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Venture capitalists, think tanks, and naïve doctors – oh my!
We have a lot of friends in DC. So each night, after the volleyball game that day, we generally get to have supper with another friend we haven’t seen in a long time. We had supper with ‘Susan’ one night, and I learned about think tanks and lobbying firms. The next night, we had supper with ‘Chris’, who we hadn’t seen in 20 years or so. Chris has a very different background than Susan.
He grew up in rural Wisconsin. He was a good athlete in high school, but at 5’8” and slender, no scholarship offers were forthcoming. He was an outstanding student, and got a partial academic scholarship to a nearby state college. He paid for the rest of it via ROTC. If you recall, Susan wanted to go to Berkeley, and her family could afford it, but she wasn’t accepted, so she went to a state college in Utah. Chris probably could have gotten into Harvard, but his family couldn’t afford it, and a young man of modest means just couldn’t imagine borrowing that much money, so we went to a state college and enrolled in ROTC.
Susan spent her weekends and time off skiing in Utah. Chris spent his time off working on his grandfather’s dairy farm. Susan skied and partied in college. Chris worked hard in college, and did extremely well. Then he spent 6 years in the Marine Corps flying COBRA helicopters. After that, he was accepted to Harvard Business School, and got his MBA. He spent years with a consulting firm, working insane hours, living in hotels, and succeeding at every task they gave him. Then, one of the companies he did consulting for made him a very good offer in the field of finance. He’s worked his way up from there, and now is one of four principals in a venture capital firm in DC.
I asked Chris what he does, exactly, and he said, “I have the best job in the world. What we basically do is we look for start-ups or growing companies that show promise – they’re good at something. Although often they’re not all that good at running a company. We spend a lot of time studying these companies, the field they work in, and the relevant larger economic factors at play. We get to know the leaders of the company. We study lots and lots of companies in great detail, decide which ones have the most potential, and then we go out and talk to venture capitalists. We then take invested capital, and help the companies we’ve chosen to improve. We provide capital, of course, but we also help them with things like tax strategies, payroll, legal, regulatory compliance, and other stuff so they can focus on building a better widget or whatever. And when the companies make money, our investors make money, and we make money, and then we go look for more companies. It’s awesome.”
I told him that the research and analysis side of the business sounded daunting. He said, “Oh heavens yes. We spend months and years researching hundreds of companies, most of which will never amount to anything. The resources and man-hours we put into that side of it is by far our biggest expense, and it’s not reimbursed. But our investors expect us to do our homework. So we do our best to be thorough.”
Me: “You know, just last night I had supper with a lady who works at a think tank right here in DC! The government hires them to research things, and then they give that information to the government. Maybe you could hire somebody like that to do your research for you!”
Gosh, I’m so smart. You would think that Chris would have thanked me for the tip, but, um, no…
Chris: * suppressing a smile * “Um, well, that’s not really how this works. We need to get this right. If we give someone advice based on questionable information, then no venture capitalist will ever speak to us again, and we’d all be looking for work in a matter of weeks. We can’t get this wrong. So we do it ourselves.”
Me: “She said she had the most brilliant people in the world studying these problems.”
Chris: * really struggling to suppress a smile * “Um, I’m not sure you understand exactly what think tanks are, and how they work.”
Me: “Yeah, you’re probably right.”
The differences between Chris and Susan are striking. Susan was born to an extremely wealthy family, and married an extremely wealthy man. Now she’s in her 50’s, and divorced, and finds herself very wealthy with no obvious skills to contribute to, well, anybody. It must be a weird feeling. She has gradually slipped down the social strata throughout her life. From a fabulously wealthy upbringing, to not getting into a prestigious college, to partying away four years at a state school, to marrying a wealthy man and traveling the world on his dime. Now she’s single, divorced, and not all that important to anyone. She’s still wealthy, but nothing else is going right.
Chris was born of very modest means, grew up working on his grandfather’s farm, went from state schools and the military to Harvard, to consulting, to finance, and now is at the top of the heap. He has had a difficult rise, but has succeeded every step of the way, and now, in his 50’s, he is very important to a lot of people, and is setting himself up for an early and very comfortable retirement.
Susan looks down her nose at people like Chris. For a lot of reasons. Susan is an enlightened atheist. Chris is a devout Catholic. Chris doesn’t know anything about the best ski slopes in Austria, or French wine, or Italian shoes. To Susan, he’s just a rat in the rat race, unlike her position as a worldly philosopher, above such petty concerns.
Chris knows exactly who Susan is, too. Or at least, people like her. When I suggested that he could use the expertise of people like her, he initially thought I was kidding. And then, he concluded that I just had no idea what I was talking about, but he was too nice to point out how absurd I sounded. Even though we both knew that he was right.
Imagine someone like Susan working for a private equity firm.
Imagine someone like Chris working for the government.
Imagine Joe Biden or Barack Obama doing anything in the private sector, at any point in their lives.
Such thoughts are absurd on their face. People like Chris are drawn to the private sector, and people like Susan and Joe and Barack are drawn to government.
