1%

Of the places I’ve been to, there’s one entire city that I think would singularly defy explanation to an ancient visitor.  It isn’t one based on manufacturing, like Shenzhen, or trade, like Dubai,  or a port, like Antwerp, or a capital seat of power, like Washington D.C.  It’s not even a city based on mirages, like Los Angeles, or tourism, like Orlando.  Because it wouldn’t be that hard to explain these places.

Buildings are a concentration of energy and resources, and a reflection of our values and culture.  An ancient Egyptian looking up at the skyline, would see the Pyramid of Khufu, the deity-king, and go about his business, knowing that in his world, the link between the afterlife and this life was sound.  An ancient European, looking at the nearest castle or church, would have similarly seen the relationship between herself, the powers that be, and the powers that govern the ever after.

Even in our modern world, you can pretty much look at any building and identify its reason for being.  Office towers – a clustering of service-industry companies.  Malls – our consumerist economy at work, and/or modern town centers.  Residential towers – lack of space in a city where people want to live.

But.  There’s an island in the middle of the South China Sea with some of the largest buildings in the world.  Likely, 99% of the population of the world will never go there, nor have a reason to.  And I’m not so sure an ancient visitor would have any idea what they were for, nor understand how they were built.  They aren’t residences, marketplaces, nor granaries, offices buildings, warehouses, or anything that could have existed a few hundred years ago.

Because these buildings?  They’re a type of factory built on a single mathematical probability, and that is the probability that over hundreds of thousands of games played, it will lead to a convergence towards a single number – 1%.  It is an island built on our modern world’s triumph of risk management.

I’m talking about Macau.

Now there are a lot of different directions we can go here, but I want to start with the sheer size of these buildings.

Ancient descriptions of splendor always interest me.  For example, Marco Polo, arriving at the court of Kublai Khan, marveled at the “greatest palace that ever was”, with gilded walls and a main hall so large that it could seat 6,000 dinner guests.  The Khan’s palace, like many other palaces, were built to awe, stupefy, and impress power upon their subjects and vassals.

Now of course, this kind of breathless praise is subjective, and dependent on the eye of the observer.  What if we applied this kind of writing to modern buildings?  How’s this one:

A massive pleasure ground filled with all sorts of marvels and luxuries, boasting 30 restaurants of cuisines from all around the world, accessible to guests by means of a gondola crossing a lake, nearly 6 football fields in size, activated with fountains that explode into the sky in a synchronized dance.  At the end of the voyage, guests are greeted by attendants who show them into a staggering hall accommodating nearly 10,000 pleasure-seekers at once.  Above them, more than 1,000 stately rooms await, bedecked in lavish gold leaf and precious metal furnishings.  Plush carpeting create a serene environment for these guests of honor, who arrive at their rooms passing carousels and ferris wheels arranged throughout the lobby, made entirely of floral arrangements.  Artwork carefully selected from around the world and across the span of history, with priceless Qing Dynasty treasures and more than $120 million worth of contemporary paintings alike, greet these visitors.  Costing a staggering sum of more than $4 billion dollars, constructed over a 2-year period with a city’s worth of laborers, this pleasure palace is…the Wynn Palace in Macau.

Located in Cotai, the Wynn Palace is one of twelve casino resorts built with a similar level of stupefying investment.  At 400,000 square meters (4.5 million square feet), its gross area is larger than most buildings in North America, including the Mall of America (the largest mall in America) and the One World Trade Center (the tallest building on the entire continent), and larger than Disneyland or Disney World Magic Kingdom, including parking lots.  It’s larger than airports.

To build the Palace, Wynn invested more money than went into the One World Trade Center, a building whose reason for being, in Manhattan, is more or less crystal clear.

The Wynn’s neighbor, the Venetian Macau, ranks among the top 5 largest buildings in the world.  At over 1,000,000 square meters (250 acres), the single casino resort is more or less the size of Hudson Yards’ East Yard (home of 4 skyscrapers each over 900 feet tall, a retail mall, hotel, 2 million square feet of residential properties).

And on the Cotai Strip alone, there are ten more like them!

Returning to our ancient visitor.  No doubt he would be astounded to step foot inside one of these palaces, although he would have no idea what people were doing inside of them.  He probably would have been even more astounded by the fact that unlike ancient tombs, palaces, temples, or castles, stepping inside one of these modern palaces is completely free of charge.

Now imagine you’re the ancient visitor, entering a casino in Macau.  The casino floor sprawls out for, literally, acres.  There are people with their eyes glazed over the slot machines, seemingly engaged in some sort of modern-day temple offering.  They insert tokens of monetary value into a metallic, neon offering jar.  Capriciously, it offers some back.  Other times it swallows the tokens, as if appeased.

If you walk a little further, out to the open expanse of the tables, then you might see something that you can relate to.  No machines here.  Just a simple exchange between two humans, and a crowd of people surrounding them.  The two humans seem engaged in some sort of rite.  One of them wildly gesticulating, engaged in all sorts of rituals of extreme concentration: blowing on some pieces of paper, mumbling what seem to be incantations, shouting words as they flip them over, peeking slyly under them, slamming the side of a hand down and pretending to ‘chop’ the paper in half.

