Bottom Line Ethics

I am following with great interest one of the most significant fraud trials of the past decade, that of Elizabeth Holmes, the CEO of biotech startup Theranos. The company’s central product was a machine known as the Edison, which was supposed to provide a wide range of blood tests on just a few drops of blood taken by pricking a finger. It had the potential to revolutionize the blood testing industry, and the intent was to roll the machines out in pharmacy settings, including at Walgreens. Holmes’s vision and persuasiveness were sufficient to enable her to raise nearly a billion dollars in capital to support the dream, and no one ever asked for audited financial statements. As it turned out, there was a giant disconnect between what Holmes advertised and the actual performance of the machines.

John Carreyrou of The Wall Street Journal broke the story through a series of articles beginning in 2015, eventually resulting in his book, Bad Blood. The whistleblower in the case, Tyler Shultz, is the grandson of former Theranos board member, George Shultz, who was Ronald Reagan’s Secretary of State. The younger Shultz was employed by Theranos after graduating from Stanford, and he quickly became aware of the inconsistency of the company’s testing and of the willingness of upper management to cover it up from outsiders. He captivated my Accounting Ethics students this spring as he told his story.

Elizabeth Holmes is not your everyday felon. As she battles for her freedom in the eighth week of her fraud trial, she portrays the quiet resolve of someone who has always, in the end, won. And this may indeed happen for her again.

There are several reasons why Ms. Holmes may never go to prison for her actions as CEO. Her trial, which began over two months ago, has devolved into a grind for a jury pool that is rapidly shrinking. The sheer number of witnesses going over similar facts about who knew what, and who was responsible, would be a lot for me to bear, and I am fascinated by cases like this one. For the average Californian who has a job and a family, and who is being called aside to do this as a civic duty, the requirements to focus must be unimaginable. One juror has been dismissed for working on Sudokus while the trial was going on. Another juror was allowed to leave after expressing to the judge that she could not send Elizabeth Holmes to prison because her religion believes in forgiveness.

In addition, there is the looming specter of the trial following hers of Sunny Balwani, her former partner and Theranos’s chief operating officer. In some senses, the defense has tried to make the current trial a trial of Balwani, holding him up as insulating Holmes from things that were nefarious, so that she never knowingly signed off on anything fraudulent. Balwani’s reputation as a bully certainly helps Holmes’s case. Without any resolution from a previous trial, the defense has significant opportunities to introduce reasonable doubt into the jury’s mind about what Ms. Holmes knew when.

In the entrepreneurial world, many celebrate the concept of “Fake it till you make it,” and those who perhaps exaggerate their progress early in the startup process are lionized as heroes once the company is a stable success. Holmes went beyond the normal startup founder,

captivating a broad audience with her persona and the back story of a teenage Stanford dropout who was just wasting her time taking classes when she already knew what she wanted to do. In addition, she was able to recruit investments from, and fill board seats with, a cadre of influential investors and politicians, earning her the title at one point of the youngest U.S. female billionaire. It also landed her on magazine covers and on stage at prominent business conferences.

It is easy to become jaded and wish for the worst for those who fall prey to their own hubris. And I would probably be the last person anyone in these cases would want on their jury. But at this point in my life I wonder, what if she had just accepted that they had failed in their attempt at greatness and offered disappointing news to her investors, and then tried again? Today she would likely be CEO of Theranos or of something greater. And when she holds her mother’s hand, it would be to walk her little boy around the block, not to go in and out of the courtroom.

And what exactly do I tell my students? All of them are looking for people to inspire them to do great things; my students want to be like these accomplished people. Should I turn my students into cynics because these people cross lines? My students sometimes have trouble settling for being really good, and they are only okay if they are the very best. The same has been true in amateur and professional sports, where numerous athletes have taken steroids to get an advantage.

