January 2017

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With the current adulation for the business prowess that got Donald Trump elected to the highest office in the land, we perpetuate our tendency to celebrate the success of growing a new business and turning a huge profit. We lionize entrepreneurs and business leaders and, in so doing, miss a key determinant in what makes a person or business a success.

By focusing on the “victory lane” we are misled into believing that success was somehow inevitable for those who won. We lump together those who succeed by choosing a single path and never veer from it and those who are forced to pivot and adapt along the way. In doing so, we obscure a key distinction.

Undoubtedly, these are always fun stories to hear. Who doesn’t like to dream about their own triumph through the success stories of others? However, to learn from success, the lesson comes not by focusing on the outcome, but rather how successful people got there.

In the arc of a career or a business, inevitability of success does not exist. It requires hard work, some luck and the match between demand for what you have and your ability to provide it. Some fortunate people have a path that never wavers and the demand and supply match-up occurs and is sustained. However, for most of us, somewhere along the way we must modify our path and pivot to get there.

Pivoting increases the number of opportunities in the lifetime of a person or business to find the perfect profitable match-up. It’s a skill that increases the likelihood of success.

Interestingly, a person’s ability to pivot can be predicted long before the need to pivot occurs. In a society where we are looking for the next winners, recognition of this trait is essential. Look for two important personal attributes: self-awareness and empathy.

Self-awareness is the ability to look outside of oneself, and see yourself as others see you. You can’t act on new information effectively unless you are able to see its effect on you. Self-awareness is the core to adaptation — unless you understand why you act in a certain way, you cannot act differently.

Empathy is the ability to perceive how your actions affect those around you. It creates a feedback loop, where you measure your actions and subsequent reactions. For example, the concept of understanding your customer and making something your customer wants, relies heavily on this cycle.

The world shaping our careers and businesses is increasingly unpredictable and changeable. The likelihood that any of us will have an unwavering path to entrepreneurial and career success is less and less likely. Winners will be those who adapt and learn from their mistakes. For those who can pivot, chances of success increase dramatically.

This column originally appeared at WashingtonPost.com.

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I am struck by two conversations our nation is having about the future of the American worker: protecting American manufacturing jobs and the application of artificial intelligence in business. I believe the two are related.

President Trump has shown his ability to use the bully pulpit to make U.S.-based manufacturing jobs a high priority. Overturning years of orthodoxy, plans are being made to slap tariffs on imported items. Congress is considering giving preferential tax treatment to U.S. businesses that manufacture products domestically, and penalizing companies that import items.

Trump’s strong public push for bringing American jobs back home is having a visible effect. A rush of announcements from businesses such as Softbank, Carrier and Fiat promise to put Americans to work through investments. Others such as General Motors are playing catch-up in this rapidly changing political climate, fearing criticism if their company’s investment decisions benefit foreign workers.

Meanwhile, technologists are warning us that artificial intelligence will steal tens of millions of jobs from humans, accentuating the reality started by the introduction of computer hardware, software and robots decades ago.

The pace of job substitution that has occurred over the last 30 years will be dramatically accelerated, as will the diversity of the types of jobs eliminated. This shift is a big deal. For example, a recent White House study on the potential effect of artificial intelligence on employment suggests that up to half of jobs currently being done by humans will eventually be carried out by machines.

The Trump administration may face an interesting dilemma: how to promote new jobs — particularly in the manufacturing industry — when technologies continue to emerge to make current jobs obsolete.

Early indications are that President Trump will indeed be able to influence businesses to use American labor. And, it is certainly true that he can further influence behavior through more drastic actions involving tariffs or tax policies. But businesses won’t stop pursuing economic efficiency. And American consumers might not embrace paying higher prices just to protect local employment.

What is lost in the current conversation is the reason jobs have gone overseas in the first place, or disappeared through application of technology. Both alternatives were cheaper than employing American workers. Businesses acting in their own narrow economic interests have done what businesses always do — they seek efficiency.

Actions have consequences, and societies can make choices. There is nothing determinative about how technology is to be applied. As recently as last week, the CEOs of IBM and Microsoft both emphatically argued that artificial intelligence can be used to enhance human employment, rather than substitute it.

Similarly, merely maintaining a job in the United States does not in itself mean it will provide a living wage, or ancillary benefits. The manufacturing jobs of old carried wages and benefits significantly higher on an inflation-adjusted basis than many of the jobs being created in business today.

