I was sitting in the office the other day when the following conversation ensued:
Coworker One: Wow, I just noticed your sweet (insert_nice_car_here)! What kinda 0-60 you seeing on that?
Coworker Two (nonchalantly): Hey thanks. Yah its all dinged up now.
Silicon Valley is filled with people who are fantastically driven, talented, hard-working and happen to live in an industry that specializes in wealth-creating disruptions. It is also generally filled with highly educated progressive people who are – to put it mildly – slightly less comfortable displaying their wealth than, say, 50 Cent. Or T.I. Or every other idiotic rapper out there.
Now, that’s not to say that we don’t LOVE our BMWs and our SF Marina sailboats, our big-time Palo Alto homes, our Porsches or even (in my relatively impoverished case, right out of college) our tacky red Nissan 350zs. We just don’t want to look like dicks while loving them. That’s so….LA. Barf.
So how’s a fundamentally nice Silicon Valley person to square this awkward social situation circle? BitBubble’s here to help with this handy list of tips:
- Self Deprecate: When confronted with a social situation that points out your latest sweet toy in a cloying/envious manner, simply turn attention to your own flaws. A few examples:
- “Oh! I bought that car to get over a quarter life crisis!”
- “I wear a Rolex because I’m just a douchebag at heart!”
- “Yah I won the lottery at Google and blew all my cash on this giant house. Not smart financial planning but what the hey! Maybe I should go look for a job at AIG!”
- Tarnish Latest Toy: Its also useful to wipe the psychological luster off the shiny new house/car/bling by finding some horrendously minor flaw with it. A few examples:
- “Oh look. There’s an invisible scratch on the underside of my Rolex!”
- “You know, I know its a Porsche convertible but the top takes 30 seconds to drop! Guess who has two thumbs and got ripped off on the deal?! THIS GUY!”
- Compliment Envious Complimenter: File this one under deflection mechanisms. When confronted with a compliment on your bling, find any way to compliment the complimenter. Try not to patronize them but this is secondary. Being patronizing is better than the ugly feeling that accompanies privileged guilt. Examples include:
- “Wow, your Honda Civic is AMAZING! No power windows either!!! You’re so retro cool, really.”
- “I love the deals at Target! That Mizrahi fellow really does it do it better than Marc Jacobs, no?!”
Of course, you can mix and match from the 3 categories above. I’ve seen compliment deflection and self deprecation combined to very useful effect.
The epic clusterfuck of 2008 has since encouraged in me a desire to learn the arcana of the financial world. Collateralized debt obligations? I can tell you all about it. Chinese savings glut? Got you covered. Something to throw in the faces of relatives who still spout nonsense about “YOU SHOULD BUY PROPERTY IF YOU DON’T WANT TO DIE POOR”? Oh yeah. Check.
But most of the news articles and books have focused on the here and now. If you want to cast a wider net, be sure to pick up Niall Ferguson’s “The Ascent Of Money: A Financial History”. While poorly named (especially since it was published in early 2008, a few months before Lehman), the book walks the reader through the earliest conceptualizations of money – whether on physical tablets or on silver and gold coinage. It covers European expeditions to South America such as Francisco Pizarro’s conquest of the Inca empire.
Ferguson then speedily moves on to medieval Europe, the birthplace of so many of the financial innovations we take for granted today. Which brings me to an interesting digression – in Silicon Valley, we’re so warped in our own sense of self that if it doesn’t involve something built with Twitter Annotations or geolocation data, it doesn’t “feel” like innovation. But its safe to say that the modern economy exists because financial innovations such as banking, joint stock companies, promissory notes and bonds/securities came into being.
But I digress. In the book, we visit early 13th century Europe – when Fibonacci (of the eponymous sequence fame to computer scientists) published his pathbreaking Liber Abaci which introduced Europe to Arab (Indian, really) numerals and did away with the disastrous Roman numeral system and reduced friction in trading and currency conversion. Yup, I thought it was fascinating too.
We then discuss the introduction of banking (derived from the Italian “banco” or bench where business was conducted) and the Medici banking dynasty of the Renaissance – yes, the rich hedge fund guys were arts patrons and douchebags hundreds of years ago too. Some things never change.
