My friend Scott Coles apparently committed suicide yesterday, apparently seeing no way out of the disastrous Arizona mortgage market, in which he was the largest private lender. He had purchased the business from his father, and made private loans funded by individual investors. Many of the investors were friends of his, or friends of his father, or —as one of my friends who also invested with him— said "every Jew in Phoenix."
Scott proudly proclaimed that in the entire history of the business, he had never lost a penny for investors. I'm guessing that was about to change. I'm also guessing that the two developers who sued him for not fully funding their loans (who could raise money for mortgages in this environment?) affected him personally, too, because he was himself fully invested financially and emotionally in the business. He always thought he could find a solution if he just worked hard enough, but the current credit crisis and mortgage meltdown defeated even his brilliance and hard work.
So as the investors begged to have their capital released, and the builders begged to have their loans funded, Scott didn't see a way out, I'm guessing.
So he left a beautiful wife and three children, and sought peace by killing himself.
It's not my job to judge him, just to mourn him. Yet when something like this happens, I always look for what we can learn from it.
Fortuitously, today I am at "Under the Radar," a technology conference, and the lesson manifested.
There was a way out — a way I see every day here in Silicon Valley.
The way out is to accept failure and go on. Here in Silicon Valley, this happens every day. No one is happy about it, of course, but when a "black swan" comes along (one of those events no one can predict), you disconnect your ego from the outside event, pick yourself up, and move on. Everyone had to accept that after 9/11, when the Web 1.0 bubble burst, and they will have to do it again when the Web 2.0 bubble bursts. Here in the Bay Area, they're used to it. In their lives, they have a portfolio of ventures, and some succeed while others fail.
The difference between here and the Phoenix real estate culture is that Silicon Valley is a culture that accepts failure as the price we pay for innovation, rather than pilng on the person with problems. In the tech world, when someone fails he is presumed to have learned, and investors are more, not less, willing to fund him/her next time.
Scott, sleep well. You have earned it, and you need the rest. I know how hard you tried.
Update: I'm turnng off comments for this post because of the uncivil tone. I'm grieving and I can't deal with it.