David Croushore

On Capital

On Capital On Capital

I just finished reading Hugh McLeod’s book Evil Plans: Having fun on the Road to World Domination.  In on chapter, Hugh discusses the evolution of capital throughout the course of human history.  This chapter was one of the most insightful comments on the course of human social history that I’ve ever seen, and one that I feel compelled to share (in paraphrased form) here.

The Evolution of Capital

I should begin by explaining what I am referring to when I say “capital” in this sense.  For this purpose, “capital” is the means and abililty to differentiate yourself from other groups or individuals in order to achieve a level of success, which could be either financial, social, or otherwise.  In other words, “capital” is what lets you win (in a Charlie Sheen kind of way). 

Human Capital

The first form of capital was Human Capital.  What did this mean?  It meant if I had a bunch of big strong guys in my tribe, I could send them over to your tribe to beat you up and steal your food (and probably steal your women, but let’s pretend to be more evolved than that now). 

Physical Capital

Later, we invented forms of Physical Capital, these were the tools that allowed us to overcome a disadvantage in Human Capital.  For example, build a better club and you can scare away those strong guys from the other tribe.  Build a wheel and you can roll it into their huts in order to steal their food (and probably their women, but again, let’s move past this).

Intellectual Capital

Of course, we eventually used all that Physical Capital to construct complex societies and even Capitalism, which is a kind of nice term for societies run by Capital flows, so the next thing we needed was a way to win in that world.  The result was the invention of Intellectual Capital.  That is, if my guys make better widgets than your guys do, I get to sell them and get the money, which means I can buy more food (but Real Men don’t buy women, and that’s serious). 

We evolved Intellectual Capital for a while.  (Really, all of these took a while, but Intellectual Capital drove society for most of our lifetimes, so it feels the longest, even though it’s probably the shortest).  After a while, though, Intellectual Capital stopped being completely effective.  All of a sudden, consumers weren’t always buying the best product (or the best value).  Marketing started to evolve and generated a new kind of capital.

Emotional Capital

The big idea behind Emotional Capital is this: people want to feel passionate about the products and services they purchase.  It isn’t about being better in a binary kind of way, it’s about being inspiring and awesome, and making people fall in love with your brand.  This kind of capital started to evolve in the 50s and 60s, but probably wasn’t really embraced until the 80s and 90s.  Still today, Emotional Capital is the primary motivator of commercial success, just think about Apple.  They have Emotional Capital, and they are on their way to becoming the most profitable company ever.

Expressive Capital

But the evolution of capital is not over.  The advent of social networking has exposed the early rumblings of the next great phase of the evolution of capital, and that is Expressive Capital.  Allowing people to have a platform to express themselves or the ability to control their world will be the ultimate driver of success in the future.  That level of expression and control is what makes Facebook so popular.  On Facebook, I can not only express myself, I can also careful control the image I put out into the world.  As the social web expands, I expect to see even more opportunities for expression and control to develop in every facet of life. 

Maybe someone will even come along and let me control the atmosphere at my favorite bar…

The Atmo Launch!

The Atmo Launch! The Atmo Launch!

As of 5pm Friday, February 25th, Atmo is officially alive.  As the CEO of Atmo, this event makes me extremely excited.

Atmo is a new music system that allows users to vote for their favorite songs and dynamically influence the music they hear at their favorite bar, coffee shop, community center, etc.  Votes are cast through a smartphone (currently through the web, native apps coming soon) and recorded by our system, which controls the music at the venue and plays the most popular songs. 

The first venue to install our system is the TerpZone, a community center on the campus of the University of Maryland.  My co-founder, Randy Baden, got the system set up yesterday and the buzz started almost immediately.  We are getting a ton of positive sentiment from students, businessmen, and potential business partners, and I really believe that this business is not only viable, but the next big thing.

