PowerApril 22, 2022
“Just as the individual is not alone in the group, nor any one society alone among the others, so man is not alone in the universe.”
— Claude Lévi-Strauss
As a young man, I thought my success was solely a function of my being awesome. My character, my grit, my talent. What a fucking child.
I’ve built companies, had some success in different forms of media, and am a good (not great) professor. The fire that drove my success was not talent or some calling; it was a fear of being broke (again), and desperately needing to feel relevant — to impress my mom, friends, and people I’d never met. When something really wonderful happens these days, it feels as if it didn’t really happen, as I can’t call my mom to cement the achievement. For 18 years, she hasn’t been there. I’m a 57-year-old man who still hasn’t gotten over the loss of his mother. And that’s OK. Truth is, I hope my boys feel some of the same emotions about me when I’m gone. But that’s not what this post is about.
If I’m generous with myself, I do have one skill. I foster a decent amount of loyalty among the people I work with. It’s not a function of character or empathy, only the recognition that nothing wonderful happens when you’re on an island. Simply put, greatness and happiness are in the agency of others.
Married people are happier, healthier, and wealthier than single people. Partners compensate for our weaknesses, encourage us to take risks, and (in a healthy relationship) have the strength to tell us when we’re doing something wrong, unfair, or just plain stupid. Good partners protect you from others; great partners protect you from yourself. It’s true on sports teams, boards of directors, and ensemble movie casts.
Everyone needs counterweights. Indeed, the more weight you carry, the more you need others to balance you. Some of the most valuable advice I get isn’t about what to do, but what not to do. I’ve done so many dumb things in my life. But a number of 15-car-pile-ups have been averted because someone said, “Hey, maybe … don’t.”
Entrepreneurs succeed by navigating an ecosystem of counterweights. Customers want the lowest price and the highest quality. Employees want you to compensate them at, or above, market rates. Investors want to dilute your stake in exchange for their capital, and the big hand of the government is calloused and slow. Finally there’s the most formal, obvious counterweight: your boss, the board of directors.
Building a company requires that you listen to, and balance, all of these counterweights. Each has (traditionally) held influence over the trajectory of your business, providing inputs that lead to course corrections. Early-stage entrepreneurs who ignore their counterweights fail. They lose access to key information and piss people off: Customers stop buying, employees quit, investors sell. Stories of people ignoring everyone around them and coloring outside the lines make for great scripted television, but they ignore the ropes and parachutes that guide the ascent.
Some entrepreneurs achieve enormous success within this system, balancing leadership and consensus. And with great success comes great power — the power to stop listening. Which often results in a fall from grace and loss of power.
The British historian John Acton said, “Power tends to corrupt and absolute power corrupts absolutely.” Some of the greatest tragedies in human history have validated this — we’re witnessing one in Ukraine. But corruption that morphs into inhumanity (Putin) obscures how power corrupts people every day in less stark ways. Power doesn’t just create bad actors, it creates ineffective actors. Ignoring advisers means ignoring their signals that you’re headed toward an iceberg. Immorality is not the biggest threat in business. That’s easy to identify and bleach from the ecosystem. As Dov Seidman said, it’s amorality that is the bigger threat. People who are not bad people, but ignore the externalities of their actions as they continue to host benefits and give earnest speeches about the ills plaguing other sectors of society.
Research shows power dulls you to risk. That is, it decreases the cognitive resources dedicated to recalling and anticipating constraints. As a professor at my alma mater who studies this phenomenon has observed, there are parallels in evolution: Predators have forward-facing, binocular vision to better track prey — at the expense of good peripheral vision. While prey species have more sensitive peripheral vision: “They sacriﬁce depth perception and focus for the ability to detect danger approaching from any angle.” Lions are awesome, and yes, you want a lion running your company, not a nervous antelope. But someone needs to alert the lion to less obvious threats.
Power is a drug that downplays costs and magnifies rewards. People with power are psychologically more inclined to act on their instincts than those without it. Which helps to explain the #MeToo problem: Power has a nonconscious influence on sexual arousal; a common thread among sexual aggressors and harrassers is that they aren’t aware their advances are unwelcome. Power does, in fact, intoxicate.
At a corporate level, the combination of risk blindness and a lack of inhibition creates a vicious cycle. People begin to yes-man you to share in your power. As a result, you start receiving false signals, which artificially inflate confidence, leading you to believe even more firmly in the notion that you are all-seeing, all-knowing, divine even. What’s left is a hypersonic missile with a broken GPS.
Successful companies build guardrails into their corporate architecture. Waffle House, for example, requires its executives to work shifts in its restaurants. At Amazon, Jeff Bezos was obsessed with information flow and decision-making, and he expressly took actions he didn’t personally believe in when he did believe in the team — he called it “disagree and commit.” Bezos understood that Amazon’s success was due in part to his genius but not entirely — that he functioned best when he trusted his team. Beyond the counterweights of Amazon, however, power is having its effect. (Note: I’m especially proud of working Waffle House into the above paragraph.)
The greatest prosperity vehicle in history (America) was built on guardrails: Our Founding Fathers created three branches of government to protect each of them from themselves. The executive is strong in action and given the power to spend money and deploy violence. The legislative is strong in planning, able to coordinate the views of hundreds of opinionated members. Both are subject to the whims of political expediency, however, so the life-appointed judiciary forces long-term principles of constitutional order. At least in theory.