And then government doesn’t work, and we blame Republicans.
No. Government doesn’t work because it can’t. For so many small reasons. And a few big ones.
As the left continues to influence our culture and institutions to produce more Susans and less Chrises, this is going to continue to get worse. And I don’t see an obvious solution.
I didn’t start drinking today until 2pm! Under the circumstances, I consider that heroic.
Published in General
Don’t let yourself get dehydrated, now.
To me, it’s always seemed like it’s been the Producers versus the Parasites.
For most of my life, it’s been no contest; the Producers have always won, mainly because we were educated to become Producers.
Now, that’s not the case and that’s a prime reason that we’re in deep s**t.
Agreed! We are really screwed. As folk who thrive on individualism and liberty above all else, government is antithetical to our natures. Yes, we know that man is flawed and we must give power to a government to keep our society orderly, but actually rolling up our sleeves and making government our life’s work is gagworthy at best. Thus, our true compatriots won’t be found running governments. It is just not our thing. Whereas, the left…boy you are talking right down their alley. It’s why, in the long run, we don’t have a chance.
I agree, for the most part, but still have faith that one day the producers will get fed up with the direction in which the country is being taken and will become more involved once again. I’m afraid, though, that will require a crisis on the order of World War II.
Heroic indeed! It gives me a standard to strive for!
Yet there are quite a few venture capitalists, angel investors, and successful entrepreneurs who support the Democrat and even the ‘woke’ worldview. I know some of them.
You seem to let nothing go to waste. One of your best pieces, Doc.
The Chris/Susan ratio would be a good measure of the health of
an advanceda civilization with no recent external threats, I’m thinking.Astute observation.
Any organization needs more “Indians” than “Chiefs” but the real problems come when you have “Chiefs” who should be “Indians.”
First thought I had.
I agree with your general premise, but think some federal workers would do well in private industry. Take for example my father’s colleague Pete Wilhelm who worked at the Naval Research Lab from 1959-2014.
https://www.nrl.navy.mil/Media/News/Article/2534128/nrls-peter-wilhelm-bestowed-naval-research-award-for-outstanding-lifetime-achie/
Of course, the environment for working on space today is far different what it was in 1959. Perhaps if Pete was starting out his career today he would be working for SpaceX.
Not to mention “indians” who think they should be “chiefs”.
To save time, let’s just call them “bidens.”
But you were just kidding. That’s clear, given your interaction with Susan and your opinion of her. The real story ends with you and Chris having a good laugh at Susan’s expense over a few glasses of Scotch.
That’s why they are “chiefs”. They couldn’t cut it as “Indians”.
Doc, I’m glad your daughter is going to school there. Sure has given you lots of subject matter. Keep ‘em coming!
Very good article, as usual. One point, though:
From an old joke about grammar nazis: “Mine Führer!”
Yeah, I looked at that too. But I wasn’t sure how to do it correctly.
How should that be spelled?
I spent my career in a world that had attributes of both a think tank and a venture capital firm — learning how to manipulate government on the one hand and learning hard, cold, immoveable facts on the other. Since government was the source of funding, over time manipulating government became more important than discovering facts, even though the government was presumably paying for facts. But government rarely pays for facts they do not want to know. And you don’t consistently make money by publishing facts that the government doesn’t want to know.
This is a default state for government-funded research. But the more ideologically driven government is, the more “discovered” facts have to match government dogma. Just ask historians of the Soviet Union.
I never thought of stating it quite that way. Thx.
This guy is really interesting. This particular interview focuses more on history and less about his investment business.
Simon Mikhailovich
It has a transcript
https://hiddenforces.io/podcasts/simon-mikhailovich-soviet-union-tbr/
For patreons?
You are exactly correct. I wrote a post about how the Soviet Union handled this sort of thing – China as well. It’s astonishing, really.
Sorry. I don’t subscribe to it and I really just started paying attention to it again after he put up a pay wall. He usually puts a third of the interview behind a pay wall but this one is totally free except for the transcript apparently. I just saw the transcript button and didn’t think about it.
This was really good.
One very sad reality is that for those of us 65 and older, we grew up in a world where the Movers and Shakers, Researchers and Scientists who were in charge of shaping national and local policies were cast in the same mold as “Chris” is today.
Now it is the “Susan”-style Mover and Shaker who oversees our reality.
It is also true that the Department of Education did not exist in that earlier world. And although the FDA, CDC, NIH etc did exist, there was no one figure head working tirelessly for the sake of The UN and the WHO, who also controlled 80 billion dollars worth of grant monies.
The problem is Susan is neither a chief nor an Indian. She is a ditz who thinks she is a chief. Just like Obama and Biden and 90% of the political elite.
A serious question to Dr Bastiat: Chris is successful, but he isn’t Bill Gates or Jeff Bezos successful. Yet Bill Gates and Jeff Bezos are the bread and butter of the Susans of the world. How do you explain this?
I’m not sure I understand what you’re trying to say, exactly, here.
(It’s Monday morning – I’m a little slow right now…)