When Strength Becomes Weakness

And hence the saying “Nothing Fails Like Success”

Image by Thomas Millot from Unsplash

FANGMAN stocks are all 800 pound Gorillas.

Where does an 800 pound Gorilla sit? Where ever he wants to !!

You never know how strong you are, until being Strong is the only choice you have. — Cayla Mills

Build upon your Strengths, and Weaknesses will gradually take care of themselves. — Joyce Lock

I could go on about the references to and emphasis upon words like “strong”, “strength”, “800 pound gorilla”, “giant”, “the best”, “fastest”, “newest”, “hottest”, “smartest”, etc. in describing people or companies in conversations or publications.

Though these may not be craved upon when the pursuit of success begins, in one’s chosen field. But it does land up occupying one’s mindshare when you taste it once, and then once more, and then again. After some time, it becomes a habit, and occupying the top spot becomes the end of it all, which justifies all means. That’s when Pride takes over and Rationality is thrown out of the Window.

Sometimes, it’s not the taste of it that gets you worked up, but rather the envy/jealousy that takes one over. As Charlie Munger stated in his speech on “Psychology of Human Misjudgement” — ‘envy/jealousy made what, two out of the 10 commandments. Those of you who’ve raised siblings or tried to run a law firm or investment bank or even a faculty. I’ve heard Warren say a half a dozen times, “It’s not greed that drives the world but envy.’

Here again, you go through the psychology survey courses. You go to the index: envy, jealousy. In a thousand-page book, it’s blank! There are some blind spots in academia. But it’s an enormously powerful thing, and it operates to a considerable extent at a subconscious level, and anybody who doesn’t understand it is taking on defects he shouldn’t have.

Source — ‘Big Bang Theory’ Episode Clipping from Youtube

Just as the video shows Sheldon getting jealous of Howard and trying (shoddily) to gain Amy’s attention; isn’t bias from envy/jealousy also a reason when strength (or blind pursuit of strength) also becomes weakness bringing one’s own downfall.

If you look for real-life examples to support both these arguments, you will find many. Let me highlight a few #

CASES WHERE SUCCESS BECOMES WEAKNESS (CORPORATES)

1. Nokia CEO in 2007 could have chosen to adopt Android on their devices but he stuck to building their own OS Symbian and referred to Android as follows “Opting for Android is like pissing in your pants in Winter, just to keep yourself warm. It ain’t a long term solution”.
2. Kodak let its digital photography patents languish since they were generating huge amounts of cash flow due to Kodak print photos.
3. Blockbuster stuck to its physical distribution of rental DVDs while web streaming of movies took a life of its own, making Netflix the King of Online Entertainment.
4. Xerox could have owned the entire computer industry today, only if they had not handed over Xerox Alto to Steve Jobs to work upon. They were busy filling coffers from the business of printers and brushed aside the GUI as a hobby thing to be shoved aside.

CASES WHERE SUCCESS BECOMES WEAKNESS (INDIVIDUALS)

1. Bernie Madoff ran a Ponzi scheme, defrauding investors of billions. The movie Wizard of Lies is a Must Watch if your keen to understand how Pride & Delusion can make you feel invincible, and the cost the family has to pay for your lack of virtues.
2. Raj Rajaratnam ran the hedge fund Galleon Group with USD 7 billion in 2009. The fund sourced it’s successful trades on the back of Insider Trading deals and eventually got caught doing deals on Goldman Sachs before Warren Buffet bought a stake in the bank in 2009. More than 50 were convicted and sentenced to prison (Surprisingly, almost all were multi-millionaires already)
3. The Quants at LTCM were headed by a very confident John Meriwether who was considered a prodigy even at Solomon Brothers but had to leave the firm on account of breaching the code of conduct as a Team Leader. At LTCM, they would exploit arbitrage opportunities with billions in levered positions. In 1998, the strategy didn’t pan out the way it was expected to and ultimately the firm had to be saved by the Fed & other Wall Street Banks, to avoid a systemic contagion.
4. Vijay Mallya built a life of opulence and grandeur becoming one of the richest Indians in 2013. It was this very show (an expensive one to keep running) that brought him down on his knees, eventually to sell his stake in UB to pay off the debt owed to creditors in India. In July 2019, Mallya was granted permission to appeal to London’s High Court against his extradition. But in April 2020, The plea file by Mallya against his extradition to India was rejected by the London High court.

