institutions.

Seen in this light, the goal of social policy is to ensure that those institutions are robust and vital. And that's what's wrong with the European model. It doesn't do that. It enfeebles every single one of them.

In other words, the problem with the European model is that by substituting government policy for individual action, it tends to rob people of the ability to derive deep satisfaction from their lives. If the government takes care of the effort and guarantees the results, can any human activity provide real happiness?

Aha, you might say, but doesn't the U.S. model allow far too many to fall through the cracks and suffer? Too many children live in poverty and go uninsured. Could it be that the price of our American attitude is too high?

That's where I think our public discourse has failed us. Forcing people to choose between freedom and compassion assumes a false dichotomy. There is a middle way between social Darwinism and the nanny state.

The Power of the Miserly Safety Net

It's no surprise that I'm a fan of the miserly safety net, which I've proposed as a solution to the issues of poverty and the credit crunch. The miserly safety net neatly combines the most economical solution with build-in safeguards against gaming the system (because the benefits it provides are so miserly that only someone without another viable alternative would opt in).

But after reading Murray's speech, I realize that the miserly safety net has yet another advantage: It protects people without removing the incentive to or possibility of bettering themselves through their own efforts.

An overly generous welfare system not only introduces perverse incentives for slackerhood; that very slackerhood (however appealing it might sound to some) precludes true happiness. Despite its good intentions, by crowding out the need to work, the European model actually *reduces* happiness.

Working hard to provide for one's family can give a man a sense of self-worth, but not if he feels like a chump when others can do nothing and receive a higher standard of living from government dole.

Ultimately, the limited nature of the nanny state is implicit in its very name: When it comes to parenting, is the best way of raising a successful child to give it everything without having to work for it? Of course not; doing so cheats the child out of the very important pleasure of doing things for him or herself. Government shouldn't cheat its own citizens out their happiness.