Elizabeth Holmes fans in line for day one of her trial

The interesting thing to me is how many of these people are extraordinary without crossing the lines. Multiple Hall of Fame quality baseball players are not in the Hall simply because they took steroids. People like Barry Bonds and Roger Clemens were amazing before they broke the rules. The same is true of Elizabeth Holmes. What makes them willing to risk it all rather than fall short of being transformative?

I assume that ego is part of the answer. But I also have to recognize that many of us, including me, love to believe the unbelievable. And we invest ourselves in those who can make things seem possible. Sometimes it is just hero worship, and sometimes it is our money, but when those heroes fail, we are ready to burn the whole thing down. Perhaps we should recognize that we feed the flame as well.

In the meantime, in the next month or two, Elizabeth Holmes will learn her fate. Twelve good people will set the direction for her life. And this piece that I have written will fade into the dust of memory.

But if I could say one thing to my students, regardless of the trial’s outcome, it would be this: You are enough as you are. Dream big but tell the truth—to yourself and to others.

And if you are going to invest your money in your heroes—ask for audited financial statements.

I look out through the blinds at the twelve-foot-strip of grass that is my prison yard this morning. As I write, I am on day 3 of my banishment for testing positive for COVID, despite being fully vaccinated. The “privacy” fence out my window would feel more appropriate with a stretch of barbed wire across the top.

I managed to get through one week of classes, suitably confident because I tested negative for the umpteenth time the week before, this time as mandated by the University. Unlike virtually all those in my building, I wear my mask consistently around other people. I taught without it, but I put it on if anyone approached me. My wife, the World’s Most Beautiful Woman, encouraged me to get tested again after my first week’s teaching, and it is a good thing she did.

I am asymptomatic, which in technical terms means I was able to yell at my computer screen for each of the Aggies’ turnovers Saturday night. I certainly feel better than the Kent State kicker who missed two short field goals in the last minutes, with all the gambling world waiting to see if the Golden Flashes could cover the spread. Now that is pressure.

My wife, who is vulnerable because of underlying conditions, has had one negative test since I was incarcerated. We pray for a second. Having each lost a parent in the last year, we are both reeling a bit, even though we know we have so much to be thankful for. It is one of those times in a marriage when you see hopelessness in the eyes of the one you love, and you feel powerless to change things.

I am scheduled to receive the monoclonal antibody treatment, Regeneron, because of my age. I await the results of a second test to confirm my positive status before undergoing the regimen. It is humbling to feel like a carrier and to feel like I need special attention because of my condition in life. I am used to being the one bearing up others through their challenges, particularly students much younger than me.

I have had several friends go to prison, and I have one long-time friend who will be sentenced soon. I am feeling new empathy for them this morning. But I pace this room like a caged cat when I am not feeling reflective or yelling at the Aggies. And I know in my mind that most prisoners do not have what I have; many have cells squeezing two people into half the space I have, with an open toilet. I struggle to understand what that does to a mind. How would you turn it into a positive and not go crazy?

Someone encouraged me to remember that the apostle Paul was in prison. But, to be honest, I am no Paul. And I know that Paul called himself the “chief of sinners,” but I am pretty confident he would not have yelled at Ainias Smith trying to field a punt over his shoulder inside the 10. And if I had not received the Curative curse word, “Positive,” I would have been doing so along with 97,000 of my closest friends in person, including my wife and brother-in-law. I wore my blue shirt for the 9/11 remembrance game anyway.

This week, assuming I am feeling well enough and not receiving an infusion, I will conduct my classes from the confines of this room. The past year and a half have provided me a lot of Zoom experience, and it is not an intimidating prospect. But oh, I miss being face to face, and not just with students—with anybody. It has become clearer to me in the last year than it has ever been that we are all designed to need others, even those of us who are introverts.

It is incredibly unnatural to make myself stay away, to pace the floor of this 12 by 15 room, and I am not alone in feeling this. I recognize that it is “selfless service,” and that it is my duty to wait. But I want so much to burst out that door and go to the office, or get a snow cone, or mow the lawn, or kiss my wife. (Well, maybe not mow the lawn.) Honestly, we are in a time like no other that I have experienced.

