by John Tamny
In 2015, Silicon Valley was home to 124 “unicorns,”7—relatively young start-ups valued at more than a billion dollars. Will all of them survive? Of course not. Neither did most of the Valley companies from the 1990s. And that’s the point. Silicon Valley isn’t the richest region in the world because all of its companies succeed. It’s the richest precisely because many of its start-ups fail. Success is about information, which is embodied in the wins and losses in technology.
But Millennials’ success won’t be the product of technology alone. As we’ve seen, prosperity drives up the consumption of a huge range of goods and services. In the years ahead, as substantially greater wealth chases more goods and services, the variety of jobs producing those goods and services will explode.
Naysayers write off the Millennials as the most coddled, spoiled, and entitled generation in history, but the older you are, the more easily you should see through such complaints. Every new generation is coddled, spoiled, and entitled, and the reason is what we call progress. Thanks to economic growth, today’s youth expect a lot from their employers, and given their potential productivity, their expectations are reasonable. And if they’re spoiled and entitled, that’s because amazing economic advances have allowed each generation to grow up with more than the one before it. Millennials appear spoiled because they grew up free from great hardship.
Fortunately, their entitled ways will not keep them from producing. Since everyone wants more, Millennials will produce in order to get more—and that’s exactly what markets are signaling. USA Today reported in 2016, “Every major hotel company has designed a new brand to appeal to these consumers in their 20s and early 30s whose purchasing power and desire to travel is suspected to increase exponentially in the coming years.”8 Hoteliers aren’t launching new brands to fulfill the needs of slackers living in their parents’ basements. We can read the same market signals on Wall Street. Investment firms, which make money by attracting the savings of earners, are busy courting Millennials.9
Wait and see: the generation that supposedly doesn’t know how to work will be the richest generation yet.
CHAPTER SEVEN
My Story
“I have never believed in myself more than when I was writing my script. I was never happier with myself.”1
—Dominick Dunne, The Way We Lived Then
“How do you like school?” Yogi Berra replied, “Closed.”2
I’m going to pause now to share the story of my own career, not because it’s extraordinary but because it’s in fact pretty ordinary. My story illustrates how economic evolution has expanded the range of work options. When I graduated from college in 1992, there was no Internet to speak of. Within a few years, as I’ll explain, it made my career as a writer possible.
My story is also a reminder that the path to the job that aligns with your talents and passion is often rocky and marked by failures. I don’t mind saying that fear propelled me much of the time.
After years of moving around as my dad wrapped up his time in the U.S. Navy and attended business school, my parents moved my sister and me to Pasadena, California, in 1975. From kindergarten through the third grade I attended Linda Vista School, which was right in the neighborhood.
Our classroom bookshelves contained the “Meet” series of biographies of great Americans—Meet George Washington, Meet Abraham Lincoln, Meet Martin Luther King, and many others. My favorite was Meet Thomas Jefferson. I couldn’t get enough of the “Meet” books, and that seemed to be a problem.
Though I was in the middle of every game at recess, in the classroom I kept to myself, poring over those short books. Because of my consuming interest in those biographies, my parents and relatives bought me more and more books about historical figures, especially U.S. presidents.
Still, by second grade I found it hard to pay attention in class, and one night I told my parents that school wasn’t going well because I was reading all the time instead of following what was going on in class. My parents were relieved when my teacher told them she was pleased with my love of reading. As long as I kept my nose in books, she said, everything would be fine.
I liked history and writing, tolerated math, and loathed science. Sports made attending school fun, but probably like most kids I dreaded Sunday nights.
In high school, the math became much more difficult. Freshman geometry went way over my head, and Algebra II as a sophomore merely added to my angst. It was doable, but there was nothing fun or interesting about it. It was assumed that these classes were essential if you were college-bound, and I got by with Bs and the occasional C.
As a junior I transferred to Loyola High School, west of downtown Los Angeles. Unfortunately, my extreme dislike of math in no way subsided. An advanced algebra class was beyond my capabilities—or at least beyond my willingness to work hard—so I dropped it. One of the counselors warned me this would be difficult to explain to colleges. It was all so depressing.
My grades reflected my middling interest in school. I wasn’t one to act up, but the only classes that captivated me were history and literature. Cs in math and science kept my grade point average in check. Nevertheless, I remained a voracious reader.
The first hardcover book I ever bought was Mafia Princess by Antoinette Giancana, a purchase motivated by my fascination with the mob. The entertainment industry also captivated me, and I read a history of Saturday Night Live, a biography of Frank Sinatra, and the story of a 1970s financial scandal inside Columbia Pictures, Indecent Exposure. Business reads included Lee Iacocca’s autobiography and Ken Auletta’s Greed and Glory on Wall Street (about the original fall of Lehman Brothers in the 1980s). Herman Wouk’s The Winds of War and War and Remembrance had me entranced in the months it took me to read both, and I was an early fan of James Webb (the future senator), whose novels dealt with life at the Naval Academy, combat in Vietnam, and military life in general. After nights out drinking with friends, I’d come home to read books.