Bonds and public debt – also invented in Italy, much to my surprise – follow the discussion on banks. Did you know that bonds were first invented to finance wars? I especially loved the quote in the book: “War Is The Father Of All Things” even though its not quite accurate and a deliberate exaggeration. The chapter on bonds is hellish fun.
At a fast clip, we arrive at the origins of the stock market, first invented by the Dutch as they sought to pool together finances for The Dutch East India Company (you can thank us Indians for our important indirect contribution on this one at any point now) – conquest is risky business, after all, especially when you’re sailing thousands of miles and when there’s no call centers (get it?) to complain if shit goes wrong. It made sense to pool finances and buy “shares” of a company. It made further sense to create a secondary market to create liquidity since it took several years for the initial “shareholders” to recover their investments in the trading company.
We then take a more modern turn and cover the measurement of risk, and more specifically, insurance. Did you know that insurance policies as we know them today were invented by a pair of Scottish priests?! WTF?! And that the British (Ferguson is a Brit) take out more insurance than anyone else? This is a great fact-filled chapter.
Then, we cover real estate – that most misunderstood of asset classes – and the political invisible hand pushing Western consumers towards purchase of property with every imaginable bribe possible. Nothing gives me more joy than reading a lucid argument against property being a “sure thing”, especially since my relatives love nothing more than to lecture me about how “real estate is how you make money in America” with a condescending know-it-all look. An illiquid, one-way bet on a market is risky just like most other bets – as a lot of people found out to their detriment after signing ridiculous no-doc loans.
Finally, CHINA. I won’t say too much about this chapter except that its mostly covered in the press and that you won’t derive as much value from it as the previous chapters. But a fun gallop nonetheless.
All in all, this is a cool book for all business and history buffs. Read it!
Update: Looks like good ol’ Bezos has been reading BitBubble in his spare time (yes, I’m kidding. No, I’m not that delusional). Amazon Prime comes free for college students for a year! Way to hook ’em! http://www.amazon.com/b/?node=668781011
The day-to-day tech world tends to think of innovation primarily in terms of products and features – Foursquare’s “checkins” and game mechanics being an example of lauded innovation that’s being ripped off by others at an alarming pace.
On the flip side, we tend to simply ignore or discount great process innovations that produce fundamental behavior change. For me, this was the case with Amazon Prime. I always thought it didn’t make a lot of sense to pay 80 dollars for free 2 day shipping if you were an infrequent Amazon shopper. After all, you’d have to be already buying 2o or more items a year, roughly, for it to make economic sense.
It turns out that I got the whole thing exactly backwards – Prime *turns* infrequent shoppers into rabidly frequent shoppers. Amazon Prime isn’t – or at least shouldn’t be – aimed at the people who were already heavy shoppers. It should be aimed at people like myself. You see, last year a friend got me on his friends/family Amazon Prime account (20 dollars instead of 80 since we pooled) and I then realized how powerful/addictive Prime can be. I’ve since quadrupled my annual spending on Amazon and actively try to not walk into brick-and-mortar stores. Point, click, ship-to-office, done.
So what Prime has done, instead, is produce serious behavioral change by reducing online buying friction. I know I won’t pay for shipping anymore, so I don’t have to worry about nebulous S&H pricing. I don’t have to try to package my purchases together to get over the 25 dollar limit – packaging frequently delays transaction consummation and i end up driving to Target. I now buy early and often and with disorganized impunity. The end result: I have the honor of paying Amazon 20 dollars a year so I can buy four times as much stuff as I did 2 years ago. Who’s the smart one in this equation?
The final question, then, is: Why doesn’t Amazon push Prime more aggressively? Why is the entry point to Prime 80 dollars? Why can’t there be Amazon Subprime (okay, bad name choice) that does free 3 day shipping for a lower price point? I’m sure Amazon could extend this to the logical conclusion by looking at the spike in yearly purchase volume after a user acquires a Prime subscription. Is it foolish to imagine a world where 80% of all Amazon customers are all on Prime and buying more and more with free shipping? And why haven’t other general retailers like Walmart.com (with the exception of Overstock) adopted this innovation en masse?