As our new president uses his influence, my wish is he and his advisors appreciate that creating the jobs our citizens want and ensuring that good jobs continue to exist, is about more than simply looking at trade and manufactured goods. It’s about making choices.

We must have an honest conversation about how to balance economic efficiency with job creation. It’s the determining factor for whether our nation creates opportunities for its workers to enjoy rewarding jobs.

Tariffs will not address this core conversation, and the sooner we acknowledge the intricacies of our employment reality, the better off we will be.

Column originally posted to WashingtonPost.com.


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The flow of capital supporting our start-up ecosystem is clogging. At risk is the core activity of venture capital — the conversion of accumulated wealth into innovation. Based on recently released 2016 data, I am concerned.

The strong relationship between businesses that grow rapidly and the availability of venture capital cannot be understated. Over the last 20 years, almost $190 billion have been invested in Internet businesses, while $150 billion were invested in healthcare businesses. Most technology products we take for granted today were fostered in some way by that flow of funding, as were many of the highest-paying jobs in our nation. But that flow must travel in two directions: first to the businesses in need of funds, and then back to the investors as profits. Therein lies the problem.

Last year, investors committed $41 billion to new venture capital funds. This was a 10-year high, and the third-highest annual commitment in history.

Meanwhile, previously raised venture funds deployed $101 billion in new capital to growing businesses in 2016. This was down from a peak of more than $130 billion in 2015. Both years were exceptionally high against historical trends.

Presently, 184 tech start-ups valued at more than $1 billion (so-called “unicorns”) have not been able to return cash to their investors. And, it is not just for unicorns. For all venture capital funded start-ups, the necessary recycling of cash is slowing.

There is a growing disconnect between capital coming into technology businesses, and the ability of the financial markets to provide exits. An exit gives a business owner a way to reduce or eliminate his or her stake in the business — it’s the moment owners and investors can cash in. A recent article in Bloomberg suggested that at current exit activity levels, it could take 14 years for every one of today’s unicorns to provide an exit for their investors. Perhaps they are indicative of a larger, longer-term problem.

Something has got to give. Either exits will need to pick up dramatically, or venture capital investors will be disappointed.

My sense is that we are at the end of long-term growth cycles surrounding the disruption of media and communication, and a corresponding explosion in drug discovery through biotechnology. As emerging businesses disrupted what was there before, much money was made and new market champions emerged.

These new winners have in many instances surpassed their forbearers in market power and economic concentration. Industries such as healthcare, media and software have become highly concentrated and are dominated by a relatively small number of companies.

But now, the disruptors themselves might need to become the disrupted for our economy to grow.

Where will this disruption come from? In software and media, from the acceleration of commercialization of artificial intelligence. Progress in this industry is ever more visible in the cars we won’t drive and home appliances we will turn on through voice commands. In healthcare, it will come from a greater understanding of the human genome and personalized medicine. Soon, useful lifespans will expand for those fortunate enough to afford revolutionary healthcare.

Meanwhile, it’s becoming clearer that for many investments, exits will simply not occur. The venture capital industry must rapidly change its industrial focus to truly invest in what is new and disruptive. Its ability to pivot will be a determinant for how quickly disruption and new growth can occur in our core technology industries.

Failure to make this pivot will result in a continued hindrance in the flow of venture capital, and if it slows to a trickle, our economy will suffer.

Column originally published in Washington Post.


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While helping to frame the United States Constitution, James Madison wrote “if men were all angels, no government would be necessary.” In his opinion, good government depended upon the concept that individual self-interest shouldn’t undermine the public good.

The incoming Trump Administration will place an unprecedented number of billionaires and successful business people in leadership roles — many of whom will have an ongoing personal financial interest in the country’s economic and foreign policies. Where to draw the line between the personal interests of those serving in government and the common good is on the mind of many.

Insights gained by growing a business help create concrete understanding of the many impediments and opportunities that shape success. For instance, a company navigates many federal, state and local regulations all while management motivates and develops employees, sells to customers and shares a clear and inspiring vision.

For complex industries, business leaders have a deep understanding of their inner workings. For a thorough explanation of how a complex financial derivative works, or how machine learning can replace a customer support employee, ask the leader of the related business. The insights gained from business success and mastering the complexity of key industries certainly makes a successful person an attractive candidate for managing a federal agency or creating new policies for the economy.

