37.5 Reasons Why I Am “Irrationally” Long Apple

After we sold Babble to Disney in late 2011, we put an “irrationally” large portion of the proceeds into Apple stock. Every sensible person I spoke with about this told me it was a crackpot move, and I should be beaten about the head and the neck with a French baguette.

Apple has been a roller coaster ride in the last several years, and there have certainly been times when I have questioned the wisdom of our decision (overall it’s been a good run up in the last three years, though shy of the performance of the Nasdaq 100 during the same period). Instead of reducing our position, which most level-headed fathers-of-three would have done, I have doubled down in recent weeks, increasing our AAPL stake to about two thirds of our total portfolio. Nuts, right? We do not intent to keep it this high … the plan is to sell perhaps half the position going into Apple Watch hysteria in the Spring.

As you can imagine, I am feeling some suspense as we wait for Apple to release FYQ1 Earnings in a few hours. I will either be bent over and spanked by the whimsy of the market – and reminded that we really should be index funds – or rewarded for my derring-do (which may or may not be a good thing).

For those interested, here is my longstanding investment thesis for our Apple position, followed by my case for making large, asymmetrical investments (diversification is for wusses is the short version), which clearly, given the drubbing I regularly receive from my savvy friends, runs counter to conventional wisdom.

Here’s why I think Apple is a good medium-to-long term play:

People just like Apple better. This has been true for a long time – every customer satisfaction survey, and purchase intent survey – I have seen dozens of these in my compulsive reading in the last three years — always shows that the preference for Apple products exceeds Apple’s current market share. The data also consistently show that people using iOS devices spend more time online, and spend more money, by a wide margin. Sure, there are a subset of early adopters and tinkerers who speak loudly about the advantages of Google’s more open platform, but survey data has shown again and again, for many years now, that iOS makes people happier than Android.

I think the explanation is pretty simple – the more complex the world gets, the more people value simplicity, and no one does simplicity better than Apple. The irony is that the same priorities that caused Apple to lose to Microsoft and friends in the 1990s – obsessing on design simplicity, ease-of-use and the beauty of the product at the expense of cost savings and choice – are the priorities that have enabled Apple to move into a dominant position in the age of mobile computing. Needless to say, form is more important when your computing device is a fashion accessory, and simplicity and ease-of-use are more important when the average user has more than 80 apps on their phone. Bandwidth constraints and the comparatively small size of phone screens also rewards the more simple, consistent and reliable user interface.

So why, I have asked myself for years, has Apple’s market share not kept up with customer satisfaction and purchase intent data? The best explanation that I have been able to come up with is that Apple’s market share has been unnaturally constrained by more limited carrier options (particularly overseas) and form factor options (most notably the absence of large screen size options) and higher price points. So my core investment thesis – not terribly sophisticated or original stuff – was that as carriage increased, and more screen size options and price points were offered, that Apple would assume a dominant position.

Well, it’s taken an awfully long time – Apple moved much more quickly with the iPod to make it available in every form factor and price point than they have with the iPhone, and in retrospect this was clearly a mistake. But finally Apple has (for the most part) delivered, and we are seeing huge market share increases.

An equally important question is why Apple trades at a discount to the market — an unbelievably cheap multiple of 10x forward earnings when you back out cash — when it is wildly outperforming most companies. I think there are three mistaken assumptions, common among investors, that artificially depress Apple’s value: the first is that we would inevitably see a repeat of the Apple vs. Microsoft battle of days yore (mistaken for reasons described above); the second is that Apple’s innovation was all because of one man, Steve Jobs (recent products and performance prove this to be wrong — Steve was critical, but he was also a major impediment); and third is that the most valuable company in the world cannot continue to grow at this clip (mistaken because the vast majority of people on the planet still do not have iPhones, not to mention Apple Watches, TVs, Macs, and whatever is coming next).  My friend Jay Haynes provides a great analysis of Apples more rational value here — http://bit.ly/1b85AUu.

The market is easily disappointed, and expectations tonight are extremely high. I am optimistic … signs indicate this is likely to be a big one … but it’s always possible that manufacturing constraints will result in a merely great quarter, rather than a truly extraordinary quarter, and this could result in pain for outsized Apple investors. It’s happened before.

If the stock gets a lift, we will unload some and begin to diversify. If AAPL pulls back, we will wait it out, because I think 2015 will be an extraordinary run for Apple. I think the Apple Watch will over-deliver (despite legitimate battery concern), Apple Pay has the potential to be a juggernaut, and I think the home and health app ecosystems will be transformative in the next few years.

In terms of stock movement, though, looking beyond 2015, I am less certain. There is no question in my mind that Apple will continue to grow at a staggering rate – staggering for the largest company in the world – but I have learned in the last few years that the market is emotional, and revenue and market share are not enough if investors lose faith, which is what happened in late 2012 and 2013.

