Rich Karlgaard

Rich Karlgaard, Forbes Staff

I celebrate innovation and growth.

8/24/2010 @ 12:02PM |2,135 views

Gullibility Is The Dark Side of American Optimism

Mark McGwire, Sammy Sosa and Barry Bonds gave the average sports fan what he wanted – a thrill. Those amazing years of 60-plus home runs (and 98 mph fastballs by middle-aged Roger Clemens) changed the pleasure of watching baseball from sublime to sensational. Americans always go ga-ga for the sensational. Just check movie box office ratings. Sensational trumps sublime every time.

Bernie Madoff gave his investors what they wanted, too: a 1% return per month, 12 months a year, year in, year out. Think about that – a quarter-million annual retirement income on a humble $2 million stash. You, Bernie, are sensational! Lance Armstrong stirred the cancer community by beating the disease himself then coming back to win the most physically demanding event in sports – a three-week sufferfest called the Tour de France – a record seven times. Our sensational Texan put those spandexed Euroweenies in their place.

None of these feats were remotely plausible, of course. They belonged in super-hero comic books. So why did we eat them up at the time? What unmet needs did Americans have – and still have, as evidenced by the thriving Armstrong cult – that causes us to swallow these tales every time? Here are some reasons:

Gullible Genes

A must read, if you want to understand the connection between American culture and its historic entrepreneurial success, is John D. Gartner’s book, The Hypomanic Edge: The Link Between (A Little) Craziness And (A Lot of) Success in America. Hypomania is the quality of restless energy combined with a love of risk. Gartner says the American culture – a culture of immigrants – genetically selects for restless and optimistic people. What a lucky inheritance! But carried too far, the restless search for greener grass can lead to, well, questionable fertilizers or astroturf.

The Bastardization of Christianity

America is still largely a Christian nation and a Protestant one at that. The great sociologist Max Weber was correct. Protestants generally see no conflict between earthly success and heavenly salvation. This is good to a point and explains much of America’s prosperity (particularly in the late 19th and 20th centuries, when Christian-inspired books like Think and Grow Rich and The Power of Positive Thinking fed the American urge for success).

But at the corner of miracles and riches have lived many of our greatest con artists. The con artist adopts the religious leader’s tone and technique of getting you to believe. The con artist spins this vision not for your immortal soul but for your fleshly greed. And why do you buy it? Because you are special and you deserve it! Bernie Madoff acted like a rabbi who made his largely Jewish clients feel chosen for having been suckered.

The Fine Line Between Hope and Flat Out Lies

Let’s face it. The best entrepreneurs have a gift for b.s. The ethical and ultimately successful ones use their b.s. as a credit line. It works like this: The entrepreneur comes to you with a plan. Maybe it’s a plan to deliver 3 gigs a second into your iPad, from anywhere in the world, for $5 a month. Now the entrepreneur may truly believe that he can deliver such a service and make billions for investors while doing so. And, heck, he might be right. What he likely exaggerates is the speed of rollout even as he downplays the amount of funding capital required.

Our entrepreneur doesn’t shade the truth because he’s a liar, but because he lives in the future of wonderful possibilities. That’s where all visionary entrepreneurs live. They drag society forward a combination of facts, scientific possibility and hope. As an investor, you will accept the hope part — i.e.; the b.s part. — if the entrepreneur is fundamentally correct in his engineering and market assessment, if he is working his butt off, if he is meeting just enough milestones to steadily improve the value of the company, and if he lets you control the finances.

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