Perhaps, if I remain asymptomatic, a week from now I will be free. Or, if I get a mild case, two weeks. Of course, it could go badly, and it could be longer. My challenge today is to quiet my soul enough to reflect on what is going on inside me. I hoped to have built up the emotional and spiritual resources to deal with the hard things God allows to happen late in life. Our parents’ deaths and missing walking my daughter down the aisle during COVID made it clear I am not who I thought I was. Now I wonder when I might see my grandson, who is due in the next two weeks.

But my challenges are small, and I am very conscious of those who have lost loved ones to this scourge. Sitting still and being quiet is the least that could be asked of me. I am also sympathetic to those who are having to make difficult decisions about who meets for classes, and who goes to football games. Their challenge is so much greater than mine.

If I could wish for anything, it would be for fewer accusations of being stupid and foolish, or Luddites, or ignoring the science, or of government conspiracies. Even if I knew the source of this, or the volume of mistakes that have been made in trying to manage it, I would not be more informed about human nature. People do evil things, and people do stupid things. In fact, I study that for a living.

But what I am missing most is people, the same broken people who make mistakes of judgment and of arrogance. Long after I am done teaching, I will need people in my life. And I have no desire at this stage to burn the bridges that connect me to them, however much those bridges may swing and wobble in the wind. I would give anything right now to be with them. And this is true even though what I want more than anything is to protect my wife.

So, I will wait quietly on the Lord, and on the results of the second test, and on the infusion. I will step forward into this unknown week and do the best I can. My hope is that I will be a different and better person for having this experience.

But if we turn it over five times next week, all bets are off.

Today is the first day of the most unique fall semester of my career as a professor. I will be back in a physical classroom for the first time in months, masked and ready to go. In one of my classes, over 90 percent of students have decided to attend in person. This speaks to me of the longing for human contact, and the fundamentally different experience of even the most humdrum college classroom when compared to a technology link.

Social media is atwitter with stories of reckless college students gathering in droves, and the anticipation is that it is only a matter of time before universities go online. Some prominent universities already have. But there is a certain recklessness, at least a modest amount of risk-seeking behavior, in all of us who are not hypochondriacs. Certain needs will prompt us to assume risk because of what we get in return. We may try to tightly control the extent of that risk. But five months into this COVID adventure, we all have a much better read on our propensity to assume risk.

And, to be honest, it is a lot higher across the spectrum than I would have guessed, and not just for college students. My desire for normalcy in the classroom and in my workplace drive me to assume risk. I feel pressure from peers in my church community to regather, even though it still seems like a bad idea to me. Most people who know me would see me as risk averse; I am, after all, an accountant. And yet later on today I will be face-to-face with new MS Accounting students in a professional seminar in a classroom down the hall.

Many who see college students as selfish would characterize professors going into the classroom as heroic. I think that is a bit of a caricature. Of course, there are a number of college students engaging in purely self-interested behavior because they believe the downside risk is minimal. This is nothing new, and it is the reason we have organizations like CARPOOL at Texas A&M to minimize the consequences of this type of behavior by offering rides home from bars to those who need them.

But professors have needs, too. And when I look in the mirror, I have to ask myself—why have I chosen face-to-face instruction rather than teaching online? Part of it is that I taught online in the spring and summer. To be honest, it would be a lot easier than the hybrid version I will start with this fall, where I try to attend to the needs of students in the classroom and those Zooming in. But I give up a lot sitting in front of a screen, physically detached from my students. My career has been about life-on-life investment, and as hard as I try to make the online experience seamless for my students, it is not the same. Am I being selfless, or is it just evident to me that the experience of being a professor without human contact is, for me, a lifeless one, and less worth doing?

