Wishing you a lovely last week of November 2021. We kindly suggest to don´t spend all your money during black weekend. Save a bit, please. Think cautiously before buying what you need (which is ok) but try to don´t spend on what you feel like you want. There is always a fine line between what you really need, and what you feel is what you want. Many things that we want are not needed. But that is just a little piece of unsolicited advice that has helped me tons, when in times of crazy “sales”, as this occasion after thanksgiving.

Today´s subject is about beginning with the medullary part of the saga. We will provide a sense of our personal reflection. A punch list of integral thoughts that can help us to begin to see beyond our day-by-day present time and look not in a today´s span, or 10 years, but at least 100 years ahead. Many of these thoughts are dedicated to the private equity and venture capital industry, but they can be applied in our daily lives as citizens of any country and culture.

Please read the following paragraph:

“In the past five decades, the venture capital (VC) industry, running less than 2% of the world’s institutional assets, has funded ideas that have gone on to transform global business. Seven of the world’s ten largest firms were VC-backed. VC money has financed the companies behind search engines, iPhones, electric cars, and mRNA vaccines. Now capitalism’s dream machine is itself being scaled up and transformed, as an unprecedented $450bn of fresh cash floods into the VC scene. This turbocharging of the venture world brings risks, from egomaniacal founders torching cash to pension pots being squandered on overvalued startups. But in the long run it also promises to make the industry more global, to funnel risk capital into a wider range of industries, and to make VC more accessible to ordinary investors. A larger body of capital chasing a bigger universe of ideas will encourage competition, and is likely to boost innovation, leading to a more dynamic form of capitalism”.

Zanny Minton Beddoes
Editor-In-Chief The Economist.

Yesterday I was reading the above introductory thoughtful paragraph written by the editor-in-chief from The Economist magazine. We always read this magazine, because The Economist authors of articles trigger us to think and cause opinion. Many times, the significance of their thoughts is well treasured by everyone who wants to be over tiptoes the current business atmosphere. After you finish reading the paragraph above, now leave it there, and let´s begin:

• Capitalism as the triumphant political economy. During the last 100 years, capitalism has proven to be the top conductor of prosperity and wealth creation in the world. Even China, the biggest communist country is now capitalist at the core of its manufacturing business model. By accepting the fact that capitalism will continue to be the model for innovation and competition, we must acknowledge and incorporate capitalism first, as the triumphant political economy above socialism. And by accepting this reality, that is how we begin to think with a long-term view within our own endeavors.
• Capitalism or transition to capitalism is where we stand. When we accept kindly and gently that we were born in capitalist societies, then and only then we can study and understand the premises of capitalist reality. Portfolio analysis is a decision-making tool to create prosperity for the different SBUs of our diversified companies. The better decisions we take, the superior is the result if we live in a capitalist economy. If we live in such system, gaining an awareness of where our capitalist society is in terms of its own development; then that is how we begin to open our eyes of the status or the degree to which our nation emphasize collectivism or individualism. We also recognize with facts, the degree of success or failure in terms of our more democratic or totalitarian government.

