In 2001 I was faced with a choice.

Sit quietly on the sidelines of a corporate collapse while hell was freezing over, find a new job, or attempt a management buyout.

The latter involved some breaking ranks: never a comfortable path, as Gerd Gigerenzer has shown. But in the circumstances, and in Schumpeterian terms, it would seem to have been honest and right to try. In a Chapter 11 auction, you need bidders quickly. They need to come from somewhere. With my colleagues, I decided we were as worthy as any. After all, we had been pretty neat in creating social networks, so we knew how to operate at high levels of productivity without the need for as many staff as most news companies. Remember, we had to operate in Reuters’ backyard — probably the reason we were so resourceful, necessity being the mother of invention and all that.

Bear Stearns played a small but disappointing role in this MBO attempt, as investment banker to the wider company sale, appointed by the company’s creditors. Surprisingly, as a thirty-something editor, this was the first management buy-out I’d attempted. So I needed help. I was pointed toward the bankers as I needed to prepare business plans and locate potential investors, but I was also still doing my bit trying to find a corporate buyer in London for the whole firm. As I recall, emails, calls and voicemails to Bear Stearns went unreturned. All I got for my efforts was a solicitation document pdf that I already had, and to which I’d made some contribution as a general manager, in any event.

Where Bear Stearns were too lazy to venture, I had to go find other help. It materialized in the form of London bankers Cazenove, who were systematic and supportive. Time worked against; all sorts of clocks are ticking in these sorts of end game, (although not as quick as must have happened over this past weekend).

It is just possible that, as an internal player, the rules put you at a disadvantage from the get-go. You feel an unwelcome visitor at the poker table — everyone else is expecting you to be clearing out the ashtrays. But I spent enough time at the table to lay down a couple of hands and get the chance to explain a little about the productivity benefits of social networks within the firm to a few of the great and good, who I guess might be grateful now for having had a little of that accumulated knowledge.

And one of the biggest ironies of it all: as we re-modelled our various news business lines to reflect an independent future, our strongest business plan identified that there was an untapped news market in a rapidly growing sector called credit derivatives. And we had the people who knew how to and wanted to cover it.

As we wake up each morning with the scale of the credit crunch appearing ever larger, I’ve wanted for a while, so long as you won’t think me a Jeremiah, to coin that old cliché from the Jaws movie for the sake of our central banker friends, uttered by Chief Brody (Roy Scheider) to Quint (Robert Shaw):-

• “You’re gonna need a bigger boat.”

And I wonder if, before too long, anyone is gonna get to say:-

• “Smile you son-of-a-bitch.”

Unfortunately, we may all now be in the same small boat.

For those unfamiliar with the movie, it goes something like this. As one YouTube commenter said: the shark still looks fake:-

(un)related posts

• magoo finance iv (2)
• Gigerenzer London talk Sep 23 (2)
• apple crunch (2)
• another fine mess (2)
• pop finance (0)

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.

Flush-through

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. Continue reading ‘the maverick’s story’

(un)related posts

• risk aversion (0)
• black swan/white face (3)
• Gigerenzer London talk Sep 23 (2)
• uncle bryan's story of the stone-age people (11)
• apple crunch (2)