I also believe that there are cycles of single platform dominance (think: AOL in the 1990s) and diversification (think: explosion of the internet thereafter). It seems logical to me that single platforms dominate in periods with bandwidth constraints (early internet, and early mobile) when a controlled environment can deliver a better experience. At some point, extraordinary innovations and more consistent design standards outside the controlled platform start to lure people away … it’s cyclical. I wouldn’t be surprised to see the mobile web start to pull people away from the app ecosystem in 2016 and beyond. I also think that Oculus Rift and Microsoft HoloLens are awfully compelling and gesture towards some big changes in the next decade.

The AOL comparison above is actually quite apt — my first investment was $1,000 (every dime I had) in AOL in 1991 or 1992. It grew 100x, if you can believe it, in the next 8 or 9 years, and then lost 80% of its value following the Time Warner merger. I will never forget reading an article in Wired magazine in mid-90s, when I had made 10x in AOL and was considering selling, in which Steve Case was quoted as saying “The average internet user is getting less sophisticated, not more sophisticated as more people come online” and thinking, “he’s right, I won’t sell.” The globalization of mobile devices is not dissimilar. Having said that, I learned a lesson by holding AOL too long. Cycles.

The case for asymmetry: I do believe that making large bets in the market you best understand, is among the better ways to generate outsized returns if you are risk tolerant. Think of it as extreme Warren Buffet principle — instead of investing “in what you know” across 6-12 companies, invest overwhelmingly in the one company you know best and believe in most. You will also end up learning in the process,  like it or not … I have read several posts every day for twenty years now about companies in our portfolio — compulsively, involuntarily — and this has probably helped with my broader understanding of the marketplace. (Our biggest bets, for those interested, are, in order of size: Apple, Google, LinkedIn, Chipotle Mexican Grill, and Tesla, all of which I believe in as long term holds.)

Having said all that, as I sit here feeling a little zesty percolation in my torso an hour before Apple’s FQ1 earnings release, I am humbled by the fact that the Nasdaq 100 has averaged a 25% annual return in the last five years. Very hard to beat that kind of performance over time (not that I assume it will continue to grow at this rate). If there is one thing I do think you can bet on, it’s that the Internet will get bigger, and technology will continue to be a driver of global growth for decades to come. So yes, I think we may join the other middle aged milktoasts, with the backbone of a chocolate éclair (to confuse food metaphors and borrow a phrase from Teddy Roosevelt), by moving most of our position in the next year into a diversified — though tech-heavy — ETF position. But we will still own some Apple, and I will still be cheerleading on the sidelines.

UPDATE: As everyone now knows, Apple absolutely crushed expectations … unbelievable results: http://nyti.ms/1EpeKOH

I just listened to the earnings call, and a few interesting take aways: Tim Cook said only a “low teens” percentage of current iphone users have upgraded, so most of the upgrade cycle has not yet begun; they saw a higher Android switch-over rate than in any prior new iphone release; and Cook reminded folks on the call that the vast majority of the world does not yet own a smartphone. This is what makes the Apple story so extraordinary — the biggest company in the world is growing at the pace of a startup, and there is a rational argument that this could continue for a few more years.

Though I think the company is positioned to continue to grow it’s fundamentals at a staggering rate for a few years, it’s likely that Apple’s buzz as the preeminent tech innovator will crescendo in 2015. And stock price, at least in the case of Apple in the last few years, is more tightly correlated with investor optimism than fundamentals.

Why Jobs and Zuckerberg Are Bad Role Models, Luck is Understated in Success Stories, and “Nice Guy” Business Leaders Are Ascendant

Facebook filed to go public last Wednesday, and we are all awash in hagiographies to Zuckerberg, stories of the determined, bright young Harvard drop out who, through force of will, has revolutionized the internet and human relations. Like all invention myths, these stories leave out both the inevitability of the evolution of a facebook-like platform, and the unoriginality of the idea at the time of Facebook’s launch.

This meme is not new – we all know that invention is usually evolutionary, more like the aleatory, methodical process of natural selection than the “Eureka!” shouting epiphany of intelligent design (Steven Johnson’s Where Good Ideas Come From is insightful on this point). We exaggerate the impact of individual geniuses, without whom we like to think the world would be profoundly different, for two reasons, as far as I can tell: Because it makes for better stories, and because we want to elevate human agency, we want to believe in our individual power to bend the world with the force of our will.

We are not wrong, it’s an extraordinary time for innovation, and individuals can have profound impact. But at the same time I think wildly successful people have an obligation to say: “Yes I worked my tail off, and no, I am no dummy, but it’s also true that I got really really lucky.”

