Capital in the Twenty First Century

I’ll confess I didn’t finish it (audible tells me I made it about three-quarters through). It is, however, a great book, but it does not make for great listening. This one (and it is the first book I’ve thought this about) really should be read on paper.

The central thesis of the book is that the return on capital generally exceeds the rate of economic growth, and when economic growth is slow (as it has been for much of human history) that this leads to a natural tendency for societies to develop extreme inequality.

I’ve long had a “rich-get-richer” argument playing out in my head, but through a slightly different mechanism, which plays out like this: as people get wealthier, their ability to take risk with their capital increases; as this “risk appetite” increases, they are able to devote a more substantial share of their capital to higher-risk assets with a higher expected return; this, then, would lead to a higher overall return to their investments. Think of a person initially holding only cash, then saving up enough money for a down payment on a home, and then to investing their savings in liquid stocks and bonds. Each class of investment (cash, real estate, equities) is riskier and higher-returning than the last, and this sequence leads to an increasing return on increasing capital. Wealthier people are invested in all these asset classes and more, such as hedge funds or privately-held companies.

So it was no surprise to me that there should be runaway effects to wealth inequality. But the rationale Piketty lays out are quite different. I must confess that I did not completely understand the reasons that returns to capital (as a whole, not the varying allocations of capital that I describe above) ought to generally be at a rate faster than economic growth. But the data show convincingly that it is now, and has usually been so. The result is runaway wealth inequality that has only been tempered throughout human history by capital-destroying calamities, such as world wars, that bring people back to an equal footing.

Where Piketty really succeeds, if you ask me, is in linking this argument to the literature describing the extremely stratified societies of, for example, Victorian England. He saying “watch out, these crazy societies could one day be reborn”. I hope he’s wrong, but he’s given ample reason to fear that he might be right.

Review of Lean In

Recently I finished listening to Lean In, which you should probably Google if you don’t already know it. I listened to it as part of a college-friend-audible-book-listening-club, and kept some thoughts about the book as I listened on. Here they are.

If there is one key theme to the book that deserves singling-out, it is the focus on the individual woman as the unit of analysis. Sandberg’s book, when it’s all boiled down, is a entreaty to women, as individuals, to consider a fuller range of career and family options, and gives many “how-tos” regarding how to accomplish some of the tougher options. She is basically saying “You, promising young woman, here is what you have against you and how you can best navigate it”. So although she does pronounce some big goals, such as 50/50 splits in the executive ranks everywhere, her book is emphatically not about what policy needs to do to change things. This is a pragmatic manifesto which aims to give women more tools to confront, as individuals, the institutional sexism that impedes their career progress.

I’m going to get an MBA quite soon, so I’m a sympathetic audience for career-enhancing tips, and I found much of her advice quite applicable as well as useful. Perhaps sadly, though, much of her advice is either not gender specific or only applicable to elites.

Sandberg’s advice can be broken down into two categories: that aimed at helping women more adeptly confront sexist barriers in their professional lives, and that aimed at helping women to make choices that balance their professional and personal lives. For the former, most of this material is, when one really gets down to it, applicable in equal parts for men For example, when outlining the differing negotiating strategies of men and women, the advice that she gives to her female readers is to use tactics that are, in their essence, a subset of the “principled negotiation” methods outlined in Getting to Yes. Men, too, would be well advised to adopt state-of-the-art bargaining methods, not to mention develop relationships with mentors, and to have some thoughts about their future careers.

Although Sandberg is absolutely right to attack the stigma placed on working mothers from all sides (showing, for example, that children with home care from nannies develop just as well and have just as healthy a relationship with their mothers as those raised by full-time moms. I, for one, am one of these children, so I should hope so.), it is just not the case that many women are in a position to consider many of the options that Sandberg urges her audience to feel better about, such as working more flexible hours or having a nanny. Sandberg acknowledges this, and this does not affect the efficacy of her argument; it does, however, limit its scope.

The most powerful part of the book is Sandberg’s entreaty to women not to put their foot on the brakes of their professional lives until they are indeed confronted with hard tradeoffs. The point of the practical portions of the book being, of course, tools to give women a better set of options in these dilemmas.

The book is littered with references to studies and much of its summarized research is quite compelling. Sandberg erred, though, in making her argument for the motivation of the book; namely, that women’s progress infiltrating all strata of professional ranks had stalled. Her data, which were only long-term statistics, only showed that progress was not yet complete, not that it had slowed down. This mishandling of the data led me to approach the rest of her citations with a more skeptical eye.

