On Annual Reviews, Ups and Downs, and Creative Destruction

Welcoming instability by zooming out and trusting the journey

I don’t like annual reviews. When I worked in investment banking, annual reviews were what everybody longed the entire year for. Getting a good review meant getting a bigger bonus, and a bigger bonus meant that you were better than those who got smaller bonuses. That’s how life worked there. Everything was measured in terms of money: the more they paid you, the better you were. If you’d have a bad year, you wouldn’t get paid, ergo, you would sink in the general ranking (yes, there was a ranking; like tennis players). In short, you weren’t any good. No value whatsoever was attributed to the lessons that you (supposedly) learned. No time to even think about them. Performance and money drove your status; nothing else. Many loved this whole framework. I hated it. So why was I there to begin with? Good question. I guess it has to do a little with what I wrote last week. 

But anyway, back to annual reviews. I don’t like annual reviews not only because I tend to associate them with my investment banking period, but also because my view is that looking backwards makes little sense. If you made a mistake and learned a lesson, that lesson is already part of who you are and how you do things. There’s no need to go over it again, no need even to tell others, to give them the heads up, as they are going to learn only from their own mistakes. Kevin Kelly put it better than anybody else: “Life lessons will be presented to you in the order they are needed. Everything you need to master the lesson is within you. Once you have truly learned a lesson, you will be presented with the next one. If you are alive, that means you still have lessons to learn”. I don’t believe in over-processing. And I don’t believe in shortcuts or proxy learning. Controversial? Maybe. 

The other day I stumbled upon this quote by Patti Smith: "Sometimes you're doing really well, then, after three or four years, everything inexplicably crashes like a house of cards and you have to rebuild it. It's not like you get to a point where you're all right for the rest of your life." It was in an interview she gave in 2013, and I was shocked at how true it is. One of those things I’ve always known they exist but could never articulate in a linear, coherent thought; let alone into words. 

Life goes through ups and downs, and that’s nothing new. But that every few years “everything inexplicably crashes like a house of cards” is no obvious realization. Yet that’s exactly what always happened to me. Not only that, these up and down cycles that used to last three to five years each have compressed lately; so much so that from one year to the next, for me, changes have been often dramatic. 

Economist Joseph Schumpeter’s concept of creative destruction may be a well-fitting parallel. Schumpeter coined the term “creative destruction” in his seminal book “Capitalism, Socialism, and Democracy” to put forth the idea that the engine of progress is imbalance and not equilibrium: innovation ultimately loses its steam and products get obsolete, leading to chaos (destruction), during which the seeds of new innovations and growth (creation) are planted, and this cycle repeats itself over and over again. So chaos is necessary to bring along new and better products and processes that will drive improvements in the quality of life and generate greater growth, until a new imbalance materializes.  

Patti Smith’s quote read with a pair of Schumpeter glasses made me realize that my life has been a series of creative destructions that, by (inexplicably) crashing everything like a house of cards, were nonetheless necessary to produce the next growth phase. And it’s been like that for as long as I can remember. When I was twenty, my theory was that good and bad periods would eventually even out so that, all in, the net result would be a harmless, uneventful, and predictable zero. But then I started to realize that every upcycle is always more powerful than the prior one, so that the net result at the end of the day is greater than zero, and that’s precisely what growth is like. Growth happens in a non-linear fashion, but it happens. And it happens in increasingly greater upcycles because the lessons learned in every downcycle are the propelling force that will push things higher than they were before.  

2022 for me has been a year of creative destruction. Well, destruction for sure -- the creative part has just started to manifest itself, as there has to be a natural lag between destruction and creation. I’ve never written an annual review, not even just for myself, and it’s too bad that I get to start with such a bad year. As no year has been ever reviewed, however, nothing keeps me from reviewing another year; a good one like 1993 or 2003 or 2007. But no, let’s do 2022.

What should I say, though? Should I review what happened in chronological order? Should I say that in 2022 I had three dental cleanings, got six haircuts and caught twice the flu (one of which was Covid)? That I sold three of my guitars (finally overcoming the vintage guitar collector’s selling block) and rescued, with my kids, a five-days-old kitty with the umbilical cord still attached and took her home with us and called her Bruschetta? I mean, is this interesting? Who cares? Plus, these are not even mistakes to learn from, and I’ve already said that 2022 was a bad year. What was all this badness about?  

While the investment fund I manage for a bunch of clients was helplessly getting hammered by macroeconomic circumstances, I was standing still, motionless, in a silent inner panic, unable to act. A perpetual Munch’s Scream mode. My business partner and I would get into unpleasant conversations with clients every day and maintaining a calm façade was paramount. This will soon pass and things will get back to normal and the fund will go up again and don’t worry cause your money is not lost unless you’re forced to sell and you’re not forced to sell, are you?, we would say. I was worried and couldn’t think of anything else but what was going on in the stock market. I couldn’t sleep. I couldn’t play. I was paralyzed. Never, in my twenty five-plus years investing career, had I experienced anything like this. Ours is a long-term strategy, we would repeat to our clients endlessly; times like these are part of the game in the short term, we just have to wait for them to pass. “It’s like a plane going through turbulence, there’s no way around it”, was one of our favorite metaphors. And this excruciatingly painful situation, unfortunately, is still going on. 

In the midst of this hell, I had to find the strength to zoom out and put things in perspective, to focus on something else, to occupy my mind with new thoughts and emotions, and let things be. 

And I did find the strength. And I started writing regularly. And by writing regularly, I became part of a community of extraordinary human beings. And the destruction, once again, planted the seeds of creation. And I know that I’m on the verge of something beautiful; that an awesome, positive period is about to start and that it, too, one day will be gone to make room for some new form of destruction. And that this roller coaster called life is what I signed up for.

I didn’t want to write an annual review, and this clearly isn’t one. But thinking about what happened in my 2022 and Patti Smith’s quote and Schumpeter’s creative destruction made me aware of a simple yet powerful idea that gets often overlooked in our relentless march towards the best version of ourselves: nothing’s here to stay, nothing’s immutable. We cling to what we have built or achieved or obtained as if that’s going to make life stable and simple. But there will never be a time when life is stable and simple. Things come and go -- the sooner we accept that and learn to let go, the more peace we will have.     

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