I have gotten lucky, and I am working hard to get luckier still.  Clearly Success = some combination of hard work, intelligence (more the ability to learn incrementally from experience than some kind of mystical genius) and luck. The first two are requirements for admission, and you have to keep at it until you find the third. Older and wiser people like Warren Buffet and Bill Gates are more likely to acknowledge the role of luck in their success – both of then have spoken about it eloquently — and Malcolm Gladwell did a good job of describing the luck factor in Outliers. Bo Peabody came clean in his thoughtful book, Lucky or Smart. But it remains wildly under-recognized, in my opinion.

Why does this matter? It matters because if people think innovation happens because of the actions of Isolated Geniuses, they draw the wrong conclusions about their own potential and how innovation happens. It’s easy to draw the wrong lessons from hyperbolized success stories. You could conclude, for instance, that when brought into a new social media startup, you should stall, rip off the idea, and go it alone (Zuckerberg). Or that true visionaries scream at developers and designers, tell them their products are shit, and storm out of the room (Jobs). Needless to say there is much that we can learn from Jobs and Zuckerberg, two brilliant innovators — some if it is useful and broadly applicable, the rest historically specific and potentially misleading.

I am about half way through the Jobs biography (its been temporarily displaced by Thinking Fast and Slow due to my AMPs syndrome), and I think Isaacson deserves enormous credit for keeping the extraordinary story of Steve Jobs tethered to the ground. If there ever were a case that individuals can be overpowering forces on history, lead-weighted billiard balls that profoundly alter the picture, Jobs is right up there with Einstein and Hitler among the strongest cases. He achieved extraordinary success not once but thrice with Apple 1.0, Pixar, and Apple 2.0, and he was a wildly original rogue force.

The problem, however, with Jobs as an example, is that what has worked for Apple is very nearly the inverse of what works more broadly online. The idea of locking people in sealed chambers for years at a time to develop products incompatible with other standards, without any feedback from users, is pretty much the antithesis of the best way to navigate the emergent connected, social-media-accelerated world, in my opinion.

My guess is that if you were to plop Steve Jobs in various places and times in history – the precisely same Steve Jobs with his peculiar psychological blend of brilliance, iconoclasm, and a borderline sado-masochistic stinginess with warmth and affirmation (arbuably a result of his fraught relationship with having been put up for adoption, according to many of his intimates) – in 9 out of 10 cases he would not have been a business success. He would have been, as Steve himself said, a broke poet in Paris (a career path I think of warmly, by the way). It’s not easy to be successful in business if you are uncollaborative, egotistical, disinclined to give others credit, and very nearly completely blind to the obstacles. Indeed, you are highly likely to fail with that disposition, it’s a low probability approach, but if you succeed, you have a shot at doing so on a large scale, in a memorable way. And thank goodness Steve Jobs did so — as many of you know, I am among the faithful when it comes to Apple products, and believe a forceful personality was necessary in this case to elevate design in the anarchic world of technology.This is what’s missing from so many of the success stories that surround us, in vivid Technicolor: data on probability. It’s a classic case of availability bias, and in the Gladwellian era of business journalism, we are ever more focused on celebration of individual stories, often selecting for the anomalous.

My personal reality distortion field is a case of optimism, and I believe there is mounting evidence that the business environment is changing in ways that increasingly favor the kind, generous business leader.  “Nice guy” business leaders still fire people who don’t perform and make hard decisions, but they consider it their job to create warm supportive environments with opportunities for growth. The Barry Diller approach, which Steve Jobs was also susceptible to, is going the way of the hammered dulcimer. There are three reasons for this:

1)   The importance of attracting talent – the best people are less and less willing to deal with hot-headed leaders, because every year it’s getting easier to start companies or change jobs if you have desirable skills.

2)   Customers are more and more informed, and they like supporting companies that are forces for good.  Obnoxious leaders breed obnoxious companies, and the cost of alienating even a very small subset of the population has gotten lot higher.

3)   Industries are increasingly non-zero sum, and consequently businesses with more collaborative cultures outcompete those with less collaborative ones. This is category dependent, of course – Amazon’s winner-take-all approach may be well adapted to the low margin e-commerce environment.

All in, I believe that the highest probability paths to success and happiness — two conditions, it should be noted, that are often uncorrelated – are not well exemplified by Jobs or Zuckerberg. Ruthlessness born of misanthropy or alienation has propelled business leaders for generations in zero sum game industries, but it’s increasingly ill-adapted to the modern world, and from a happiness perspective, you don’t want to be that guy. This was one of the more surprising take aways from the Jobs biography – he seems remarkably discontent, all things considered. He treated us customers a lot better than he did the people immediately around him, and the latter is what sets the table for life satisfaction.

As Steven Covey said years ago, helping others succeed may not always be the fastest way to succeed, but it never fails.  It’s not the Jobsian way, but if you only have one life to live it’s the higher probability path.

