A Week of Intellectual Dissonance

I’ve been heads down this week on a handful of transactions. As a result, I haven’t been paying much attention to the world around me, but it’s inevitable that some stuff leaks through in random conversations, emails that I get and skim to respond to later, or stuff I notice, even though I’m not looking.

While I was just in the shower, I had a handful of random things roll through my head that I realized were creating intellectual dissonance for me. They are the kind of thing that I like to dissect and chew on, and expect I’ll blog deeper about some of them. Whenever I feel intellectual dissonance, it’s usually a leading indicator of something. It’s not necessarily “something bad”, but it’s almost always “something different.”

But for now, I thought I’d share the list just to get it out of my head and on virtual paper somewhere.

1. I saw two situations where angels are being pitched on secondary purchases of late stage companies. While the secondary activity has been going on for a while, I separate for “people trying to buy late stage stock” from “angels investors.”

2. Several people, who I view as generally stable and rational, had unexpected negative emotional responses that I felt were overwrought and inappropriate to the situation. In each case it felt like something else was going on, but when confronted the individual actually dug in on their emotional, non-rational position.

3. I pay little attention to the macro, especially global stock market indicies, but somehow I noticed that the Shanghai Composite was down over 30% in the last month and then up 5% yesterday.

4. I encountered a huge retrade on a deal from someone who doesn’t have a reputation of retrading deals. It’s not something I’m involved in but I noticed it.

5. I saw two situations of what I would consider very bad / disingenuous early stage investor behavior in the context of companies that had previously raised modest amounts of angel money. Each were things that regularly happened in the early 2000s, but I have seen very little of in this cycle. Suddenly, I noticed two different situations in the same week.

6. I thought Stan Wawrinka had a shot at Wimbledon, or at least was going to be in the finals (I love Stan). He was on the receiving end of an 11-9 loss in the fifth set.

7. The NYSE and United both had massive, independent computer outages at the same time. But, it appears not to be cyberterrorism.

I generally define intellectual dissonance as stuff going on in my head about factual / experiential things that seem interesting or different to me in the moment, or things I rarely think about or notice showing up in the thought stream.  While it could just be my brain doing it’s normal garbage collection, it felt worth pondering.

  • Henry Sztul

    The list of observations you are sharing all seem negative or dooms day-ish. Just out of curiosity, do you ever keep track of these types of observations and connections when they are more neutral/positive?

    I’ve been finding this type of recording/journaling has led to some very creative directions lately.

    p.s. This reminds me of The Mothman Prophecies!

    • Yup – whenever I’m feeling negative and a series of positive things happen, that often creates a similar dissonance. Or just a string of unexpected things, positive or negative, result in the same feeling.

  • wrt #2, everyone is always dealing with something that at any given moment will surface in inappropriate behaviors. You know that, of course, and pressed it.

    People show + tell us only some of it, but often *none* of it.

    Opening up requires an incredible amount of trust + ego-suppression. It’s really hard for a lot of people to do. Me included.

  • Sam

    As someone who was in the tech industry in the late 90s bubble but is now observing it from the outside, perhaps this is clearer to me… it sure looks like #1-5 point to a “frothy” relative maximum in asset prices. And we know the Fed’s low interest rate / QE posture is in the process of tightening up.

    Probably worth making sure your CEOs are thinking about how demand for their products and services might change in a down economic environment (lower asset prices, lower personal wealth, increasing unemployment, general economic uncertainty). And in light of that, how would their organization and operating expense model need to adapt?

    I am still a big believer in the long term potential of disruptive technology. Now more than ever. But that doesn’t mean we can’t go into a 1-3 year trough of economic activity before we get to that future.

    • Yup. Way ahead on you on this as it’s part of my general calibration of the universe.

  • zmre

    Seems like as the angel pool grows larger, the need for individuals to cash out early will only grow.

    On my list from this week, which I’ll add to yours: the dissonance of Congress shaking its fist at the Office for Personnel Management for not encrypting sensitive employee records, while simultaneously holding hearings on the evils of encryption and how it jeopardizes national security.

  • ktinboulder

    I dig this post, thanks for sharing.

    The “get it out of your head” stuff is powerful, one of the reasons I like GTD so much.

    • Yeah – for me, writing it down clears it out so I can think about thinks I need / want to think about.

  • You know, between the Greek debt and the recent downturn in the Asian markets, that’s $4 Trillion of losses, which is about 5% of the world’s GDP.

    My interpretation is: if you work too hard/try too hard (China), or if you don’t work too hard (Greece), you crash anyways. Nothing beats the right balance, the right pace, the right mind.

    Speed kills. And slow lanes too.

  • DaveJ

    Did you see the same black cat twice?

  • Glitch in the Matrix…

  • Never trust anything coming out of China and ethics always get bad around tops. Used to see this behavior on the trading floor.