I have often told my students, “If you can’t self-regulate, you WILL be regulated.” I certainly know people who will wear a mask only under force of rule, and complaining all the while. But it is pretty clear at this point that the only thing that can make this fall semester happen the way we want it to is for students and faculty to self-regulate at uncomfortable levels. Around here, we call that selfless service.

Can we do it? Who knows? I know that I will be washing my hands every time I walk by a bathroom, and soaking my paper cuts in hand sanitizer constantly. (Again, I’m an accountant.) I have the equivalent of a “No Shirt, No Shoes, No Service” sign on my office door. I have an assortment of masks for every occasion, from N-95 on down to casual dinner wear. The last thing I want to do is bring this scourge home to the World’s Most Beautiful Woman, and not just because I will be relegated to a distant room (or a tent outside) for two weeks. Protecting her is all that really matters.

It is hard to know how much I will resemble last year’s Dr. Shaub as I go back in the classroom. I feel like a bit of an imposter. But if it protects her, I am okay with that. Whoever I am, I am hopeful, and strangely happy, about this opportunity. I want to do the things I can to prolong it, and I want my students to have fun learning along the way.

But who am I to criticize them for being risk-seeking? My presence with them says that they are not alone. Here’s hoping we are all able to self-regulate sufficiently to prolong the joy that comes from the beauty that is the university classroom.

Explore my recent post “100” and the news story it prompted on KBTX.com.

In the midst of a pandemic that has made me more risk averse than I have ever been, I am witness to a standard of longevity that stands as a monument to tenacity and grace. This week, my Dad, who survived Iwo Jima among a series of Pacific battles that engaged the 4th Marine Division, will turn 100.

When I was growing up, my chain-smoking Dad was the last person I would have thought would live to a ripe old age. I am pretty confident that I never saw my Dad participate in athletic activity when I lived at home, unless you count yelling at Little League umpires. He never worked out between the ages of 30 and 70. He was not careful about what he ate or drank. He was just my Dad, and not anyone you would think of as an icon.

Today, he is one of the most popular people on the third floor of the Isle at Watercrest, still getting around with his walker and, whenever possible, refusing help. But for the last four months, this has been invisible to us, and we have relied on others to provide all of his care and comfort. We are the outsiders, banned from visiting because of the COVID threat to residents.

I would give anything to sit across the room from him in the reading chair that I bought when he moved here a year and a half ago. We would have a meandering conversation about life in Pennsylvania shooting rabbits with his father, or coming of age in Baltimore, or the war. None of the discussion would involve politics or the Astros, as it might have a decade or less ago.

We would look at pictures of Mom on the wall, gone three decades now, but very much alive in his heart still. Next year Linda and I will pass the number of years given to my parents together, but I can guarantee you that the fire still burns bright for my Dad, and it gives me hope that we can continue to kindle something that our kids and grandkids will use in the years ahead to warm their lives.

The pictures in his room also include frozen moments in time of my parents just after the war, and then with one, two, and three children. The last of these is my first birthday, on the porch in Baltimore in my Mom’s arms with me wearing a classic birthday hat, with my two older brothers looking mildly disinterested. I have not seen these pictures for four months because of COVID. But I see them clearly in my mind, and they connect me to my Dad in ways that are hard to describe.

One day, I suppose, similar pictures will hang above my recliner in a similar place, telling a story of days already long ago in which my life was formed and shaped. And my children and grandchildren will, I hope, visit long enough to have that unique mixture of sadness and sweetness that goes with encountering life at the stage where the battery is flashing.

But amidst the long, slow decline, we have this amazing moment. 100. How could it be that he could have gotten to this point, and that he still acts as if the road goes on forever? This man who has witnessed over 40 percent of the history of our nation, who was born just after World War I and the flu pandemic and while Woodrow Wilson was still president, soldiers on in the summer of COVID. And he does it without a single visitor, though we are chomping at the bit to be with him.

