Category Archives: Leadership

WeWork – Counterfeit Capitalism

Source: Matt Stoller blog, Sep 2019

WeWork, because it’s just such an obvious example of self-dealing couched in New Age management consulting speak. Its CEO, Adam Neumann, was just forced to step down.

The Stupidity of WeWork

WeWork describes itself as offering the ‘“space-as-a-service” membership model that offers the benefits of a collaborative culture, the flexibility to scale workspace up and down as needed and the power of a worldwide community, all for a lower cost.” In other words, the company sublets office space.

Generally speaking, Softbank’s model is to manipulate private capital markets as a way of drowning out competitors with cash.

For instance, there were several ‘rounds’ of WeWork investment where Softbank was buying more shares at higher valuations. WeWork ostensibly became more valuable because Son said it was more valuable, and bought shares for higher prices. And since there was no public market for these shares, the pricing of the shares was totally arbitrary.

WeWork then used this cash to underprice competitors in the co-working space market, hoping to be able to profit later once it had a strong market position in real estate subletting or ancillary businesses.

The goal of Son, and increasingly most large financiers in private equity and venture capital, is to find big markets and then dump capital into one player in such a market who can underprice until he becomes the dominant remaining actor. In this manner, financiers can help kill all competition, with the idea of profiting later on via the surviving monopoly.

Engaging in such a strategy used to be illegal, and was known as predatory pricing. There are laws, like Robinson-Patman and the Clayton Act, which, if read properly and enforced, prohibit such conduct. The reason is very basic to capitalism. Capitalism works because companies that thrive take a bunch of inputs and create a product that is more valuable than the sum of its parts. That creates additional value, and in such a model companies have to compete by making better goods and services.

What predatory pricing does is to enable competition purely based on access to capital.

Someone like Neumann, and Son’s entire model with his Vision Fund, is to take inputs, combine them into products worth less than their cost, and plug up the deficit through the capital markets in hopes of acquiring market power later or of just self-dealing so the losses are placed onto someone else. This model has spread. Bird, the scooter company, is not making money. Uber and Lyft are similarly and systemically unprofitable. This model is catastrophic not just for individual companies, but for their competitors who have to *make* money.

Endless money-losing is a variant of counterfeiting, and counterfeiting has dangerous economic consequences. The subprime fiasco was one example.

Another example was the Worldcom fraud in the late 1990s, which forced the rest of the U.S. telecom sector to over-invest into broadband. Competitors have to copy their fraudulent competitors. It’s a variant of Gresham’s Law, which says that “bad money drives out good.” If you can counterfeit something for cheap, the counterfeit will eventually take over the entire market and drive out the real commodity. That is what is happening in our economy writ large, a kind of counterfeit capitalism as ‘leaders’ like Neumann are celebrated and actual leaders who can make things and manage are treated like dogshit.

This kind of counterfeit capitalism is terrible for society as a whole. At first, with companies like Walmart and Amazon, predatory pricing can seem smart. The entire retail sector might be decimated and communities across America might be harmed, but two day shipping is convenient and Walmart and Amazon do have positive cash flow. But increasingly with cheap capital and a narrow slice of financiers who want to copy the winners, there is a second or third generation of companies asking Wall Street to just ‘trust me.’

As euphoria in capital markets takes hold, predatory pricing scheme come to entirely wastes capital on money losing enterprises, and eventually these companies become Soviet-style generators of white elephants and self-dealing.

The men and women who run them have to be charlatans, because they are storytellers justifying losses. Powerful men like Dimon are sucked in, consultants start explaining to old-line economy companies how they too can become like WeWork, and eventually more and more of the economy just adopts counterfeit capitalism.

Across the West, the basic problem of a corrupted productive process is becoming a quiet crisis. The reason is simple. The people that do the work in organizations are increasingly excluded from the decision-making about the work.

That is why Boeing is losing its ability to build planes, why we can’t build infrastructure, and why New York City is on the verge of disaster. And the cherry on top is investors pouring money into enterprises that aren’t even speculative, but are purely loss-making, because they find a destructive personality like Adam Neumann compelling.

If we restore laws against predatory pricing and centralized financial control, the entire counterfeit capitalism model will go away. We can then get back to the business of making and selling things to each other without engaging in celebrated cases of fraud and abuse under the guise of ‘quirkiness.’

Peter Thiel – Wriston Lecture

Source: Manhattan Institute, Nov 2019


Peter argues that our technological imagination has been too modest, too content to fiddle on the margins when what we need are transformational breakthroughs.

These are no substitute for the pathbreaking, world-changing innovation that America needs.

robust innovation relies on a system of free enterprise.