It’s an interesting book, but far more so for its cultural cache than the material inside.

What I’m looking for at Wharton

After we shut down Building Hero, my career goals were pretty simple: start and launch new products and businesses. My analysis led me to conclude that this happens in essentially two ways: (a) as an independent entrepreneur and (b) as a product manager (or similar role), usually within tech companies – after all, big companies launch new products all the time. After taking as many coffees as possible, putting out a few feelers, I concluded that (b) was going to be a very tough role to land with my background. And for (a), despite working on Building Hero for two years, I never built up a deep network in tech; I explored an idea for about a month but concluded that I didn’t have either a strong idea to build on nor a network in tech to leverage.

I concluded that business school would be a good chance to learn many of the basics of business-building and the product development process, build a great network alongside a world-class cohort of people, and that my degree would provide me with significant reputational capital. In addition – and I didn’t articulate this beforehand – I think the two years at business school will be a great opportunity to create new things with the resources available to students (not least the amazing cohort of fellow classmates).

On August 4th, I’ll start the first of two years getting an MBA at Wharton. One of the pieces of advice they give you when you’re a matriculating MBA student at a school like Wharton is to take some time to really think about what you want to get out of it, because there will be so many potential demands on your time. So as I’m winding down my current job, I’ve started to think about what I want to get out of the whole experience.

Below, I list out the overview of what I want to achieve, broken down into the following categories: academics, community, leadership, personal branding, and finally, some specific plans.

Academics

As mentioned, academics are one of the four core reasons I decided business school would be a good choice for me. I actually probably weight academics more strongly than most other matriculating students; I’ve experienced firsthand what it’s like to try and build a business without working mental models, and it was a tough experience in which I usually felt lost. Only late in the experience when I started taking classes on product development and reading more widely on the subject did I realize how lost I truly was.

At any rate, a true accounting of my skills would rate me a bit behind the curve in many basic business categories. I’m most excited about classes on product development, entrepreneurial management, marketing, and leadership – as they relate most directly to my career interests – but I’m also excited to get a basic education in finance, operations management, and accounting. So – the basics.

Community

The greatest value in business school is probably in the cohort. It certainly felt that way when I got to meet my future classmates this past Spring at Welcome Weekend. So it would be a crime not to find ways to maximize that experience.

Clubs are a big part of business school – both in terms of the career development process and the social scene. Career-wise, the Entrepreneurship and Technology clubs align most closely with my goals. I am going to check out the Marketing and Design clubs as well, but as long as my career goals don’t change it’s seems relatively certain that the Entrepreneurship and Tech clubs will get the majority of my attention. Socially, the Photography and Climbing clubs map perfectly to my current outside hobby interests, but who knows what will gel.

In addition, I’d like to find ways to engage with both the Wharton and the Philadelphia communities outside of traditional channels. (There is a specific Wharton-led opportunity in this area that I am super-interested in, though.) My roommate and I discussed creating a sort of lifestyle/community email newsletter that we’d curate. We’ll see about that – but I’d like to get involved in something that isn’t just put out on a platter by the school. Which takes me to…

Starting Something (and “Leadership”)

Leadership really is a separate category, containing elements of specific training, academic learning (i.e. the mechanics of emotional contagion), and, I dunno, just having to be a leader. My career ambitions put me at the top of organizational structures by definition (i.e. I’m not looking to be a hugely successful investor), so this is a very important skill to develop.

There are some specific leadership programs offered by Wharton which I’ll get to below, but my number one goal at Wharton is to start somethingRight now I’m agnostic on what that will be; it could be a new club on campus, a civic organization, a company, or even “just” an event. But this is an important goal to me; at the very least I want the practice of creating something out of nothing, and I don’t want to let a prime time and a litany of resources for doing so go to waste.

Personal Brand

Careers are changing – everyone knows that the days of working for years at a single company or organization are gone. As Reid Hoffman puts it:

Whereas we used to have a career ladder, now we have a career jungle gym. Success in a career is no longer a simple ascension on a path of steps. You need to climb sideways and sometimes down; sometimes you need to swing and jump from one set of bars to the next. And, to extend the metaphor, sometimes you need to spring from the jungle gym and establish your own turf somewhere else on the playground.

The value, then, of a personal brand is paramount, as your environment will constantly be changing throughout your career.

