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November 9, 1989 - The Proper End of History
Written by Jay Turo on Monday, November 9, 2009
Passing with surprisingly little fanfare, today is the 20th anniversary of the fall of the Berlin Wall.
One of my most enduring memories of my college days (I was an International Relations Major at Stanford, Class of 1990) was a class that I took from an extremely engaging and charismatic young professor on Soviet Foreign Policy.
One statement that my professor made stayed with me - that probably none of us in our lifetimes would see the Berlin Wall fall.
a) The inevitable brain and talent drain that an opening of the wall would bring about
b) The more that people in the old Soviet republics and in Eastern Europe were allowed to see with their own eyes the freedom and prosperity that liberal capitalism creates, the more likely they would be to rebel against their masters.
Thus, the Soviet leadership, out of pure and obvious self-interest, would never allow it to happen.
Well, the rest is history. Six months after this perhaps off-hand classroom statement, the Berlin Wall came down. And 15 years later, my young and charismatic professor - Condoleezza Rice - was named the 66th United States Secretary of State.
I am not exaggerating when I say that of all of my college experiences and memories (at least the ones I can remember..:), that that day and that class and Professor Rice's statement stayed with me. Why?
1. It inculcated in me at a very early age that the future is very, very uncertain, and that there is often little correlation between the depth of one's understanding of a topic and the ability to PREDICT about it.
Professor Rice KNEW the Soviet Union - even then she was considered one of the nation's most knowledgeable and versed thinkers and commentators on topic. And yet she, like so many others, was wildly wrong here.
2. While I could not put it into words until last year when my good friend and perhaps best thinker on "systems of prediction" I know - Rafe Furst - introduced me to Nicholas Taleb's masterpiece "The Black Swan," I and many others intuitively felt that something VERY, VERY, VERY outside of the realm of prediction took place the day the wall fell.
3. And more deeply, BECAUSE it fell outside the realm of prediction, it MATTERED. The "smell test" on these kinds of moments are simple - they are the ones we remember where we were when we first heard about them.
For my generation - The Space Shuttle Disaster (and Reagan's incredible speech that night), The 1987 Stock Market Crash, the fall of the Berlin Wall, Clinton's impeachment, September 11th, the capture of Saddam, and the fall of Lehman (for those of more business/financially-minded) fall into this category.
My friend Rafe and Taleb tie this core life insight to business and investing.
How? By only wagering on the unpredictable. Raynor in the Strategy Paradox makes the same point. BIG success and BIG money are only made on the BIG outliers - everything else is just transom.
In a strange way, the fall of the Berlin Wall was a seminal event in my youth that pointed me to my life's work. It affirmed by belief in liberal capitalism and in the "way of the West" as the right and proper end of history.
And in business, it led me to entrepreneurship and to private equity.
Why? Because it is in the aspirations of the entrepreneur and of their backers that the power of the unpredictable is made most real in business.
Those that grasp it - the Bezos, the Brins, the Pages, the Josh James of Omniture, the Aaron Patzers of Mint.com, the Kevin Planks of Under Armour, MAKE history.
And hopefully take the rest of us along for the ride.
I look forward to your attendance and feedback.
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