America’s reputation for unimpeded inquiry, which has historically driven our culture of innovation and must do so again if we’re to meet the unique challenges of this century. A society that censors challenging ideas may well be headed on the path to suicide.


a libertarian revolution against all central banks. We’re going to liberate money from government control, and we’re going to this transpolitical technological level to transform things.

one critique that I am sympathetic to is that innovation does not scale well. And that as the tech industry’s gotten bigger or bigger governments, things like that, you’re going to have the innovation more slowly.

what are the kinds of scales we should be working on in 2019?

in the world of 2019, and in some ways, it’s shaped by the rivalry with China. And if we sort of think about a rival that’s also incredibly big, simple bigness is not necessarily the right strategy.

there is, I think, some urgent need to rethink all these different scale questions. Where are we going to be good? Where’s going to be, sort of, much more challenging?

to the extent China has focused our competition, it suggests that we need to think about the scale issue very differently.

What are the kinds of places we can scale in a good way where we can win and do that better in the years and decades ahead? And if I had to sort of give one general gloss on it, I would say that perhaps we have to shift a little bit from quantity, from simply scaling in size, to quality. And that’s sort of the question.

And this is back to innovation, back to intensive growth, not just doing more of the same but shift towards IP protection, shift towards fewer scientists but actually doing real science, fewer good universities, but we understand them to be elite universities. And somehow, a shift to quality over quantity is probably the place of comparative advantage that we have to think through really hard vis-à-vis China.

I think that on the left the distraction machine from asking a question about what to do on the scale of the United States, the distraction machine has been driven by identity politics of one sort or another. And it’s sort of like a subscale. We don’t think of the country as a whole, we think of just subgroups within the country, and I think there’s something insane, self-contradictory about identity politics.

I think from the right, the sort of doctrine I would encourage us to rethink is the doctrine of American exceptionalism, which was, again, sort of a super big scale, but sort of put the US on a scale which simply could not be compared to any other country, any other place.

what happens – say you’re exceptional in all these ways – is you probably end up being exceptionally off in different ways. You end up with subways that cost $3.8 billion a mile. You end up with people who are exceptionally overweight. You end up with people who are exceptionally unselfaware. And I think something like the corrective to exceptionalism is that perhaps in the 2020s the United States needs to settle for greatness.

Q & A

I think that my hopes are that we find a way back to more intensive growth.

I would like to see innovation, not just in some kind of narrow iPhone app but across the board.

one form of this problem of scale that I talked about is if you’re too big a scale, it becomes impossible to actually know the particulars of what is going on. And I think it’s maybe a feature of late modernity that things are so specialized. And we have the cancer researchers talking about how great they are, and the quantum computer people say they’re about to build a quantum computer. And you’ve all these narrower and narrower groups of self-policing experts telling us how great they are.

I think the rivalry with China is what’s going to push us to ask these scale questions anew. We’re not in a great place in a lot of ways, but the country still has a lot of advantages. And we should think really hard what are our advantages, where do we push them, things like that. And I think it is one of the few issues that are essentially bipartisan.

A Warrior for the US

Source: TheVetsProject, May 2017

The Green Berets have a motto “De Opresso Liber,” or “To Free the Oppressed.”  I was the oppressed growing up in Vietnam. I had my freedom ripped away from me. I had no hope. If I’d stayed in Vietnam I might be in prison, dead, or be just another communist, content with a terrible lifestyle. I was the people without hope. God has given me hope. My mom sacrificed everything she had so I could become an American. When I became an American I saw a higher calling. I had certain natural talents in my thinking and in combatives. I realized that I could take that mindset and I could use that mindset in other countries to help out

What happens when you have internal conflicts within a family? You fail to sustain growth. If you’re fighting internally how can you defend your country?

What’s going on in America right now? The generations that are behind us are of the entitlement attitude. “What can you give me?” “What can my country do for me?” These are the questions that are now being asked versus, “I’m of a warrior class and I’m going to protect my country no matter what,” or “I’m a civilian and I’m proud of my country.”

We have this new issue with a generation of entitlement and that’s the future.

The biggest issue in our culture is patriotism. When I was young we put our hand over our heart as we raised the American flag, as one nation under God. We recited the National Anthem and we were proud to be Americans.

Nowadays most schools don’t even pay tribute to the American flag or our God. You’re starting to see more of the entitlement attitude in today’s society, versus worrying about what you can do to protect this country and protect the things you love. A lot of people in our country now are completely disconnected from what’s going on overseas, nor do they even care to defend their own lifestyle. That’s the difference in our society nowadays as compared to back when I was young.

The military will give you a higher education and it gives you principles as a human being. They give you ethics and morals. When you leave the military you should be a much better person than when you joined. The amount of knowledge you gain while serving far supersedes a Master’s or Doctorate.

