As I’ve grown older, I find myself fascinated by the power of social capital; specifically, how it encircles the person who possesses it with a halo that sets them apart from society even when they are far from the only snowflake. People often mistake fame with competency or ability. This tendency is part of human nature so it shows up in every field and across every discipline.
Take social capital in investing. While Warren Buffett is constantly called the greatest investor alive by the mass media (and obviously I have a tremendous respect for him as he was my childhood hero) I doubt very seriously any professional investor would assert that he is better than, say, Peter Lynch if you put them in two side-by-side rooms with identical capital levels, identical legal restrictions, identical staffs, and identical mandates. Lynch had different values. He made his first few hundred million early in life, setup a private investment company, and dropped off the radar to spend time with his family. He’s hardly mentioned these days.
[mainbodyad]Take social capital in music. If you had someone try and name the most successful musicians in history, most people would respond with who is popular and high profile today rather than answering the question. Walk the streets of a major city and ask anyone under 25 this question and you’re more likely than not going to hear them say something like “Beyoncé!”. While she has sold a lot of albums as part of a group, and later, a solo artist, due in no small part to her legendary work ethic, her personal career has her currently tied with Kenny G and Enya. She is considerably behind Meat Loaf, Barry Manilow, Reba McEntire, and Katy Perry. Her sales don’t hold a candle to Cher, Lionel Richie, Olivia Newton-John, Donna Summer, George Michael, Barry White, Johnny Hallyday, Rod Stewart, or George Strait. And she’s so far behind Phil Collins, Billy Joel, Frank Sinatra, Barbra Streisand, Neil Diamond, and Julio Iglesias, they aren’t even on the same continent. Meanwhile, Elvis Presley, Elton John, Mariah Carey and Celine Dion are on a different planet. Maybe, someday, she’ll get there but the fact people subconsciously assume she’s there already because of seeing her in today’s headline proves there are two or three interesting mental models at work.
You know who wrote the songs for a lot of those people? A woman named Diane Warren. The daughter of an insurance salesman has grown up to become a living legend among musicians; a superstar’s superstar. I’d wager money that something like 98% of the people on the street wouldn’t have a clue who she is. It is her compositions that propelled a lot of the most famous names in rock and pop to superstardom. Some of the biggest, career-defining hits were composed in her home. With a waive of her pen, she can transform a prepackaged Disney-esque singer into a Billboard star by writing something tailored specifically to their appearance, voice, and audience. You audition for certain songs and she only gives them to you if you can fill the vision she has. She just finished working with Adele on her new album.
This is a woman who has created out of thin air a portfolio of copyrights so incomprehensibly impressive that she’s sitting on at least $500,000,000. Her songs have defined life experiences for millions of people in dozens of countries, serving as the soundtrack to births, funerals, weddings, breakups, birthdays, and retirement parties. And most people don’t have a clue who she is nor what she looks like.
Elton John came close to this career model. He and his songwriting partner, Bernie Taupin, planned on selling music to other people but ended up with Elton – then Reginald – performing himself since the pieces were different than what most people were used to hearing. Here is the demo, recorded in 1969, of his composition “Border Song” when nobody knew who he was.
A year later, when he, himself, became the act …
He could have very easily been the guy in the background as other artists covered his compositions, like this …
… or this …
Would that have made him any less talented? Of course not. The world is full of talented people who will never be famous beyond their own family. Social capital is often an indicator, but not guarantee, of talent. Some of the most gifted men and women of all time died in obscurity. Jane Austen never enjoyed seeing her books gain popularity and today she remains one of the top selling authors in history. Her works, at times, have almost single-handedly been the profit generators that kept classic literature presses solvent. Bach was a simple church musician who died in obscurity. His sons used his compositions as butcher paper to wrap meat, forever destroying masterpieces that would now be priceless.
[mainbodyad]The more I think about it, the more I am convinced that fame works as a sort of evolutionary signal, broadcasting information about competence and access to resources in the absence of other, better information. If you’re a manager at a restaurant and aren’t sure if the person at the table is successful and rich, sending over a free bottle of wine represents a riskier trade-off than if you see a celebrity you know will generate headlines, and photographs, in your establishment, increasing business. It is compatible with other behaviors, such as people becoming more and more secretive as they amass resources, going stealth so they don’t attract attention.
Social capital, in a way very different than other forms of capital, comes with significant downsides as, by its very nature, it is almost impossible to hide on any consistent basis. While it can open doors, be transformed into other forms of capital with almost no effort, and make life a lot more interesting, by its very nature it can result in a near total lack of privacy, a constant stream of negative attention and hatred, threats on one’s life, and a host of other maladies that explain why so many of the top 1% go stealth. Not everyone wants social capital. In fact, many intelligent people run from it.
It’s interesting to me to observe how some people desire social capital above all else, while others flee at the slightest hint of it. The wisest, perhaps, seek niche social capital among specific groups of people. Diane Warren is an illustration. The people who need to know who she is know who she is, but she is otherwise left in peace when she wants to grab a coffee from Starbucks. On the other hand, Benjamin Franklin had so much social capital that there are few Americans who ever had the global influence he did. The man was a legend not only in the colonies, and later states, but most of Europe. He used his social capital to help win the Revolutionary War.This is what I get for working my way through Jane Austen’s books, again, all these years after first reading her body of work as a teenager. Social capital plays such a huge role in the conflicts, relationships, attractions, and machinations that I find myself staring off into the distance to contemplate how much it has shaped empires and changed human events. There are times, in certain places, under certain circumstances, when social capital is the only form of capital and without it you die. There are other times when it puts a target on your back that threatens your family. It can be built through dinner parties or destroyed through stairwell gossip. It is both absolute in its power and brittle in its foundation.
It’s such an interesting thing … so stupid, and yet so rational at the same time given the evolutionary pressures that caused it to arise, I can’t help but be bewildered by its mercuriality.