This is baccarat in Macau.  

This is a game where the house edge is slight, and the actual decision-making made by players is almost nonexistent.  Add to that the influence of native Chinese superstitions, and you get a game where paradox of the illusion of control looms large.

In baccarat, or punto cano, one plays the game by betting on one of three outcomes: whether the “banker”, usually the dealer, or the “player”, usually another player, will  win.  Or that they will tie.  The two sides are dealt cards, and these two players then flip them, nothing else.  Then they are issued new cards according to strict rules.  Literally, after you bet on one of these three outcomes you have nothing else to decide.  

And for the player herself, she does nothing else but flip the cards or draw them according to preset rules.  There is literally nothing to stop casinos from replacing the “players” and dealers with robot arms.  But perhaps for this simple reason, an elaborate edifice of rationalizations in the form of rituals and superstitions, arises.

Gambling has a rich mythology. From the earliest days of human society, casting lots —often by drawing straws or tossing dice made from the knuckle bones of sheep—was a way to ask the gods for answers. The high priest who wanted influence soon learned to become a “sharper,” positioning the straws just right, shaving the dice, or even devising elaborate rules to ensure that more than random chance would determine the outcome. In many societies, it was a serious crime for anyone but the high priest to touch the instruments used to divine the will of the gods. This imbued the dice with a sacred quality. It also made sure no one could tell if they were loaded.

A screen by the table displays whether the banker or player has won previous rounds, in alternating colors.  What is this screen even for?  The result of a previous hand has literally nothing to do with the next round of play.  

But when a player gets hot, you see the player’s marker blazoned in blue or red, curling back down and around, like an improbable banner, a dragon’s tail.  You see players in states of concentration, chain-smoking, guzzling tea by the gallon, “cutting” their cards with a big fist, pounding it down on the table, then chopping it in half before taking the edge of the card, like it weighs a ton and he’s struggling against the weight of his fight against fate, peeling it back with the force of the spirits unleashed in his hands.  Then you see tables erupting in pandemonium as players go on streaks, crowds gathering around the table four deep, jostling for position to bet, often through reps located closer to the action, chips flying above and through the crowd and landing all over the table, and then ladies of the night creeping up and slipping their phone numbers to the big winners.

The energy is intense, and it makes you start believing it, this thing called luck.

And on second thought, maybe it’s not so far-fetched to believe that an ancient visitor would have related to what goes on there.

*******

Gambling is 90%+ of revenues in Macau.  In Las Vegas, that percentage is closer to 40%.  Baccarat alone accounts for 80% of revenues in Macanese casinos.  And of this 80% of revenues, most of it is from VIP gaming, where the minimum bet size is $5,000 US dollars.  

By some estimates, the actual count of these VIPs is in the thousands or tens of thousands, meaning that it is the population of a small town driving the revenues of a small country’s GDP.

The mechanics of the baccarat game are worth reiterating.  

When you play baccarat, unlike most casino games, where there is no strategy or decision making.  You do not decide to draw or stand, like blackjack.  You do not have dozens of options, like in roulette.  You do not look at the other players’ cards or try to read their faces.  You can try to card count, but the consensus among the best card counters alive, including Ed Thorpe, are that “despite the resemblances between baccarat and blackjack, the favorable situations detected by perfect card counting methods are not sufficient to make the game favorable.”  

A more appropriate analogy might be to think of it as a team-based version of casino war.  There is no winning strategy.  The odds are given.  The “banker” will win 45.9% of the time, and the “player” will have the upper hand 44.6% of the time.  And you can bet on either.  Less than 1% of the time, they will tie.

The net of these three outcomes results in a 1% advantage for the casino.  It’s the slimmest of odds, and it’s the statistical substrate on which nearly billions of dollars in buildings have been built.  

Take some time to think about whether you would build a business on a 1% margin.  Does that sound appealing?

You might be saying that if it’s a sure thing, then of course!  

But the problem is that probabilities are not sure things.  In fact, because the house edge is so slim, in short games, small volumes, and large hands, baccarat players can go on inexplicable streaks that wreck holes in casino vaults.

Bill Zender, former Nevada Gaming Control Agent, sums it up: “your risk is 100 times your average bet.  So if a guy is betting $10,000 a hand, he could conceivably win $1 million from you.  That’s within two standard deviations, so it can happen.”

And in a game where VIP regularly wager half a million dollars a hand, the casino can lose tens of millions of dollars in minutes.  If this sounds theoretical, let’s take a trip back to 1990.

This was the era of one of the greatest bubble eras in human history, with its epicenter in Japan.  Residential land in Tokyo was worth $6,000/sqm.  That’s more than $60,000 a square foot!!!  The Nikkei stock index had quadrupled in less than 10 years.  The appraised value of the Imperial Palace was reportedly higher than the land value in California.  Reeling from the heights of their stock market, Japanese banks, companies, and businessmen were on a shopping spree, snapping up properties in Manhattan and London and “priceless” artworks the world over.  It was, for many Japanese companies and businessmen, the height of their arrogance.   