My grades reflected my boredom in school, and I overheard my disappointed father telling friends that his son had “priced himself out of” top colleges. It was true.
In a senior-year class on public policy, our textbook was Newsweek magazine. I couldn’t believe my luck. This wasn’t work because it was too much fun to be work. I’d been reading for years about current events, so I was way ahead. Needless to say, I was the top student in that class, and I always had my hand up. For the first time in many years, I was the teacher’s pet. My A-plus in that class was another signal about my talents.
To my high school counselor’s surprise, I was admitted to Cornell University, but I wanted a college with big-time football, so I chose the University of Texas. It was just my luck that the Longhorns endured three losing seasons during my four years in Austin.
I majored in government and did B-minus work. My problem was having too much free time, but a part-time job during my senior year finally forced me to use my time more wisely, and my grades went up. But that’s really not the point.
Even though I slept through lots of classes, I was interested in learning. I read the Wall Street Journal cover to cover, with special interest in the editorial page, as well as policy-focused books by economists such as Walter Williams and Thomas Sowell. And then I spent a lot of time in the UT library reading back issues of countless magazines covering everything from entertainment (Vanity Fair) to sports (Sporting News) to current events (National Review). Fiction and non-fiction books were all around me.
Sophomore year, I ran for student body president—mostly for fun, as I didn’t expect to win—but the enjoyment I got out of talking policy publicly was yet another signal of what most interested me. All this became more apparent when I spent a semester abroad during my junior year.
The program I signed up for was Semester at Sea. Students travel the world on a ship, taking classes while at sea and visiting countries such as India, China, Brazil, Venezuela, Cuba, Kenya, and South Africa. Semester at Sea was the best thing I did in
college, and I easily learned the most from it. One of my professors on the ship was Richard Lamm, the former governor of Colorado. I loved his class on public policy, and once again I was the top student.
By my senior year, it should have been obvious that I ought to look for work in public policy, but I didn’t see it that way. As far as I could tell, I had no obvious path. Paid jobs in Washington were scarce, and moving there to work for nothing or next to nothing didn’t make sense to me or my parents. In the spring of 1992, I thought the possibility of work that interested me was slim.
I interviewed at investment banks, but this was a slow period for the economy, and they weren’t interested in seniors with 2.7 GPAs. Eventually I got a job with NDE Environmental, a struggling technology company based in Los Angeles. I moved to Houston and was assigned a sales role in Texas and Louisiana. NDE tested underground gasoline storage tanks for leaks, and my job was to sell our services and oversee several technicians.
It was a great experience in many ways. I found sales difficult but also reinforcing and somewhat remunerative as I built the business from nothing into something that was profitable. My confidence as a salesman grew.
At the same time, since I didn’t understand the technology, I was a disaster as a manager. Fortunately, I was so successful at building the business that I was sent to Chicago to start all over again, building up our business throughout the Midwest. Still, when the technicians called me in the middle of the night with questions, I rarely had answers. I didn’t know what they did and was too lazy to learn. My ignorance made me a poor manager and kept me from being able to talk to my customers’ engineers.
After successfully building the Midwest business, I was promoted to national sales manager at the company’s new headquarters in Austin. I still didn’t understand the technology, but I planned to go back to school for an MBA after my fourth year with NDE. Mediocre college grades and a conventional résumé kept me out of the top-tier business schools, but I made it into the perfectly respectable Owen Graduate School of Management at Vanderbilt.
Given my aversion to numbers, business school might seem like an odd choice, but that’s what people did then, and still do. For good or for ill, it’s fairly simple to hide your weaknesses at business school because so much of the work is group-focused.
I was pretty hopeless in the finance and accounting classes, but the school’s aversion to failing students meant that I got through them with low Cs. Other classes involved group work, so I would usually write up the reports while others handled the numbers. I was fine in the economics classes because I was interested in the subject. Many of the classes involved presenting ideas, and this was tailor-made for me. After all, I was still an avid reader who also liked speaking.
Despite average grades in my first year, I received an offer of an internship with Goldman Sachs, then as now very much the investment bank. There was a bull market in 1997, and Goldman was eagerly staffing up its private client services (PCS) group to gather the rising assets of America’s super rich. This work didn’t require arcane financial expertise as much as sales skills.
The summer internship at Goldman was posh. Lots of fancy dinners but minimal work. It didn’t seem to matter that I was not a numbers guy. If you were at Goldman, it was assumed you were fairly bright, and an intern’s work didn’t stretch the brain too much.
There was one scary exercise that would take place at random intervals. The intern coordinator, Bobby Zrike, would out of nowhere call “open meetings,” at which summer associates had to answer questions. Fortunately for me, most of the questions pertained to the stock market and current events, allowing me to shine. I came off as smart and personable and had a successful internship. At the end of business school, I came to New York PCS. It was 1999, and the bull market was still raging. It was seemingly a great time to build a PCS business, particularly at Goldman Sachs, whose private client division covered nearly half of the Forbes 400.
