Echo chambers.

To paraphrase Schumpeter, ‘successful business people are always conspiring to preserve the status quo.’ And one of the best ways to do that is to leverage your position in the market to influence, ideally control, the conversation around how the business or sector operates. Yet again it’s an example of everything you need to know, you learned in high school: “anyone who doesn’t do business by our rules is a loser.” Potential dangerous and should be ostracized. Of course this kind of self-interested ass-covering is entirely understandable in the context of human nature and for what it’s worth is fair enough: “I’m on top of the hill and I’ll use all the advantages that affords me to stay here.” Not enormously noble, but fair enough. What is somewhat more stomach-churning is when, in a vain attempt to rationalize their naked self-interest, these same incumbents wrap up their need to protect the status quo with some spurious justification that it is in fact to “protect” the “little guy.” What a load of crap. You want advice? How about running a country mile anytime someone who’s interests are clearly orthogonal to yours tells you they are looking out for you.

All industries operate within echo chambers; ironically the rise of the web has probably accentuated this as most communities go ‘deep’ rather than ‘broad’ in terms of information flows. Like any good flatlander, after having spent 15 years in institutional capital markets, I was certain that that industry’s echo chamber reverberated loudest. But now having spent a couple years around the fringes of the venture capital industry, I know that isn’t true. Further I suspect every industry and community suffers from this disease more or less equally. I’m not an anthropologist but I bet it has something to do with the evolutionary hard-wired pre-disposition for people to form tribes. I’m not sure why, but naively I expected the venture capital industry to be less political, less petty, less groupthink than the investment banking industry. Well it’s not. In fact it might even be more dysfunctional. And it certainly could use a few more traders within it’s ranks. (Just to be perfectly clear, that last opinion is completely self-interested, possibly self-centered and isn’t trying to help anyone except possibly me, including the poor entrepreneurs.)

I don’t mind the fact that this (or any other) industry is messed up. That’s where the opportunity lies. And being outside an echo chamber looking in is a wonderful – if sometime lonely – vantage point from which to recognize and capture these opportunities. And if I’m right, just maybe I’ll have an edge. Everyone needs an edge. And if this edge helps me succeed (I mean really succeed) then just perhaps one day the frame of reference will shift. And I’ll be the one out there telling everyone not to rock the boat because, “y’know it’s really helping the little guys.” Not. Well at least I hope not. But I can’t guarantee it. So if this comes to pass, that’s when you should tune out. Find a new prophet…because you know it will just be so much baloney…

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