It is Father’s Day, 2012. You are three weeks old today. It is noon and the day has been perfection, so far.
I took you on your first tour of the nature trail. We startled a baby deer who jumped from the tall grass right across our path, and we watched a sand hill crane hunt the bog. This is the first day that it really appeared that you were seeing the World, your eyes catching and releasing on the swaying green branches as we walked, sunlight dappling your face, little coos of what I think were recognition issuing from your miniature lips.
Your Mother considered a nature trail walk at three weeks old, risky behavior. What if that jumping deer caused me to drop you? Or what if I lost my balance on one of the steps up the hill? Risk management is a critical skill in our accelerating complex world. So, let’s talk about it. I think the sooner we start this particular dialogue the better because, as my son, you are likely to inherit my appetite for risk.
There are two main kinds of risk: financial and physical.
Financial risk has been in the news a lot recently. Risky use of capital has almost ruined the World in the years running up to your birth. As a result, the tolerance for risk appears to be diminishing. Banks aren’t lending and corporations aren’t spending; hoarding cash. There is a great deal of discussion about how much risk is prudent, and whether we should legislate how much should be legally allowed. This seems acutely un-American to me, and exactly the opposite of what we should be doing as complexity increases. (see my lecture on Moore’s Law) when we should be investing in innovation; the only thing that can save us. But then, I tend to look at the World a bit differently from the madding crowd. I have been an entrepreneur, working with my colleagues to raise over $50 million in capital over the last twenty years to form 6 different companies.
My high stress threshold and hearty appetite for risk makes most people uncomfortable, but it has served me well. I have had an interesting life with many more adventures to come (hopefully). Maybe you and I will tilt at windmills together some day. I hope so. And maybe my later years will see a deeper prudence settle in me to counter any irrational exuberance you may exhibit. Calculated risk is the only risk to take in finance. But risk avoidance leads to inertia and stagnation.
Personal risk is another matter altogether. I am unqualified to lecture you on it, since I have been so fast and loose with my own personal safety as I traveled the world looking for adventure and experience. When I couldn’t talk others into going with me I just went alone. I went alone to Moscow, to Tokyo, to Brazil and Egypt. I was chased through the streets of Sao Paulo by thugs, robbed at gun point by the Moscow police in the middle of the night in the blowing snow. I went to Egypt three weeks after the 1998 Luxor massacre, and was detained and interrogated by Israeli agents while trying to walk across the border at Eilat. I would like to say that most of my recklessness was in those years of high testosterone between 16 and 30. For the most part, that is true. But as recently as three years ago I made the sober decision, against all advice to the contrary, to dive head first from the cliffs at Rick’s Cafe in Jamaica, my left elbow sprained and my back wrenched like I had been under the Inquisitor’s rack. There is a video of “the dive”. Your Mom will be very happy to show it to you as an object lesson about ignoring most of my advice.
I very much want adventure for you. I can only imagine what is in store for you once the wanderlust kicks in and you get that adolescent bullet proof yearning for finding the limits of things. But I do hope to teach you risk management before it hits, so you get through it all in one piece.