All the cultural battles being fought today are the culmination of history he has witnessed. When I was young, it felt like I could never make him happy. Now, he never complains, unless you try to help him. When I talk to him, one of his most common phrases is, “So be it.” It is a mix of resignation and contentment. After Mom died, he spent almost thirty years alone in the home I grew up in. I suppose he is as prepared as anyone I know to be alone in this pandemic, and I am pretty certain that he is content with the periodic visits throughout the day from his caregivers.

But, if I am being honest, I am not. I want to see my Dad, and hug his neck, and let him know face-to-face how much I love him. I almost never talk to him without him telling me how proud he is of me. How many men my age are hearing that? How many men of any age are hearing that?

I have the voice of my father telling me I am worthwhile for one more day. I do not take this day for granted.

I love you, Dad. Here’s to you. 100.

Updated 12/4/2019 11:24 AM with scholarship information at end.

There are times along the road of life that we are given to cynicism. In my world, that cynicism can come from following closely the stories of people in the business world, and in the accounting profession, who live on the edge ethically. They deflect criticism and offer a litany of excuses when they wrong others or take their money. They largely avoid punishments they deserve, and they move on to hurt others in similar ways. There are days when I wonder if there is any hope of changing the environment my students will go into in the business world.

And then you meet someone like Maegan Sanders. Raised in a family deeply rooted in its faith, in a close-knit community, the kind of small town that sends its best to Texas A&M. A gentle, effervescent soul who could dominate you intellectually, but refuses to make you feel small. Maegan is the kind of person you design exams around; the goal is not to challenge her, but to see if you can create an exam on which she will not make 100.

She has been a presence in these halls even before she was in these halls, the precious daughter of a colleague who shapes some of the very best of our Accounting students with the information technology skills that put them in high demand on the market. Her mom is one of the most influential members of our faculty, and I have spent the entirety of my 13+ years here officed in the same hallway, watching her children go in and out of her door as they became formative Aggies.

Maegan hit the ground running here, accelerating through Business Honors into our Professional Program in Accounting (PPA), and she was headed out the door next May to work for Ernst & Young in San Antonio, and to begin her new life with her beloved fiancé. Last Sunday her life was cut short in a moment on a too busy holiday highway.

The tragic accident that took Maegan and her brother, Wesley, from us is the type of event that could make us cynical as well. The unexplainable is often the root of doubt and despair. A decade ago we lost one of our very best in the Professional Program in a similar sudden and unexplainable way, and I am affected by that seeming injustice to this day.

But I also see in these tragedies the hope that springs from faith and from community, and from a life well-lived, whether for 22 or 92 years. I received word of the accident barely 48 hours ago, and yet I have seen an outpouring of love and commitment from the Aggie family and from the students in our program that humbles me. Within hours a 24/7 prayer vigil for the family was launched by PPA students that is continuing at this moment. Money for an urgent need was raised through a Venmo outreach—in 20 minutes. A scholarship is being established to remember Maegan and Wesley, and Aggies from all over are asking how they can be a part.

I try with everything in me to teach and to model a life worth living in the business world. And then someone like Maegan Sanders enters my classroom, already living the joint life of technical excellence, even brilliance, and unquestioned integrity. I wonder exactly how God puts together a person like that.

I can give you a clue. In my Accounting Ethics class, my students are required to develop principles to guide their professional lives. Maegan’s first and last principles came from the same source—her mom. “Always listen to your little voice.” That little voice was “built and sculpted by the way I was raised,” Maegan wrote. And the second principle that was her guiding force in the voice of her mother was this: “Just be nice. It’s as simple as that.”

Tonight I will attend the visitation, and tomorrow the funeral, for two precious lives taken too soon. I will wear something green for Wesley, and yellow for Maegan, as the family has requested. And as I sit there, I will listen to my little voice. It is the same little voice that told me to write this.

And then tomorrow, in the challenges that go with directing a program and caring for aging parents, I will try to remember to just be nice. Because, in the end, it’s as simple as that.

