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Review – The Dog’s Mind (#canine, #dogs, #psychology, #dogtraining)

The Dog’s Mind: Understanding Your Dog’s Behavior (buy on Amazon.com)

by Bruce Fogle, DVM, MRCVS, published 1992

A “valueprax” review always serves two purposes: to inform the reader, and to remind the writer. Find more reviews by visiting the Virtual Library.

Peering into the canine mind

If you’ve ever owned a dog, or even just observed one owned by someone else, it seems almost inevitable to ask yourself the question, “What is going on inside that dog’s head right now?”

I grew up with dogs and have fond memories of four different family dogs of different breeds since childhood. But as a child and even a teenager I didn’t spend much time trying to understand the dogs. They were just there, part of the family landscape and in many ways I took them for granted.

Those fond childhood memories influenced my decision almost two years ago to acquire my own dog. This time, my decision was purpose-driven based upon what I understood about dogs and dog breeds, what I hoped for as a lifestyle to be had with my new companion and my own emotional idealism concerning the dog. We ended up buying a pure bred female German Shepherd from a professional breeder who creates showdogs and pets from German working bloodlines. She is a beautiful, intelligent creature to put it mildly.

We spent a considerable amount of time before and after acquiring our puppy studying articles, videos, books and other information at sites like Leerburg.com and others around the web (two other titles which were helpful, amongst many: The Art of Raising A Puppy and How To Be Your Dog’s Best Friend) trying to establish a baseline of knowledge concerning both dog biology and dog psychology to aid the integration of this creature into our home and to improve our chances of training and controlling the animal in a manner beneficial to both parties.

While we’ve been largely successful in this endeavor (so much so that it is hard not to be a bit judgmental towards most of the other dopey, clueless dog owners and dog lovers we come across on a daily basis) the mystery largely remains– what is going on inside that little doggie brain?

The unity of The Dog’s Mind

The author is a practicing veterinarian who I gather may have been an American (or at least was fond of the American revolution at one point, based upon the names he gave to his two Golden Retrievers) but at any rate now lives in the UK. This is a strength of the book because he clearly has personal experience with thousands of dogs of a multitude of breeds and he obviously loves the animal, but it is also a weakness because Mr. Fogle is so intelligent and academically-minded that he often spends a lot of time going into medical and biological minutae that the average pet owner neither needs to understand (“Here’s a short explanation of DNA sequencing in the dog genome!”) nor is likely to be interested in (“A research study into the effect of X on lab rats showed Y, which may provide interesting insight on the nature of dogs as well.”).

In other words, this is an at-times-top-heavy but otherwise practically-oriented book written by an extremely knowledgeable, experienced and well-read author (read: “scientific”) that explores not dog behavior, or dog psychology but the dog’s mind.

Essentially, Mr. Fogle seeks to explain how

the dog’s mind is a result of instinct, genetics, evolution and selective breeding… hormones influence the mind… and… maternal and peer imprinting and human intervention alter the ways of the dog.

Key ideas here are that the near ancestor of dogs are wolves, a species which inhabits an “opportunist omnivore” ecological niche, and that dogs can never get away from this historical and genetic fact and that despite breed differences which emphasize one characteristic of the dog over another (scent versus eyesight versus aggressiveness versus size, etc.) the mental core of the dog is common to all breeds and can be shaped by humans the same way.

Physiology and psychology

“The Dog’s Mind” is divided into two parts, “The Anatomy and Physiology of the Dog’s Mind” and “The Psychology of the Dog’s Mind”. The first part explores the role of genetics, the “wiring”, size and layout of the dog’s brain, the five senses, the interplay of hormones and the communication strategies of dogs while the second part explores maternal, peer and human imprinting, social behavior, breed differences and finally the effects of age and ill health on the dog’s mind.

Dogs are sentient beings, aware of their own personalities… Dogs dream… They are amazingly perceptive to nuance and observe the most imperceptible changes in us… dogs have been bred to retain the juvenile characteristics of play, exploration and subservience to the leader.

There are so many fascinating insights in this book, far too many to quote them all so I plan to cover some of the more interesting or important ones and sprinkle other quotes without comment as I go.

Speaking of genetics, the author observes that there are more genes which control behavior than there are genes which control “morphology” (the dog’s physical characteristics and appearance) which is part of the reason that there is a large difference in the morphology of an Irish wolfhound and a Chihuahua after generations of selective breeding, yet the “mind” of each animal is quite similar. It also explains why dogs remain so wolflike after thousands of years of domestication and co-habitation with humans. This is so key for dog owners (and the general public!) to understand and yet, tragically, it is not. Most people expect from dogs thought processes and behaviors that are simply unreasonable given the dog’s mind. The dog comes from the wolf, a predator animal, and every dog, no matter how big, small or lovable, continues to think of himself as a predator animal. Like the wolf, the dog is also a pack animal. Amongst modern humans it is popular to be egalitarian and democratically-minded, but to dogs aristocracy and a pecking order is the most natural and desirable system in the world, so much so that attempts to make the dog an “equal” in a human pack can be greatly destabilizing to the point of psycho-somatic derangement.