  • Re: #6

    I think this Wimbledon will be Federer’s swan song. He’ll win and then announce a retirement after the U.S., going out on the high note that he wanted. If there were a place to bet on that, I would.

    I’d also bet on Serena completing the slam, simultaneously tying Stefi Graf’s winningest record, and then playing another year or two to surpass it, just because she can.

  • Glenn Whitney

    This hardly constitutes a “grand unifying theory,” but I think the collective unconscious is affected by seasonality. Right now a lot of people are on vacation; some of them are working sloppily at the same time on their handheld devices. Others want to be on vacation but aren’t and are therefore more irritable and hyper sensitive than usual. Also, and this isn’t a psychiatric term of course, but 15-plus hours of daylight makes some people rather “squirrely.”

  • Carmen Wiedenhoeft

    We had an exhibition entitled “Fragments Revealed a Continuous Process” for the artist Kelton Osborn. I love the title he chose as you certainly see it in his body of work, and in general I think our minds work like this. It’s a nice framework with which to gather these fragments for the time being and piece together the pattern later.

  • Genuine thoughts are always welcomed, often lost to noise. Your inner-self is just saying hey,… something is wrong! Showers welcome powerful moments. I concur with your voice and perhaps my insights can offer reconciliation. Your absence from the macro may reveal some gems. Concurrent crisis in bond, currency, and asset markets warrant investigation to hedge your bets. Allow me
    the opportunity to share some macro insights:

    -US markets are shrinking, 50M people support 140M who receive some form of govt subsidy. The US is establishing a dependency welfare state (very important to understanding portfolio futures earnings defined by shrinking markets… who is your customer?). Regulatory actions reveal it as self-apparent. Follow the persistent path to obvious outcome.
    -Unlimited QE has propped up the stock market and banks accomplished by swaps, invalidating fundamentals.
    -The slow decline over the last 7 years is accelerating with consumer pricing
    sky high. Unless you are in the trenches, you may not perceive buying
    power evaporation.
    -Numerous banking scandals reveal global financial ecosystems are centrally managed, free markets and fundamentals are non-existent. Suppression of commodities markets is shameful.
    -IMF is likely to announce in October the introduction of the Yuan as the new reserve currency, which is likely to shift value from USD, dissociating the benefits we currently have on exchange markets currently taken for-granted. Alternatively, China’s reaction to equity markets was harsh intervention with suppression of trading actors may invite an IMF argument against allowing the
    reserve status. Regardless, China is already a de facto reserve by treaty and international exchange agreements eliminating USD reserves. The USD is dying! The #1 economy, China, is experiencing the greatest bubble in history, with definitive futures impact to US/global markets.
    -Negative interest rates are effecting more countries globally, banks are having to pay customers with variable rate notes; their model cannot accommodate this environment.
    -Where I live, in the FL county of Palm Beach, is the 5th wealthiest county in the USA however out of 1.2 million homes 800 thousand are in our have been foreclosed.
    -1 million businesses closed since 2008 and increasing. I can tell you for a fact, as experienced in the R&D prototyping and product creation business,
    the supply-chain is drying up!!! Those 1 million companies were a backbone to creating value, their departure is realized as diminishing return to society. Eventually impacting your office and family.
    -A series of bubbles are manifesting that are unsustainable, expect a margin call. Too many macro concerns to list here, any one has impact worthy of hedging.

    You should listen to your most intimate voice… Wealth creation is not perceived value, it’s historically defined. The transmutation of raw materials into durable goods is the only form of wealth creation, otherwise focus is diverted to lesser value creation and extraction. Fiat recirculation is not wealth creation, it is speculative perversion. I often hear the VC models are broken… this is why. You
    cannot extract from welfare recipients. VC focus on limited value creation is systemic and will have future impact. There is a way to correct it, but requires macro-economic perspective and listening to you that little shower voice.

    Closing point: The macro-shift is a tremendous wealth creating opportunity, and easily recognized if your awareness/perception is tuned to recognize it. Your portfolio focus is abundantly software and internet. How does this actually create wealth? How are you hedged?

    • DavidMelamed

      I can’t speak to the other points but re: #2, in my lay opinion.

      Whenever there is a disproportionate emotional response, it is rarely about something else going on at that specific time.

      It is more likely that this specific instance triggered an unresolved experience, possibly from a long time ago, and the reaction is proportionate to how they felt/feel about that unresolved issue.

      I wouldn’t expect most people to even be aware of these reactions, let alone the source of it without years of psychotherapy… If they are pretty stable as you say, the likelihood of them knowing or realizing why they reacted the way they did is very slim.

      My advice would be to empathize with their reaction instead of confronting it, and they will likely come back around to rationality pretty quickly.

      • @DavidMelamed:disqus That was insightful.. and generally useful tip for everyday life. Thanks