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You don’t pay for my time

I had a colleague once who for a time was the leading lights on the investment banking industry. He was in his early 40’s and was smart and full of confidence. Similar to a lot of his caste, his sense of the public good was tied to his power not in giving.

As a banker at the height of his game, he attracted customers like moths to a flame. It helped that he was in the real estate financing business and this was in the lead up to the GFC. As it turned out, he was instrumental in creating some of Australia’s biggest financial disasters that were to come, though he would never be held accountable.

So I remember in this one meeting with a property development company that was eager to float into the all too hungry oceans of investor capital. They had been granted an audience with my colleague who had sat quietly through their presentation whrre their sought to explain what they wanted to do. At the end, he approached the white board, drew three boxes and a couple of arrows and then explained how one plus one could equal three. This was the strategy he would recommend. And with that he finished with the line “You don’t pay for my time. You pay for my expertise.”

Now that is a very simple way of saying I’m bloody expensive. But is it actually accurate. After all, time is ultimately all we have to sell – particularly, when you are an investment banker who doesn’t physically produce anything tangible. It’s bothered me ever since. What was he actually saying?

My take on it was about positioning. His time was so precious that it looked damned silly as an hourly rate. He was creating scarcity around his brand. He had collected expertise and more importantly a network that he could call on to execute the transactions that could deliver them their dream outcome. He only needed 2 or 3 clients cause they were elephants that were totally aligned with him – they made more money, the more money they raised.

It’s a clever approach for a consultant, or anyone in the business of selling their time rather than a product (that could well be an asset created by an investment of their time). Professional sportsmen are faced with the same challenge. Their sunk costs are into themselves, they and their parents have invested years in creating their performance edge. And they are so acutely aware that their time at the top is finite.

One of the benefits of our social media age is that democratization of personal brands. With control of entertainment and information flows having been lost to the masses, the ability of just about anyone to rise up from the cacophony has been made possible. Not that it makes it any easier. The competition for attention has also been amplified by a factor of a large number.

This is the reason people like Seth Godin are so strong on recommending that you focus on your tribe- that group of people outside of your family and friends that will like your story. The more narrowly defined your tribe, the more likely that you can hone your message to resonate with them. It’s the same way that Kevin Kelly arrived at the conclusion that all you need is 1000 true believers to make a living.

So the lesson is if you are in the business of selling your time – which inescapably we all are. Then you better start by focusing on selling your message to a well defined audience. The tighter the framing, the more likely that you can tailor it to their needs. So much the better if that audience has very deep pockets, or in the case of my banker buddy, access to truckloads of other people’s money.


Negotiation tactics nuclear-style

Where once we had red phones, we now have red buttons. The imagery of nuclear negotiation has morphed to reflect the times. When deterrence is based on mutually assured destruction, the need for direct negotiation to avoid misconstrued emoticons is paramount. But with North Korea the destruction isn’t assumed to be evenly shared – hence the bigger button – though perhaps the better image is a battery of buttons (or is the collective noun a ‘minefield’?).

Just how the US imagines it can prosecute regime change is the realm of Monte Carlo simulations. We can be sure that they have their plans, and that they are unlikely to include nuclear weapons – except as a retaliatory contingency. So what can we learn from negotiating nuclear-style?

