Sunk Costs
Ginny gave me “The Art of Critical Decision Making” for Christmas.
She gave everybody else a bathrobe. After saying it’s hard to buy a gift for me, she told me to get back to her, to let her know what I thought.
Huh. I’m self-educated. Show me a lecturer and I’ll point out someone I can daydream during the presentation of. I can count on one hand the number of riveting college professors I had, and they were all in the art department, which is why I switched majors, from English, wherein they didn’t give a hoot what I thought, they just wanted to teach me classical theory and eradicate all the creativity extant in my body.
I was never one of those people lauding educators. Because like musical stars, we only cotton to the best, the rest are journeymen at best, some are barely punching the clock, it’s like no one ever busted them and told them they were boring.
And I was afraid Michael Roberto would be boring.
The intro certainly was. Wherein they lauded him, reciting all his accomplishments and I started to tune out. But then, Mr. Roberto began.
Unfortunately, the initial lecture was too much of an overview. Don’t tell me where you’re going, just take me there. The theories were littered with examples, but they were just a tease, no depth was afforded, I wanted to know about how they decided to switch to New Coke, but alas, I didn’t find out.
Not yet anyway. There are twelve CDs, and this was just the first.
But at the end of the first, after delineating the thought process made in decisions, Professor Roberto said he believed in the case method, and his first example was going to be…the 1996 Everest tragedy.
I can get into that. I read ” Into Thin Air,” Krakauer’s essay in “Outside” before that, I know the players, I’m a student of the game.
And I heard about Rob Hall and Scott Fisher and Beck Weathers and then Roberto started talking about…
Something I just couldn’t figure out.
I didn’t go to business school, I don’t have an MBA, and although I’d like the experience, I’m fearful they’d drain out my essence. You see it’s too much about money, less about emotions than critical thinking. And without emotion you’ve got no joy. And the only joy MBAs get is when they party, which is why so many go to these schools, to network, what they learn there is secondary at best, even at Harvard. It’s who you know, not what you know, don’t ever forget it.
But I was now stimulated. There’s nothing like delving into a new subject. And if you think school is for learning…I point you back to the earlier paragraph. That’s what flummoxes the nerds, the fact that they do well in school but are lousy at life. They get their degree, they get a job at the firm, and when they don’t make partner…they’re lost.
But I was having a pure learning experience. Roberto was listenable, better than good if not truly phenomenal. But I just couldn’t understand the point he was making. But about the fifth time through, I got it, he was saying SUNK COSTS!
What are sunk costs?
Essentially those you’ve already made that you cannot retrieve.
And listening to Roberto pontificate I was running through scenarios from my own life. After you invest so much, do you keep on going?
Kind of like Tim Armstrong and Patch. It was his idea, he couldn’t let go.
Roberto said CEOs who made major purchases kept investing, only their successors with no emotional ties could cut bait.
Think about this. Professor Roberto has. You’ve spent so much time and money…it’s easier to spend more, it’s easier to believe. Doubling down prevents you from the fall. Kind of like those students who think it’s about grades as opposed to life.
We just terminated someone. My initial instinct was to keep going, we’d spent so much already.
But Ginny, the soon to be nonagenarian, was the first to say we should pull out. That’s the wisdom of age.
The youngster just keeps trying harder, banging his head against the wall.
Every day I get e-mail from people saying they’re never going to give up.
You can’t tell these people they’re good, but not good enough. They’ve dedicated so much time and money into being a musician, working in the biz, they can’t start all over again.
But they should.
Kind of like Marko Babineau and Steve Tipp.
Babineau started selling real estate, he gave up looking for a new job in the music business. As did Tipp. But there are too many dreamers surviving on scraps believing the good days are gonna come back when the truth is they’re over fifty and their opportunities have evaporated.
Then there’s the criticism of the labels, that they just don’t stick with anything anymore. But maybe they’re smarter than you are, maybe they like the act but just don’t see how they can make any money, so they drop them. Certainly the new CEO/President drops most of the previous regime’s acts, he’s got no emotional ties to them.
It’s no crime to let go. Sometimes it’s smart.
Rob Hall and Scott Fisher had expended so much time and effort in getting their charges to the top of Everest that they ignored their own rules, like turning around between 1 and 2, no matter where they were.
Furthermore, they’d never seen bad weather. People have a bad habit of ignoring the odds. Just because they’ve never experienced the downside, that does not mean it’s not coming.
And Professor Roberto went much deeper than I’m going now. And listening was quite stimulating, and I’m looking forward to the next ten CDs.
But think about those sunk costs.
If you can’t write off the past, you’re beholden to it.
