Big StupidJune 3, 2022
Your ancestors pet snakes and drank foul-smelling water. You (likely) do not, as you have learned from their mistakes via the ultimate streaming network of life lessons, always on in your head, called instinct+. In sum, our instincts help us predict the future. If you get close to a lion it will eat you, etc. However, there are decisions our society presents whose nuance/complexity has outpaced instinct. Our response to these challenges are what advances (and hinders) human progress. Just as 80% of people believe they are above average drivers, few people believe they make a lot of bad decisions … which makes them especially dangerous. Similar to death, stupidity is more painful for others. Professor Carlo Cipolla’s Basic Laws of Human Stupidity break it down:
- Everyone underestimates the number of stupid individuals among us.
- The probability that a certain person is stupid is independent of any other characteristic of that person.
- A stupid person is a person who causes losses to another person while deriving no gain and even possibly incurring losses.
- Non-stupid people always underestimate the damaging power of stupid individuals.
- A stupid person is the most dangerous type of person.
Professor Cippola brings texture to a common word with a cocktail: stupid decisions are actions that are bad for you and damaging to others. Just as we underestimate the number of stupid people, we underestimate the business world’s, and seemingly successful people’s, ability to make stupid decisions that damage themselves and others. Success is literally an intoxicant that makes you more risk aggressive and impairs your peripheral vision to reality and risks.
Some firms and decisions that, in my view, are stupid:
Bad ideas from big firms have more mass, hence more inertia. A couple weeks ago, the world’s most valuable firm presented a virtual reality headset to its board. Apple has been working on this bad idea since 2015, and not even Jony Ive could kill it. According to The Information, Mr. Ive argued: “VR alienated users from other people by cutting them off from the outside world, made users look unfashionable and lacked practical uses.” Ive’s design team was “unconvinced that consumers would be willing to wear headsets for long periods of time.”
VR is a decade-long experiment that has cost tens of billions of dollars to prove nobody wants it. Consumers putting something on their face designed by Stanford and Harvard engineering graduates who live in Redmond or San Jose is less likely than the next great SaaS company emerging from Florence.
To be fair, few firms better understand the importance of how we look using a product than Apple, and the Cupertino firm has become the largest jewelry maker in the world via the Apple Watch and Airpods. Wearables represent 10.5% of Apple’s revenue, or $38 billion, in 2021 (seven times the revenue of Tiffany & Co.). Jewelry and wearables make you more attractive and utile, respectively. The Apple Watch and Airpods do both.
In contrast, headsets make you less attractive and less utile and add fuel to the flames of isolation, loneliness, and depression that plague American youth. When my sons are on their phone(s), they’re only pretending they can’t hear or see me. VR headsets are cigarettes minus the charm.
A few weeks after the Apple board was pitched $2,000 cigarettes, Coinbase announced a plan to inject divisiveness and anxiety into its workplace. The crypto-trading platform is testing a software tool that asks employees to rate each other after every interaction. If a colleague says something you don’t like, you’re expected to give them a thumbs-down and notes on how they could improve. Every employee gets a scorecard with a rating from 1-10. Those with lower ratings are deemed to have lower “believability,” which co-workers are expected to factor in when considering whether to listen to them. You can’t make this shit up.
An organization is a means of leveraging one of our species’ superpowers: cooperation. This is a tool that encourages anti-cooperation, full stop. The process was developed by mega-hedge fund Bridgewater, part of founder Ray Dalio’s vision of “radical transparency.” Dalio can point to 223 billion reasons his management approach works. However, there’s also reason to believe it’s a narrow set of people — mostly traders — who will tolerate a granular scorecard tracking every aspect of their performance. At Bridgewater, 20% of employees leave within the first year. Employees are seen crying in bathrooms, and workplace politics such as sex scandals are resolved by ignoring those with lower believability scores. Coinbase can take solace that they also have a great deal of tears in the bathroom, as the stock is 80% below its initial listing price.