An Old Trunk

When I started this blog a little over a year ago, I had just lost most of the writings and photographs I had from the first half of my life due to a bill paying snafu with American Self-Storage. I wrote in my first post that this loss had caused me to feel quite painfully how evanescent our memories are, more gaseous than a solid at the end of the day. I wrote that I felt “the loss that a prosecuting attorney must feel when critical evidence is destroyed. Evidence of my younger self – how I thought, felt, came at the world.”

It was also freeing — nostalgia is the original ball and chain, and I knew none of the material was world-changing — but it smarted. I had forgotten at the time that one trunk stuffed with old papers that I had intended to bring to storage was still in a corner in our office. I have thought about this trunk quite a bit since I re-discovered it six months ago, but I haven’t had the time, and more critically the emotional energy, to address it. I have quietly kindled hope that it might contain a stash of old writings and photographs of some significance to me, and as that hope has risen so too has a proportional fear that it’s filled with nothing but worthless old bills. So I haven’t been able to bring myself to open it. This despite the fact that the trunk has been sitting in the middle of the reception area in our office, staring me down every day.

Today, Sunday, I came in to the office and summoned the strength to crack it open. I was overwhelmed by the contents: dozens of old photos including one of my beloved old Kawasaki 450 LTD ; copies of Mondo 2000, an early 90s magazine about technology that some of you will remember; files of book reviews and whimsical essays I wrote for the Arkansas Democrat Gazette during my Little Rock years (which I never thought I would see again, published pre-internet); a pamphlet about “how to get on-line (sic) with E-World and the Internet!” — Apple’s ill-fated answer to AOL in the early 90s; a flyer for a mail order t-shirt company I had started called Wordwear (which taught me the important lesson that my taste is not universal); a big stack of letters from Jack Murnighan and Leif Ueland in their post-college years; a book proposal which would be picked up by a new york agent (very exciting at the time), but would not result in a book contract; two binders of college writings; a dorky invitation to a going away party I threw when I moved from Little Rock to New York (see below); a copy of Lotus 1-2-3 for the mac; and a photo of me as a child in my father’s lap, among other things.

Among this sundry detritus of my hapless 20s, I just found a handwritten note on a random piece of paper about the state of my relationship with the lovely but ultimately incompatible woman with whom I was living at the time. The note is dated November 18, 1993, which was, extraordinarily, 17 years ago (I was about 25). I am changing the name to protect the innocent:

“I sometimes feel that Z and my relationship has terminal problems. I get depressed, feel vulnerable, and then feel more in love with Z than ever. I have a solitary side of me that is not simply a form of solace in the absence of love, as it appeared to me during long years living in the absence of love: it is a relishing of our human condition that will always be with me. And I have a carefree, social side that is constitutionally autonomous. And I also have a powerful need to love and be loved exclusively. I do not think these facets of my personality are incompatible with one another, but they require a soulmate who does not feel that these other parts of my life are competition — a soulmate who shares these qualities.

“I think Z does share these qualities but nonetheless sees them as competition (mine anyway) for our love. And I do not know whether or not this can change.

I think this was a long winded way of saying that I needed to find a woman who was willing to give me room for my sometimes solitary relationship with myself, and my appetite for social shenanigans. It’s wonderful to read this years later realizing that I have found, married, and had three children with such a woman.

My favorite line from the above, which of course I have no recollection of having written, is this one — “I have a  solitary side of me that is not simply a form of solace in the absence  of love, as it appeared to me during long years living in the absence of  love … ” Apparently I thought, before I had fully experienced a loving relationship with a woman, that my relationship with myself was a consolation prize. It’s nice to learn otherwise.

a few pieces of dorky detritus from my 20s follows …

The Fate of the Purple Spotted Editor: Evolve or Die

Many of my friends are editors.  We employ editors, or more accurately, former editors. They are a wildly talented collection of people. They have refined over many years a skill that, like making watches by hand, is extremely difficult to acquire. Good editing is a thing of beauty, a high art. And like many painstaking, manual crafts, the market for it is shrinking.

The glass half-empty view is that editors are obsolescent – they are giant pandas in a receding bamboo forest.  As the supply of editors outstrips the demand for them, the cost of the service of editing declines. New York is bursting at the seams with wildly talented editors who are under-employed, or about to be.

Many denizens of the print world seem oddly calm, like violinists on the deck of the Titanic, whether because they honestly believe the ipad will save the business model, or because they don’t think there is anything they can do about it. But panic, frankly, is the more rational response. The value of traditional editing skills is collapsing, and the new skillset in demand is evolving quickly. Editors have a tough choice right now: take a pay cut and learn the new skills, or go the way of the hammered dulcimer.

