Friday, May 30, 2014

At our best during our worst moments

During last week's kite race I accidentally crashed my kite into another competitor's kite, wrecking his kite (mine suffered no damage). It was entirely my fault and I felt terrible. I could have simply "left the scene of the accident". But I felt really bad and wanted to do all I could to help the other racer. For a short while I simply stayed floating close to him waiting for the rescue boat to pick him up. Then I realized that we had identical kites, so I could give him my kite and take his. This would allow him to compete in the following race and avoid the ordeal of a rescue. We did that and I got rescued with his kite. Afterwards I told him that we should swap kites permanently. He would keep my kite, which was in perfect shape, and I would keep his broken kite and fix it.

The other kiter really appreciated my behavior and told me that last time he had a similar incident the racer who was at fault didn't do anything to help him with his situation or broken gear. He simply apologized and moved on. I didn't feel that I was doing anything particularly special. I had caused an incident and felt that it was my responsibility to do everything within my power to correct the situation. Why should the other kiter deal with the cost and hassle of repairing a kite that I had broken? Yet, as we all know, not everyone always does the "right thing". This bad situation that I caused gave me the opportunity to show that I am one of those people who does try to do the right thing. And the people who witnessed that appreciated it.

I am obviously not suggesting that we intentionally put ourselves in bad situations to show we behave well in them :-). Just that we remember that our worst moments sometimes give us the opportunity to be at our best. 

Tuesday, May 20, 2014

Financial Leverage 101

Told the boys about financial leverage. Used the example of buying a house with 100% of your own money versus a 20% downpayment and 80% mortgage. When you sell the house, your return can be a lot better if you have the leverage of the mortgage. Of course, you need to factor the cost of the mortgage, i.e., the interest, and the risk that if the value of your investment goes down you might end up owing more money to the bank than your investment is worth.

Sometimes people use leverage because they have no choice. They simply don't have the money to buy the asset without borrowing. Sometimes they do it for the better expected financial return - if they think they can invest the rest of their money in something else that will give a better return than the cost of the loan.

A bit of leverage can be good, and sometimes represent's "free money". For example, interest expenses on home mortgages are tax deductible. That tax deduction is an incentive from the government towards home ownership and is, in essence, free money. Of course, even with that benefit sometimes you are better off not borrowing, say, if the interests are too high, or not buying, say if renting is a better route. So it is important to always keep the big picture in mind.

Monday, May 12, 2014

Beware of First Impressions

A few years ago I met a couple of people around the same time. One was more extroverted and charismatic, call him Bob, the other more serious and quiet, call him Jim. I initially became closer with Bob. He was much easier to talk to. I was a bit intimidated by Jim. Yet over the years I had the opportunity to interact many times with both and realized that I didn't really like Bob very much. Sure, at first he seemed nice & fun, but it turned out underneath he was a bit mean and didn't share any of my values. Jim, on the other hand, turned out to be the nicest guy. Sure, he is a quiet guy, but after talking with him enough times I realized we got along very well and had many shared values and beliefs.

I thought this was a timely anecdote to share with the boys as Paco is about to go to a new school for high school. He will meet dozens of classmates and might decide who to befriend based on first impressions... The good news if that in a situation such as high school, Paco will have plenty of time to get to know most (if not all) of his classmates - and thus move beyond first impressions. Most situations in life are not like that. So what to do? At least one should be aware of the imperfect nature of first impression judgements. Be careful about "superficial" traits that might make someone likeable, e.g., charisma, and those traits that might make other people harder to relate to, e.g., seriousness, shyness. Figure out what is it that you really care about in people and assess that.

Wednesday, May 7, 2014

We see and hear what we expect to see and hear

Ale was giving Paco a hard time about being late when Nico jumped in saying he wasn't late. Ale clarified he was referring to Paco only but Nico insisted Ale had also referred to him. Truth is Ale had been super specific about Paco, even saying that while Paco got up first, he was often last to the car. I believe that Nico had heard what he expected to hear, i.e., his older brother giving him a hard time. And our memories are so unreliable that I am sure Nico remembered Ale saying his name. We construct our memories based on our expectations.