It was in this milieu that two real estate tycoons met.  One was a shadowy Japanese businessman named Akio Kashiwagi.  Rumored to have ties to the yakuza, Kashiwagi was known among casino owners to be a whale, one who would wager hundreds of thousands of dollars a hand.  And for this reason, he was widely courted.

His game of choice was baccarat, and he was the type of player to play big hands and have the ability to walk away with profits.  Exactly the type of player that casinos both love and fear.  In effect, because of the even nature of the game, a casino owner inviting a whale to play is himself making a gamble – that the combination of circumstances, custom rules, and setting will induce the player to stay as long as possible to let the slim 1% odds play out.

The second tycoon?

None other than our current president, Donald Trump.

This was their second meeting.  In their first meeting, Kashiwagi walked away with $6 million of the Trump Plaza’s money.  Earlier in the year, he had blown a $20 million hole in the vaults of the Diamond Beach casino in Australia, almost bankrupting it.  In other words, he was a fearless and skilled(?) gambler.

Now in their second encounter, Kashiwagi wagered $18 million an hour, playing a hand every 50 seconds.  At one point he had looted Trump’s vaults of that amount, $18 million.  The RAND consultant/mathematician that Trump had hired, along with Trump himself, watched in confoundment and extreme anxiety as the pile of $5,000 chips overflowed off the felt onto the carpet.

It was more money than the entire rest of the casino had lost or even wagered that weekend, meaning that this single chain-smoking businessman was single-handedly wrecking the hotel’s profits for the year.

As the marathon gambling session went on, the grindstone of the ever-present 1% odds began to work in Trump’s favor.  Kashiwagi started giving back his winnings, millions at a time.  He was down $10 million with every intent to continue playing when Trump decided to call it quits, reportedly against the terms of the $12 million freeze-out agreement that had been negotiated.

The point is not what happened.

It’s that the house edge of 1% is not assured.  A casino’s very fortunes can swing on the volatility of one player.  It takes time for probabilities to play out.  The probabilities also play out over multiple players.  Getting as many people to play, and staying as long as possible, is the only way to ensure that the probabilities work out in the long run.

Returning to our ancient visitor again.  By this time, having explained the workings of the casinos to him or her, perhaps explaining the game as a battle of spirits or gods, what would the game look like?

Macau, as a machine that crunches half a trillion dollars in rolling chips, the clay tokens thrown or carefully slid across the felt tables by players, making countless glances into the edges of their cards.  Millions of cards folded beyond recognition, thrown across the table, billions of dollars exchanged into chips, and as the probabilities roll on across millions of plays spanning thousands of hours, a residue.  A layer at the top, the 1% that is the house take, resulting in the gross revenues that drive the entire place.  A place where the vagaries of superstition, fortune-telling meet the caprices of probabilities and fortune, and have largely been…controlled.  

Essentially, a factory where thousands of hands transform money into revenues for the casino.  And that, is the reason for Macau’s very existence.  

What I Learned From: My Grandfather

I don’t remember much about him, but what I do remember: a booming voice that carried across a room, an unafraid voice, a voice from a generation unaccustomed to the idea of phones.  Whenever he picked one up, he yelled into it, unsure if the other person could hear him.  He spoke Korean with a northern, Pyongyang-tinged dialect, a lilting one, rendered harsh by Siberian winters.

He was an expansive man, moving in abundance and generosity.  Some of my favorite memories of him were when he came to visit, asked us if we “needed” anything from Toys R Us, and proceeded to order my father to drive us there.

He was born in 1923, at the height of Japan’s colonization of Korea.  He was fluent in Japanese, studied at Keio University, then returned to Pyongyang to work with his family of industrialists, capitalists, and landowners.

Also, they were Christians, which basically meant that there were at least four reasons the Communists wanted them dead.

Kim Il Sung’s goons came for him once, but he hid himself in the wardrobe – my grandmother standing at the door, chills running up her spine, her voice shaking as she remembered identifying the dead bodies of her cousins at the police station.  He wasn’t home, she said.

She sold it well – they went away.

Things got worse, and the war broke out.  He carried my oldest aunt, 7 at the time, on his back the whole way from Pyongyang to Busan.  They rode trains, took boats across rivers, and mostly walked.  The flood of refugees was so chaotic and compressed that sometimes babies were mistaken for luggage and thrown off the tops of trains.

They bundled all the money they had around themselves, but after carrying it thousands of miles, discovered that everything besides the gold was worthless paper.

In Busan, they became food stall peddlers.  Then they sold leather, coming home every night reeking of hides and dye.

Some of my most vivid memories are of my grandparents counting money.  They would take a wad of bills, fold it in half, lick their thumb, and rapidly flick the wad like human money counters.  They were in their golden years so I always associated it with prosperity, but I realize now that it was probably from their days as merchants.

They moved frequently.  A few years after the war, looking for startup capital, he wandered the city for a week.  My grandmother said the only time she saw him cry was when he was turned down by some people for loans.  These were “friends” who owed him the money to begin with.

I always try to measure myself against him.

When he was 30, the Korean War was on the verge of ending.  Having lost everything, he was just scraping by.

And then – for two decades, he just worked.  At one point, he saved enough to sublet space in a shoe factory near Daejeon.