(Pro tip: if you ever see a “mean” dog that barks/yips at every dog and stranger passerby, you are actually witnessing a situation where the human is unwittingly beta and the dog has designated itself the alpha pack leader and protector… a truly sad and, for the human, completely unwitting state of affairs!)

In the dog’s limbic system, a battle plays out between his instinctive behavior and the negative or positive stimulus humans provide by punishing or rewarding certain behaviors. If we can create a stronger stimulus than the instinct, the limbic system is overridden and we’re able to control the dog’s behavior. A dog that is “uncontrollable” is simply a dog whose owner has not found a sufficiently stimulating punishment or reward to alter behaviour. This is important not just for control but trainability– the dog’s mind is most amenable to learning when its interest is aroused which is why positive reinforcement (systems like “marker training“) tend to be the most effective ways to establish long-term behavioral conditioning in the dog’s mind.

Touch is the earliest and possibly the most important of all the canine senses.

The role that senses play in the dog’s mind is another critical piece of the puzzle. When a newborn pup emerges from the womb, its ear canals are closed shut, it can not open its eyes and its wonderful sniffer is fairly ineffective. Touch and sensations of warmth are how it maneuvers itself toward its mother’s teat for its nourishment. This connection to touch remains with the dog its entire life and becomes therefore an important tool of social communication– touch a dog and it feels rewarded, ignore a dog and it feels despondent.

While touch has the biggest social implication, it is smell that is the strongest of the five senses. The book explains that taste is actually fairly restricted for dogs, they basically experience taste as “pleasant”, “indifferent”, and “unpleasant” unlike the human experience of salty, sweet, spicy, bitter, etc. And while a dog’s vision is in many ways superior to a human’s both in terms of distance and operation under varied light conditions, the positioning of the eyes on a dog mean that it is best-adjusted to observing peripheral motion, the “furtive movement” of its prey, rather than focusing on objects directly in front of it. Dogs are also known for their ability to hear sound frequencies humans can not perceive and are even considered to be “musical”, but it is truly the sense of smell that is most developed and differentiated in the dog which means that the dog’s mind primarily experiences the state of reality through smell.

Dogs have around 220 million scent receptors around their nose compared to the average human’s five million.

Smell memories last for life and affect almost all canine behaviors.

The dog uses scent in a number of ways– to sense prey, to sense other dogs, to sense a mating opportunity, etc. The reason dogs seem to forward with humans, sniffing our butts just as they sniff other dogs, is because in a dog the anal glands have developed to give an ID to other dogs. And because smell is so key to the functioning of the dog’s mind, it is the ability to get out of the house and smell things, rather than the exercise, which is most satisfying and important to a dog on a walk. It also means that “the quality of life of a blind dog can still be quite good.”

The chapter on hormones is somewhat technical but one important idea is that in tact male dogs live their entire lives with male sex hormone circulating throughout their body, whereas in tact females only experience the female sex hormone twice a year for a total of four months. This means the volatility of a female dog’s personality is greater than a male’s.

Selective breeding by humans has enhanced the “infantile” vocalizations of dogs. For example, adult dogs rarely whine at each other, but rather at us humans– a learned response. There are 5 primary vocalizations for dogs:

  1. infantile sounds; cry, whimper, whine
  2. warning sounds; bark, growl
  3. eliciting sounds; howl
  4. withdrawal sounds; yelp
  5. pleasure sounds; moan

Dogs also are masters of body language in communicating to one another, and to observant humans, how they are feeling, manipulating the position of their mouths, ears, tails, hackles, front and hind quarters and even their entire bodies to demonstrate a range of emotional experiences. And in dogs, staring is a form of dominance (like physical mounting), only alpha dogs can look directly at other dogs, so when you pet your dog and it looks away it is expressing deference to you, not disinterest.

Dog psychology

When it comes to the developing dog mind, early exposure to mild stress (loud noises, sudden movements, bright lights, etc.) are valuable in creating a stable, even-tempered pet. Dogs are learning all the time and what they are exposed to frequently and at duration (called “flooding”) they learn to tolerate or even accept as natural.

The concept of “imprinting” is also important. There is a key window in the puppy’s development, from around weeks 6-12, during which it is critical the puppy not only be exposed to humans but also to other dogs so that it learns that both are part of its pack. A puppy only exposed to humans becomes fearful and protective around other dogs, and a puppy only exposed to dogs becomes anxious and often untrainable with humans.

