“In a snowstorm, when you’re trying to get from one place to another place, you never look up at the storm. You watch your feet. If you look up at the storm you will fall.’
It was May 2008, and the stock market in the U.S. was in free fall. Crashing home prices were starting to tank the economy. There was talk of a banking crisis. Investors everywhere were scared. Mellody Hobson was the president of Ariel Investments, the largest minority-owned investment firm in the U.S., managing the pensions and retirement funds for thousands of people. Ariel was founded by John Rogers Jr., with about $11 billion of assets under management (AUM) and with pressure from institutional investors, Rogers Jr. and Hubson were feeling the heat as clients kept firing Ariel every day by moving their money.
When the phone clicked off and the news settled in, Rogers, 50, who had been managing Ariel since founding it at the age of 24, burst into tears. Mellody, who had worked with Rogers for 17 years and had never seen such a reaction from him, cried as well. After a long beat, the wounded Rogers placed the blame on himself, even telling Mellody he felt it was his fault because he picked the stocks. 1
By 2004, Ariel’s assets hit a peak of $21 billion, up from about $8 billion at the start of 2002. A $10,000 investment in its flagship Ariel Fund at its inception in 1986 was worth $116,143 by the end of 2004, compared with just $75,477 if it was invested in the S&P 500® Index. 1 Ariel’s flagship fund fell as much as 50% in 2008 and major clients pulled their funds from the firm. In 2004, Ariel’s assets under management peaked at $21 billion and fell to $3.3 billion in 2009. The company had to lay off 20% of its 100-person staff team.
“We lost a lot of clients. Every single day someone fired us. Every day. Every day I woke up thinking, ‘This is someone’s kid’s college education or the money for their first house or their retirement.’ It was emotionally devastating. Emotionally, [it was] very, very, very hard.”
Ariel’s period of outperformance ended in 2005 after investments in newspaper companies (Lee Enterprises, McClatchy, Gannett) fell as the digital transformation away from legacy media accelerated. As a result, the stocks suffered dramatically, in some cases going practically bankrupt. 1
“If you’re on a beach and a tsunami hits, you’ll drown whether you’re a small child or an Olympic swimmer. Some things will go bad no matter how good you are.” — Lloyd Blankfein
Early one morning during the crisis, global markets were plunging. Hobson doesn’t usually focus on day-to-day fluctuations, but this day she was staring at the TV, hyperventilating. She and Lucas always talk at 7:30 A.M. Chicago time when they’re in different cities. “George said, ‘What do you know better than anyone else because you live in Chicago?’ ” she recalls. “I said, ‘George, I have no idea. I’m not interested in mind games.’ He said, ‘The one thing you have in Chicago is snowstorms. What do you know about snowstorms? In a snowstorm, when you’re trying to get from one place to another place, you never look up at the storm. You watch your feet. If you look up at the storm you will fall.’ ” Hobson says, “I went to work, and thought, We must stay focused and watch our feet. We must just do the work.” 2
“In a snowstorm, when you’re trying to get from one place to another place, you never look up at the storm. You watch your feet. If you look up at the storm you will fall.’
Mellody’s boyfriend at the time (and later her husband), American film director George Lucas, gave some advice that stuck with her: “You’re from Chicago. What does Chicago have a lot of? Snowstorms and blizzards. You do not look up at the storm. There’s nothing you can do about it. Watch your feet, because if you don’t watch your feet, you fall.” That meant handling what you can control and ignoring the rest.
Watch your feet, because if you don’t watch your feet, you fall.” That meant handling what you can control and ignoring the rest.
As the unpredictable market conditions continued, Mellody focused on the idea that “all we can control is what we can control.” Ariel couldn’t control market direction. What could it control? What process improvements should Mellody recommend? Ariel had three potential options 1) Do nothing and live off a nest egg. 2) Small layoffs to get a little cushion 3) Large Layoffs. Decision point: Ariel Investments ultimately laid off 20% of its workforce. 3
The watch your feet metaphor is a great analogy to dealing with the vicissitudes of life. Whatever would go wrong would eventually go wrong (Murphy’s Law). The key to navigating any storm is to stay focused and when things do go wrong as they often do, do not wrong with it. Do not let success get to your head and Do not let failure get to your heart. As you are either coming from a storm, heading to a storm, or leaving a storm. In a storm or crisis, ask yourself “What can I control?”
God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference. – Serenity Prayer
Meditations
Daily Calm with Tamara Levitt: Happiness
We slip into autopilot because of our habitual thinking. As you breathe notice how strong the pull is to explore thoughts, ideas, and fantasies.
Though our path may not always be easy, it is the one that we are on and we might as well find joy within it. We often postpone what we have right now because of the idea that enjoyment lies in the future but the thing is once we place our happiness in the future that is where happiness stays, we would always be chasing happiness without ever managing to catch it.
Happiness is right here, right in front of us. If we continue to miss it by resisting it, fighting it, or reducing it to a means to an end, we are not only disconnecting from the fullness of this moment but ultimately we would miss the essence of our life. The future never arrives, it is always the present moment.
Happiness, not in another place but this place…not for another hour, but this hour. – Walt Whitman
Daily Jay with Jay Shetty: Faults vs Mistakes
Schadenfreude (Harm-Joy): The experience of pleasure, joy, or self-satisfaction that comes from learning of or witnessing the troubles, failures, or humiliation of another.
Nothing grabs our attention more than a negative headline, we are fascinated by others’ missteps. Frequently when we tune in to others, we want to hear about their personal shortcomings, their character defects, and their faults. Too often we zoom in on people’s faults, trying to build ourselves up by putting them down.
When we fixate on others’ faults, it keeps us small. If we want to grow, we should focus on their mistakes instead of their faults. People’s mistakes can be illuminating – we see a blunder and by analyzing the situation with compassion and curiosity, we learn how we can avoid doing something similar. It is natural to notice others’ faults, flaws, and mistakes, we just need to do it in a way that serves us. It is about examining their behavior and not judging them for it.
All the best in your quest to get better. Don’t Settle: Live with Passion.
Comments are closed.