Moreover, wealthy Americans are seen by many as less likely to use a government position to seek personal advantage. They are seen as incorruptible because they can serve the public interest free from the need to gather resources to provide for their family.

So insight, experience and perceived incorruptibility could justifiably lead us to conclude that having more business leaders in government is a good thing. Indeed, many who voted for Donald Trump were drawn specifically to his business success.

The big issue, however, is not qualification, it is the degree to which business people in key leadership roles will be willing to disavow the potential financial self-interest in their government decisions.

If James Madison were alive today, he would likely still ask whether our business leaders are “angelic” enough to serve the public interest.

For close to 250 years, our nation has been governed with Madison’s words in mind. Americans agree that without rules of conduct and disclosure, there’s a risk a political appointee’s or politician’s self-interest takes precedence public interest. Here in the nation’s capital, we are familiar with Federal Acquisition Rules disclosing and avoiding personal gain in contractual transactions, but there are many other examples. Both our economy and government are based on the premise that self-interest must be disclosed and avoided when individuals are asked to exercise their judgement for the good of others.

Unfortunately, Congress and the incoming administration are clearly signaling that principles of disclosure, or the avoidance of personal profit, are of less concern than previously agreed. We are going to have to trust our leaders to find their better nature. However, in an environment where most Americans do not trust our political institutions, having faith might be the toughest challenge we face.

I believe that there is a large opportunity for thoughtful government and new approaches represented by the inclusion of business insight. But, we should expect that those from the business community who choose to serve also understand the enormous responsibility that each will carry — the responsibility to put the public interest ahead of their own.

Will an administration led by business people be the solution for our nation? Only if they are all angels.

Column originally posted in WashingtonPost.com.

Video: SiriusXM’s Forward Thinking Radio, January 9, 2017

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My prediction of the United States financial markets in 2017 is a mix of good news and bad news: When markets are chaotic, there are often large opportunities — and they are usually found in unexpected places.

The biggest change in the coming year is that investing in the United States will not be an obvious choice. Over the last few years, international concerns such as China’s growing debt bubble and the possibility of the demise of the Euro have made investing in America appear attractive in comparison. While these threats have abated somewhat, our political risks have dramatically increased.

Meanwhile, expressed policy priorities of the incoming Trump Administration are creating inflationary expectations, causing U.S. market interest rates to trend higher. Expect these pressures to increase due to an erosion of federal fiscal restraint and if, as suggested, there are trade restrictions put in place between China and the United States (or elsewhere). These factors will create an unwillingness on the part of international investors to purchase U.S. government debt, which will drive our interest rates higher.

Thinking about refinancing your home or taking on long-term debt to finance your business? Do it now. Debt will be significantly more expensive by year end.

The U.S. equity market is harder to predict. Certain businesses are likely to benefit from a lessening of regulation, particularly anti-trust regulation. Look for continued consolidation of market power in media, carbon-based energy, transportation and telecommunications. Businesses that depend on complex value chains are less likely to be happy with trade restrictions. All these factors suggest a stock market that will move sideways at best. However, the nature of these businesses will not be the only relevant factor.

Expected tax cuts for both individuals and corporations will undoubtedly create new liquidity for financial investment. As we saw with the Bush tax cuts, cutting taxes for people and businesses that are already satisfying their consumption with existing cash generally results in these tax cuts becoming financial assets and not spending on consumption of things or services. This means that the effect of tax cuts on the economy will be muted at best, but the impact on financial markets will be large.

Investment patterns over the last 20 years show that as financial assets of the well-off increase, the portion of these assets being managed by financial managers also increases. A result of this flux of new money in the hands of financial managers will be an increase in market volatility. Simply put, the more money being managed to generate short-term returns, the more markets are affected.

Turning to technology innovation, there will be significant business interest in technologies that increase worker efficiency. The incoming administration is shining a bright light on companies opting to shifting jobs overseas, so businesses seeking margin improvement will need to consider technology to lower overall effective labor costs. This will be a very strong driver for start-up innovation in the coming year.

Overall, investing and starting a business in 2017 will be complicated. There will be ample capital available for anyone demonstrating a high-growth opportunity, but capital for run-of-the-mill business expenses will be significantly more expensive. Investing in the stock market will require a strong stomach, and a willingness to take a long-term view.

America asked for a president to shake things up. The financial markets certainly won’t disappoint.

Column originally posted on WashingtonPost.com.

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