Play is a lifelong activity in dogs… as strong in wolves as it is in Yorkshire terriers.

But even with this human imprinting, a dog still thinks of itself as a dog and expects the human to behave as a dog does, participating in group activities, playing, hunting together and sleeping in the same den.

Puppy Aptitude Tests (PAT) have become popular when selecting a pet from a new litter, but there is little research that shows these techniques are successful indicators of long-term behavior other than those which demonstrate aggression or dominance, which tend to persist into adulthood but which are also rare in high levels in the dog population as a whole.

Regarding dog training, it is important to remember that dogs don’t think symbolically, they operate on a “what you see is what you get” basis. They learn three ways:

  1. observation
  2. classical conditioning
  3. operant conditioning

Dogs are also ALWAYS learning. They pay attention to all cause and effect relationships and will expect them to happen consistently in the future once substantiated once unless they are conditioned out of the expectation. This is why, for example, my dog becomes alert and predatory at the corner of my block in front of a house where it once saw a cat on the lawn– it happened one time and is now imprinted in her mind so she expects to see the cat each time and gets aroused in anticipation.

It’s worth quoting Mr. Fogle at length on this point:

Dogs are learning all the time and our objective is to control the stimuli, responses and rewards. We can do so by reinforcing, not reinforcing or punishing the behavior… They learn fastest when their behavior is consistently rewarded… The timing, intensity and intervals of reinforcement all have direct consequences on learned behavior. Reinforcement must be immediate… The object of canine punishment should be to reveal your power, not inflict pain… if a learned behavior is not reinforced, it is eventually lost.

Another important implication of the way dogs are always learning is that they interpret our reactions to their behavior as the control they have over us. If we respond to unwanted behaviors, they see that as their dominance or assertiveness operating. As humans, we must be very thoughtful about how we respond to all dog behaviors, good and bad, at least as far as we morally categorize them as such.

There was also an interesting list in the book showing tendency of behaviors between male and female, with more likely in females at the top and more likely in males at the bottom:

  • Obedience training
  • Housebreaking ease
  • Affection demand
  • Watchdog barking (baselined at 0)
  • Excessive barking (baselined at 0)
  • Excitability (baselined at 0)
  • Playfulness
  • Destructiveness
  • Snapping at children
  • Territory defense
  • General activity
  • Aggression with dogs
  • Dominance over owner

I also thought it was interesting that the author noted that most dog breeds are similar in intelligence although their capacity to excel in certain roles and functions is quite different. Many people tend to think of very small and very large breeds as “dumb” dogs not worth training.

Conclusion

As I said, there is a ton of information in this book. I had read a lot of it in other places before I got to this book, and I found some of the detailed explanations of biological processes a bit overwhelming and beyond my interest in reading the book but that doesn’t change the fact that this is chock full of info. In fact, there is a very handy appendix with training tips for some of the primary behaviors every pet dog should have (come, sit, stay, down, etc.) and the latter half of the book dealing with dog psychology includes not only diagnoses of various forms of dog aggression but also suggestions on how to prevent or treat their development as behavior traits, which could be helpful to many people who think they “just have an aggressive/mean dog.”

Dogs don’t think and behave as we like them to, they think and behave as they do, and what they do is strongly influenced by their genetic heritage as wolves as well as the early experiences they have in the litter and in our care. If we want to have enjoyable relationships with our dogs and other people’s dogs which are increasingly prevalent parts of our society, we would do well to become familiar with the essential knowledge contained in books like “The Dog’s Mind.” It will fundamentally change our relationship with these creatures and may even leave us appreciating, rather than bemoaning, our biological differences.

 

Notes – The Snowball, By Alice Schroeder: Part V, Chap. 43-52

The following are reading notes for The Snowball: Warren Buffett and the Business of Life, by Alice Schroeder (buy on Amazon.com). This post covers Part V: The King of Wall Street, Chap. 43-52

[These notes were never published on time. They may be incomplete as posted now.]

The modern Buffett

In Part V of the Snowball, we see Buffett’s transformation from the early, cigar butt-picking, Grahamian value-minded Buffett, through the filter of his Fisherite partner, Charlie Munger, into the mega cap conglomerator and franchise-buyer Buffett who is popularly known to investors and the public the world round.

It is in this part that we also see Buffett make one of his biggest missteps, a stumble which almost turns into a fall and which either way appears to shock and humble the maturing Buffett. It is in this era of his investing life that we see Buffett make some of his biggest rationalizations, become entangled in numerous scandals he never would’ve tolerated in his past and dive ever deeper into the world of “elephant bumping” and gross philanthropy, partly under the tutelage of his new best friend and Microsoft-founder, Bill Gates.