I’ve got two primary goals for my personal brand: (a) build a fantastic network while I’m at the school, and (b) to keep writing and use my blog as a tool to promote myself.

My view is that connections are best formed organically; trying to network has never been my thing, but when you actually have things going on – you’re trying to get an event off the ground, you’re building a company, you’re writing a blog post, etc. – the people that you reach out to to collaborate with often become friends and future collaborators. So I’m not necessarily going to devote time to this specifically, but my hope is that Wharton will provide a fertile environment for my network to grow as a form of “exhaust” from all the other shit I’ll be trying to do.

I realized that I really enjoyed writing, and that the process of writing really helped me distill and structure my thoughts, during the time I was putting together sixteen application essays for business school; these essays dealt with serious topics about my life and future ambitions, and they helped me form a vision for the future. So I love writing on this blog, and at the same time, having a well-articulated point-of-view on relevant topics is a great way to establish credibility with other people. So I’m going to write on this blog more regularly (my goal is to post twice/week) and to promote it more heavily. I have readership and engagement goals, but I won’t share those for now. I may have to establish a more consistent theme, but this is something I’ll worry about later.

Specifics

In terms of specifics, I will almost certainly look to get an internship in tech over next summer, which most likely means I will be getting involved heavily in the tech club early on. My view at the moment is that this kind of internship will provide me with the most relevant training and the right kind of optionality to either start a company or to gun for a product manager/product marketing manager role after school. I imagine I will be competing with a number of students with similar career goals, so it will make differentiating through personal initiatives all-the-more important.

There are many specific programs that Wharton offers; the ones that I’m interested in mainly fall into “leadership development” and “entrepreneurial resources”. On the leadership side, the programs that interest me the most at the moment are: the Venture Fellows program, possibly because I did a 30-day NOLS mountaineering course, which was one of the most amazing and personal-growth-catalyzing experiences I’ve had; the Non-Profit Board leadership program – I work at in the non-profit space now, and recognize the inherent difficulties of running these organizations well, but at the same time am a huge believer that civic involvement is an important part of a well-led life; and their Executive Coaching program: growing up I played baseball for all of my youth, and had great coaches shape my development; I am excited to see how “coaching” – outside perspectives and regular feedback – works outside of the athletic setting. I see no reason why it should be much different.

On the entrepreneurial resources side, Wharton has a business plan competition, and a “venture initiation program”. It seems clear that at the very least for practice that I should enter the first; the latter, which is geared around providing resources to actually start a company, we’ll have to wait and see about.

And just as importantly, some noes. I’m not particularly interested in applying to the Leadership Fellows. I can’t really articulate why, but it doesn’t really interest me off the bat. I’m similarly not interested in being on the Welcome Committee – in this case, although it seems interesting, it just doesn’t seem as interesting as many of the other opportunities available, so I’m going to deprioritize it.

That’s the plan for now! I’m sure it will all change.

Facebook was right to run its test

Lately, there has been an uproar over Facebook’s study on emotional contagion in a large number of users’ feeds. The study seemed to indicate that Facebook had the ability to make people happier or sadder – that is, manipulate their emotions – by manipulating the content of their feeds.

Lots of people don’t like the idea of being unwitting lab rats for experiments, or at the prospect of a corporation having the ability to control our thoughts and emotions, or just the danger of conducting such a study:

In my mind, however, these arguments rest on a faulty assumption, which is that Facebook isn’t already manipulating our emotions, at least by accident. Indeed, the studies done on this topic seem to suggest the opposite; Facebook already impacts its users’ emotions significantly. (onetwo)

In addition, Facebook has to use some algorithm to show content to its users. I think it’s a mistake to assume that there is a “neutral” scenario, especially when all evidence is to the contrary.

Then this issue really becomes a question of understanding what’s already happening, not about doing something different qualitatively different, and it’s clear to me that in this frame Facebook should be conducting experiments like this (within limits, obviously).

The take by some, though, is that it’s not the experiment itself that’s troubling, but that it was conducted without its users knowing:

But again, if there really is no neutral scenario, and your emotions are going to be manipulated in any sort of consumption of Facebook, then even before any intentional tests have been done, you’ve already opted in to having your emotions manipulated. Indeed, you opted in when you started using Facebook, and every time you added something to your Facebook universe, via a like or added friend, you increased the scope of what could impact you.

So I’m glad Facebook is doing this research, and I’m really glad they’re publishing it for external consumption.