The New York Times discovers Silicon Valley’s worship of youth over experience. As usual for the NYT, they get it wrong.
The problem is not young men, full of testosterone and bluster. It’s not “bro culture”. The problem is the feedback mechanism.The problem is not 'bro culture'. The problem is the feedback mechanism. Click To Tweet
There are institutions that routinely handle men and all our associated problems. The military certainly seems to manage them, although, admittedly, its mission is a bit different from that of the average startup.
When I was helping manage the S.F. branch of an options market-making group, we had a lot of smart, energetic young men. There were many more all around the trading floors, working for other companies. As the experienced older man in my group (my nickname was “Gramps”, because I was 35), I could provide insight and advice. It might have helped on rare occasions. But the advice made far less impact than actual market experience. You’ve never seen a young man so chastened as immediately after he lost a bunch of money. Losses are the best teachers and losses happen all the time in the capital markets.
The markets, with their very fast and brutal feedback mechanism are a better teacher than any man or woman, no matter how grey their temples. You can add as many advisors or mentors as you like but none will teach as much as one deep, gut-wrenching trading loss. (Of course, if a young trader works at a huge investment bank, with their incredibly favorable order flow and massive assets behind them, he or she may be sufficiently insulated from his or her results, that the learning process is delayed.)
Meanwhile, in Silicon Valley, what is the feedback young CEOs are receiving? We regularly see articles about how great it is that they are successful at a young age. Forbes, for example, publishes a list of 30 young entrepreneurs under 30. The clear implication is that their youth is a value in and of itself. Silicon Valley both worships youth and discriminates against age, so these young people are less likely to be exposed to the views and experience of those over 50. Certainly, in the cases of some of the companies mentioned in the NYT article, investors are almost throwing money at these young entrepreneurs. No wonder they have a proclivity for blowing up companies.
If you’d thrown this sort of money and attention at the mid-20’s me, well, it would not have been pretty.
So how do we fix the flawed feedback mechanism?
- Investors could surround these young men with seasoned execs and it might help.
- Taleb would suggest they need skin in the game. The problem is that they appear to already have skin in the game in the sense that they own a lot of shares. But, based on the behavior observed, my guess is that they feel insulated from loss in some manner. Maybe they are already so rich, at such a young age, that it’s hard for any drop or error to cause significant pain.
- Another solution would be to reverse recent trends and to start taking companies public more quickly, so the short-term gyrations of the stock price would be visible.
- Or, investors could only fund young people with children, who’ve already learned to worry about the future. Also, they’d get so little sleep that “bro culture” would pretty much go out the window. On the other hand, I’m fairly sure this suggestion runs afoul of a bunch of anti-discrimination laws, so maybe we scratch one.
Perhaps, the New York Times article marks a shift in the culture, away from the devotion to youth for its own sake. I’m still waiting to see an article gushing about the top 50 execs over 50. But I’m “talking my own book” here.