I’m currently looking for venues to participate in our expanded pilot program, so if you know the proprietor of any establishment that might be interested, let me know.  We will be continuing to test and refine the system for the next couple of months, and hope to have a production version on the market this summer.

Review: The Honest Rainmaker

Review: The Honest Rainmaker Review: The Honest Rainmaker

It’s been a while since I’ve read anything that wasn’t pop psych, econ, or self-development related, so I decided it was time to crack open something more akin to a novel.

The Honest Rainmaker is a non-fictional work, but it’s as close to fiction as one can get.  I’d say about 75% of the story is fictional, but since it comes in the form of quotations from the protagonist, Colonel Stingo, it beats the non-fiction test by a nose (that pun is pretty funny if you know what this book is about).

This book was the first by A. J. Liebling that I’ve ever read, but based on the quality of it, I’ll have to pick up another one soon.  If you’re afraid of 5 dollar words, don’t pick up this book.  If you think that humans are naturally honest and considerate, you should probably pass as well.

The book was actually created from a series of short stories published by Liebling in The New Yorker.  Throughout, he recounts his conversations with Colonel Stingo (AKA James MacDonald), a long-time sportswriter for several papers, and a self-denying con man who may or may not have pulled off some of the most creative cons ever.  Stingo regularly mixes times and places casting a shadow of doubt over everything he says, but were a single word of it to be true, then he is potentially the most honest con man to have ever lived. Each of his schemes relies not on trickery, but simply on the laws of probability written into poorly understood contracts with “the boobs” (his name for everyone on the other side of these schemes). 

Interestingly, the kind of schemes espoused by the Colonel throughout the book are similar to many of the things perpetrated today through the internet (and “health clubs”).  I would encourage anyone with an interest in not being deceived by the hidden hand of chance to pick up this book and read it closely. 

An Economics Comment on Fitness

An Economics Comment on Fitness An Economics Comment on Fitness

When it comes to fitness, we each have a monopoly over ourselves.  That is, we control the decisions we make that affect our fitness.  There may be certain externalities imposed by others, like someone taking 45 minutes in the squat rack, but ultimately we have the power to determine our level of production.

Every little bit of effort you have to expend in exercise is a cost.  Therefore, the act of exercise has a cost function.  The first derivative with respect to this function is the marginal cost of additional exercise (production). 

Additionally, exercise has benefits, up to a point.  These benefits are the revenue of fitness: more strength, endurance, etc., and can also be summarized in a benefit function. 

As a monopoly, the goal is to produce exercise at the level where the marginal cost of exercise equals the marginal benefit of exercise.  Most people do not do that.  They fall into two categories.  People who do very little if anything at all, and people who do way too much. 

Don’t be those people.  Do as much as necessary to reach your goals, and no more.  And don’t do bicep curls unless you are willing to admit that your only goal is vanity.  Vanity is fine, just admit it.

Law 2: Friends and Enemies

Law 2: Friends and Enemies Law 2: Friends and Enemies

This chapter is the one I’ve been looking forward to since I first heard about this book.  I once saw a simple word document that paraphrased the 48 Laws and law 2 is the only one I remember.  That document simply said, “If you have no enemies, make some.”

Law 2: Never Put too Much Trust in Friends, Learn to Use Enemies

The full law is a bit more involved than simply “make enemies,” though the opening “Judgement” passage does include a version of my favorite line from above.  In all, this law’s focus is on the way that friends and enemies should be considered in working to achieve and maintain your power.

Friends, it seems, are not always the best choice to help you further your cause.  Employing a friend in your service can cause a host of unintended consequences.  Greene puts it best in this paragraph:

Ingratitude has a long and deep history.  It has demonstrated its powers for so many centuries, that it is truly amazing that people continue to underestimate them. Better to be wary.  If you never expect gratitude from a friend, you will be pleasantly surprised when they do prove grateful. [12-13]

If friends are best kept for friendship, then who do we employ to further our cause?  This is the role of enemies, which is both counter-intuitive and unsettling.  Enemies expect our vitriol, so a display of kindness is likely to put them off-balance.  Furthermore, as the quest for power requires us to operate consistently in our own self-interest, employing an enemy in some capacity allows us pursue our interests openly.  Our enemies will pursue their interests as we pursue ours.  This is no different than what our friends will do, but it is more expected, easier to predict, and thus easier to strategize for.  Finally, an enemy shown a challenge will have something to prove, and as Greene points out, “a person who has something to prove will move mountains for you” [13].