• Understanding where our society is positioned as a political economic system. Once we understand where we are in the graph shown above, then, and only then, we can begin to help our economic system to evolve, to change, to improve. If we are not able to accept the fate in which our current capitalist economic system is (with the more or less feature of a free-market economy, a command economy, a mixed economy or a state-directed economy), we will never be able to think with a long-term capacity. We also need to accept to study and visualize the capitalism existing premises of the XXI century, otherwise it will be impossible to progress. Or at least to begin to see our realities and decision making with a long-term view (when it comes to innovation or inventing things to sell).
• The key to long range success is respect. Respect from inside out. Nowadays, the rate of economic progress in any country depends on the extent to which that country has a well-functioning market economy where “respect” is the motto for endurance and long-term prosperity.
  Respect to regulations which are constantly evolving and setting up the right limits to everything that will cause damage to humans and societies. Respect to ethics and human rights. Respect to transparency to stop bribes and corruption. Respect to the poor majorities which need to cover the basics of health, education and jobs with a promise a middle-class status in the near future. Respect to the legal systems and degree of democracy. Respect to the opposition or to those who are against the “status quo” by offering them the channels to create democracy, instead of fighting it with extremes. Respect to the different parties´ ideologies much essential to keep a balance in power. Respect to cultural, ethnic, and religious minorities. Respect to communicate with kind regard, and respect to the freedom of expression channels. Respect to our natural ecosystems that keep our long-term survival. Respect to fair electoral opportunities that spread democracy. Respect to establish diplomatic ties with everyone that wishes to be our friends. Respect to animals (fauna) and flora. Respect to the land, air, water sources that we live.  Respect to get genuine information for decision making. Respect to humanity, solidarity, and the key ethical values that keep us in the right track with others: humbleness, meekness and peacemaking, mourning, hunger for righteousness, mercy, courage under suffering, purity of heart, faith & hope, integrity, and love. In summary, it is impossible to think about “long-term” prosperity creation through enterprises within an economic system; if there is no respect.
• The private equity and VC industry require a profound transformation. The paragraph of the Economist magazine that I pulled out for you here, describes why are we in deep troubles with technologies. And why are we in intense conflicts of not watching in time, to no more than the end of our nose. The VC and private equity industries have sent to the markets, all the top disruptive technologies without any hesitation, without any Design-Based Research approach, without any type of break engine regulations from the governments, without any type of integral academic theory that puts the well-being of societies at the core. It is all about money, deal edging back and forth, pushing buttons for instant money and make everything cheaper, cheapest, less expensive.
• Examples of why the VC industry need to change. When something as block-chain, bitcoin or cryptocurrencies, NFTs, etc. or whatever emerging crazy idea, that has not been approved, or was not proven and regulated by any state, is rolled out as the next big disruptor of societies under the “extreme free-market premises of capitalism, that is a sign of our lack of long-term view. When something as the Smartphone (originally conceived to communicate) is used for everything you can think of doing, and was not proved nor regulated first, and it is rolled out as the solution to the lack of education, or lack of prosperity… then that is a sign of our lack of long-range approach. When something as the global supply chains and logistics of the cheaper products from Asia, come to destroy the local artisan and handmade industries including all types of authentic art… then that is a sign of our lack of long beam of actions. When something as the augmented reality and virtual rooms appears from Facebook as the solution to our current problems… then that is another sign of our lack of long-term planning. When something as the largest web-ecommerce marketplaces do not have any type of regulation at the local, regional, and global basis… then that is another sign that a little wrong is happening. When a state owned enterprise playing the capitalism with a flag of communism decides to buy thousands of robots for their manufacturing plans to make plus cheapest products, that is also another sign of lack of long-strategic thinking.
• The capitalism in which we live needs some form of tollgates in the context of speedy tech. For example, architectural design was made by hand. No usage of AutoCAD or similar software existed 40 years ago. So, the rhythm of the draftsmen of architectural schemes was the pace for the paper plans making. The lack of technologies to draw was the brake pedal to control ourselves in the building-construction industry. The same applies to communication tools: when instant messaging was not available ubiquitously, processes and things were slower by their own nature. Balance turned out to be by nature in the past because of the lack of current omnipresent technologies. And that balance kept us in equilibrium. Nowadays, everything we do need some time of technology that is hilariously instant and hasty, so there is no time to think, or to try to stabilize our rhythm of disparity.

Why do we need to ignite long-term strategic thinking? Not just with our portfolio analysis tools, but with everything. The bold and short answer will be offered in our next post when we visit the topic of our short-sightedness.

Why did we choose the songs of Thanksgiving? Because of the singers’ voices. Kelly Clarkson, ABBA singer Agnetha Fältskog, Keith Urban, and Sarah Evans. All of them have magnificent voices. Their toned voices speak up for their love for music. We hope you felt touched by their voices, full of gratitude and thankfulness.

Song of today. We would like to close our chapter with the song “Memories” from Maroon 5. We also have added the version of the same song interpreted by One Voice Choir, and by Karolina Protsenko. We will tell you why we selected this masterpiece. Enjoy!

See you next Tuesday. Four more posts and we are done. Thank you for reading to me.  

Disclaimer: Illustrations in Watercolor are painted by Eleonora Escalante. Other types of illustrations or videos (which are not mine) are used for educational purposes ONLY. Nevertheless, the majority of the pictures, images, or videos shown on this blog are not mine. I do not own any of the lovely photos or images posted unless otherwise stated.

Published by eleonoraescalantestrategy

Corporate Strategy Artist, San Salvador, El Salvador View all posts by eleonoraescalantestrategy