Why is demand for traditional editing skills going away? Three reasons:

1)   We have far better data with which to judge the success of writing than we used to, and this data is available to everyone. Traffic, engagement data, and social media success provide a much clearer picture of the effectiveness of a piece of writing than the opinion of a single editor. Refining one’s writing style based on this feedback loop is the best editing process available.  We’ve already learned quite a bit from this iterative process – we’ve learned that most readers prefer the raw, opinionated, sometimes emotional voice of a blog post — or an article written like a blog post – to the objective, painstakingly rendered linguistic object that is a finely edited article. The evidence suggests that a portion of what editors have done in the past – removing bias, encouraging a measured consistent tone – makes writing less engaging to most readers.

2)   The length of an article or post has become relatively unimportant. Space is free, and it really doesn’t matter whether or not readers finish articles — we need users to engage with what they read, comment on it, and then continue to interact with the website in other ways. Therefore, the age old challenge of honing, trimming and sanding articles until they are the perfect size to slide into precisely shaped slots in newspapers and magazines is of diminishing value. The importance of the title and the lede – the first several sentences in a story – remains paramount, but if a writer chooses to prattle on for an extra page, and the reader finds something else on the site more interesting, the cost to the publication is low. The correct mentality is one of managing abundance, as people say, rather than scarcity.

3)   Abundance – the long tail — is necessary to win online, and it is impossible to produce abundance with intensive editorial process. It’s prohibitively expensive. So it’s necessary to develop another skill: the ability to coach teams of people who create an abundance of content, and help teach them how to do three things: (1) read the data to figure out what works from a voice and style perspective, and (2) use the various levers of google trends, facebook, twitter, stumble, and so on to understand what readers are interested in, and (3) push content out to the places where those readers are looking for it, packaged in a way that enables it to succeed in that environment.

The old craft of editing isn’t going away completely, of course. Carpenters still make rocking chairs by hand, and there will clearly always be high value segments of the market where the cost of a full editorial rolfing makes economic sense. Indeed, parenting is a high value ad category, and we continue to do traditional editing in a number of sections throughout Babble.com. But it remains the case that traditional editing is shrinking as a percentage of the whole. If you want to be on the right end of the demand curve, you are going to have to develop some new skills.


The glass half full view is not quite so grim: the role of the editor is evolving dramatically – so dramatically, in fact, that perhaps they should be called something entirely different. The brilliant and prescient Sean Mills, who runs Nerve.com out of the same office as Babble, is talking about calling new Nerve editors “content producers,” which may be more apt.

Editors have historically had two jobs: finding interesting material, and making it better. Next generation editors, if we still call them editors, will do two things: identify great content creators, and help them package and distribute their content in a way that is mutually beneficial. The relative value of the brands of content creators is ascendant, and publishers need to think more like coaches who are also business partners. (I have a number of additional thoughts about this that I am going to put together in a post titled “unsolicited advice for the New York Times.”)

UPDATE: I just had an interesting conversation with Sarah Bryden Brown, Babble’s VP Content, in which she made the case that the new data available to editors makes possible a more effective, hybrid form of editing, informed by both traditional editorial principles and the new science of audience engagement. She makes a great point — even if an increasingly small minority of the total content produced is editing by a third party, the quality of that editing is arguably better if informed by the old art and the new science.

Where can you learn these new skills? There are a handful of online content companies that are doing this well. Huffington Post, NYMag.com and Gawker Media have all figured out how to innovate and scale. Babble, our website for moms, has grown rapidly in our first three years to more than 4 million uniques, passing parenting sites run by Disney, Viacom, Meredith, and other old media companies in size.

In the next year we believe we will more than double traffic and revenue, and our approach to content, described above, is critical to our momentum. If current trends continue, we will be the market leader in the parenting category within 24 months. I don’t mean to be overconfident here, you never know, but we are certainly helped by the fact that our competitors are, for the most part, doing things the old fashioned way.

We have an amazing team of editors  – did I say editors? content producers — who are responsible for the phenomenal performance we have seen in the last year, and we are looking for more … we have a lot of work to do. If you are interested, please email a cover letter and resume to jobs@babble.com.

The Birth of Rye Griscom, in Pictures

We are thrilled to announce the birth of our third boy, Rye Griscom — Rye Frederic Volkman Griscom. He was born last Tuesday, October 5th, at 8:36 a.m. He weighed 8 pounds and .4 ounces, and he had not only ten fingers and ten toes, but also ten names until very close to his departure on Saturday. We are utterly elated, needless to say … we had our first breakfast this morning as a family of five, and the house felt full, fully full, in a way it hasn’t before. And of course we are sobered by the certain knowledge that with three boys under roof, we are in for it.

Here, for your amusement and edification, is a photo documentary of the grisly and beautiful series of events:


Alisa not lifting heavy objects the night before delivery.

Kissing the watermelon.