There are so many examples to choose from when it comes to this law that I have difficulty choosing only one. 

One of my particular favorite examples is present often in the sports world. Professional sports is full of big egos and power-hungry people.  Examples of friends teaming up to take on the world (think: Miami Heat) are contrast with enemies who are forced to work together and actually succeed (think: Kobe/Shaq).  When professional athletes with “superstar” status try to work together, the results are usually abysmal.  Chad (Johnson) Ochocinco and Terrell Owens are good friends who got together in Cincinnati, and their friendship can be at least partially blamed for their failure.  Meanwhile, rivalry pushes both rivals to higher levels.  The Steelers and Ravens have an intense animosity for each other, and the existence of an enemy makes both teams better.  In Chicago, Lovie Smith put two former rival head coaches onto his staff.  Result?  They are in the NFC championship game.

Use your friends for friendship. Work with your competent enemies. 

The 48 Laws of Power: Law 1

The 48 Laws of Power: Law 1 The 48 Laws of Power: Law 1

Last semester, I took a course called “Leadership and Managing Human Capital.”  One section of the course focused on power and influence, and renewed my interest in the topics. 

I’ve decided to read Robert Greene’s The 48 Laws of Power as a follow up to that unit.  As I go through the 48 laws, I will detail them here, along with (hopefully) experiences in my life where the laws have come into play.

Today begins that series.

Law 1: Never Outshine the Master

The basic concept behind this law is that your superiors must not be made to feel that they are being overshadowed by you.  The image is that of the sun, surrounded by stars.  There can be only one sun, the brightest shining star.  That is how your superior must feel.  If you challenge that brilliance and attempt to crowd your superior out, you can make him/her feel insecure.

At times, it is possible to outshine the master inadvertently.  If you are naturally more intelligent, charming, or humorous, you may cause your superior to feel insecure about these qualities.  In these cases, you must downplay your abilities, make your master look good, and engage in (discreet) flattery. 

Additionally, it is important to remember not to abuse any favor you have garnered from your superiors.  Always remember your place and be patiently humble.  Acting as though your superior’s high regard entitles you to act above your rank can be fatal to your quest for power. 

A great example of this concept comes from the movie Casino Jack, which my wife and I saw a few weeks ago.  Kevin Spacey plays the role of Jack Abramoff in the dramatization of the scandal that took down the famous lobbyist and several politicians with him. 

In the movie, Abramoff begins to garner a lot of media attention for some of the big lobbying deals he brings in.  In addition, he uses his favored status in the firm to try to get a good deal on purchasing the “Sunsail” floating casino chain that the firm has asked him to find a buyer for.  Through these actions, Abramoff begins to outshine his well-respected law firm, and abuses his favored status, violating the first law of power. Ultimately, one of the partners takes him to a sushi place (that I happen to know to be very good) and fires him.

This law is extremely important, as it is an easy one to violate in the superior/inferior relationship.  When you outshine the master, you shoot yourself in the foot. 

Correcting False Assumptions

Correcting False Assumptions Correcting False Assumptions

I ride capital bikeshare to and from work.  Metro stresses me out.

Today, when I was walking to the bikeshare station, a metrobus pulled up in front of me that I knew would take me straight home faster than I could bike there.  I paused for a moment, but ultimately decided to take the bike. 

It was a slower-than-normal ride home today.  The hint of snow has all the DC drivers in a tizzy, so I had to be extra cautious. 

