If you understand, you’re falling behind the curve

Last week I attended the OCTANe program on digital advertising, and aside from the frightening Orwellian aspects of the evolving internet, I was absolutely fascinated and overwhelmed by the information revolution and the new business models that it conceives.

OCTANe's Digital Advertising Program

One of the companies presenting was Brand Affinity Technologies (BAT) and their CEO, Ryan Steelberg was not only charismatic, but also thinking 3-5 years ahead of most of my contemporaries.  The second presenter was Mike Hodges from Freedom Communications, the parent company of the Orange County Register and 20-30 other newspapers.  By the end of his talk I felt like such a prisoner of antiquated technologies, I canceled my print subscription to the New York Times the next morning.

Charlie Black from Specific Media presented on how advertisements on the internet were becoming user specific.  I always thought that it was uncanny how the internet pop-ups seemed eerily targeted.  Now I understood my own stupidity and that this was on purpose.  I was so looking forward to Scott Christensen’s presentation from CBS Outdoor Advertising anticipating that I had to have a good general understanding of the business model for billboard advertising.  I was crushed when the conversation turned to using cameras to monitor the eyes of the people looking at the billboards, and changing the content based on viewing audience.  I started to think that if you understand everything that these guys are doing and selling, they’re slowing things down too much for you, and in the process you’re falling behind.

Living and working in a high technology sector requires the self confidence to surround yourself with people that know more than you do.  If you need to be the smartest guy in the room all the time, chances are the room’s intellectual evolution will be replaced with stagnation.  But rather, if you resign yourself to be one of the less gifted ones on a particular topic, to fill the room with bleeding edge technology experts, and have the comfort to ask when you don’t understand something, chances are that everyone will ultimately be a little smarter, and the room will emerge ahead of any single individual’s expertise.

Technologies are evolving exponentially.  The capabilities we have today were unfathomable 10 years ago.  It’s hard to say exactly what the future holds, but it is safe to assume the technological advancement in the coming ten years will eclipse that of the last fifty.  Many companies will be unable to keep pace with the meteoric changes in how things get done.  The most successful will be the ones with the self confidence to surround themselves with people that are more advanced than themselves and the courage to admit to their own ignorance thereby curing it.

Ben’s Lessons in Portfolio Management

Benjamin Netanyahu, after years of fierce reluctance to accept a Palestine state in the Middle East, for the first time accepted the idea of Palestine coexistence along side Israel.  There are questions concerning the motivation for his reversal, and the long list of caveats tied to his so called “vision of peace,” but clearly there is the recognition that diversity is ok.  In fact, an acceptance of diversity could lead to increased stabilization in what is undoubtedly the most volatile political arena in the entire world.

On the surface it seems that there is personal security in homogeneity, and risk in heterogeneity.  Surrounding yourself with people who act and think like you do is a low risk scenario.  Most likely they will agree with your suggestions, and support your ideas.  You will have similar communication styles, likes and dislikes.  You will feel comfortable with each other in being able to anticipate responses and foresee criticisms.

Ironically, this comfort breeds instability, and diversity actually drives the development of longer term foundations for continued growth.  One of the fundamentals of investing is portfolio diversification.  By diversifying a portfolio, you reduce the economic risk associated with a single security’s volatility.  If your portfolio is sufficiently diversified, when one stock loses value, another will gain, and the ultimate peaks and valleys will be minimized.

These same principles apply to start-up businesses.  When we interview candidates, it’s always easy to select the individuals that are most like ourselves.  They respond to questions the way we would respond, and consequently we think that they are polished and intelligent.  We tend to surround ourselves with people that think and act like we do.  They agree with our suggestions and support our ideas.  While it feels like we are creating a stable long term work environment, we are, in actuality, increasing the volatility and the risk associated with a myopic perspective.

It’s important to surround ourselves with people that think differently from us.  People that are comfortable challenging our ideas and that offer contrarian viewpoints will add the most value to our business teams.  Ultimately, this will reduce the risk in any organization, improve the quality of decision making – and therefore increase the long term stability of the management team and the organization.

Interestingly, most of our world’s problems can be traced back to a lack of appreciation for and an encouragement of diversity.  The willingness to accept, and embrace ideas and ideologies that are different from our own will improve the quality of our thoughts and reduce the volatility in our actions.  We need to recognize that solutions that are derived from diverse teams will have the benefit of multiple perspectives and ultimately make our world stronger.

I’m not sure if Mr. Netanyahu bears all of these things in mind, or if his acceptance of a Palestine state is sincere, but I applaud his efforts to evolve from his previous position and seek to accept diversity in the Middle East.  And I recognize that this is a step in the right direction from which we can all benefit.

A human-being? Or a human-doing?

Clearly we have seen better economic times.  Unemployment is at an all time high with the national average at roughly 10% – higher in California.   In May 300,000 jobs were lost – and this was an improvement over previous months where the norm was closer to 600,000.  Projected GNP changes for 2009 are, as Elvis Costello says, “less than zero!”

The federal government is spending at an unprecedented rate in an attempt to stimulate an economic recovery.  There is considerable debate about President Obama’s economic reform activities, and it is probably too early to tell if we are turning the tide or haphazardly spending, but few would argue that the government is sitting idly.  Presidential tenures are often characterized by their first hundred days, and President Obama’s first seven fortnights have been a flurry of activity.  So while it’s hard to say if he’s doing the right things, it would be difficult to criticize him for lack of effort – at least he’s “do-ing.”

This begs the question, are you a human “be-ing” or a human “do-ing?”  All too often we sit not so quietly on the sidelines lamenting about the decline of the economy, the fall of the S&P and our personal portfolios, the state deficit and our increasing taxes, and the loss of jobs.  At the same time, people are lining up to collect the increased benefits associated with the American Recovery and Reinvestment Act as if this were some sort of baptismal entitlement.  My question is, “If there is a problem in our economy, what are you doing about it?”

Over the past few weeks I have frequently been asked, why did you want to come and work as a part of the OCTANe team?  My response – I want to be a human “do-ing.”  OCTANe’s mission is fueling “innovation development” in Orange County.  We marry entrepreneurs, capital, and technology thereby accelerating entrepreneurship and company development for the technology and biomedical industries.  We work together to get more companies started, funded, and accelerated in OC and surrounding regions.  We teach entrepreneurs what to do and then how to do it.  In so doing, we create jobs, revenues, an increased tax base, and societal value.  These are the activities that will stimulate the economy and will support our nation’s financial recovery.

I can’t say for sure that what I contribute to OCTANe will have an appreciable impact to our nation’s recovery, although I am sure that the OCTANe community will keep these goals and activities at the forefront of their ambitions in supporting and driving innovation.  This is why I want to work at OCTANe.  It’s difficult to predict the timing or the ultimate end points of our acitivities, but there is no doubt that the OCTANe team is a group of “humans do-ing”, not merely “humans be-ing.”