This was his big break.  Before the war, his family were a clan of manufacturers.  And though they had to abandon all their property, including factories, my grandfather did have one thing left: knowledge of the precise method to make rubber.  In the desolate post-war landscape, not many other people had the knowledge.

And being sublet in the shoe factory had its advantages, because they had a ready customer for rubber soles.

By the 1970s, when my grandfather would have been 50 or so, he had completely reestablished his family’s business, with a factory churning out rubber soles for all sorts of uses.  He was on a council of a hundred businessmen personally advising Park Chung-Hee, the strongarm dictator of the decade.

They were prosperous enough that they were able to hire drivers, with a Ford Mustang and Jeep in the stable.  This was to the enormous chagrin of my father and younger aunt, who begged to be dropped off a block away from school.

And from his 50s until he passed away, just before the age of 70, my grandfather became the picture of a prosperous businessman.

Those are the outlines of his life, and that is all I know.  He died when I was 10, before I had a chance to ask him anything about life or business.  I’ve wanted to ask him so many questions.  What was the war like?  How did you go from having nothing to a KOSPI-listed company?  What did you tell himself, day after day, while struggling for decades?  What advice would you give?  What guidance?

I wish I knew more, but over the years, I’ve come to accept that maybe, he’s taught me what I need to know.

He was generous with his wealth, boisterous, loud.  He was playful, always shadowboxing with me, a big fan of “pro” wrestling, and outspoken and outgoing to a fault.  I remember him going up to complete strangers at Six Flags or Disneyland, striking up conversations in barking English monosyllables and gestures, and asking random people – usually blondes – to take pictures with him.

He came from a world where business was mostly conducted in person, and on the back of envelopes.  He carried around a little black address book, and lots of pens.  Decisive and quick, but sometimes wrong.

This made him not so good in other areas, such as principles of managerial succession, and those of finance.  With lots of debt, and no competent middle- or even senior managers at the company, it was made quick work of during the Asian financial crisis.  At some point, it was delisted.  And a few years after the AFC, it was completely liquidated.

He wasn’t alive at the time it happened.

My last memory of him was in 1992, when I held his warm, dying hand and looked into his eyes before they pulled the cord on his life support.  Only 10 at the time, I didn’t know what was happening.  I didn’t realize he was dying.  Surely after a few treatments, he would get better.  Because that’s how medical care works, right?

As a kid, no one tells you anything, especially in Korean families.  So I thought I was just there to say hi, and when my uncle told me later that he had passed away, my first reaction was disbelief and denial.

What I saw in his eyes?  They recognized me.  His grasp was light but warm.  His eyes were still very much alive.

It is a matter of family legend that his company had faced a credit crunch right before I was born.  It was an issue, again, of a loan.  After I was born, whatever the issue was, it resolved itself, and so it was the reason my grandfather prized me so much, his only grandson, because I was a good omen.  Or so it goes.

But I like to think it’s more than that.  Maybe it’s because he recognized something in me.  Maybe he wanted to pass something down to me.  Or, maybe it’s that I recognize something in him.  Maybe something he wanted me to have.

I saw a picture of my grandfather as a young man once.  He must have been in his late 20s, early 30s.  It must have been taken shortly before or after the Korean War.  It was his whole clan, his five brothers and a sister.  He was the fifth brother, and he stood at far right, the shortest one, a gaunt, almost hollow face above a wiry frame, in complete contrast to the thick, booming man that I had known.

It was a revelation about what those years between 30 and 50 must have been like.

Because his face was intense and his eyes were burning with hunger.

What I’ve Learned From: Raising a Daughter (so far)

About halfway through my hedge fund job, I lost my Xiaomi phone with the first six months of my daughter’s life in photos.

Six months old is a time when you can leave your child in the morning, and come back in the evening to perceive that she’s changed in all sorts of subtle ways – mannerisms, appearance, skills.

Like a fool, I hadn’t backed up any of the pictures, and it literally felt like I had no accounting of the last six months of my life – and hers.  This was still when I was working two jobs, so admittedly, I hadn’t been spending much time with her besides in the evenings.  I felt deprived and hollow.

This wasn’t the only reason, but it was a catalyst in a series of events that led me, a few months later, to quit my budding finance career.  I became a work-at-home-stay-at-home dad, at least in the afternoons.

And for the last three and a half years, I’ve taken care of her every day, for at least half of every day.  Playgrounds, playrooms, parks, bike rides, reading stories, swimming, etc.

Looking through my journals over the past three years, I’ve been astounded at how little I seem to have “accomplished”.

Because compared to my earlier years, I don’t have many notches.  And it was only after a momentary bit of confusion that I realized all the time had gone into raising a certain little rascal.

In many ways, you feel the presence of time when you have a child.  You hear that children bring you into the present, but you have no idea what that means until you have one.

They have no sense of past or future, everything is in the present.  Everything that is in front of them, including you, is their entire world, their here and now.  They emote with their whole bodies.  Their joy cannot be contained, they cannot help but to jump and shout.  When they’re sad, they curl up into balls.  They grow rigid and tense when fearful.  They droop and wilt, almost like flowers.  They cannot mean one thing and emote or say another.

