Linked by Jason F. on January 11 2011:
Bill Taylor on why it's going to end badly, again.
At one point, Rose asked the question that scholars, pundits, and plaintiffs attorneys will be debating for years: “Should wise people have known better?” Of course they should have, Buffet replied, but there’s a “natural progression” to how good new ideas go badly wrong. He called this progression the “three Is.” First come the innovators, who see opportunities that others don’t and champion new ideas that create genuine value. Then come the imitators, who copy what the innovators have done. Sometimes they improve on the original idea, often they tarnish it. Last come the idiots, whose avarice undermines the very innovations they are trying to exploit.
The problem, in other words, isn’t with innovation itself — it’s with the imitation and idiocy that follow. “People don’t get smarter about things as basic as greed,” Warren Buffett warned Charlie Rose.
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5 comments so far
Jake Jacobsen 12 Jan 11
While the point is valid in general, with the situation of the financial meltdown, there were also systemic problems that encouraged those in the financial world to take high risks. The economics professor Thomas Woods has good lecture about why it happened and why we are continuing to have economic trouble. (http://www.youtube.com/watch?v=541bajR4k8g&feature=related). It’s an interesting and funny lecture.
To use an analogy of the situation, you can blame drunken people for making poor decisions, but you should also blame the bartender passing out free drinks to alcoholics. What did the bartender expect was going to happen?
David Andersen 12 Jan 11
“People don’t get smarter about things as basic as greed.”
Warren would definitely know.
Timothy 12 Jan 11
@JF
Talking about advice, any chance you might write a blog post about Groupon behind the scenes given your involvement as a Board of Director for well over a year now.
Seeing the recent news of Groupon rejecting the buyout from Google sounds like a “Fried move” given your endless posts/talks about not selling out.
Though, I have to admit, you’ve got some balls to walk away from a $5 billion offer. That’s just stupid money.
Robbie Abed 12 Jan 11
@JF Great article. The groupon & facebook funding along with some other side cases like about.me getting bought out almost immediately after launch are on everyone’s mind. It’s hard not to ignore that, and many entrepreneurs & vc’s don’t want to miss out.
I agree, it’s not going to end great – but that’s sort of the american way to do it. High risk now, worry about what’s going to happen later. No one says “hey, i’m not going to make this big investment because I care about what it will do to our economy”. It’s more like, “hey, If I don’t make this investment now – someone else will”. I’ve listened to you speak a few times in chicago and i’m always thinking
1) Brilliant speaker & great ideas everyone should follow and 2) If someone wants to invest money in my startup / business – they are risking their money. Not mine!? In the end I just want to be successful and create a product that everyone will use. how I get there is really irrelevant to me.
You are now probably banging your head on your desk thinking how I can think like even after hearing you speak multiple times!
donald 12 Jan 11
All due respect, that’s not the real story of the financial meltdown. When all is said and done, it’s a case of gargantuan fraud perpetrated by many actors. The ratings agencies, granting AAA ratings to financial products; the mortgage brokers, abetting and committing direct mortgage fraud; the investment banks, suckering their clients into buying financial products they knew had a substantial risk of being worthless.
The greed of investors helped cause them to fall for these frauds, sure, but the defrauders deserve more blame than the dupes.
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