Desending to our lobby at 5:45 a.m. on the big day.



Mr. Bubble, the family patron saint, who makes getting clean almost as much fun as getting dirty, looked over the birth of Rye much as he did the births of our first two sons.





after: 8 pounds .4 ounces of Rye, born at 8:36 a.m. on October 5, 2010


Even the third time around, despite the relative sterility of the c-section experience, we were dewy-eyed fools.



Collecting our little Russian doll complete with antibiotic eye ointment.



Demonstrating his usefulness, Rye put on his game face wednesday morning for a thorough plundering of the spoils of the New York Presbyterian breakfast cart.



The incomparable softness of baby skull peach fuzz.



This photo renders me all blubbery and verklempt. I think Declan is taking in the exciting implications of a 100% increase in the population of his constituency.



Leaving Saturday morning, outnumbered.




The family at our stations Saturday morning -- Rye sleeping, Alisa making pancakes, and Dad playing with his iPhone, while the boys barracade the front door with five feet of pillows and toys. We are rediscovering the delightful false advertising that occurs in the first few weeks of a newborn's life -- lots of sleeping, nose crinkling, and assorted acts of cuteness.



Yes, like the bread, the dry humor, the town in New York. The family is still adjusting.

Learning to Love Your Mental Disorder: A Case for Neuro-Diversity in Business and Life

There is a great piece in today’s Sunday Business section of the New York Times titled “Just Manic Enough: Seeking the Perfect Entrepreneur.” The thrust of it is that a certain level of hypomania – mild, non-psychotic mania associated with high energy, compulsive focus and productivity, but also sometimes delusional overconfidence – may be necessary in order to succeed as an entrepreneur.

The piece describes Seth Priebatch’s impressively maniacal evangelism on behalf of scvngr.com, a company that seeks “to build a game layer on top of the world.” It’s an interesting, grandiose business mission, which is what we expect of internet startups – non-grandiose missions aren’t worth putting up on the wall.

David Segal, the author of this piece (beautifully executed, David), says,

“The hypomanic temperament is, of course, not limited to entrepreneurs. It’s found in politics (Theodore Roosevelt) the military (George S. Patton), Hollywood (the studio head David O. Selznick) and virtually any field where outsize risks yield enormous rewards.  But the business world has contributed more than its share of hypomanics, particularly the abusive, ornery kind. The most colorful of the breed was arguably Henry Ford.”

He goes on to talk about Steve Jobs as an archetypal case.

A simpler phrase for hypomania might be “high octane, reality-proof optimism” – you have to have a certain measure of this succeed as an entrepreneur. Meanwhile, a large dose of this condition makes it nearly impossible to be an effective operator – reality must pierce the semi-permeable boundary of one’s optimism if you are to generate somewhat realistic time projections, which is in turn a pre-requisite for somewhat competent manage of a team. Which is why successful companies are, more often than not, handed off from one personality type to the next at some point in the growth process.

This article fortified a belief I have had for some time now, which is that all the most common forms of “mental illnesses,” in their mild forms, confer advantages as well as disadvantages. Brains come in flavors – some of us are more anxious, some more manic, some more depressive, some more distractible – and these different flavors have been evolutionarily selected for over time because they enable success in different environments.

This is an emergent view – see the great “Science of Success” article in the Altantic last December – but it’s a radical deviation from the convention thinking of what we call, inappropriately, “the mental health profession.” The conventional assumption is that there is a single optimal type of human brain / personality, which we call “normal,” which is the right kind. Any significant deviation from that “normal” brain — which functions as a kind of Copernican sun around which mental illness rotates — is a mental disorder, a neurosis or psychosis that makes its host less functional. (SIDE NOTE: I have great respect for the mental health profession, even though I think it needs to be renamed – my mother is psychoanalyst, and she is an articulate and nuanced spokesperson for the conventional view). I would like to offer a different metaphor – just as there is no one optimal body type, but rather many body types that offer advantages for different sporting events, there is also no single optimal brain, or personality. There is certainly such a thing as a “well rounded” brain or personality that can do a lot of things well, just as there is a body type that can do a lot of sports well. But the best are specialists. Swimming selects for people with long trunks (they float better) and large feet and hands (for better propulsion). Sprinters are stouter with bulkier mucles (which have a higher percentage of fast twitch fibers) and marathon runners are lighter with endurance focused muscles (more slow twitch fibers) and massive cardio capacity relative to body weight. The ideal squash player, I have heard it said, would have short, muscular legs (for rapid acceleration) and long arms (for court coverage).