  • Power asymmetry isn’t all it cracked up to be – Can the US really sustain an atomic explosion on its landmass? Can the US really justify total annihilation of the North in response? These are the implied positions – neither seem particularly sustainable. The implication is that bargaining from a position of relative strength doesn’t help, if the ramifications for any action using your strength are likely to be poor. There are no good nuclear wars.
  • You go first – in a gunfight, it’s the fastest draw that wins. It doesn’t work that way when both sides are missing body parts when the dust settles. The incentive is to avoid action regardless of your relative strengths. In these circumstances, the US has little leverage to force the hand of North Korea to abandon its program as it is caught in a ‘you-move-first’ bind.
  • How to make a credible threat – notwithstanding the above, no one wants to cross a crazy man. It’s the reason ‘white with anger’ is so much scarier than the everyday red-faced variety. In the game of bluster and bad behaviour, President Trump has demonstrated an expertise that none of his recent forebears could match. He is a better actor than Ronald Reagan and has none of the restraint or class of Obama. The thinking behind escalation strategy is to automate the launch process beyond a trigger point – midnight on the Doomsday clock. Trump’s crazy eyes and small hands are all designed to blur his fingers on that trigger.
  • Where’s the escape hatch – from a North Korean dictator perspective, there doesn’t seem to be an option that leaves me alive – let alone saving face. Given my demonstrated disregard for the people of my country, is it really likely that I’m going to get altruistic at the very last moment? What I need is a way out – short of being relocated in a witness protection program. Does the North become a vassal of China? At least that way, the nuclear codes join a bigger library.
  • Coalitions still win – which leads to the real problem with the current US strategy. Coalitions win conflict. Remember the invasion of Iraq, there was a whole sham thing about weapons of mass destruction? This time there can be no doubt about this. So why isn’t there a mass movement to de-arm?


Failing at failing fast

Ever been culpable of rolling an idea up a hill beyond its use-by date? Even with the benefit of hindsight, it can be kinda difficult to spot the optimal moment when it would have been wise to let go. Which is why this ‘fail fast’ fad has me flummoxed. I’d hoped that I could apply it to experience and not repeat the mistakes of the past, but I’ve been struggling to understand what it actually means.

See, I first took it that decisions to abandon a project can be accelerated. The lean model talks about testing your hypotheses and quitting as soon as they fail. So failing fast becomes about setting specific and measurable benchmarks that trigger the escape hatch if they are not met.

A problem with this is that benchmarks may not be simple to define and can be harder to measure – particularly where the concepts are emergent. For example, how do you define a benchmark to filter out the positive responses in market testing that, combined with a little confirmation bias and a dash of inertia, provide more than enough motivation to keep going.

Another assumption is that you can save money, time and effort by stopping out of failures early. But as any trader will tell you, a stop-loss can quickly become a target that simply gets triggered before the bigger trend resumes. The last thing you need if you are committed to a project is to exit just before the opportunity can be made real.


A plan, like a tree, must have branches – if it is to bear fruit. A plan with a single aim is apt to prove a barren pole. – Basil Liddell Hart, 1954

Perhaps the point then is that it is more important to get the big picture right – the big trend that will ultimately underpin the market dynamics that can support success. It’s like the difference between losing a battle and a war.

The genius of Winston Churchill was his ability to filter the chaos through the big picture, so that decisions were optimised for the very uncertain circumstances. “There must be that all-embracing view which presents the beginning and the end, the whole and each part, as one instantaneous impression retentively and untiringly held in the mind.” He had a framework within which to respond to challenges and take advantage of opportunities as they arose. Individual failures are simply events that help to shape the direction taken to achieve the ultimate objective.

David Einhorn likens the challenge to playing poker – where there are things that you know with certainty (your cards, everyone’s wagers), things you can surmise (that fellow’s playing style) and things that you don’t know except at the limits (the number of cards still to be played). There’s a spectrum of uncertainty along which calls are made. The challenge is to identify the key calls, those decisions that will make the biggest difference to the outcome – and tilt the odds in your favour. Again, it’s his ability to assess the context and then the circumstances within that determine the appropriate choices. Failing fast may mean folding early on a hand, but in doing so you’re more likely to have the resources to bet big when the opportunity arises.

So perhaps failing fast is a really a short-term concept within a long term context. And just as “a plan doesn’t survive first contact”, it’s understanding the potential points of failure and being aware of the contingent paths that will optimise chances of success. If failing fast is a skill, it is referring to the ability to dynamically choose the path not the destination. The objective remains to scale the hill, just that it may require pivoting along a few paths to get there. Even Sysiphus can have his good days when it’s as much about the journey as the destination.