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The Accounting department has created a scholarship endowment in memory of Maegan and Wesley Sanders. Income from the endowment will be used to provide an annual scholarship for an outstanding accounting major and to help create a lasting legacy for Maegan and Wesley. If you would like to contribute to this fund, please visit the Texas A&M Foundation page and choose The General Memorial Fund.  Under gift details, check the box in honor of someone special, select “In Memory” of “Maegan and Wesley Sanders” for the “Memorial Scholarship” and notify “The Sanders Family”. For information on where to send checks, please email ppa@tamu.edu. Thank you.

On this August day, the University of Nebraska at Omaha flags fly at half-mast for a man whose heart was as beautiful as his mind. David Swanson could have done any number of things with that extraordinary intellect. What he chose to do was to quietly make life better for thousands of Nebraskans by investing himself in a critical role that impacted its university system. It is not the kind of thing that engenders a hero’s respect in most people’s eyes. But then Dave is not most people.

I met David when I was a young professor at Nebraska, about the time he married Ronda. He was a bike-riding graduate student who thought on a different plane. As they grew into their marriage and encountered parenthood, our friendship blossomed. Linda and I were hopelessly overwhelmed with three, and then four, children, so we welcomed their curiosity and their practical help.

He loved the Twins. The first two times I typed that, it came out “loves” as if my fingers couldn’t type the past tense. He loved them stupidly, like a child, against all evidence, the way I love the Orioles. I still remember a camping trip our families took together, our boys tossing the baseball back and forth as proxies for us. My last memory of Lincoln before leaving for good is a whiffle ball game at his son’s first birthday party.

He loved the Huskers, too, even through a long period of gradual decline after three national championships. But even in frustrating times, he could always laugh at the irony of decisions that were being made. He had a lightness to his heart that did not, with rare exception, allow the blows of life to drive him to despair.

And so he served as a sort of flotation device for many, including me, a combination of humor and relentless rationality that kept us from sinking too deep. He was not just rational about science and math, but he understood the rational implications of the faith in Christ he so boldly proclaimed for all the years I knew him.

Right now I am emotional and dazed at this tragic and seemingly pointless loss. And then I start thinking of him talking to me in that uniquely nasal tone I could immediately identify if I heard it in a crowded room. He is finishing every other sentence with a rat-a-tat laugh that says, “What did you expect?” It is not a cynical question.

So much of our lives as believers is ironic. What would make Dave and me friends? How would we both marry above ourselves to women who, though born a decade apart, cannot seem to get enough of being together? Dave and I would have been stuck with each other even if we had not found so much to like in each other. But I cannot remember spending five minutes in David Swanson’s presence without laughing, even in the bad times.

You don’t lower a flag to half-mast for Ph.D. types who are computer gurus, but on the day I write this, they are lowering it for Dave. He would be laughing and saying, “Are you kidding me?” No, dear friend, we’re not. You have lived a life worthy of that. You have made a meaningful impact on so many, one life at a time, not just one professional accomplishment at a time. What you could do with your mind gave you access to our hearts. And your unselfish devotion to each of us, to your family, and to your Lord is the reason we feel not just regret, but pain, in losing you.

I know you are hearing even better commendations now. But I wanted you to hear it from me, too. Well done, beloved friend.

Related: Two funds set up to support Swanson family

My wife and I were walking up from the beach together, past a house that had a pickup truck whose bass speakers were sufficient to physically rattle the windows of our house across the street. I looked over at the truck, and an older man (and, by that, I mean younger than me) shouted at his daughter to turn the music down out of consideration for us. Her immediate reply to him before complying was, “They were young once!”