The many different mental challenges we face select for a similar variation in thinking styles / personality types /brains. What are the most successful among them? Here, it’s interesting to consult the National Institute of Mental Health’s overview of mental disorders. The NIMH website says that 26.2 percent of American adults suffer from a diagnosable mental disorder in a given year. Presumably there are far more with mild cases that do not seek help, and a far higher percentage that suffer from a mental disorder, as they say, in the course of their lives. Could evolution really have screwed up this badly? Here are the most common mental disorders:

  • Mood disorders (Depression, bipolar disorder, hypomania, et al) – 9.5% of the population
  • Anxiety disorders (obsessive compulsive disorder, panic attacks, various phobias) – 18.1% of the population
  • ADHD  — 4.1% of the population
  • Personality disorders – antisocial, histrionic, narcissistic, paranoid – 9.1% of the population

The New York Times article effectively described the advantages of mild mania – more energy, more focus, more optimism. Of course these benefits come with liabilities, which is why, from a game theory perspective, it makes sense that we are not all manic. And of course I recognize that the people who suffer from the extreme forms of all these conditions do indeed suffer and need help – please understand I am talking here about the functional majority of the population, not the small minority that cannot function.

ADHD is associated with creativity – it encourages swift movement between different subjects, which makes it easier to scan for interesting relationships, and ADHD is also associated with hyperfocus once the individual seizes on something that attracts their attention. A disproportionate number of people with ADHD are over-achievers, and, I suspect, a disproportionate number are also underachievers. I wouldn’t be surprised if ADHD and hypomania sometimes afflict the same individual.

I suspect that people with mild anxiety disorders, such as mild phobias and obsessive compulsive disorder, can be unusually good at detecting danger, and unusually good at persistent execution and attention to detail. Every successful business needs people in this spectrum – people hypersensitive to very small problems, who can hunt down deviations in spreadsheets, or errant zeros and ones. Who better to open hundreds of franchises across the country with unerring attention to detail, or perform other important, repetitive tasks precisely, than someone “suffering from” a mild case of obsessive compulsive disorder?

My point here is that any group of people – a society, a business, a tribe in the ancestral savanna – benefits from having a range of personality types. I learned early on that if I only hired people like me, my business would fail. I think the comparison between a modern small business trying to adapt to rapid technology change and a tribe of a few hundred people on the African savanna 100,000 years ago is actually quite relevant. In both cases groups comprised of people with different kinds of brain specialization are likely to outcompete those comprised of a single personality type.

Every group needs a range of specialists – people great at thinking up new ideas and then obsessing on them until they are perfect; people great at executing a vision in a systematic, consistent format and leading a team; anxious people who wake up in the middle of the night worrying about competing groups or threats that haven’t emerged in years. These varying, complimentary (albeit not always chummy) personality types are all highly valuable to the collective.

Alisa, my lovely, nearly perfect wife, sometimes jokingly calls herself “the watchtower woman.” If she hears a faint sound in the middle of the night she bolts upright. She periodically gets migranes which make her so sensitive to sounds and light that she has to sit in a silent dark room with a towel over her head. She has an extraordinary ability to contemplate every possible danger — not just physical danger but a broader, sophisticated risk analysis — that could beset our family. If you know her, you might not have guessed this; she is very outgoing and adventurous and at ease the vast majority of the time. But she is genetically (and culturally … I agree with you Mr. Shenk;)  wired to be a sentinal – as she puts it, the watchtower woman.

I think I have a mild case of ADHD (more on this come in a later post). Much as Alisa likes to think of her mild anxieties in the context of the positive function they perform for the group, I like to think of my ADHD  as AMPs – Absent Minded Professor Sydrome. I enjoy the advantages of the way my brain works, even as I take small steps (daily exercise, obsessive self-management systems) to mitigate the disadvantages.

It’s reasonable to ask why this matters. Mild mental disorders are not as stigmatized as they once were — references to one’s therapist have been fashionable in New York since the 1970s. Having said that, we are not quite at the point at which you can comfortably say that you have mild obsessive compulsive disorder or ADHD or hypomania in a job interview. But we should be headed in that direction. We are each better able to manage our thinking styles — to build on our strengths and compensate for our weaknesses — if we gladly own them. We are more likely to own them, even if they are called neuroses or psychoses, if we understand their benefits. And we are better able to appreciate the different (yes sometimes annoying) thinking styles of other people if we appreciate that the group, in the end, benefits.

Are Old People Better Entrepreneurs? The Case for — and Against — Aging

Last week Newsweek ran an article entitled The Golden Age of Innovation which included an extraordinary factoid: People over 55 are twice as likely to found successful technology companies than people between 20 and 34. I was surprised to read this — I haven’t met many founders of internet companies in their 60s, and I buy the logic that people, broadly speaking, become more risk averse with age. On the other hand, successful older people regain the luxury to take risks, and in so far as they are more risk averse, this may be an advantage — Malcolm Galdwell wrote a profile of Ted Turner for the New Yorker in January in which he made the case that successful entrepreneurs are, in fact, more risk averse than generally assumed. I think he’s right.

