It was the Germans! 🪃

Short, practical drops on culture and technology. 🚀

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Why culture, business, and tech? 🤝

Many of you asked me what inspired me to invest in the intersections of culture, business and tech. It’s a good question.

Culture 👉 because it is the sum total of the agreements we all make to one another every single day. We carry culture in everything we think, write, say, and do.

Business 👉 because private enterprise is governed by reality. Someone will pay you to solve their problem, or they won’t.

Technology 👉 because technology is now baked in to our lives forever.

The intersection of all 3 is where the magic is.

It was the Germans! 👀

Sometimes I read something and I have to get up and walk around the room. It just hits different.

The highest ratio of impact to words is probably Michael Lewis. He’s almost impossibly good at his craft. As John Williams said about The Undoing Project👇

I felt the same way when I picked up Boomerang.

It crystallized my fascination with the intersection of culture, business, and technology in a way that is rare. Boomerang is Lewis’s attempt to explain the global financial meltdown of 2008 by diving in to the culture’s that were most compelling at the time. America, Iceland, Greece, etc.

It wasn’t until 2011 that he made his way to Germany. Greece had just been ranked 126th of 126 countries with ranked debt. They were officially rated the least likely to pay their debts, and all of Europe was now looking to Germany for an indication of what would happen next.

Germany matters in Europe. As one senior official at the Bundesbank told Lewis at the time, “If we say no, it’s no. Nothing happens without Germany…” 

We all know the stereotypes. The pragmatic, thoughtful, at times quite literal, Germans. If you took the pulse of the German people at the time, it was one of ‘incomprehension,’ that the rest of the world could have behaved so irresponsibility with their money.

Lewis writes about the timeliness and prestige of German officials on his tour of the country, “I have arrived about three minutes late, but the German deputy minister of finance runes a full five minutes late, which, I will learn, is viewed by Germans almost as a felony.” 

So what’s the catch? Ironically, as Lewis goes on to point out, the prudence that the finance minister was showing outwardly did not match reality. Germany was in big trouble and that trouble looked a lot like the increasing complexity and corruption in America’s banking system. “There had never been any innovation in German banking ...You gave money to some company, and the company paid you back.” They went [virtually overnight] from this to being American. And they weren’t any good at it.“

In the end, they lost ‘massive sums,’ in almost every financial innovation they touched, including U.S. subprime loans and Greek government bonds, and one possible reason why is completely fascinating. 👇

Double-click on 'U.S. subprime loans' 🤯

Because there had been ‘no financial innovation’ in Germany, the slick American bankers that flocked to the four-corners of the world to shill subprime garbage was an anomaly. It didn’t happen in Germany amongst Germans. “German banking was never meant to be a high stakes affair…”(👆 If you’re wondering, that was the German equivalent to the head of Bank of America or some other huge American institution who, as Lewis tells us, was actively hostile to bankers making a lot of money.)

The Germans saw banking, historically, as pragmatic. As a service. At the same time, in America, trad-fi had become a casino. Germany’s financial brass simply had no experience with huxterism and snake-oil salesman of the calibre America was now sending about.

“The intercultural misunderstandings were quite intense….The people in these banks were never spoiled by any Wall Street salesman [before]. Now there is someone with a platinum American Express credit card who can take them to the Gran Prix in Monaco…He has no limit. The Landesbanks were the most boring bankers in Germany so they never got attention like this. And all of a sudden a very smart guy from Merrill Lynch shows up and starts to pay a lot of attention to you. They thought, ‘Oh, he just likes me!”’ 

He goes on to completes the thought. “The American salespeople are much smarter than European ones. They play a role much better.”

And so, we found ourselves encountering the time-oriented, literal, and pragmatic Germans making up a disproportionate number of those who onboarded American subprime that would all go to hell-in-a-hand-basket. “You’d talk to a New York investment banker and they’d say, ‘No one is going to buy this crap. Oh. Wait. The Landesbanks will!”

Michael's story (and entire book) is the very essence of the intersections of culture, business, and technology.

Gratitude 🙏

As always, thank you for being a part of this community. I couldn’t do it without you.

See you on the path. 

- MG