When I got home, I dropped off the bike and started walking (across the street) to my apartment.  Then the bus pulled up. 

So much for my assumption that the bus was faster than the bike.

What other assumptions am I making that could be corrected?

Something I’ve Needed to do for a Long Time

Something I’ve Needed to do for a Long Time Something I’ve Needed to do for a Long Time

Kudos to Ramit Sethi for getting me to do something I’ve been putting off for a long, long time. 

On Wednesday, Ramit posted on his blog about the need to examine the assumptions that we make and test them to keep them from holding us back.  One assumption of mine was that a well-known author, though not a household  name, would be too busy to answer an email from me.  I’ve been wanting to reach out for a long time because I think this author has a unique ability to focus on the big picture and ignore the day-to-day chaos that the media shoves down people’s throats. 

Well, thanks to Ramit, after about a year of procrastinating I finally sent the email.

The response came immediately: “Error: Mailbox is full.”  I guess I was right to assume that he wouldn’t respond, or maybe I just need to try harder.

Next step: find a new email address.  The adventure continues.

My Current Projects

My Current Projects My Current Projects

Hello all!

The last year saw some incredible things happen in my life, and now it’s time for me to take it to another level. Here are my current projects (more coming soon):

1. Work (gotta eat)

2. MBA - I’m on my second semester of the University of Maryland’s part time MBA program.  Semester #1 was interesting, but this semester looks much more challenging, and I will be getting a 4.0.  No excuses.  Four-point-Oh.  That means doing every reading, putting 100% effort into every assignment, going beyond the curriculum to research the subjects (managerial economics and financial accounting) more thoroughly, and of course, acing some tests.

3. Training for my first half-ironman triathlon (and 2 Olympic distance ones, and a sprint).  Just a simple 1.2 mile swim, 56 mile bike, and 13.1 mile run (aka half-marathon).  Longest (open water) swim of my life to date, 1 mile.  Longest bike ride of my life to date, 30 miles.  Longest run of my life to date, 9.5 miles (though I did that in a half-marathon and limped to the finish line on my injured knee).  Easy.

4. Entering business plan competitions - starting with the Yale School of Management Education Business Plan Competition.  I have a killer idea.  Can’t share it of course, because I fear intellectual property theft.  I’ll give you a hint: it has to do with education.

5. Learning Ruby on Rails - Just for shits.

6. Writing a game theoretical analysis of football strategy - yes, you read that right.  Quick test: Your team is trailing by 4 points and you have only 1 time-out.  Your opponent has the ball and rushes for no gain on first down, making it second and 10 their own 15 yard line with 2:43 to play in the game.  What is your optimal strategy?  Rex Ryan just got this question wrong against the bears at a game I attended.

7. Eating paleo Sunday - Friday 100% without going crazy.  That means looking up many creative and delicious recipes (and, of course, eating a good deal of stir fry).

Basically, the theme of 2011 is productivity.  Believe it or not, with all that going on, I still have a lot of down time and I’m looking for more projects to fill it. 

The race is on.

Pressing the Reset Button

Pressing the Reset Button Pressing the Reset Button

No matter how much discipline you have, there will come a time when motivation just isn’t there for you.

Of course, these times are one reason we like to build good habits.  It doesn’t take much motivation to just keep doing what you do. 

Still, at some point, we all face one of those ruts that sucks up all of our energy.  So what do you do?

Hit Reset.

Take a week to relax.  Eat what you want.  Sleep however much, or little, you want.  Don’t do anything unless you really really want to.  Even let your routine (and all of your good habits) go.  For seven full days just let it all go.  Then, one week later, see how you feel.  Get back into your routine and get back to work and see how that feels.

I just took a reset, and I felt awful, but after that week I had renewed my motivation to achieve my goals (and had taken the opportunity to reevaluate them as well).  It was worth the temporary sacrifice. 

When did you last take a reset?