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David D. Kirkpatrick and Jamie Heller

the breakfast table
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from: David Kirkpatrick

The Success of Failure

Posted Thursday, May 25, 2000, at 10:22 AM ET

Jamie--

Maybe now is the time to float my new idea for a Slate feature: Lunch Counter Intuitive, where two journalists offer midday commentary on what's already been said about that day's papers in the morning's "Breakfast Table." What do you think?

I see that we have some wiseacres over in "The Fray." Pedro, I appreciate your suggestion that editing my work more carefully might help me afford an apartment in Manhattan. I'll keep that in mind. If you are curious about where I got those statistics about Wall Street's role in the New York City economy, I did give you the economists' names and affiliations. You can find their paper at the Web site of the Federal Reserve Bank of New York.

Dola, point taken. Trying to stir up a debate here over reasons for the volatility of the Nasdaq stock market wasn't such a hot idea. Astonishingly, some of your Fray pals are still at it, chewing over that efficient market stuff. Please do remember, however, that comparing myself to the "solemn ass" Calvin Coolidge was my joke! Anybody out there have anything nice to say?

Meanwhile, let's continue with the dot-com theme, since I didn't give you a chance to respond yesterday and it seems to be very much in the news again today.

For coolest person in today's newspapers, I nominate Nicholas Hall, a three-time failed Net entrepreneur. He appears in today's Page One Wall Street Journal story about the funding drought for Web start-ups. His latest effort: Startupfailures.com. According to the WSJ, the site "features an active chat board in which failed and failing entrepreneurs vent their frustration and share tips." The site offers "coaching" from an online adviser. Overwhelmed by requests, Hall is looking to hire new advisers and already employs five assistants. He plans a kind of FB2B exchange, in which failed business people sell their equipment and ideas to outfits that are still afloat. This is the stuff that makes America great! Talk about resilience! Problems? Opportunities! (Did you also notice that publisher Steve Brill has hired free-speech lawyer Floyd Abrams to help win permission from probation authorities for cyber-thief Kevin Mitnick to write a column and give lectures?)

Some quotes from Startupfailures.com: "You are probably aware of these statistics: Only six of every one-thousand business plans ever receive venture funding. Of the companies that receive funding, sixty percent go bankrupt. Forty percent of businesses fail in the first five years of operation. ... Our purpose is to take the stigma out of failing." The site features a "Your Failure Feedback" page. Hall is currently seeking funding--presumably, forgiving funding.

If you're tired of talking about dot-coms--a bit of a busman's holiday for you--I'd love to know what you think about the Microsoft decision, or the news that George W. Bush owns a good bit of Mr. Softee himself.

David

the breakfast table
entries
123456789101112131415161718
from: David Kirkpatrick

The Success of Failure

Posted Thursday, May 25, 2000, at 10:22 AM ET
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David D. Kirkpatrick is a contributing editor at New York magazine who writes frequently about business and finance. Jamie Heller is editor for strategic ventures at TheStreet.com, where she's worked since its 1996 founding.
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Reader Response from The Fray--to be read after the most recent entry:


I still don't understand how the stock market can be efficient in the long term and not the short run. And I'm not relying merely on Keynes' famous sentiments about the long run; my point is even simpler: when is the long run? Was Microsoft's long run value from 1990 to early 2000 or to today? Short run volatility must have consequences for people who claim long run efficiency. To my mind, and for many other reasons, believing in efficient markets is like believing in Santa Claus--there are correlations between expected results and reality, but people really ought to grow up and accept that no-one on Wall Street knows anything.

--Jeff

(To reply, click here.)

(5/22)

To Jeff: Various natural processes are long-term efficient without being short-term efficient, for example the downhill flow of water or the process of natural selection (aka evolution). Complex human processes seem to have similar behavior. Perhaps efficient is being confused with "optimal". The problem with most strategies that attempt to be optimal is that they often have truly horrendous failure cases, which wipe out all their interim or theoretical gains. Democracy has been called "the worst form of government, except for all the rest." It is hardly optimal, and in many cases very inefficient. A dictator could get the graffiti cleaned up and the trains running on time; democracy seems to have a hard time doing such things. But what about the failure case of a less-than-benign dictator or a dictator whose benign intentions diverge from many or most of the desires of the population? An example of short-term efficiency vs. long-term, in terms of human happiness.

That's not to say short-term efficiency is bad, or that we can't improve on raw systems. But it is possible for a strategy to be the best long-term one without exhibiting short-term efficiency.

--Paul Canniff

(To reply, click here.)

(5/23)

Washington Post
The Washington Post
OPINIONS
Topic A: Obama's Speech
| Pundits and diplomats respond.
Robinson: Sunshine in BerlinToles: The World ?'s ObamaTelnaes: Meanwhile, McCain