The lesson

Buffett made a series of poor investments but ultimately survived them all because of MoS. There will be challenges, struggles, and stress. But after the storm, comes the calm.

The keys to the fortress

From the late seventies until the late nineties, despite numerous economic and financial cycles Buffett’s fortune grew relentlessly under a seemingly unstoppable torrent of new capital:

Much of the money used for Buffett’s late seventies spending spree came from a bonanza of float from insurance and trading stamps

This “float” (negative working capital which was paid to Buffett’s companies in advance of services rendered, which he was able to invest at a profit in the meantime) was market agnostic, meaning that its volume was not much affected by the financial market booming or crashing. For example, if you owe premiums on your homeowner’s insurance, you don’t get to suspend payment on your coverage just because the Dow Jones has sold off or the economy is officially in a recession.

The growth in Buffett’s fortune, the wilting of his family

Between 1978 and the end of 1983, the Buffetts’ net worth had increased by a stunning amount, from $89 million to $680 million

Meanwhile Buffett proves he’s ever the worthless parent:

he handed the kids their Berkshire stock without stressing how important it might be to them someday, explaining compounding, or mentioning that they could borrow against the stock without selling it

Buffett had once written to a friend when his children were toddlers that he wanted to see “what the tree has produced” before deciding what to do about giving them money

(he didn’t actively parent though)

Buffett’s private equity shop

Another tool in Buffett’s investment arsenal was to purchase small private companies with dominant franchises and little need for capital reinvestment whose excess earnings could be siphoned off and used to make other investments in the public financial markets.

Continuing on with his success in acquiring the See’s Candy company, Buffett’s next private equity-style buyout involved the Nebraska Furniture Mart, run by a devoted Russian immigrant named Rose Blumkin and her family. And, much like the department store chain he once bought for a song from an emotionally-motivated seller, Buffett beat out a German group offering Rose Blumkin over $90M for her company, instead settling with Buffett on $55M for 90% of the company, quite a discount for a “fair valuation” of practically an entire business in the private market, especially considering the competing bid.

An audit of the company after purchase showed that the store was worth $85M. According to Rose Blumkin, the store earned $15M a year, meaning Buffett got it for 4x earnings. But Rose had buyers remorse and she eventually opened up a competing shop across the street from the one she had sold, waging war on the NFM until Buffett offered to buy her out for $5M, including the use of her name and her lease.

One secret to Buffett’s success in the private equity field? Personality:

“She really liked and trusted me. She would make up her mind about people and that was that.”

Buffett’s special priveleges

On hiding Rose Blumkin’s financial privacy: Buffet had no worries about getting a waiver from the SEC

Buffett got special dispensation from the SEC to not disclose his trades until the end of the year “to avoid moving markets”

The gorilla escapes its cage

Another theme of Buffett’s investing in the late 1980s and 1990s was his continual role as a “gorilla” investor who could protect potential LBO-targets from hostile takeover bids. The first of these was his $517M investment for 15% of Tom Murphy-controlled Cap Cities/ABC, a media conglomerate. Buffett left the board of the Washington Post to join the board of his latest investment.

Another white knight scenario involved Buffett’s investment in Ohio conglomerate Scott Fetzer, which Berkshire purchased for $410M.

Then Buffett got into Salomon Brothers, a Wall Street arbitrage shop that was being hunted by private equity boss Ron Perelman. Buffett bought $700M of preferred stock w/ a 9% coupon that was convertible into common stock at $38/share, for a total return potential of about 15%. It even came with a put option to return it to Salomon and get his money back.

But Buffett had stepped outside of his circle of competence:

He seemed to understand little of the details of how the business was run, and adjusting to a business that wasn’t literally made of bricks-and-mortar or run like an assembly line was not easy for him… he had made the investment in Salomon purely because of Gutfreund

Buffett’s disgusting ignorance and hypocrisy

Buffett:

I would force you to give back a huge chunk to society, so that hospitals get built and kids get educated too

Buffett decides to sell the assets of Berkshire’s textile mills– on the books for $50M, he gets $163,122 at the auction. He refused to face his workers and then had the gall to say

“The market isn’t perfect. You can’t rely on the market to give every single person a decent living.”