Over the past three decades, we as a nation decided to lower these guardrails and glorify the individual. We got bored of the slow, careful process of deliberation. We fetishized vulgar narcissism and confused it with leadership.
You can see it in corporate governance. We’re obsessed with visionary founders, as evidenced by the increasing popularity of the dual-class shareholder structure. WeWork’s failed IPO in 2019 would have given Adam Neumann stock with voting power worth 20 times that of public shareholders. It took several billions of dollars in losses before the board stopped drinking from Adam’s ayahuasca Venti Big Gulp. BTW, it wasn’t his wife or the board, but the Public Investment Fund of the Kingdom of Saudi Arabia that forced Adam to be less crazy.
You can see it in politics. In 2016, 46% of us decided that our self-regulating system was too slow and/or broken and that the best man to fix it was a failed businessman who’d made a name for himself fake-firing people on TV. Unchecked power made him think he could do anything. “When you’re a star, they let you do it. You can do anything. Grab ’em by the pussy.”
Elon Musk has a lot of power. He’s the richest man in the world, thanks to his 173 million shares in Tesla. He runs two of the most important companies on Earth, and he’s been an enormously positive influence on the electric vehicle market and space travel. He commands the price movements of crypto markets and the attention of 82.6 million Twitter followers. And now he wants to buy Twitter itself — to buy one of the world’s most influential vehicles of mass-communication, or what he calls the “de facto public town square.” It’s also clear there are no longer any guardrails.
I believe Elon will be a poster child for how power corrupts potential. Not the Putin kind of corruption, but the more pedestrian (and still troubling) kind. The kind that reduces effectiveness. Last week at TED, Mr. Musk continued to disparage what’s left of our nation’s umpires, calling the SEC “bastards” for its enforcement action against him after he tweeted he had “funding secured” to take Tesla private. Elon insisted the Commission had bullied him into saying he’d lied and had no funding. The day after Elon’s TED interview, a court filing confirmed that, yes, he had lied, and funding had not been secured. Mr. Musk’s wealth results, in large part, from the protocols of the SEC, not despite them. Likely the biggest one-day hit to his wealth would occur if he were to leave this ecosystem of bastards and re-list TSLA elsewhere. Without subsidies and credits from the entity he has such contempt for (Uncle Sam), would TSLA even exist?
Putting a town square under the ownership of one man has already proven catastrophic. Mark Zuckerberg owns 13% of Meta’s shares and, thanks to the company’s dual-class structure, controls 55% of the votes. As Shoshana Zuboff put it, “Zuckerberg sits at his celestial keyboard, and he can decide day by day, hour by hour, whether people are going to be more angry or less angry, whether publications are going to live or die.”
F. Scott Fitzgerald defined intelligence as the ability to hold two contrary thoughts in your head concurrently. Elon is a) the greatest entrepreneur of his generation, and b) reckless and likely to do more harm than good with Twitter. The second follows naturally from the first, absent strong self-discipline and any guardrails. What we know about power has nothing to do with a person’s track record or moral intentions. Power is a psychological change agent that makes you act erratically. Unchecked, it can lead to disaster (see above: Zuckerberg). With our guardrails in place, someone who committed blatant securities fraud, repeatedly, would be prohibited from serving on the board of any publicly traded firm, much less allowed to acquire one.
Elon’s narrative is that he’ll bring “free speech” to Twitter. What exactly does he want to say/do on the network that he hasn’t said/done already — kill a puppy live on Twitter Spaces? We should be wary of billionaires promising free speech. Musk’s co-founder at PayPal, Peter Thiel, created an entire law firm to put another media company (Gawker) out of business for exercising too much free speech — a lack of moderation — and outing him. In sum, the blood sugar levels of billionaires now decide which content we consume or don’t consume without any financial, fiduciary, or regulatory guardrails. It’s not new — billionaires control other media businesses. However, algorithms and network reach, coupled with the absence of any counterweights, create an exponentially greater blast radius.
Supporters claim that any objection to Musk’s ownership is an attempt to throttle free speech. Evangelists include the governor of my state, Ron DeSantis, who’s threatened Twitter’s board with all the power of his office if they don’t accept Elon’s offer — while simultaneously ending a 55-year-old tax and governance agreement with Florida’s largest employer because it dared criticize his “Don’t Say Gay” legislation. Every single action of both my Senators and Governor is an attempt to capture the gaze of a 60+ year-old Iowan with a straw in his hand. “Hey, look at me … I’m even crazier than that guy.”
The argument about free speech and/or moderation is a distraction from the real issue: Should a small group of individuals — who ignore the guardrails that shaped their success — have so much power that they can acquire and/or extinguish media companies and the influence they command? This is about power, a lack of counterweights, and a history that confirms that when the ratio of power to guardrails becomes this imbalanced … bad things happen. The previous sentence was hurried as two guardrails, aged 11 & 14, demanded I drive them to school. Right. Now. Dad.
Life is so rich,
P.S. Want to learn from a world-class investor? Eric Kim built a $1 billion fund by the age of 40. Enrollment for Business Drivers for Growth closes on Monday.