CASES WHERE ENVY OF OTHER’S SUCCESS BECOMES WEAKNESS (CORPORATES)

Suzlon Headquarters in Pune. Source — Google

1. Though Suzlon accounts for 1/3rd of India’s Wind Installations and generates 11,000 megawatts of wind power capacity; its stock price has fallen from INR 400+ in 2008 to INR 4+ in 2020 i.e. 99% loss of capital for its shareholders in this period. Massive acquisitions funded through debt, aggressive expansion plans abroad, fancy offices in India (as shown above) with no focus on Indian markets, insufficient Communication & PR with media. Mr. Tanti’s celebrity status and the billionaire tag was gone faster than he had created it.
2. In April 2017, a US federal judge ordered Volkswagen to pay a $2.8 billion criminal fine for rigging diesel-powered vehicles to cheat on government emissions tests. The “unprecedented” plea deal formalized the punishment which Volkswagen had agreed to. VW had run into problems of corporate espionage with GM in 1993 too and had finally settled by paying USD 100 million along with an agreement to buy parts from GM worth USD 1 billion over the next 7 years.
3. In the 1800s, Britain had a thirst for tea, a brew monopolized by China. So the London-based East India Co. hired Scottish botanist and adventurer Robert Fortune to smuggle the tea’s plants, seeds, and secrets out of China and into British-ruled India. Disguised as a Chinese merchant, he succeeded, and within his lifetime the production of tea in India surpassed China’s. It was the “greatest single act of corporate espionage in history,” according to Sarah Rose, author of For All the Tea in China.
4. In June 2000, Oracle Chief Executive Larry Ellison said it was doing its “civic duty” by hiring a detective agency to investigate groups that supported Microsoft. Oracle employed Investigative Group International to look into actions by two research organizations, the Independent Institute and the National Taxpayers Union, that were releasing studies supportive of Microsoft. Oracle said it sought evidence that the groups were receiving financial support from Microsoft during its antitrust trial. Oracle admitted ties to Investigative Group after news reports said the detective agency had tried to buy trash from two cleaning women at the Association for Competitive Technology, a research group that Microsoft backed.
5. Hewlett-Packard’s board became ensnared in a scandal in 2006 after the company spied on its directors, reporters, and employees in a probe to ferret out the source of boardroom news leaks. Investigators hired by the company obtained personal phone records by posing as reporters and company directors. They also trawled through garbage and followed reporters. As a result, then-Chairman Patricia Dunn, who approved the spying, was fired. HP also agreed to pay $14.5 million to settle an investigation by California’s attorney general, $6.3 million to settle shareholder lawsuits, and an undisclosed amount to settle a case filed by journalists at the New York Times and Business Week, which is now owned by Bloomberg.

CASES WHERE ENVY OF OTHER’S SUCCESS BECOMES WEAKNESS (INDIVIDUALS)

Source — Youtube

As funny as this video may seem, and as adults, you might feel awkward to find this video on a blog about Success & Weaknesses, but it does apply. ENVY/JEALOUSY isn’t a bias when your very young, naive to distinguish your ankle from your knees. It becomes a bias when you fail to recognize the source of your actions emerging from these emotions.

I won’t provide you with real-life cases of envy between people, which you are already aware of, having witnessed in your own respective careers. You would have felt this emotion yourself towards someone or been a victim of these ill feelings towards you. This is unavoidable and a part of human nature. The pain can be intense in both cases, especially if it hurts you or disadvantages you, with no fault of yours. This still is manageable and tolerable.

The cases that I want to refer to you are very costly in nature, and people give into these only because they are oblivious to this bias running them. Some examples are #

1. Buying stocks on a tip
2. Buying stocks because someone else is buying
3. Buying stocks because someone made money buying it
4. Buying fancy house/gadgets to fit in with your peers who already own this
5. Buying expensive clothes to stand out compared to others
6. Mis-selling or misrepresenting facts to close a deal so you qualify for your incentives/bonuses
7. Lying or belittling someone else
8. Psychological denial of your incompetency compared to someone else who actually may be better, but your bias makes you blind to it

These 8 points mentioned above and many more, make people commit errors of judgment, from which there is no walking back. Careers get ruined, capital is lost, savings are wiped out, reputations eroded and many times, crawling back from this setback becomes a painful endeavor. Worst of all, the time lost in recovering from this setback stops the compounding machinery to work for you. THIS IS THE COSTLIEST PRICE TO PAY OF ALL !!

There are a lot of things at stake when you are creating a life by design #

Compounding of Knowledge, Compounding of Savings, Compounding of Wealth, Compounding of Credibility, Compounding of Respect, Compounding of Career, Compounding of Relationships — these are incredible forces when at play together.

But if you let your success become your weakness, if you don’t think about the possible futures (a.k.a. threats) coming towards you, if you don’t live below your means, if you play today and prefer to pay tomorrow if you are lousy with your work ethics, if you don’t build your fences today, if your casual about your relationships — then the errors of judgment could put a stop to your compounding machinery, and you don’t want that.

In his book Joys of Compounding, Gautam Baid has said — “Failure hurts but passes quickly. Conversely, regret hurts forever. It’s hard to look back and face the opportunities missed because of a lack of initiative. Failure doesn’t hurt as much as witnessing how fear led us to mistrust our intuition. You only need to succeed once to unlock a new world of possibilities. Regret is in the non-doing. Many people are experts at success, but amateurs at failure.”

Don’t let Failure scare you or make you do dumb things. Act Rational and have high standards in your work ethics. Life has an uncanny way of making opportunities find their way to you if your good. Don’t fear what’s out of your control. Do good in what you have control over.

Stay Safe.

Cheers

Manish