The successful are never afraid of missing out– or going all in

Published in the San Diego Union-Tribune, April 17, 2017

I’m a big fan of “Billions,” a series that airs on Showtime. I am fascinated by the characters and the strategies, and my bride thinks that the lead character, played by Damian Lewis, is gorgeous. (I agree). Recently, the show presented an interesting puzzle that I was able to use in my work as a member of the board of directors of an e-commerce company. The conflict was between Chuck Rhodes, the U.S. attorney for the Southern District, and a hedge fund manager who may have operated outside legal bounds, i.e. he was bid rigging the U.S. Treasury auctions.

Without spending too much time on the nuances, the show comes down to a few scenes in the conference room in which the high-priced legal talent for Mr. Hedgie offers a settlement, and Rhodes rejects it. Mr. Hedgie’s legal eagles come back with another even more generous settlement. and again the U.S. attorney calmly rejects it saying, “I think we should have a nice big trial. I really think this abuse of the public trust deserves a trial.” Mr. Hedgie is flabbergasted. He thinks: How can Rhodes take the chance of losing at trial?

Nota bene: Our U.S. attorney has a very shaky case. No really concrete evidence. By all logic, he should take the settlement and get out of Dodge. A trial is two years away, and long before then, he will have been fired. So he needs the easy win, and that explains why Mr. Hedgie is astounded. But by the same token, Mr. Hedgie has to consider the possibility of real time in the Big House with Bubba.

From a strategic point of view, this is the classic “line in the sand, push all the chips into the center” play. And as we know, the most dangerous man at any table is always the one who has nothing to lose — or everything.

Let’s jump ahead to my young CEO. He has two private equity shops wanting to buy the company. And he must make a deal. Failure to sell by a certain time will cost the company $15 million, and the company will crater. So the P.E. boys know that there is a deadline. Game theory says they should wait until a couple weeks before the drop dead date and then engage rapidly to buy the company just before the deadline and pay only peanuts. Our CEO is frustrated by their nibbling at the edges, but neither one is biting the bait.

Another nota bene: There are TWO private equity shops showing interest.

So I suggest to my CEO that he call up both shops and tell them politely, but firmly, that if he doesn’t have a letter of intent by April 15, that he will no longer talk to them. In other words, it doesn’t matter what they offer after the 15th, we will not talk to you. As my favorite shark says, “You are dead to me.”

My CEO is a bit nervous. After all, what if they both walk? My answer is they would have walked anyway. I explain that he has nothing to lose. There is either a deal or he is a dead man walking.

The update: Both P.E. shops have assured him they will send an LOI by the deadline. I will keep you, dear reader, posted.

You may remember a previous line-in-the sand story about a tech transfer office on the East Coast. As of this writing, they have agreed to sign the deal with no further changes.

And in the case of Mr. Hedgie, when faced with Bubba as his roommate, he cops a major plea, folds his cards, and goes down for the count — and our U.S. attorney keeps his job. I know this one is only television, but I like the model.

So the question worth considering is this: Why is it so hard for us to learn how to say “no?” I have a theory. We all had mothers and fathers, and as children, it was hard to say no when faced with the consequences of no allowance, no car, no whatever. No.

I will test that premise with my shrink next week.

Rule No. 513:  FOMO (Fear of Missing Out) is still the law of the land.


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