Buffett on John Gutfreund:

an outstanding, honorable man of integrity

Assorted quotes

Peter Kiewit, a wealthy businessman from Omaha, on reputation:

A reputation is like fine china: expensive to acquire, and easily broken… If you’re not sure if something is right or wrong, consider whether you’d want it reported in the morning paper

Buffett on Wall St:

Wall Street is the only place people ride to in a Rolls-Royce to get advice from people who take the subway

Review – Nonviolent Communication (#peace, #psychology)

Nonviolent Communication: A Language of Life (buy on Amazon.com)

by Marshall B. Rosenberg, Ph.D., published 2003

A “valueprax” review always serves two purposes: to inform the reader, and to remind the writer. Find more reviews by visiting the Virtual Library.

What is all this hippie nonsense?

A common question

VIDEO http://www.youtube.com/watch?v=XBGlF7-MPFI&noredirect=1

The NVC Process

To practice the Nonviolent Communication (NVC) process involves four components, which are:

  1. observations – the concrete actions that affect our well-being
  2. feelings – the emotions we experience in relation to what we observe
  3. needs – values, desires, etc., that generate our feelings
  4. requests – the concrete actions we’d like to see others take in order to enrich our lives

The NVC process is not a new way to manipulate other people; it involves giving and receiving a level of respect and empathy common to ourselves and others which entails:

  • expressing honestly through the 4 components
  • receiving empathetically through the 4 components

Obstacles to needs-based communication

There are many pitfalls that trap us in our efforts to communicate our unique needs. One common communication style which serves to hinder compassionate communication is moralistic judgment, an impersonal way of communicating the focuses on the “wrongness” of the actions of others rather than on revealing what a person thinks and feels inside of themselves. In truth, analyzing and judging the behavior of others is actually a reflection of our own needs and values. For example, “The rich are so selfish!” might be an attempt to communicate something closer to, “When I witness poverty, I feel sad; I value living in a community where everyone seems to have enough to take care of themselves.” The danger of moralistic judgments is that the act of classifying can promote violence by creating adversarial, us-them attitudes toward others– people become obstacles to satisfying our needs and values rather than potential partners.

Another problematic approach to communication involves making comparisons, which are simply another form of judgment. When we make comparisons, we block compassion– for ourselves and for others. It is another way to build walls and separateness.

Compassion is similarly difficult to achieve when we engage in denial of responsibility by using language which obscures the connection between our own thoughts, feelings and actions. In Nazi Germany, officers responsible for the Holocaust and other atrocities relied on Amtssprache, or “office talk/bureaucratese”, to deny responsibility for their actions because everything they did, they did because of “superiors’ orders” or “company policy” or “just following the law/doing my job.”

There are many ways in which we can deny responsibility for our actions by attributing their cause to factors external to the self:

  • vague, impersonal forces; “I did X because I had to”
  • condition, diagnosis or personal history; “I do X because I am Y”
  • actions of others; “I did X because Y did Z”
  • dictates of authority; “I did X because Y told me to” (Amtssprache)
  • group pressure; “I did X because everyone in group T does X”
  • institutional policies, regulations or rules; “I did X because those are the rules around here when people do Y”
  • gender, social or age roles; “I hate X, but I do it because I am a good Y”
  • uncontrollable impulses; “I was overcome by my urge to do X”

History is rife with examples,

We are dangerous when we are not conscious of our responsibility for how we behave, think and feel

Two other ways we create obstacles to life-enriching communication are by stating our desires as demands, and speaking in terms of “who deserves what”.

A demand explicitly or implicitly threatens listeners with blame or punishment if they fail to comply

Similarly, speaking in terms of “deserving” creates the impression of “badness” or “wrongness” and promotes behavior based upon fear and punishment-avoidance (a negative philosophy) rather than goal-seeking and personal benefit (a positive philosophy). In other words,

it’s in everyone’s interest that people change, not in order to avoid punishment, but because they see the change as benefitting themselves

Implementing NVC: nuances and complexities

At this point you might be thinking, “NVC sounds interesting, but how do I actually use it?” Even the first element, observation, can hang people up.

The reason that the NVC process stresses observing without evaluating is that when people hear evaluation, they are less likely to hear our intended message and instead hear criticism which puts them on the defensive rather than being receptive to what we have to say. However, the NVC process doesn’t require complete objectivity and detachment from emotional realities, only that when evaluations are made they are based on observations specific to time and context. In other words, evaluations must be about specific actions taken within specific time periods. For example, “John is a great guy” is a generalized evaluation whereas, “John helped the little old lady cross the street yesterday afternoon” is an observation without evaluation.