I wrote good prospecting letters and was able to get meetings with a lot of rich people, but I ignored the advice from management to find an existing team to work with. That was the direction that Goldman PCS was heading in, and it would have benefited someone like me, who lacked quantitative skills. Why not join a team so that I could focus on getting prospects in the door while more numerate but shyer team members formulated asset-allocation pitches? Comparative advantage works in all walks of life.
Instead, I foolishly went it alone, expecting people to entrust the fruits of their life’s work to a kid in his twenties with no real financial and market knowledge. I was good at getting meetings but had little interest in the actual Goldman products. Rather, I remained interested in policy. My favorite part of the week was Friday afternoon after the markets had closed—not because the weekend was ahead, but because I’d watch my hero Larry Kudlow debate inflation with Bill Wolman and the Wall Street Journal’s Jacob Schlesinger on CNBC.
It was then that I started doing something that Goldman management would have frowned on if they had known about it but that set the stage for my future work. In the late 1990s and early 2000s, economic pundits were talking about inflation, and with the exception of Kudlow, just about all of them regarded inflation as the result of too much economic growth and too many people working. I was in disbelief.
Having grown up in the 1970s, I knew that inflation revealed itself when growth was slow to nonexistent. Inflation is a devaluation of the currency. Currency devaluation invariably leads to slower growth because the investors whose capital fuels new businesses and jobs become more cautious. Why invest if future returns will come back in devalued money? Excited by seeing what the economics establishment was missing, I began writing commentaries about inflation for my small client base. Suddenly, I was having a lot of fun.
But it wasn’t my job to be an amateur economic commentator for Goldman’s clients. I knew what my real job was, and I would look around the floor and see people who truly loved the aspects of the job that I couldn’t stand. While spreadsheets and price-to-earnings ratios terrified me, they animated my colleagues. I was self-aware enough then to realize that this job made no sense for me. Although I enjoyed pursuing clients, I had little interest in the day-to-day work of tailoring Goldman’s amazing collection of products to the financial needs of potential clients.
Stocks hit record highs in March 2000 and then began a long descent. At least I had so few clients that I didn’t have to handle many of the calls wondering why I or Goldman had lost them so much money.
Around this time, I was having—you guessed it—a serious policy discussion with a Goldman colleague. My focus was always elsewhere, but in this argument about who-knows-what, this Goldman veteran snapped me into reality: if stocks continued to decline, there would be mass layoffs in the firm. Until that point, I had never considered the possibility of being made redundant. Yet the conversation that day was the wake-up call that I needed. The Internet and technology boom that had made my employment at Goldman possible was in correction mode in a big way. Not long afterwards, a company-wide voicemail from Goldman’s chairman, Henry Paulson, (email wasn’t as widely used in the early 2000s) indicated that layoffs were likely.
I somehow made it to 2001, but by the spring layoffs had begun, and I was told that my job was in jeopardy. I was terrified, but that was good. I finally reached out to a Goldman veteran about teaming up, and his broad knowledge of the markets combined with my skill at getting meetings brought a few name clients through the door. I thought I might survive, but meetings with management indicated that my employment was still in serious trouble. It was agony, and I found myself hoping to contract some kind of major illness as a way of avoiding the inevitable.
The inevitable became devastatingly real on the Thursday before Memorial Day weekend in 2001. To Goldman’s credit, they didn’t require the laid off (there were many) to clean off their desks in public but had administrative staff box up our possessions and send them to us.
One of the h
ardest calls I’ve ever made was the one to my father. My mother called me the next day and sobbed uncontrollably. My agony was hers. I didn’t want to be out in public because I didn’t want to explain my situation to friends. But they knew too. And although job loss is often healthy, both for the person and the economy, it can still be devastating for the individual, not to mention the managers who must deliver the bad news.
Painful as they are, recessions serve an important purpose. During booms a lot of workers find their way into the wrong jobs and a lot of mistaken investments take place. The correction of mis-hires and faulty investments are part of economic growth, paradoxical as that may sound. Failure is information, for the laid-off worker and for the investor. Indeed, the economy wouldn’t grow if we didn’t have failure. Still, my own unemployment was hard to take at the time.
Luckily for me, Goldman Sachs is a great company to leave. It’s so highly regarded that its former employees are viewed as attractive hires. In denial, I followed some former colleagues to Credit Suisse PCS. Eager to correct my past mistakes, I joined a top team right away. I was one of the lucky ones, if spending another year in the wrong business was lucky. I was so eager to be on a team that I didn’t search for a good fit. While I could still get good meetings, I was with the wrong people. I didn’t trust them, and as the post-9/11 stock market was still weak, it wasn’t a great time to be hunting for new clients.
It may have been a terrible year at Credit Suisse, but my interest in policy writing remained strong. Assigned a few clients upon arrival at Credit Suisse, I was writing economic commentary for them. One client perceptively pointed out to me that I was in the wrong job. At about the same time, I made contact with the economist Arthur Laffer, who put me in touch with one of the economists on his staff, who told me to buy his book on monetary policy. It fascinated me. Noticing that he’d written it while at H. C. Wainwright Economics in Boston and suspecting that my time at Credit Suisse wouldn’t end well, I sent a letter to Wainwright’s president, David Ranson, to ask about a job—a job I was actually interested in doing.