The military teaches you about life and allows you to make the greatest possible difference in our world. You not only get to make a difference in your own life, but you get to create effective change in the lives of others. It’s a higher purpose and higher calling. We don’t join because we don’t have anything else to do. Most of us join because we have great direction in our lives and we are driven individuals who seek to create change in our world.

Be the person that you’ve always wanted to be.


HKG Protests: Creating New Chinese Characters

Source: LanguageLog/UPenn, Sep 2019

Among the new polysyllabic characters (called hétǐ zì 合體字 [“compound / synthesized characters”] in Chinese) created by the Hong Kong protesters is this one (see below in the “Readings” [especially the first item] for other examples).  It is preceded by this note: “Hongkongers will remember 721 & 831”, which are references to the extreme brutality wreaked on the people of Hong Kong by hired gangsters on July 21 and by “police” on August 31, for which see 721 Yuen Long Nightmare and #831terroristattack (also here).  This new polysyllabic character is widely circulating on the internet and has come to me from many sources (here’s one).

This composite character consists of elements of the following three Sinographs:

ging2 警 of ging2caat3 警察 (lit., “alert / vigilant observe / examine / inspect”, i.e., “police”)

hak1 黑 of hak1 se5wui6*2 黑社會 (lit., “black society”, i.e., “organized crime; the triads; gangsters”)

tit3 鐵 of tit3lou6 鐵路 (lit., “iron road”, i.e., “railway; railroad”)

It alludes to the collusion of police, hired gangsters, and railway authorities in the notorious beating of passengers described here:

The 2019 Yuen Long attack was a mob attack that occurred on 21 July 2019, in Yuen Long, Hong Kong. A mob of over 100 armed men dressed in white indiscriminately attacked civilians on the streets and passengers in the Yuen Long MTR station including the elderly, children, black-clad protesters, journalists and lawmakers. At least 45 people were injured in the incident, including a pregnant woman. The attack happened following an anti-extradition bill protest in Sheung Wan, Hong Kong and was an act threatening the pro-democracy protesters who were returning home to Yuen Long.

Despite thousands of reports made to the 999 emergency hotline, the police did not arrive for more than 30 minutes and finally arrived one minute after the mob had left the station. No arrests were made that night. Many accused the police of failing to protect citizens from being attacked, with some even alleging that the police colluded with the mobs.

One of the strongest weapons of the Hong Kong protesters against the armed might of the police, thugs, and increasingly military infiltrators from the north is language, both spoken and written, as described in this post and in the following earlier posts.

From the Comments:

SP said,

September 1, 2019 @ 3:16 pm

There’s yet another thing that’s hidden. In 黑, you can see the logo of the MTR, Hong Kong’s subway system. The attacks of 721 and 831 took place in the MTR

Boris Johnson on Winston Churchill’s Oratory

GM Drives to the Moon

Source: Fast Company, Jun 2019

Romano and Pavlics, by sheer will and their captivating motorized Moon car, had just changed the history of space exploration.

Just weeks later, von Braun created a project office to oversee the creation of a lunar rover.

It was April 1969, just three months before Apollo 11, ridiculously late to imagine adding something as complicated as a car to the Moon flights. Spaceships, spacesuits, experiments, procedures—not only were they all designed, built, tested, and flight-qualified, but the astronauts had been practicing with their Moon equipment for months or years.

The rover brought exuberance, even joy, to lunar exploration. Within minutes of heading off on their first expedition, Irwin and Scott were laughing with the sheer fun of driving on the Moon. “Man, this is really a rocking-rolling ride,” Scott said to Mission Control.

In 15 minutes of driving on that first trip, Scott and Irwin went farther than any of the previous three Apollo landing crews had been able (or allowed) to walk in hours on the surface.

On that first jaunt alone, one of three using the rover, Scott and Irwin stayed out for two hours, driving around, getting out, gathering specimens, filming geological features, then hopping back in the buggy and racing off to the next place. They not only covered terrain; the pair gave a nonstop narration of the geology they were seeing and that the rover’s camera was transmitting in real time back to Earth.

The live TV coverage had a rapt audience of, among others, geologists and scientists who felt like they were looking over the shoulders of the lunar astronauts from the back seat, as it were, seeing an astonishing display of never-before-seen alien geology.

“Keep talking, keep talking,” Mission Control’s Joe Allen said. “Beautiful description.”

The Most Successful Teams

Source: HBR, Apr 2018

In the Generative quadrant, we find behaviors associated with learning, experimenting, and confidence. Together they facilitate high quality interaction. Interestingly, “forceful” appears here too, which at a first glance might seem surprising. Exploring this further, participants were identifying the assertive expression and vigorous analysis of ideas. “Forceful” therefore relates to having the confidence to persist in expressing what you think is important.

Psychologically safe environments enable this kind of candour without it being perceived as aggressive. Note that we also see more positive emotions in the generative and uniform quadrants.