What We Got Wrong in 2019

Can and Ranjan reflect on our mistaken prognostications

Ranjan here. As we end the year (and the decade) my co-host Can and I were discussing some of our favorite year-end aggregations. Bloomberg's yearly "Jealousy List", where writers curate the pieces they wish they had written, is an original and worthwhile collection. We also enjoyed Nicholas Kristof's "most-ignored pieces" of the year” list, where he shares his pieces which received the lowest traffic, and what they meant to him.

We’re going to take a slightly different approach. We will both tell you what we got wrong this year. To be heard in today’s communications environment, being strongly opinionated and never admitting fault are two traits that, in combination, are rewarded. Certitude is social media virtue. 

But, what are the ideas and opinions that you, heading into December 31st, can readily admit, you got wrong? So many of all our tweets, newsletters, posts, and paragraphs contain strong viewpoints. It must be easy to list what we got wrong, right?

It wasn't, but writing these newsletters has been about forcing ourselves to suffer through the slow extrapolation of ideas, rather than 140-character jiujitsu. So here goes. I'll get started.


Growing up as a middle-class child of Indian immigrants meant your parents scoffed at the idea of buying any brand name clothing. Why the hell would someone spend $60 for a pair of sneakers just to get a Nike logo stamped on it?

When I first encountered the H&M's and Zara's of the world, they felt like a liberating force. Thanks to a new era of globalized business models and technological innovation, anyone could now enjoy the things once restricted to the wealthy. Everyone could work to be stylish, and that was intrinsically a good thing. The price of our electronics, groceries, and most other consumer products all raced to the bottom. I believed the democratization of consumption to be a positive force.

This was the year that belief killed off. I still lament what the $16 Sweetgreen Salad are doing to society, but I've come to terms that the environmental and societal costs of faster and cheaper far outweigh the bitterness of a chubby Indian-American kid whose parents wouldn't buy them a Starter pullover.

My brand of liberalism still carries a tiny anti-elitist streak, that I want everyone to have access to nicer things, but the true costs of faster and cheaper are becoming too expensive. As of a year ago, the term conscious consumption felt like marketing mumbo-jumbo, but as we close out the year, I'm 100% on board with the idea that we should all consume less and better.


Okay, Can’s turn. This is an easy one. I used to be one of those people who gets grumpy when he sees a couple or a bunch of friends sitting together at a cafe, and everyone's on their phones. To me, it signified the erosion of our social norms, based on an assumption people weren’t connecting at the same level like they used to. Good times meant belly laughs over a couple of drinks with everyone chiming in, and that quiet dinner table where everyone is glued to their phones was an obvious step backward in our social evolution.

Mind you, my feelings towards people being on their phones with their friends haven’t changed. However, I’ve come to terms with what it means for society has been wrong. I’ve had strong opinions on screen time yet I’ve been slowly coming around on this idea that extra screen time isn’t necessarily a bad thing, given that I’ve practically grown up looking at one up until high school. I’ve turned out OK, I think. But the final nail was when I was in Korea and observing young kids at cafes (That came out wrong?). They were all on their phones, but they still were with each other, and were clearly having a good time. My first knee-jerk reaction to seeing such scenes was one of contempt, but then when I watched them for a couple of minutes, it clicked.

These kids, born largely after the mid 90s, for better or worse, so much of their lives happened in the digital realm, in group chats, comment threads, memes, that spending time “digitally”, while they were still physically with each other, was the norm. They grew up looking at their phones, from day one, instead of it slowly seeping into our lives. Sure, it didn’t seem like it was the same kind of socializing I’ve had, but as you saw them get up and leave the cafe, some putting their phones in their pockets and some not, you’ve realized kids, and people of all ages really, would always find a way to socialize. 


Ranjan’s turn. Speaking of the way we interact with screens, trying the Magic Leap for the first time was, dare I say, a transformational technological experience for me. It convinced me that a beautiful augmented reality is right around the corner.

Regular Margins’ readers know I’ve long been bearish on things that are heavily-funded and overly-hyped. WeWork was a long-term target of my ire, but in general, if SoftBank ever showed up, I’ve been skeptical. Magic Leap might not have had Masayoshi, but they fed directly from the spring, raising $400mm from the Saudi PIF, as part of their overall $2.3bn raised. 