Ledgers of stupid people are valuable. And lists of stupid rich people are worth even more.
Robinhood built an $8 billion company assembling a list of people with a particular form of stupidity that’s widespread — financial illiteracy. The firm’s median account value is $240, and its stock has shed three-quarters of its value since listing last summer. Bad for investors, customers, and society. Stupid. More recently, the cryptocurrency Luna put a similar list on the blockchain and built up a “market cap” of over $41 billion … then crashed spectacularly.
The latest list of stupid people is being aggregated by a Valley gadfly/podcast host who is soliciting dentists and small-business owners to invest in Elon Musk’s Twitter takeover. In exchange for the right to buy Twitter at a 35% premium to the current publicly traded price, “investors” pay a 7% fee and 10% of the upside to the podcaster. The pitch makes CNBC’s “Trade Like Chuck” ads (turns out Chuck turned $4,600 into $460,000 “in just two years.”) feel legit. This is stupid for Elon as it increases the stench of desperation around the Twitter deal. An impression Mr. Musk created when he tasked his lawyers with finding a legal rip-cord (”There’s bots on the platform!”) to exit the agreement to purchase shares (for less than they are being marketed by the podcaster). I’d speculate Rolls-Royce would pay for this list of the stupid rich, as there’s likely crossover with people who are potential Cullinan owners.
The most recent stupid company? A: Flowcarbon, a firm started by WeWork founder Adam Neumann that (brace for impact) “operates at the intersection of carbon and crypto” and seeks to “bring carbon on chain to create democratized access to offsets” and “leverage web3 to protect the earth’s natural carbon sinks.” Can I get a venti, ayahuasca Big Gulp with that?
On the strength of this yogababble cocktail, Neumann has raised $70 million in funding. More than half of the consideration came from the sale (i.e., bag-dump) of his cryptocurrency, GNT. BTW, that stands for “Goddess Nature Token” — I’m praying the firm is successful enough to have an S-1. Or maybe I’ll launch a firm that decentralizes AI Meta Renewable NFTs. I’ll fund the company with proceeds from my Community Based EBITDA token. It. Could. Happen.
I was with my boys in the city this weekend. My 14-year-old is … gone. He’s figured out I’m not that cool and seems angry I let the charade go on this long. His favorite thing is, when out with his dad, to ask if he can walk home alone and leave several minutes before me. I know he’ll come back, and friends told me to expect it, but I am still shocked how fast the eye roll arrived.
My 11-year-old, that’s a different story. We went to The Edge, an observation deck in Hudson Yards where, for $38 each, you and a couple thousand tourists get to look at the city from 100 floors up. This, for me, is the seventh ring of hell. However (pro-tip for dads), I recognize moments of engagement with your sons are a function of leaning into what they are interested in. Turns out neither are passionate about CrossFit, World War ll history, or antitrust legislation.
Anyway, he spots the advertised “Thrilling Glass Floor,” which we lay down on and take selfies. He then pops up as he has great news: “Dad … there’s a bar! Should we get Cokes?” I nod, he sprints, I mean sprints, to the bar, stops, runs back, grabs money from his dad, and sprints back to the bar. Sitting, drinking Atlanta Champagne on stone benches, gazing at the city from the tallest man-made outdoor viewing platform in the Western Hemisphere, he looks at me and says, “Isn’t this amazing?” This is the closest I will get to heaven.
Later that night, the boys are asleep, I have had two Zacapa and Cokes and am feeling emotional. I text some people who mean a lot to me and tell them about my experience that day and how I feel about sons/fatherhood/etc. What I’ve gotten right/wrong. They respond, and we’re closer. The next morning I’m sober, have some distance from the moment with my son, and am a bit embarrassed at my texts. I’m more in control, less likely to spontaneously reach out to people and burden them with my emotions. Once again, I’m stupid.
Life is so rich,
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