Another element of NVC that new adoptees struggle with is separating feelings from non-feelings (thoughts). It is a common construct of the modern English language (and many others) to use “feel” in place of “think”. Red flags for feel/think confusion are the use of the following after the word “feel” when making a statement:

  • words such as “that,” “like,” and “as if”; “I feel like a failure” or “I feel that you shouldn’t do that”
  • the pronouns “I,” “you,” “he,” “she,” “they,” and “it”; “I feel it is useless”, “I feel I am always running around”
  • names or nouns referring to people; “I feel my boss doesn’t like me” or “I feel Jeff is doing a great job”

In NVC, there is a difference between expressing how we feel, and expressing what we think we are (self-evaluation):

  • feeling; “I feel disappointed/sad/frustrated with myself as an X”
  • evaluation; “I feel pathetic as an X”, which is better stated, “I am a pathetic X”

Part of developing our ability to accurately express feelings entails developing our feelings vocabulary, and learning which words connote states of being or evaluations of capability, and which words can authentically convey an emotional response to such values or needs.

The other critical component involved in accurately expressing out feelings is taking responsibility for their cause. The common misconception is that external factors cause internal emotional reactions. The reality that, while external factors may provide a stimulus, the direct cause is our internal values, beliefs, expectations and needs; when they are satisfied, we have one set of feelings (positive) and when they are violated or negated, we experience a different set of feelings (negative).

When we receive a negative message from another person, we have four options for choosing how to react to it:

  1. blame ourselves
  2. blame others
  3. sense our own feelings and needs
  4. sense others’ feelings and needs

Accepting responsibility for our feelings involves acknowledging our needs, desires, expectations, values or thoughts. We commonly mask these things by using unaccountable language such as:

  • use of impersonal pronouns such as “it” or “that”; “It makes me so X when Y” or “That makes me feel Z”
  • use of the expression “I feel X because…” followed by a person or personal pronoun other than “I”; “I feel X because you…” or “I feel X when Z…”
  • statements which only mention the actions of others; “When Y does X, I feel Z”

The simplest remedy is to adopt use of the phrase “I feel… because I need…” which connects our own feelings to our own needs. This can improve our communication with others, as well, because when people hear things that sound like criticism they invest their energy in self-defense, whereas when we directly connect our feelings to our needs we give people an opportunity to behave compassionately toward us.

If we express our needs, we have a better chance of getting them met

The liberation cometh

Emotional liberation is the state of being achievable through disciplined and consistent practice of the NVC process wherein an individual is able to freely and safely express his authentic feelings and needs to others, and to similarly be free and secure in receiving these authentic feelings and needs from others. The movement from emotional slavery to emotional freedom typically involves three transformational stages:

  1. emotional slavery; we see ourselves as responsible for others’ feelings
  2. obnoxious observation; we feel reluctant as we realize we no longer want to be responsible for others’ feelings
  3. emotional liberation; we take responsibility for our intentions and actions

Implementing NVC: the final step, making requests

The fourth component of NVC, making requests, is in some ways the most challenging of all. To practice effective request-making it is important to be in the habit of utilizing positive language as it is hard to “do a don’t.” Thinking of a way to express your request in the form of “Would you be willing to do X?” instead of “Please stop Y” serves to remove incentives for resistance and fighting and gives the other person an opportunity to make a positive contribution to your well being.

Similarly, the focus should be on making specific, concrete, actionable requests rather than something general, ambiguous, vague or abstract.

We often use vague and abstract language to indicate how we want other people to feel or be without naming a concrete action they could take to reach that state

Being clear about what you’re requesting from another person makes it more likely they’ll be willing and able to comply with your request– how can a person satisfy your needs if they don’t know what they are and don’t know what they could do to help you with them? Don’t make people guess!

Additionally, expressing feelings without providing a request can confuse people and lead them to believe you are trying to pin guilt for your emotions on them, rather than prompting them to take some corrective action. For example, “It bothers me that you forgot to do X” is not a clear request for a person to do X and may be interpreted as “You make me feel bad!” which is antagonistic and inspires self-defensive reactions.

Whenever we say something to another person, we are requesting something in return

Another guideline for making requests is to ask for a reflection– ask the person you just made a request of to reflect the request back to you to confirm you have been understood.

After we’ve communicated a request, we’re often interested in knowing how our the other person has reacted. We can get a better understanding of this by soliciting honest feedback through one of three ways:

  1. inquiring about what the listener is feeling
  2. inquiring about what the listener is thinking
  3. inquiring as to whether the listener is willing to take a particular action

A key here is to specify which thoughts or feelings we’d have to have shared; without specificity, the other person may reply at length with thoughts and feelings that are not the ones we’re seeking. Particularly challenging situations arise when making requests of a group.

When we address a group without being clear what we are wanting back, unproductive discussions will often follow

Keep in mind that there is a difference between making a request and making a demand. The difference is that when a person hears a demand, they believe they will be punished or blamed if they don’t comply. This leaves them with two options:

  • submit
  • rebel

Notice how “respond with compassion and seek resolution” is not one of the options. If the speaker criticizes or judges the listener’s response, it is a demand, not a request. A request implies that a person is free to disregard it if they don’t want to comply; that’s their right as a free individual with their own needs and wants.

