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January 15, 2008

the maverick’s story

Posted in: behaviour,black swans,business, finance and markets,collaboration,competition and performance,endurance,failure,journalism,life the universe and everything,music,recovery,sports,what hacks off the hack?,what knackered the hack?

Twitter showed its worth when @ryansholin announced (at least, it was news to me in landlocked Bath) that Maverick’s – the annual big wave surfing event in Santa Cruz, Northern California — was convening this past weekend. The organisers called it last minute on Friday. All the young dudes rushed in to catch the notoriously huge Pacific west-by-north-west swell on Saturday.

Ryan, who blogs on the changing face of journalism, works for used to work for the Santa Cruz Sentinel, but recently moved to GateHouse Media, a large publisher of highly local print and online publications. Maverick’s is in his back yard. He pointed us to the Maverick’s website, where I spent enough time looking at 2006 wipeouts (see below) to end up with a headache. It didn’t take long.

Just in case you think I’m suffering from apostrophe failure, “Maverick’s” is short for “Maverick’s Point” — Maverick being a white-haired German Shepherd dog whose human surfing companion was reputedly one of the first to try the giant waves near Half Moon Bay back in the ’60s. The dog tried to swim out to join his surfing buddy, but the conditions were too treacherous and he had to be tied to the car bumper instead for his own safety.

Surfing heaven, sailing hell

I could not have cared less about surfing a few months ago. I’d seen crazy folks surfing mid-winter in Cornwall, desperately seeking even the tiniest waves in full wet-suits, while I stood (marginally less frozen and windswept) safely on shore. British surfing culture, such as I imagined it, left me cold; old surf-bum cliché mashed up with the with teenage surf fashion — who needed it?

It wasn’t that I didn’t have an affinity for the sea. I spent my twenties sailing a yacht most weekends and studying navigation on Tuesday evenings at night school in very non-coastal Parliament Hill, North London. I’m qualified as a Royal Yachting Association coastal skipper, hold the obligatory VHF radio operator’s licence, and can confirm that yachting in the home waters of the UK is indeed like standing in a cold shower tearing up £20 notes. Who needs that either, frankly?

Crucially, though, for a yachtsman, the place where land and sea meet when the wind is blowing onshore is a no-go area. The lea shore that is surfing heaven is the sailor’s total nightmare.

But last summer in Devon, my aversion to surfing changed. It was so wet on land in August that, having been rained on solidly in our camp site for several days, we thought we might just as well embrace our dampness and at least add the wind-protective qualities of neoprene. Courtesy of Loose-fit in Braunton (the world’s first carbon-neutral surf shop, they assure me), we invested in some state-of the-art suits and plunged into the foam at Saunton Sands, encouraged by the Loose-fit slogan: “Hang Loose in the Juice.” We were only on trashy bodyboards, purchased at the beach-side store, but it was surprisingly exhilarating. It transformed a holiday that would have otherwise been a washout.


As a non-scientist, what intrigues me about surfing and sailing, particularly when it comes to understanding and managing risk, is that they embrace and expand your knowledge of the non-linear. For instance, the Beaufort Scale for wind strength (which yachtsmen must learn to determine how much sail to carry, and what course to chart, and whether to go out at all) goes from 1 through to hurricane 12. But clearly a hurricane is not just twice as strong as Force 6; in fact, it’s at least three times the wind strength, and produces more than 4.5 times the wave size.

When I did a search of Art De Vany’s blog, as I’m wont to do when I want to understand something complex, it immediately threw up the insight that surfing is what de Vany describes as a “power law” activity. And that was what struck me when a large wave unexpectedly up-ended me (not for the last time), and I experienced the sensation that surfers call “flush-through” or “wash-thru”: when the ocean breaches the sea-defence that is your wet-suit’s collar and your nether regions get flooded with icy cold water, rendering you a human washing machine on a particularly vigorous rinse cycle.

