Money is Cheap, Talent is Expensive

Charles Munger, vice chairman of Berkshire Hathaway, recently gave what Forbes called quote of the year, about the historically low interest rates that continue in the global economy

Charles Munger, vice chairman of Berkshire Hathaway, recently gave what Forbes called quote of the year, about the historically low interest rates that continue in the global economy:

“I regard it all as very weird. If interest rates go to zero and all the governments in the world print money like crazy and prices go down – of course I’m confused. Anybody who is intelligent who is not confused doesn’t understand the situation very well. If you find it puzzling, your brain is working correctly.”

With enormous respect for Mr. Munger, I can’t help but think of the Upton Sinclair quote: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

One of our core hypotheses underlying Craft is that Finance is becoming less important as a driver of business results, than it was in the Industrial era, when access to Finance was really the deciding factor. Due to ultra-low interest rates, Finance is now cheaper and more accessible than ever before.

Perhaps the governments are deliberately working to diminish its importance. There might be good reason for this. In February, The Economist published an article titled: “Warning: too much finance is bad for the economy” showing data that when the financial industry grows past a certain point, economic growth slows. In part, they say, this is because “people who might have become scientists … dream of becoming hedge fund managers.”

We believe that Finance’s place as the central driver of business results is being taken by Talent; Human Capital.

I experienced this distinction first hand in 2013, when I was working on commercial partnerships between Deutsche Telekom and innovative Silicon Valley companies such as Evernote, Lookout, Box and others. Time and again, voices from inside the giant organization said “can’t we just build this ourselves?” With a €137 Billion balance sheet, DT certainly had the financial capital to give it a go. But every time the Product & Innovation division tried to build its own Dropbox or Netflix, the results fell flat. Why? Because DT didn’t have the human capital, the Talent that had the ability and motivation to do it.

We are betting that access to Talent is becoming more important than ever across the entire economy from startup to giant companies, and that creates a significant opportunity to build a platform that effectively tracks, maps, directs, and optimizes Talent.

We’re giving it a go, and we’re not too worried about Mr. Munger. He has the talent to succeed even in this environment.

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