Making a request implies we are prepared to show empathetic understanding of another when they are unwilling to comply with our request. However, if someone doesn’t comply with our request, we don’t have to give up. We do have an obligation, though, to empathize with their reasons for not complying before attempting to persuade.

(pg.80)

[This review is currently incomplete. 6/9/15]

Notes – Reading Popper: “The Open Society And Its Enemies”, Introduction (#philosophy, #criticism)

Notes from a shared reading of Karl Popper’s “The Open Society and Its Enemies” (available at Amazon.com), to be updated as read and discussed. An introduction to Popper, his life and his ideas can be found at the Stanford Encyclopedia of Philosophy

Popper sets up a dichotomy– the Closed Society of tribal authoritarianism, and the Open Society of individual reason and critical rationalism. He claims that there are potent intellectual forces trying to always return civilization to the Closed Society and that the Open Society is relatively new as a cultural phenomenon and still in its infancy (implying it requires special protection and pleading).

He advocates “piecemeal social reform” through a democractic social structure as opposed to “Utopian social engineering” which is an ancient, totalitarian project most recently (as of his writing) guided by historicist philosophy. It’s interesting he felt the need to attack historicism as you would think the end of the two world wars effectively destroyed the power structure of the Prussian monarchy built upon that intellectual foundation.

Popper says he will concern himself with the method of science. Specifically he says that in the social realm the methodology of predicting and knowing the future is flawed and impossible and implies a determinist metaphysics he can’t abide by. He stands against predictivism and it seems he is also going to make an argument that the predictive methodology of physics and other natural sciences has been transferred, uncritically, to the social realm where it does not apply due to human will. However, curiously he does not say he is offering a scientific refutation but only a personal one intent on showing the “harm” of historicist thinking. What an odd position for a scientific philosopher to take!

Popper wants to show the barrenness of following Great Men unquestioningly. He wants to turn people away from philosophies built on the disappointment with reality not reflecting their wishes. Ultimately, it is about personal responsibility and many of these popular philosophies wish to deny it to everyone but the Great Men.

I may be putting the cart before the horse here but I think it’s interesting that Popper offers democracy as a salve for totalitarianism because it offers a “peaceful way to share power”. But democracy isn’t peaceful. It’s built on the gun. Popper only knew a little about economics in his own time, despite being so physically and intellectually close to many great economists (such as Mises!) I think that replacing democracy with the market would greatly improve his thesis in terms of both consistency and explanatory power.

Notes – Stanford Graduate School of Business Search Fund Primer (#searchfund, #business, #investing)

Notes on “A Primer On Search Funds” produced by the Stanford Graduate School of Business

“The Search Fund”

  • Greater than 20% of search funds have not acquired a company
  • Stages of the Search Fund model:
  • Raise initial capital (2-6mos)
  • Search for acquisition (1-30mos)
  • Raise acquisition capital and close transaction (6mos)
  • Operation and value creation (4-7+ years)
  • Exit (6mos)
  • SFs target industries not subject to rapid tech change, easy to understand, fragmented geographic or product markets, growing
  • Highest quality deals are found outside broker network/open market due to lack of auction dynamics
  • Research shows that partnerships are more likely to complete an acquisition and have a successful outcome than solo searchers (71% yielded positive return, 15 of top 20 performing funds were partnerships)
  • Principals budget a salary of $80,000-120,000 per year w/ median amount raised per principal $300,000~
  • Majority of the economic benefit of SF comes through principal’s earned equity; entrepreneur/partners receive 15-30% equity stake in acquired company in three tranches
  • Investors typically receive preference over the SFer, ensuring investment is repaid, with return attached, before SFer receives equity value
  • Individual IRR from 2003-2011 median was not meaningful, heavily skewed toward 75th percentile where median was 26% in 2011; 57% of individual IRRs were not meaningful in 2011; the median fund destroyed capital in 2009 (0.5x) and 2011 (0.8x); 58% in 2011 broke even or lost money
  • Half of the funds that represent a total or partial loss were funds that did not acquire a company; biggest risk is in not acquiring a company at all
  • Median acquisition multiples: 1.1x revenues; 5.1x EBITDA
  • Median deal size, $8.5M

“Raising a Fund”

  • Search fund capital should come from investors with the ability and willingness to participate in the acquisition round of capital raising

“Search Fund Economics”

  • Search fund investors often participate at a stepped up rate of 150% of original investment in acquired company securities

“Setting Criteria and Evaluating Industries”