Now, Ryan, at Invisible Inkling, talks a lot about the wave of change that is causing journalists and publishers to experience some of that metaphorical cullion-tightening wash-thru too. He urges journalists to re-skill, get blogging, Twittering and exploring social networks. Because newspaper circulations are falling, and revenue models that can guarantee the future of serious news-gathering are so far proving highly elusive.

Riding the wave

Putting these two things together reminded me of my own youthful Jeremiah pronouncements and specifically a now somewhat banal — but nonetheless prescient — observation I’d made in a meeting in 75 Wall Street way back in 1996, when I was London bureau chief for Knight-Ridder, and the idea of monopolising the Internets was just a twinkle in the young eyes of two 23-year-olds called Page and Brin.

I’d been summoned for meetings there with my fellow news managers to strategise the recovery of the Knight-Ridder international newswire that had spent several months passing through the uncertainty of an auction before being acquired from the Miami-based newspaper company (then still a thriving independent entity as one of the two largest publishers in the US) by venture capitalists.

I forget how many staff we lost precisely, but we were at least fully decimated. Fearful of acquisition by a competitor and enforced redundancy, so many had left seeking greater security, often with said competitors.

Private equity firm Welsh Carsen Anderson & Stowe, the firm that had bought us, had a bold strategy to overturn Reuters, Dow Jones-Telerate, and the emergent Bloomberg, and capitalize on a wave of financial market disintermediation by being the first company in the financial information industry to apply internet protocol. They acquired a bunch of information companies, ripped out their proprietary networks and technologies, and introduced standards.

WCAS already owned what it claimed was the world’s largest private intranet, contested only at that time by Hewlett Packard. After buying us, WCAS tried to buy that doyenne of early internet adopters, Compuserve, too. They had the blessing of — and not a small amount of investment from — the world’s largest banks and pension funds. At one point Tour de France winner Lance Armstrong was our official spokesman.


But what struck me at those early meetings in “75 Wall” was a marketing presentation that showed, among other dramatic financial industry data, the exponential growth of internet usage and technological developments over the previous year or so, which was mostly then US-driven. While we were mostly talking about recovery, and anxious about our new parents, I commented that what the data revealed was a huge wave of change coming, and those who could not figure out how to ride it would get swamped.

The quote I like in that video comes from Grant Washburn, when he says:-

One wipeout’s not likely to really finish you off, but when a big stack of waves comes and you can’t get away, that’s when you really get tested.”

Well, I’d read a lot about waves in a seminal book for yachtsman called Heavy Weather Sailing which documents some of the worst yachting storms of the 20th century. I did not have many surfing images in my head, but plenty of negative wave scenarios involving ocean-going yachts falling off crests the height of cliffs and shattering at the bottom like matchwood, as if they’d struck solid concrete. And the kind of images you see in the video above from Maverick’s are as close to what I was thinking, excepting that, the guys and gals falling off their boards — the Mavericks — are the best in the world, the only ones allowed to tackle those waves because of the skill required and the risk involved.

Bear in mind that Maverick’s Point gained its notoriety in 1994, when top Hawaiian surfer Mark Foo lost his life in a seemingly innocuous wipeout, when surfing Maverick’s for the first time. We can’t see what it looks like beneath the wave, so the onlooker has very little information about what dynamics are influencing events. Science too has only just caught up with the underwater features that produce these dramatic waves with an oceanographic survey of the area in 2007 (see next post for a fantastic eight-minute video on that science.)

Riding the internet wave was looking good for Welsh Carsen and the Newco vehicle that later adopted the named Bridge and BridgeNews. IP was definitely the way to go, and when institutions like State Street, the world’s largest custodian bank, start choosing you as their infrastructure provider, you can safely assume that you are doing something right.

The long haul-down

For a journalist/manager in the midst of all that, it was a double-edged sword. On the positive side, I got an ever-growing staff for four years, and the chance to play with IP tools and create the kinds of social networks within the firewall across a distributed staff of wide geography and expertise, producing the kind of collaboration Gerd Gigerenzer highlights from an academic perspective in his book Gut Feelings: The Intelligence of the Unconscious. And all of that in real-time. Hey, we even designed a prototypical Facebook-type application to help the 600+ journalists locate one another quickly!