They’re sheer expressions of energy and emotion, and if you forgot what things like joy, curiosity, excitement, and grateful mean, they’ll remind you.

In order to engage with them, you will bring yourself into the present too.  You can’t console a crying child with your mind on something else.  There is no meditation quite like holding a sleeping baby and peering into her face.  And negotiating meals, baths, and screen time against little machines designed to look for loopholes and the slightest contradiction, is no task for a distracted mind.  So yes, they bring you into the present.

And when you look back at that time spent raising them, you have to use an alternate measuring stick to keep track of your “accomplishments”.  I’m not sure I “accomplished” very much.  But every day, week, month, and year was full of drama, excitement, small terrors, triumphs, and wonderment.  It passed in a flash.  She’s so big, she’s a little miracle.  She’s our joy.  I didn’t accomplish anything, I just – lived.

*******

Parenting is immensely hard.  I know all the cliches about this, but let me explain why parenting is one of the hardest jobs in the world.

I see my peers dread the weekends and look forward to Mondays, the direct opposite of when you’re single.  Why?

The things that comprise job satisfaction in the workplace are well-documented.  It’s not necessarily money.  They’re jobs that give you a sense of autonomy, mastery, flow.  These things give you a sense of progress and growth, and boost morale.  And if you’re far enough into a career, then you have at least one or a combination of them.

In parenting you have none of the above.

Autonomy?  Not when you have a tiny being dependent on you for food and shelter 24 hours every day.  Having even 15 minutes alone is a relief, parents take long showers for this reason.  Parenting is a marathon energy drain by a million cuts.  It’s maintaining a simmering tension and attention on them, 24/7.  When they’re really little, it’s hard to even go to the bathroom by yourself, let alone “go home” at the end of the day.  You can’t sleep to “turn off”, because they’re waking you up every two hours.  And at 5am, they’ll do a wind sprint into your room and ask to play, as energized as you would be after downing a caffeinated pitcher of something.

Mastery?  Ask any parent if they feel like they’ve “mastered” being a parent to get a full-throated laugh in your face.  Raising kids is like playing ten games of whack-a-mole simultaneously – you think you’ve gotten the hang of feeding them, they get fussy with their sleep.  You toilet train them, but now they throw tantrums for no reason.  You think they’ve started getting articulate, then they start throwing you attitude and using bad phrases they somehow picked up from hearing one time randomly on the radio.  They get picky with their food, they ask for inordinate amounts of screen time.  They regress, they have no sense of reason or logic, they cannot explain things to you, and their brains are literally exploding with neuron growth every second of every day.  And…there’s no  measuring stick.  No one to tell you or give you feedback about how good of a job you’re doing.  Your boss is the baby, and she doesn’t do evaluations.

Flow?  When you’re interrupted every minute because their sense of time is such that one hour to them is like one week to you?  No.  Your only uninterrupted time will be at 4am before they get up, or near midnight after they’re deep in their REM cycles.  Or after they’re in school.  School = daycare.

The reality is that I’m not sure everyone will think it’s worth it.  For me it is, because what else am I going to do, ha.

In all seriousness, being a parent is a choice.  I’m convinced there’s no right amount of time you need to spend with your kids, nor one right way to do it.

*******

Naval Ravikant says about happiness and diets, that there is no single truth to them, otherwise there wouldn’t be millions of books continuously published on them.  It’s the same thing when it comes to modern parenting.

When you’re a parent, you’re bombarded with hundreds of different ways to, well, do anything: feed them, put them to sleep, talk to and educate them.  These books and methods seem to be written mostly by people whose sole qualification is the fact that they’ve had kids, sometime in the distant past, and have idealized memories of the experience.  There is no barrier to entry in this literature, and anyone can feed on the anxious mind of a first-time parent.

Of all the things that are “supposed” to work but that didn’t work for us, of which there are many, was the genius idea that you’re supposed to lock away an infant in a dark room by herself, let her cry for you, until she learns that you won’t come back.  Only then, are we told, will she learn to sleep through the night.  The same for naps.  And if you don’t do this, supposedly it impacts their ability to become an independently functioning human being later on in life.

This is the “cry-it-out” method, or in languages other than English, “child abuse”.  If it sounds ludicrous to non-parents, it’s because it is, and if you’re a parent you know that this germ of an idea is prevalent in the literature.

We tried it.  For years.  The first clue that it didn’t work, should have been the fact that she didn’t stop crying after 30 to 45 minutes.  Sometimes she would cry for over an hour before falling asleep from pure exhaustion.  She wasn’t tired, you say?  Well, the experts also say that you have to put them to sleep at the same time every night, so there’s that..

It should also have been a clue that as an 18-month old, she developed the ability to climb the steep poles of her crib and fling herself over 3 feet of railing and land on hard tile, unscathed.  Or that at the same age, she learned to climb over the crib, stand atop an air filter, and open a closed door to peer out at us while precariously perched on a level above her standing height.  It could also have been a clue that no matter how hard we tried to “walk her back to her room”, as you’re supposed to do, she would end up asleep in the living room or next to the office, to be as close to us as possible.  And that no matter how many times we walked her back, trying cajolery and punishments, she would wake up terrified and call for us.