$2.3 billion dollars without a widely commercialized product. 

Of course that was going to raise red flags, and before ever even touching a headset, I was a hater. 

I don’t know whether the company itself will survive. It’s been, and remains, a rocky road, but Magic Leap will, at the least, have played a key role in our AR future. Maybe it’ll be Apple who wins out, or maybe Magic Leap does manage to become a critical part of the hardware infrastructure, but however it plays out, they’ve invented something incredible and before I let the narrative color my judgment of a company, I will, in the future, try the damn product.


Can back again, and let’s continue on the topic of SoftBank investments. I thought the spectacular implosion of WeWork’s IPO and the somewhat disappointing performance of Uber stock since its public offering, both of which were heavily funded by SoftBank’s Vision Fund, would have had more significant implications of the gargantuan pool of money. Now, it’s true that Masayoshi Son did express some uncharacteristic humility, and there were a couple of grumblings from some of the investors in the fund, but it seems like, broadly, things are going as they did before. There’s soon going to be a Vision Fund II, and while it might attract a bit more scrutiny this time and some of its investments might be a bit more conservative, it also may not. All in all, we are back where we started.

I am not sure what to make of it. It’s undoubtedly true the very public nature of WeWork’s IPO troubles, the sheer absurdity of company’s corporate governance (or the lack thereof), and the amusing (holding back here) shenanigans of Adam Neumann clouded my judgment a bit. There was a narrative that WeWork was this crazy idea (office rentals, but with spa water), pumped up by a crazier man, and when it blew up, it’d take down everything in its orbit. I thought it’d mean that the markets, or rather giant pools of money that weren’t part of the markets, would have grown over their irrational exuberance. Cooler heads would prevail, we’d make more sober decisions. And everything would be back to normal. Yet! Yet?

Did nothing change because WeWork (and Uber), all things considered, are still too small to matter? Obviously, tens of billions is a lot of money, but when you are comparing it to hundreds, or trillions, it’s not that big. Or maybe, things did change a bit, now that we are all a bit more careful about valuations, but the change isn’t as dramatic as the actions that caused them in the first place? In other words, we had a dramatic event that made us (me) expect some dramatic changes. But the changes are more incremental compared to the triggers that I am somewhat disappointed with? This seems like more the reason.


Ranjan, with one last thing I got wrong. Continuing on Can’s surprise that the WeWork and Uber performances didn’t obliterate the startup market, I want to end this newsletter by saying, this was the year I accepted that trying to call a market top is just idiotic. 

My background was in trading, and I’ve watched various financial markets, tick by tick, even in the decade since leaving. It’s Chapter 1 that you’re not supposed to try to time the market and call a top, but I’ve long been convinced things are frothy. After the market drop in Q4 2018, I thought it was time for my multi-year hypothesis of the party coming to an end finally being realized.

This just came across my feed:

I have just been completely wrong, to the bone. Perhaps I’m forever colored by sitting on a trading floor during the 2008 crisis, but none of this makes any sense to me. We’ve reached a crazy goldilocks equilibrium where every policymaker and corporation seems to have found the cheat code:

“We’ve reached a trade deal. It’s actually phase one. It will be signed soon.” 

“We’re going to IPO when the market conditions are right. Until then, we’ll raise more non-traditional private funds.” 

“We’re not going to listen to Trump, but will lower rates, even while the stock market is a record high. Oh, and QE is back, but we won’t call it QE.”

“We’re going to claim our tax cut will be re-invested but instead keep buying back stocks.”

I know these are all gross oversimplifications but these are the financial market narratives keep ringing in my head. And they worked, and they keep working. And what I got wrong is, that is just what it is.

If a system works for all of the entrenched interests of parties involved, of course it keeps working, even if it doesn’t neatly fit into some textbook learning, or if you think it’s “right”.

When Can and I were discussing how to construct this overall post, we were debating whether we should write about things we “changed our mind on” versus “what we got wrong”. Our first inclination was that they were the same post, but this last one provides, for me, a distinction between the two.

I have no idea what is in store for the 2020 economy, but regarding my views on a frothy market, I haven’t changed my mind, but damn, was I wrong.


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