But there were much bigger downsides that at first were imperceptible, then with greater intensity swamped us in the way Washburn describes. In retrospect, a defining moment of the mess came when, in the now-demolished Desert Inn Hotel in Las Vegas, I was told by a now-similarly-demolished former corporate officer that I should get my reporters to multi-task when the content management system (CMS) that he was responsible for — and on which we relied to publish real-time news of interest-rate changes, corporate meltdowns and government collapses to the world financial markets — refused to work for extended periods during our 24/7 publishing schedule.

The problem is that when you are ripping out the cabling and installing new, you can only go as fast as your customers will let you. And just because one customer is happy to be five years ahead of his competitors (as State Street then was) you can’t build a sustainable business unless all of the customers you need are ready to do the same. Somehow you need to do both. But that was where Bridge turned out to be a misnomer.

In sailing and surfing there is no place for hubris. Indeed, it seems to be trained out of you in the very earliest days. This is certainly not the case when it comes to running companies. Or, as we all know so recently, financing them. Complex systems — whether they be waves, the weather or financial markets, or the changes now affecting publishing — should be approached with sufficient humility and preparedness so that, with luck, the inherent risks are overcome, not compounded.

Unfortunately, professing uncertainty does not sell very well. When banks started appearing on high streets, they invested in fancy stone façades to create an aura of permanence. They hoped to encourage depositors to think they would still be around tomorrow. As Nassim Taleb jokes, these days it is the same reason bankers wear neckties. And I do sometimes, so as not to scare the horses. And what about names — Northern Rock anyone?

Meanwhile, back on terra firma

Apart from structured finance, the most obvious area these days where a wave is breaking and creaming a good number of those attempting to ride it is the CD-based music industry. According to The Economist, quoting Nielsen Soundscan, physical album sales in the US last year dropped by a staggering 19% — faster than anyone (really?) had expected. EMI is among those suffering worst. This suggests to me that its new private equity owners Terra Firma, might think about a new name to better reflect the nature of the environment we all now face.

This is what The Economist says:-

The smallest major labels, EMI and Warner Music, are struggling most visibly. Warner Music’s share price has fallen to $4.75, 72% lower than its IPO price in 2005, and it is weighed down by debt. EMI‘s new private-equity owner, Terra Firma, paid a high price for the business in August 2007. Now, having got rid of most of EMI‘s senior managers and revealed embarrassing details of their spending habits (£200,000 a year went on sundries euphemistically referred to in the music business as “fruit and flowers”), Terra Firma is due to produce a new strategy later this month. But many observers reckon the private-equity men are out of their depth.”

Well, this has been a long and winding post, and if you have paddled this far out into the Knackered Hack surf, you surely deserve a better punchline than a sermon about over-confidence in business — not to mention the need to cultivate your mavericks — about which I sadly appear to be an expert. So, I’ve got another little film treat for you.

Where I remain an amateur, despite frequent claims to the contrary, is in all things geeky. As I first tried to paste in the Maverick’s video on Saturday I ran aground, and spent the entire day working with plug-ins, players and widgets to see if I could embed and stream an flv file from the original rtmp source. You may think that sounds very expert and geeky, but I can assure you that, until sometime late on Saturday, I had no idea that those words and acronyms could belong in the same sentence. I’d looked for another source than the Mavericks site much earlier, but found nothing that matched the quality that I know my readers deserve. Then I stuffed a Google fish in my ear, typed what must have been more relevant keywords, and trawled up a more easily embedded source at Spike TV.

To be sure, my approach to technology much more resembles John Cleese speaking to Terry Jones in the following clip. And this one is NSFW (not safe for work) if you are still living in the 1950s. Just be especially grateful that it’s not the Teddington Lock fish-slapping dance again.

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