Indeed they were. Once they held hands and talked of a future together. He whispered in her ear and she giggled and pulled away, only to have him gently grab her arm and pull her back to him. He looked in those clear blue eyes and felt his heart fly away to places he never knew existed. He wooed her as a college student and married her right after. They spent restless nights sleeping in an unairconditioned house with a box fan whirring in a window and a baby in the next room. They spent a dozen years living in more than that many homes, stopping and starting a career in fits and spurts until a Ph.D. program spat out a professor equipped with an inquisitive mind, two more kids and that same blue-eyed girl. Those three kids grew to five, and the seasons flew by, hardly noticed. Life for them was a continuum, pulsing from one stage to another until all those kids were gone and the grandkids had long since begun arriving.

Only then did it begin to occur to them that they might be growing old. That they—that he—might be on the backside of his usefulness. He noticed that more of his questions were “why” and fewer of them were “how.” It was not that he just didn’t remember as much; he didn’t understand as much. Because as you get older, while still in the continuing desperate pursuit of those things you never comprehended, you realize that you are quickly being caught from behind by those things that you never knew to ask about, as well as those things you no longer understand. Those deep consternations reflect themselves not just in your specific discipline or expertise, but in music and art and culture and religion. They are accelerated by changes in technology, but they are not a result of it. All generations have faced this inevitable passage in their own ways.

I sit on the cusp of freedom and despair. My life today is the opportunity to finish strong, to fulfill many of my hopes and to see so many good things happen in the lives of those I love. It is the chance to pass the baton on to the next generation, which has already begun accelerating in the exchange lane. In fact, they are quite quickly matching my speed, which is necessary for a successful handoff.

But it is also a recognition that my contribution, my leg of the race, is reaching its end. I am still running hard, and I have to in order to keep up with them. But not for long.

There is a reason I am not running the anchor leg, and that is because I am not the fastest runner. But I have done my best on my leg. I am free to enjoy, in the not too distant future, the rest of the race from the infield. The despair comes in knowing that soon, all that will be left for me to do is cheer.

My Dad turns 99 this month. In his room hangs the picture of a confident 26-year-old, with his civilian arms wrapped around my Mom’s waist after having survived both the worst of the Pacific War and two years apart from her. The whole world lies before them—like us, a return to school, five kids, and a career of the mind. They were young once. Today, he wonders where she has gone.

The pickup truck just pulled back into the neighbor’s driveway, the speakers booming life, the future, possibilities. The guy on the porch across the street from that pickup truck watches, reflecting on what it is to have meaning and confidence without youth. He knows deep in his heart that he is one of the lucky ones, still stimulated by a meaningful job that includes the opportunity to teach, and to be influenced by, a remarkable group of college students who continue to make him feel young. And to still be carried away by those gorgeous blue eyes not just to unseen places, but to memories built together, full of whimsy and wonder.

They were young once. And, to be honest, perhaps more often than you think, they still are. The immeasurable gift of a lifetime together is hard to top, even by the highest highs of youth.

But I’d be lying if I said I didn’t want to go back and try.

As I began writing this on a Friday afternoon, Tesla’s stock was down almost 14 percent as a result of the Securities and Exchange Commission filing suit against Elon Musk for securities fraud, and seeking his removal as the company’s CEO. This follows Musk’s decision on August 7 to tweet, “Am considering taking Tesla private at $420. Funding secured.” At the time, that represented roughly a 20-percent premium to the stock price. The SEC (and many others) believe that he rounded the price to $420 as a marijuana reference to impress his girlfriend. But the market’s immediate reaction during the rest of the day was a 6 percent increase in the share price. And, unfortunately for the Tesla CEO, he had arranged no such funding.

On a number of occasions recently people have asked about Elon Musk, “What was he thinking?” and sometimes even, “What was he smoking?” It is not just his recent appearance on Joe Rogan’s podcast apparently smoking a blunt, but his initial willingness to put his company at risk through refusing a relatively gentle SEC settlement offer. Instead, the SEC sought to ban him from serving as an officer or director of a public company, leading him to agree on Saturday to a $40 million penalty (half of it to be paid by him), removal as chairman for at least three years, and the addition of two independent directors to Tesla’s board.