My view is that youth, at it’s core, is the condition of not knowing what you are up against. This confers both advantages and disadvantages — I would wager that younger entrepreneurs are more likely to fail, but they are also more likely to create disruptive technologies. Younger people have less data to work with and consequently a poorer understanding of the odds, which means they are far more likely to hurdle themselves with full force in directions that are longshots. There is also the obvious advantage of being closer to new behaviors that are emerging in younger generations that will become prevalent over time. This can also be a disadvantage, because many early markets are inadequately mature to support businesses, but with persistence, in periods of rapid change like this one,  this extra visibility is a great asset.

I am 42, and will be turning 43 later this month. I have only recently identified youth as a condition from which I am recovering. I feel appreciative both of what I am giving up and growing into. We are doing a lot of hiring at Babble right now — we will have grown the team from about 18 to 30 this year. When I am interviewing people, I am always conscious of the trade off between hunger and experience. It’s great to get people in that sweet spot when they have learned enough to be effectual, but they still have something to prove. I consider myself in that sweet spot — I have never been more hungry to succeed, I don’t know exactly what I am doing but I am systematically figuring it out, and the fact that I have a couple young kids at home makes me both more tenacious and more careful than I was fifteen years ago.

On the other hand, I am less willing than I once was to take long odds and go without a salary to turn the world upside down. That’s a privilege that I enjoyed fifteen years ago but didn’t recognize as an endemic, life-stage advantage. That’s the trick, I think — to recognize the advantages of your phase of life, and play to your strength. Now, deep in my early-middle-age (thank you, Fred Wilson, for calling 50 the beginning of middle age), I am working to re-earn that privilege. Youth, the second time around anyway, is expensive.

The Advantages of Grass-Fringed Beach Umbrellas

For years I have been going to the beach with standard old beach umbrellas. No longer. I discovered a few days ago a grass fringed lime green beach umbrella at Waldbaum’s in East Hampton (on sale for $9.99, down from $19.99 — run, don’t walk), and I will tell you, there is no going back. There is something about a little grass fringe in your peripheral vision that fundamental changes your outlook on the world for the better.

When I Was Little, I Was Scared of This Frog

This morning, as we walked by PS 234, a couple blocks from our apartment, Declan said to me, “When I was little, I was scared of this frog,” and then proceeded to straddle it like a broken horse.

This is among the things that amaze me about childhood, both how present fear is, in random little things, and how unashamed kids are in expressing their fear, at least in the early years. I have a vague recollection of being afraid of Dr. Seuss books, and Where the Wild Things Are. Declan and Grey tell us all the time about what scares them, and it’s almost like a physiological description, like an itch or a chill. Are you cold? Yes, a little. Are you afraid of dogs? Yes, even small ones.

It’s a reminder that the shame we all feel around our fears is socially inflicted, and there is a time before it arrives. But fear is still fear, with or without shame, and it’s clear in Declan’s straddle that he is enjoying the distinctive big boy satisfaction of watching it recede.

The Life Cycle of A Sand Castle, in Eleven Pictures

Yesterday, Declan and I built one of our favorite sand castles, which we call the Tidal Pool Dribble Castle Sand Boat. The TPDCSB has many advantages, including immediate tidal pool ocean water interaction, dribbling opportunities, and comfortable seats in a secure boat in which small, not-yet-seaworthy boys can valiantly battle the waves as the tide rises.

We start with a basic sea wall / tidal pool moat / main wall construction.

As soon as our prayers to the wave gods are rewarded, we commence dribbling.

Please note that while it may look otherwise, no actual child labor was employed in the construction of this tidal pool dribble castle sand boat. Declan’s role was purely supervisory. (Note:  Declan broke his right arm a few weeks ago, and has a rubber thing over the cast protecting it from sand and water. Mercifully, he has no idea it makes his arm look like a giant crab claw.)

The completed moat and rino-style dribbles help repel would be invaders from all sides.

Because this is an American Sand Boat, it comes with not one but two cup holders, as well as a toy shelf. The green suntan lotion in the middle is the ignition button.

For a glorious 10-15 minutes, the TPDCSB accomplishes one it’s covert missions, which is to let the construction foreman read a magazine while the captain and his lieutenant install a much needed staircase for egress to the lifeboats, if that becomes necessary.

The sea begins her merciless ravaging.

Declan, who prefers to be the protagonist of merciless ravaging, gets in on the action.

The sea rejoins.

She hath no mercy … this is a close up from the shot above, all taken with the iphone 4, incidentally. It’s now the only camera I use … love the crisp detail in this sea ravaging action shot.

This amorphous crater, good for little other than upending lovers strolling in the moonlight, is all future generations of beach goers will have to deduce what took place here.