It is my embarrassment that we tried this horrifyingly inane “method” for as long as we did, indoctrinated as we were by “experts”: i.e., parents who did this with their own children and are trying to self-justify and absolve themselves by cloaking it in pseudo-psychological nonsense.  I’m sure it works for many people.  But not all people are the same, nor are their kids.

Looking back, this is one of my only regrets about her upbringing.

One economic principle of life is to be aware and cautious of, is the misalignment of incentives.  The modern parenting-industrial complex is one rife with them.

Kids are the ones “consuming” the product of daycare and educational programs, but parents are the ones paying for them.  Self-professed “experts” and psychologists are the ones peddling half-baked ideas about parenting and child psychology, and other families bear the costs to implement them.

There are all sorts of self-promoters out there.  You would think that in the field of parents and children, there would be governmental protections against these kinds of charlatans.  But there aren’t.

In this, as in all aspects of life, the only way forward is to think.  And treat experts as those with just another opinion.  Take their opinions into account, but do what works best for you and your child.

*******

Parenting is a choice, but you could also argue it’s a biological imperative.  I guess.  Something like patriotism, but at the homo sapiens level.

Though if you take this to the next level, in biology there’s also the concept of extinctions – meaning, why would there be any particular reason our species has to keep going?

Anyway, all this is to say, when you get the readings for your second daughter, and you see that she has chromosomal abnormalities, meaning that she’ll be developmentally disabled  – you make the choice to keep her.

It’s hard, but she’ll be our joy, and that’s once again, our choice 🙂

What I Learned From: Daniel

Daniel was a straight D student.  His parents were liquor store owners, his older sister was a gangster.  He was the class clown, unafraid to tell us about his family’s problems, unafraid to be vulnerable, unafraid to stand up for himself, sometimes too revealing about his masturbatory habits, and quick on his feet for being five and a half feet and almost three hundred pounds.  Once, he pulled over at the side of a road to fight a neo-Nazi that kept honking at him.  I got my ass kicked, he said.  But at least he fought.

It was a dark and gloomy March in Philadelphia during my sophomore year.  I reached for the phone – we still had landlines back then – and decided not to call him.

This decision not to call is still vivid to me.  I remember justifying it to myself; we had just talked a week earlier and there was nothing to say.  I “knew” what we were going to talk about – he would tell me to hurry and come back home, he would maybe tell me about a new workout routine.

A few hours later, I woke up in a muffled state after an insanely real dream of riding a bicycle through a snow-white field, smashing into something, getting pitched over the handlebars, and landing in cottony-white, soft snow with an audible grunt as something hit my chest.  In that dream Daniel was in it, riding next to me.

The dream put me in a weird mood, and just a few minutes after waking up I got a call from Sandy.  Daniel’s car had slammed into a light pole, swerved around it, and landed squarely under it.

They had to extract him with pliers and airlift him to the hospital.  His reported cause of death was internal damage.

He was in my dream again last night.  We were meeting at a restaurant.  I rounded some seats, all the while seeing some familiar faces, until I saw him again, assessing me wryly through his glasses, under his spiked hair.  He looked exactly the same.

We were 19 when he died.  Now I’m almost double that age, and he remains the same to me.

When I was traveling the world in my 20s, I used to marvel at the places I found myself in and the people I met, and imagine telling Daniel about them.  I would always think, what would Daniel think of this?  What would I say?  He thought he would die tragically as an LAPD cop.  I thought I would never see 30.  I always imagined saying something like, Daniel, we made it.  Look where we are now.

He was my most honest friend.  And that, I now realize, is one of the only definitions of a friend.

He single-handedly cured me of my habit of saying stupid things as filler, just to fill the silence.  One time he looked me in the eye after one particularly inane comment, ‘Won, you’re smart, you’re good looking, you know why you don’t have a girlfriend?  Because you say stupid shit like that.’  I burst out laughing because it was completely true.

And because he was honest, you knew exactly who he was and where he stood.  That’s why I can see him in dreams and know that he would be the same person now as he was then, except with a few more white hairs.

And it’s kept me honest too.  They say that death grounds you.  When I read that a long time ago, I always wondered what it meant.  Now, I’ve come closer to understanding what it means.  At least for me.

Because Daniel – during this second lifetime I’ve lived without you in it, I’ve never wanted to become someone that you didn’t recognize.

And you were fearless.  So should I be.

The Ways You Are Rich

Young people, you want to be rich, but you already are beyond your imagination.

You measure wealth in currencies, cryptocurrencies, investments and things that are interchangeable into such currencies: stock, timberland, bonds, real estate, art, cars, etc.  This is what people typically default to when they think about wealth.

But money is a currency, which is something that can purchase or exchange other stuff.  And there are a lot of things that the older you get, the more money you would spend to exchange into: while young people have these things in abundance.

Time:

The younger you are, the richer in time you are.  And the phrase “time is money” is literally true, as people willingly pay to free up time, whether in the form of time-saving devices, freelancers, gig economy workers, etc.

