Ego, Hubris, Hot Markets, & WAMU’s Collapse
I don’t share this often but I used to play in a summertime three-on-three basketball league with Steph Curry and LeBron James (they were my teammates).
We not only went 25 and 0, we held every other team scoreless!
After two seasons of this, I knew I was great at basketball. So, I dropped Steph and LeBron and set up my own team and, oddly enough, ended up losing every game.
I think of this story whenever I see anyone taking excess credit for market conditions, for the talents of their team, or for just cheating.
Recently, I read The Lost Bank about the collapse of WAMU in 2008 – the biggest bank failure in American history.
What was most interesting to me was the naïve arrogance of WAMU’s management. They all thought they were geniuses when they were really just riding a wave of unsustainable market conditions – continually increasing home values and decreasing interest rates.
They were further offering 90% loan-to-value, negative amortization loans (where borrowers could pay less than interest accrued) to borrowers with 680 credit scores and no income or asset verifications.
Also, their widely celebrated “top loan officer” was offering 1% illegal, undisclosed kickbacks to every real estate agent who referred him a loan. Those were the days 😊 And, it’s no wonder WAMU went belly up!
We are again riding another wave of great fortune in our industry, and JVM in particular is breaking records on every front – loan volume, number of referrals, revenues, number of agent relationships, etc.
I am extremely proud of what we have built. But, do I take sole credit for it?
Not even close.
We have an entire company full of LeBrons and Stephs who literally run circles around me, and I never lose sight of that.
People who do lose sight of all the factors and people that are helping them will almost always end up going “0 and 25” sooner or later.
I have seen it (and experienced it) all too many times. In the famous business book Good to Great, the authors remind us over and over that the most important trait behind every successful CEO is humility.
This is my reminder to everyone to check their egos at the door whenever the good times roll.
Final Point: Ryan Holiday wrote a fantastic book about this topic called Ego Is the Enemy. I highly recommend it b/c it is wonderfully entertaining and its overall message is invaluable.
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