Most agree that Elon Musk is an innovative genius. But smart people do stupid things for a variety of reasons. Psychologist Robert Sternberg identifies five fallacies of thinking that are often drivers of this decision-making: egocentrism, a false sense of omniscience, a false belief about one’s omnipotence, perceived invulnerability, and unrealistic optimism. Others have arguably checked all five boxes, like Martin Shkreli of Turing Pharmaceuticals, who mocked those opposing his choice to dramatically raise the prices of certain critical drugs. This included referring to members of Congress as “imbeciles” on Twitter after citing his Fifth Amendment rights against self-incrimination when he was called to testify before them. He was sentenced to seven years on fraud charges related to a hedge fund and forfeited over $7 million dollars.

Despite Elon Musk’s many successes, an argument can be made that he is characterized by all five of the fallacies as well. It is not uncommon that a CEO would have a streak of egocentrism, but a visit to his Twitter feed, especially as he engages with those who are shorting his stock, will give you a sense of self-preoccupation. He is extremely knowledgeable, but he could use some help from a veteran CEO or a more involved board to check his tendency to project himself as omniscient. At the very least, he could use someone who understands federal securities laws. His oblivious $420 tweet reflects a false sense of being powerful enough to do whatever he wants. Toking on YouTube is just one example of his sense of invulnerability. He has also been sued for making potentially libelous accusations, without apparent support, about a British diver who questioned the usefulness of Musk’s mini-sub to rescue Thai boys trapped in a cave. And while unrealistic optimism alone is hard to criticize, his consistently aggressive assumptions about both car production and operating cash flow have earned him broad criticism.

What is ironic is that Tesla is likely finishing a record quarter in production, if not cash flow. They seem to potentially be turning the corner on some measures, even while they still have real challenges ahead. And eliminating the uncertainty with the SEC resulted in a predictable Monday morning bounce back in Tesla’s share price.

Of the five fallacies of thinking, all but egocentrism are really just bad calculations of reality, and sometimes it takes a cold bucket of water to make a person come to grips with reality. If you want to run a public company, an SEC suit to ban you from serving as an officer or director officially qualifies as a cold bucket of water.

For now, it seems to have been enough to bring Elon Musk to his senses. Only time will tell if it is enough to keep him there.

Credit: theverge.com, September 7, 2018

Two seemingly unrelated stories in the news, one in the entertainment industry and one in the world of sports, have me thinking about how difficult it can be to summon the moral courage to do what everyone agrees, in retrospect, should be easy to do. The numerous charges of sexual misconduct against Hollywood producer Harvey Weinstein have dominated the headlines, particularly since entertainment and news are a bit hard to separate nowadays. And this week, former Baylor and Cleveland Browns wide receiver Josh Gordon revealed how he was able to pass drug tests while he was a college student and remain eligible to play.

Harvey Weinstein

While the scope and importance of these two stories may be fundamentally different, what they have in common is this—enablers are always necessary for someone to escape justice over a prolonged period of time. Weinstein was allegedly enabled by a long line of subordinates and friends, some of whom were likely on his payroll for that very purpose. Gordon claims that an assistant coach provided him with cleansing drinks and taught him how to drink them so that his system would be free of evidence he had been taking drugs whenever he was tested.

Many people would rather spend their lives around successful people than people of integrity. This is true not just because some of these people are dishonest, but because successful people can offer them things that people of integrity may not be capable of providing. These folks want to project that they are successful and that their success is merit based. This was true of numerous people engaged in the Galleon Group insider trading scheme headed by Raj Rajara

tnam, projecting skill in trading when they were really masters of getting people to divulge information illegally. Volkswagen engineers followed the orders from above to design defeat devices for their vehicles that would shut down emission controls and maximize gas mileage, except when the vehicles were being tested by emissions control experts. …Read more