This is such a trite phrase that I hesitate to start with it, but when you consider that people like billionaire Nike founder Phil Knight, in the closing pages of his autobiography states that he would give everything up to do it over again, or when Warren Buffett, speaking to students, says, “you want to be me, I want to be you,” then you begin to realize to a very rich old man, a young person’s life could be valued in the billions of dollars.

As you grow older, the price you’re willing to pay for time increases exponentially.  Although I’m not as rich as the aforementioned gentlemen, what I would give to go back 10 years.  Even 5 years.  Probably in the tens of thousands, if not hundreds of thousands of dollars.

Out of all the “alternative” sources of wealth I’m about to list in this post, time is the only thing that can’t be purchased or created.  It can only be utilized where it exists, or exchanged into, by money or financial instruments – i.e., spending money to use time that you already have, but are burning every second.  Maybe this makes it the most precious.

Time also has the characteristic that by default, adding time to money causes money to grow.  This is why when you’re young you might hear the phrase “time is on your side”.  Well, it really is.  Someone who’s 27 literally has 10 more years for their investments to compound and grow than I do.

Options:

This is a source of wealth that is often overlooked, because it is really hard to measure, unlike money or time.

Options, or opportunities, are a form of wealth that work in the background, and do not manifest themselves until they’re exercised.  And young people have an almost infinite array of Options at their disposal, as a function of having more time, energy, boldness, less responsibilities/lifestyle drag, than older people.

This is hard to explain, but when I say they do not manifest themselves until they’re exercised, it’s because it’s hard to know how they will create value to you until you actually use them.

But, consider that us older people – well, all people, spend a lot of money to travel, read, learn languages, move to different cities, obtain knowledge, attend educational institutes, physically train, etc. etc., all of which create Options, which at the opportune time or place, can create money or jobs, or be exchanged for time and other higher-level forms of wealth, like relationships, wisdom, love, happiness, and so on.

The younger you are, the easier you can pick up these invisible options.  You can learn things quicker when you’re young.  You have less opportunity costs and responsibilities.  You have more energy.  You likely have a larger social network than someone whose been working for, say 20 years in the same industry and town.  

Many people who appear lucky, are in fact just awash in the wealth of invisible options.  This is not a great example, but say someone buys 80% of the lottery tickets, and wins.  Was he lucky?  Or did he buy a lot of options?  This is kind of a bad example because the cost of buying that much will likely be higher than the payout, but I hope you get the idea.

More thoughts on why options are really hard to quantify and measure, but are still there in the background.  When people say “right place at the right time”, they are ignoring the fact that you can engineer this kind of ‘luck’ by picking up a whole bunch of invisible options.

Two college graduates with the same intelligence level and achievements: one job is in a stable, blue-chip company, the other in a fast-growing startup.  The first job is located in an old, industrial city.  The second is in a coastal, high-priced one.  The two jobs pay the same.

Right now, I would bet that the competition for the second job is higher, despite it being more expensive to live in the coastal city.  I would even wager that possibly, college graduates would accept a slightly lower salary to take the second one.

This is because the value of the myriad options embedded in the second job is enormous, hard to quantify, but still intuitively there.  As you get older, the cost of those options becomes so astronomical that it is hard to justify their potential value.  I would like to think I could take an opportunity like that, given the same scenario.  But I might not.  Ten years ago, I definitely would have.

Energy:

This is the raw stuff from which both options and money/financial instruments are created.  Energy is costly to obtain and generate, but as with all of the aforementioned, way more abundant when you’re young.

Without energy, one cannot create or have created, money or financial instruments.  Even in the case of generational wealth, someone in the distant past had to have exerted such energies to create a fortune.

Energy diminishes over time, both within a lifetime as well as within the span of a day.  But similarly to time and options, its value increases as a person ages.  Younger people are awash in it.  In the case of my young daughter and others her age (4), it is perpetually pumping through their veins, requires no warm-up, and is converted without any entropic loss into sheer joy and full speed runs at the crack of dawn.  Again, what I would give to have that kind of energy again: tens of thousands, maybe even hundreds of thousands of dollars.

Look at the number of ultra wealthy people buying blood transplants or other fountain of youth-type stuff.  Energy is undoubtedly a form of wealth, and young people are awash in it.

Summary:

The thing about these forms of wealth, is that they are all interchangeable with each other.  When money is exchangeable into time, options, and energy, then the obsession that people have with accumulating only money at the expense of energy, time, and options is probably a little misguided.

You can cultivate energy and knowledge to create other forms of wealth.  You can use money to purchase options in the form of more options, energy, knowledge, to create other forms of wealth. 

And above all, time must be utilized wisely as this is the only thing that can’t be created or purchased.  

In this way are young people bestowed with wealth beyond their measurement or imagination.  And lacking knowledge or wisdom, so are they also dismissive of them.

Of course, there are higher-levels of wealth that cannot be strictly exchanged into or purchased using money, time, options, or energy.  The previous sources of wealth are necessary, but not sufficient to gain things like relationships, love, wisdom, happiness.  But I’m concentrating only on those sources of wealth that act almost as interchangeable currencies with each other.

At the end of it, I would wager that both Warren Buffett and Phil Knight would consider me a young(er) man.  And that’s why I’m writing this down, so as not to forget..