  • Desirable characteristics for a target industry: fragmented, growing, sizable in terms of revenues and number of companies, straightforward operations, early in industry lifecycle, high number of companies in target size range
  • Desirable characteristics for a target company: healthy and sustainable profit margins (>15% EBIT), competitive advantage, recurring revenue model, history of cash flow generation, motivated seller for non-business reasons, fits financial criteria ($10-30M in revs, >$1.5M EBITDA), multiple avenues for growth, solid middle management, available financing, reasonable valuation, realistic liquidity options in 3-6 years
  • Key challenge is “know when to take the train” lest a SF never leaves the station waiting for the perfect opportunity
  • Ideally, seller is ready to transition out of the business for retirement or personal circumstances or has something else they’d like to do professionally
  • Experience shows it is better to pay full price for a good company than a “bargain” for a bad one
  • Idea generation: SIC and NAICS codes, Yahoo! Finance, Thomson Financial industry listings, Inc. 5000 companies, public stock OTC and NASDAQ lists and even the Yellow Pages; generate a list of 75 potential industries to start
  • Target industries buoyed by a mega-trend
  • Can also target an industry in which the SFer has worked and possesses an established knowledge base and network
  • Some focus on 2-3 “super priority” industry criteria (eg, recurring revenues, ability to scale, min # of potential targets, etc.)
  • Objective is to pare down the industry target list to 5-10 most promising
  • Basic industry analysis (Porter’s five forces, etc.) is then used to narrow from 10 to 3; SFers use public equity research and annual reports for market size, growth, margin benchmarks; also Capital IQ, Hoover’s, Dun & Bradstreet and One Source
  • Industry insiders (business owners, trade association members, sales or business development professionals) and industry trade associations or affiliated ibanks and advisory firms are primary methods of research and often have general industry research or white papers available
  • Next step is to create a thesis to codify accumulated knowledge and compare opportunities across common metric set in order to make go/no-go decision
  • In order to become an industry insider, SFers typically attend tradeshows, meet with business owners, interview customers and suppliers and develop “River Guides”

“The Search”

  • Median # of months spent searching, 19
  • 54% spend less than 20 months searching, 25% spend 21-30 months, 21% spend 30+ months
  • Track acquisition targets with CRM software such as Salesforce, Zoho, Sugar CRM
  • Bring up financial criteria and valuation ranges as early as possible when speaking to potential acquisition targets to save everyone time
  • A company that is too large or too small as an acquisition target may still be worth talking to for information
  • You must immediately sound useful, credible or relevant to the owner; deep industry analysis should already have been performed at this stage
  • Tradeshows can be a critical source of dealflow
  • If a particular owner is not willing to sell, ask if he knows others who are
  • “River Guides” are typically compensated with a deal success fee, usually .5-1% of total deal size
  • Boutique investment banks, accounting firms and legal practices specializing in the industry in question are also a good source of deals
  • The business broker community itself is extremely large and fragmented; could be a good rollup target?
  • Often, brokered deals are only shown if a private equity investor with committed capital has already passed on the deal, presenting an adverse selection problem
  • Involve your financing sources (such as lenders and investors) early in the deal process to ensure their commitment and familiarity

“Evaluating Target Businesses”

  • Principles of time management: clarify goals of each stage of evaluation and structure work to meet those goals; recognize that perfect information is an unrealistic goal; keep a list of prioritized items impacting the go/no-go decision
  • Stages: first pass, valuation/LOI, comprehensive due diligence
  • It is in the best interest of the SFer to tackle core business issues personally during due diligence as it is the best way to learn the details of the business being taken over
  • Adding back the expenses of a failed product launch rewards the seller for a bad business decision; adding back growth expenses gives the seller the double benefit of capturing the growth without reflecting its true cost
  • Due diligence may also uncover deductions to EBITDA or unrealized expenses that reduce the “normalized” level of earnings (undermarket rents, inadequate insurance coverage, costs to upgrade existing systems, etc.)

“Transitioning Ownership and Management”

  • Create a detailed “Transition Services Agreement” with the seller, a legal contract where specific roles, responsibilities, defined time commitments and compensation are agreed prior to the transaction close
  • The first 100 days should be dedicated to learning the business
  • Businesses consist of people, and people need communication; great leaders are always great communicators
  • “Don’t listen to complaints about your predecessor, this can lead to a swamp and you don’t want to be mired there.”
  • The goal is to learn, not to make immediate changes
  • Outwork everyone; be the first person in and the last to leave
  • Many SFers insert themselves into the cash management process during the transition period by reviewing daily sales, invoices and receipts and signing every check/payment made by the company
  • The company’s board should be a mix of deep operational experience, specific industry or business model experience and financial expertise
  • The seeds of destruction for new senior leaders are often sown in the first 100 days