A related situation that I often see is people who believe they can "interpret" others expressions and intonations. "It is not what you said but how you said it". Maybe. But a more accurate saying might sometimes be "It is not what you said but what I expected you to say". So, think hard before jumping to conclusions. Don't try to read too much between the lines, as more often than not, it is you who is writing there, not the person speaking.

Wednesday, April 23, 2014

Junkie Takes Desperate Measures

I am a kite junkie. After a day or two without kiting I start to get pretty desperate. I need my kitesurfing fix to remain sane. I joke that I now understand drug addicts better. I can relate to the feeling of needing something to which you are addicted - and doing whatever it takes to get it.

Last week I injured my wrist. For a couple of days I wasn't sure how serious it was and how long I might need to stay out of the water. Needless to say I was VERY concerned. The idea of not being able to kite for weeks, or even months, (specially now in the middle of the kite racing season) was devastating. In short, I was desperate. And desperate people do desperate things. What did I do? Fortunately, nothing too radical ;-). A few weeks earlier my mother had been in town and brought some Peyote cream. She said it had done wonders for her knee. At the time I was pretty dismissive. Peyote? Isn't that what some native americans smoke (or chew?) to hallucinate? At least that is what I remembered from Carlos Castaneda... Yet when my ability to kite was at stake, I was willing to try anything. Where is that Peyote cream?

The incident got me thinking about the crazy things that people do when they are really desperate - and the many people that try to take advantage of them. Need to recover a loved one? Need to lose weight? Need a job? Any route that offers hope is worth exploring - even if under normal circumstances we know it would be silly.

What is the take-away? Be on the lookout for crazy things we (or our loved ones) might do in desperate situations. Pay attention to the downside. Most times there isn't much downside: the cream doesn't help, the psychic doesn't change things, we waste a bit of money. But other times we might make matters significantly worst...

As to my wrist, I am glad to report that immobilizing it with a brace is making it better. And I can even kite with the brace :-). The Peyote cream, on the other hand, didn't seem to help.

Thursday, April 17, 2014

Bait and Switch

A few days ago I got an email with the subject "Speaker Invitation". The organizer of a conference about start-ups and entrepreneurship was asking me if I would be interested in participating in the event. I enjoy speaking at these kinds of events - as I usually get great feedback from the participants - so I gave him a tentative yes, but asked for more details about my participation and the agenda. At this point someone else from the organization took over the conversation and suggested that I help judge a start-up competition. Looking into the details I realized though that, given the number of judges and start-ups, my contribution would be pretty minimal. The event was not going to be in San Francisco and I concluded that it would not be worthwhile for me to go to the event unless I could contribute more significantly. I told them as much at which point they apologized and said the speaking slots where all full. The whole things felt like a "bait and switch". Like a car dealership that showcases an amazing deal on the window only to tell prospective buyers that that car had been sold, but they had another one available... My message to the boys: don't engage in this kind of behavior and be on the lookout for those who try to pull a bait and switch on you.

Friday, March 28, 2014

Cash Flow & Liquidity

I explained to the boys the concepts of cash flow and liquidity. These concepts are relevant to organizations as well as individuals. You might be "profitable", have more income than expenses, but if the timing of your expenses is sooner than that of your income, you might run out of cash and get into a lot of trouble. This, I believe, is the primary reason start-ups fail.

You might have valuable assets, but if they are illiquid they might do you no good when you need cash. A house might take weeks or months to sell; a company might take months, years or never find a buyer. Often there is a trade-off between speed and value: a car can always be sold quickly at a dealer, but for less than a private buyer, who might take weeks to find, would pay.

Understand these concepts and keep an eye on them for your personal and professional lives.