Living in a Ghost Town

Taipei, Taiwan

The pictures looked great online.  And having no knowledge of the terrain, we judged it not so far from the subway station.

Only 20 minutes away by bus, they said.

After living in small apartments for the past three and a half years, we were ready for an upgrade.  It was an unimaginable size for us, over 1,500 square feet, which in most Asian cities is a mansion.

Little did we know, after settling in, that we were living in a typical Chinese ghost town, developed one of those mainland developers starting with the letter ‘V’.

2019-01-29 15.13.17.jpg

In our building of 22 floors, we’ve counted about five families.  We see the same faces in the lobby.  A twin building next door to us, reserved only for owners, has one actual tenant, judging by the lights at night.

Inexplicably, about five of the lights come from homes with no curtains, whose owners just decide to keep their lights on for some reason.  Maybe to ward off ghosts, maybe to give the impression to prospective buyers that the community is not so deserted.

2019-01-29 15.34.42

I’ve wandered a lot of ghost towns and shopping centers in China over the past few years, and the thing that sticks out to me the most, is how quickly a development can be overtaken by nature.

Make no mistake, we are all here by the grace of the planet and not long after we’re gone, there will be no trace.  For an unmaintained building, the process might take less than a year, if that.

Next to us a set of villas have a plastered wall around them, literally whitewashing over the fact that they lie in a decrepit, dilapidated state, although you can glimpse the broken windows, missing walls, above them.

2019-01-29 11.08.322019-01-29 14.52.22

But our twin buildings are pristine.  The staff who work here, outnumber the residents, and it results in an echo chamber of a residence where you are never really out of surveillance range.

Four children under the age of 10 live across forty-four floors of residences, and two of them walk to a school down the street.  And the whole way, from their exit out of our buildings, to the corner of the development, and finally to the converted villa that is their school, vigilant guards with walkie-talkies announce their progress.

Of course, it’s nice living here.  It’s serene.  When the weather is right, you can see almost the entire expanse of Taipei.  And sometimes when it’s cloudy below, it’s sunny up here.  Other times, the clouds envelop us, making it seem as if we’re literally floating.  And there are no problems with our building.  In fact, it’s like a 22-story hotel being maintained for just the ~20 of us.

All of it is maintained, but at what cost?

It’s difficult to imagine a scenario where all this is being maintained profitably.

Especially since next door lays a work-in-progress, triplet of a tower that has been under construction for the past few years, where a single worker shows up several days of the week to operate a drill that reverberates loudly throughout the entire neighborhood, but is otherwise ineffectual.

2019-01-28 08.50.06.jpg

I can’t help but note that if this building were located anywhere else in China, where there was an actual market for this stuff, the whole building would be taken to completion from its present state, in a matter of weeks, if not days.

I have a problem with the way the media portrays China’s “ghost towns”, because a lot of the developments are in a state of waiting, built in advance of the demand.  Sometimes they actually do fill in over time, while sometimes they don’t.

But I’ve always had an underlying anxiety with isolation.  And this lays bare why.

Something so far from an urban center has great costs to maintain.  The cleaners and clerks commute here by scooter or bus.  The landscaping.  The maintenance of two minibuses an hour that service the residences.  It all seems fragile.  Because if for some reason the owner of the development decided one day to stop financing it, it would no doubt within a few years, look as if no one had ever lived here.

2018-12-30 17.20.53.jpg

What I Learned in the Jungle

 

Last week, a client called me to join him for a site visit in the jungles of Southeast Asia.  It was the first time I had ever been sent a packing list that included things like: emergency rations, waterproof boots, first aid kit, and “materials for showering in the river”.

One thing I learned was that unlike later models, iPhone 5’s are not waterproof, especially when your kayak tips over in a tributary to the Mekong River.

Another thing I learned was that fire ants blend in really well to tree branches, and that ignoring the packing list’s suggestion for “hiking gloves” was not a good idea.  And that no matter how many times you dunk your hands in the river, fire ants do not wash off.

Now, one cool thing I learned was that inside caves, you can be surrounded by total darkness, and if there’s a hole at the top of the cave, the sun really does shine like a light beam through the blackness, in almost a straight line.  Kind of like a movie effect, Indiana Jones-style.

One last thing.  We toured a number of rice paddies with other members of the team, who were Malaysian farmers.

What I had assumed about agricultural practices in not only Southeast Asia, but around the world, was that if generations of farmers had been farming rice for about 10,000 years, it must be pretty optimized, right?

But no.  The consultants pointed out seed spacing problems.  They pointed out the use of inferior fertilizers.  They pointed out the fact that despite an abundance of water, many of the fields were not irrigated properly, if at all.  They basically said that yields could be increased by 50% to 300%, easily.

In many places in Southeast Asia, farmers often ‘forget’ the practices of their grandparents.  Exacerbating this is that use of GMO crops make them indebted and dependent on large companies for their livelihood, as GMO crops do not seed.

It strikes me that something so fundamental and as ancient a technology as farming can be forgotten in just a few decades.

I don’t have any profound realizations related to this except just a reminder that life, on all fronts, is subject to entropy and decay: what things in my own life, and what practices or values in our society are we forgetting?

XIAOYI

XIAOYI

XIAOYI