Category Archives: Life

Strategy Consulting (McKinsey & BCG) Billing Rates

Source: Matt Stoller blog, Dec 2019

McKinsey’s competitor, the Boston Consulting Group, charges the government $33,063.75/week for the time of a recent college grad to work as a contractor. Not to be outdone, McKinsey’s pricing is much much higher, with one McKinsey “business analyst” – someone with an undergraduate degree and no experience – lent to the government priced out at $56,707/week, or $2,948,764/year.

How does McKinsey do it? There are two answers. The first is simple. They cheat. McKinsey is far more expensive than its competition, and is able to get that pricing because of its unethical tactics. In fact, the situation is so dire that earlier this year the General Services Administration’s Inspector General recommended in a report that the GSA cancel McKinsey’s entire government-wide contractHere’s what the IG showed McKinsey was eventually awarded.

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.’

Charming Helps!

Source: Medium, Jan 2020

Bring The Positive Energy

Here’s the first key to being charming: you have to make other people want to talk to you… and that means that you want to be open and welcoming.

People who are charming are people who make us feel good. They make us feel like they understand us, value us and think we’re awesome. They’re nonjudgmental, empathetic and caring. They’re the sort of people you feel like you could rely on when the chips are down because they’re just that kind of person.

So how does one convey warmth to others?

To start with, you want to smile. A broad, genuine smile that reaches the eyes — the famous Duchene smile — is a way of making yourself instantly seem friendlier and more approachable. It also forces you to feel happier and friendlier in a nice bit of biofeedback; by making yourself feel more friendly, you will come across as friendlier and more likable.

http://www.journalofadvertisingresearch.com/content/58/1/51.figures-only

You want to make sure to be as positive as possible. You don’t have to be a wide-eyed optimist, but we are instinctively drawn to people who are happier. Happy people give energy to the room and make others feel good.

Build The Emotional Connections

The next key to being charming is to build the emotional chemistry by finding commonalities with the person you’re talking to. Charming people have the ability to make us feel as though we’ve known them forever — even if we’ve only just met them thirty minutes ago. They bring an easy sense of familiarity and intimacy that we don’t often feel with other people, especially with people we’ve only just met… but it feels so natural that we never think about it.

In fact, one researcher found that it was possible to build an incredibly intense emotional connection — one stronger than even some long-term friendships — in the span of an hour.

The key to building this emotional intensity comes from sharing personal emotional information with one another.

You want to share emotional truths that illustrate some of what makes you who you are. One of the easiest ways to do this is through the Question Game– taking turns asking meaningful questions of one another. Those questions like “what would a perfect day look like to you”? They may sound cheesy… but they’re the ones that elicit the emotional truths and help forge those surprisingly deep and intimate connections that make us feel so close to someone we’ve just met.

So you may want to ask something like “What would you do if you could do anything with no chance of failure?” or even just sharing an embarrassing — but amusing — incident in your life. The key is that you want to allow yourself to be vulnerable; being charming means letting others feel as though they’re getting insight into you that few other people may get.

Just be sure to leaven it with humor. After all…

Funny is Sexy

As I’ve said many times before, there’s a reason why women rank a sense of humor so highly when they’re listing what they find attractive in men. In fact, some researchers believe that there’s a direct correlation between being able to make a woman laugh and her level of sexual or romantic interest.

The most charming people out there have excellent senses of humor. Some are droll and witty, others are self-deprecating, while yet others are brash, even borderline offensive… and we love them for it.

So why is humor so important to charm? It’s the way that it makes people feel.

Charm is all about making the other person feel good in your presence. Laughter releases muscle tension in the body, leaving you feeling relaxed calm while also releasing endorphins in the brain. If you’re able to make a woman laugh, you’re able to make her feel good… and she’s going to associate that feeling with being in your presence.

A good sense of humor is also a reliable indicator of intelligence; after all, most humor — even puns — is intellectual in nature. Even pratfalls and low-brow humor require a strong sense of comedic timing and being able to gauge the social appropriateness of the situation. Plus: being able to understand the proper time and place for different forms of humor is a sign of finely tuned social calibration.

Develop Your Presence

The final part of charm is to utilize your presence. We often talk about people who feel larger than life, or who have us riveted. These people have presence.

We like people who like us… and the ability to make you feel liked is one of the keys of being charming. Charming people have a way of making you feel like the most important person in the world. They give you their full attention and give you the impression that not only are they hanging on your every word, they’re finding absolutely everything you have to say fascinating.

The first and most important way of using presence is simply to give someone your full attention.

The next way that you develop presence is to indicate that you’re actually paying attention. There are many ways of doing this — countless non-verbal signs like nodding your head and “go on, I’m listening” sounds, for example — but the most powerful is to be an active listener.

Making a point to ask questions about the things that she’s telling you, especially if you use her choice of words or phrasing, makes it abundantly clear that not only are you paying attention but that you’re making a point to engage with her, not just passively absorbing her words like a sponge. Even just repeating the last couple of words back in an intrigued, questioning tone can build and signal your interest in what she has to say.

Feynman: “we represent the physics department” for Free Food (bottom box)

Source: “Feynman’s Rainbow: A Search for Beauty in Physics and in Life“, 2003

Boris Johnson on Churchill’s Speeches

Snowflakes

Source: Quanta, Dec 2019

China shrugs off PISA scores

Source: Inkstone news, Dec 2019

Chinese teenagers ranked as the world’s best students according to results from a closely watched global survey announced on Tuesday. But unlike in the rest of the world, in China, the victory was met with a resounding shrug.

“It is misleading to take the Pisa test result as a vote of confidence in our education system,” Xiong Bingqi, deputy director of the 21st Century Education Research Institute in Beijing, told Inkstone.

He said China’s high test scores often result in teachers neglecting important soft skills that are integral in real-life situations.

As a standardized test, Pisa encourages the exact kind of rigorous test-prepping education that Chinese students spend years perfecting, said Xiong.

Chinese schools are very behind in sparking students’ interest in learning or nurturing a creative and curious mindset,” he added.