One of the reasons I am such a big fan of Charlie Munger is that he is ruthlessly realistic. He and Warren Buffett believe that the key to Berkshire Hathaway’s incredible success is that they are built for rationality. They have the bulk of their net worth in Berkshire Hathaway stock which gives them great alignment with their shareholders. They are very honest about the mistakes they have made and tend to point those out more so than their successes, which have been numerous and incredible in terms of how much value they have created over their 50 years in business.
I’ve cited this quote from Munger previously but I thought it was worth revisiting since I think it has some relevance to the topic of this blog.
I like people admitting they were complete stupid horses’ asses. I know I’ll perform better if I rub my nose in my mistakes. This is a wonderful trick to learn.Click To Tweet
I must admit I sometimes do this in tennis after making mistakes but I’m not sure how helpful it is to me. Reflecting on my mistakes afterward is something I have found to be more productive since I’m more clear-headed when reflecting on how I could have done better. Here is another quote from Munger that is also applicable to my tennis game.
You need patience, discipline, and an ability to take losses and adversity without going crazy. Click To Tweet
I bring this up because with Afghanistan capturing so much attention with the collapse of the U.S. backed government, military, and police and the almost immediate takeover by the Taliban after the U.S. withdrew its forces, there is obviously a lot of concern as to what will happen in Afghanistan after 20 years of a U.S. presence, thousands of lives lost and many more injured, and over $2.2 trillion spent.
Here is a headline from the Washington Post.
I read a fascinating interview on Politico with Saad Mohseni whose background is given as follows in the introduction to the interview:
[C]hief executive of Moby Media Group, which operates multiple TV channels and radio stations in Afghanistan, including Tolo News, the country’s biggest independent journalism outlet. Mohseni has also long been a major player in the Afghan political scene, connecting with Afghan presidents, foreign ambassadors, and the country’s power brokers.
If anyone has an incentive to look at the world with rose-colored glasses it would be him as his business is facing a potential existential crisis with the re-emergence of the anti-democratic, ideological Taliban and I’m sure he hopes that he can work out an accommodation with the Taliban to stay in business.
When I read the interview, however, I was struck by how incredibly realistic he was about the situation, which he acknowledged poses grave threats to his business, while also looking at things from the Taliban perspective and how there may be a potential way to co-exist.
I found myself immediately having great respect for him as his Tolo News was able to secure an interview with a Taliban representative. So who did he have to do the interview? A female news anchor. What a statement! And lo and behold the representative of the anti-women’s rights Taliban allowed the interview to take place with him.
So let’s unpack the interview.
The first thing I took away is how much Afghanistan has changed over the last 20 years and that having a woman conduct the interview may not have been as radical as we would have thought. This is what he had to say about the very different Afghanistan of today versus in 2001 when the U.S. invaded to crush Al Qaeda.
Well, we can’t beat around the bush. This is the new Afghanistan and it’s been new for 20 years. Sixty-five percent of the population is under the age of 20, the median age is 18. The point I often try to stress is how the younger generation of Afghans have never lived under the Taliban rule and that they’re used to media, they’re used to being able to freely express themselves. They’re used to social media.
But this is also the case for the Taliban fighters. They, too, have grown up in — whether it’s in Pakistan or parts of Afghanistan — they’ve always had free media. They’ve always been able to watch programs. They’ve had WhatsApp and Facebook and Messenger and God knows what else. And they’ve watched women on TV, whether it’s in Pakistan or Afghanistan. So it’s not alien to them. It shouldn’t be alien to them.
The country is quite young and the social media genie is out of the bottle on both sides.
The interviewer then expresses skepticism that the Taliban has really changed and what’s going to stop them from imposing their draconian rule over the country in spite of what the large, young, more modern cohort may want. And this is where Mohseni’s realism shines through. He tells the interviewer to slow down. Yes, it may end up that way but it will take some time to get there. He speculates that the evolution (or devolution) will occur in three phases.
This is what he has to say about the first phase.
You’re stating the obvious. Of course. I’m talking about today. We’re taking this one day at a time. We’re taking this one hour at the time. There are essentially three phases, if one was to speculate. The first phase is: they consolidate rule over Afghanistan. It’s about forging alliances. It’s about getting rid of opposition. It’s about installing people in key positions to make sure they have security. It’s working on their international relationships, whether that’s with multilaterals like the U.N. or with governments. It’s important for them to continue to receive aid from different countries.
In that first phase, I think the media is going to be relatively OK, unless you put something out that’s very controversial. I think the pain threshold will be pretty high.
So he’s relatively optimistic that the Taliban will have so much work to do in the first phase that they won’t immediately clamp down on the media unless coverage is quite negative and controversial. The second phase will result in more pressure on the media after a government is formed and the Taliban has to cater to its very conservative constituency.
The second phase will be a transitional government because they need to have some sort of a government takeover. They need to have a cabinet. They need to have ministers, police chiefs, governors and so forth. In this second phase, I think we will see some restrictions because, despite what we’re saying, the Taliban is a religious movement first and foremost. And they have constituencies that will demand changes, whether it’s media or social behavior and so forth. So we will probably have some restrictions — or maybe lots of restrictions — in that second phase — call it appointment or installation of a transitional government or arrangement. And in this transitional period, they’re going to work on the state — what is this new Afghanistan going to look like? The state, the structures — will we have a parliament, will we have a constitution or no constitution.
And what’s the third phase?
And essentially the third phase will be the Emirate of Afghanistan. We may perhaps even have more restrictions in the third phase.
He concludes this part of the interview acknowledging that he doesn’t know the time frame of the first phase but with the belief that the Taliban will be relatively hands-off.
So this is the first phase. It may last a week. It may last a month, it may last a day. But I think they’re going to have a laissez-faire approach to media as long as we’re not pushing too hard. That’s one of the reasons we have to be a little careful because you’re dealing with individuals, you’re not dealing with institutions.
The conversation moves on to what a new government may look like. He talks about the leverage the Taliban has and some of the internal challenges they are going to face that suggests it is in no way uniform in its approach, goals, and philosophy.
Whatever leverage people had is no longer there. Not the Qataris, not the Pakistanis, not the Americans. So to a large extent, they’re relying on the goodwill of the Taliban. But the Taliban have stated in discussions with us and also with others that they do want a more inclusive approach to things. And they also realize it’s going to work in their favor to have to have a broad-based government. In the 90s, they were seen as very much as a sort of a Pashtun political movement, the religious, political, religious movement. If they take a big-tent approach to governing, that’s going to bode well for the future of the country. And they know that having such a government is going to be good for them. So as a result, I think it’s being considered.
But the other thing we don’t know is, who’s going to prevail? The Taliban have [their] political office or council, and then they also have a military council. Which one of these councils will prevail? Within these councils, you have different identities and wings, so to speak. So even with the Taliban, there will be a tug of war. There’s always a tug of war in every political, military or revolutionary movement. So it remains to be seen as to who’s going to have the upper hand. And the next few weeks will be telling.
The interview then transitions to the cold hard reality of whether he feels threatened by the Taliban in terms of if he thinks there will be reprisals against his organization and whether it will be able to operate in the future. Once again, another soberly realistic response.
Do you worry about reprisals against your company for these U.S. ties?
MOHSENI: Of course we worry. We’re not alone. We of course we’re concerned that they may target us, view us as the network that was too closely associated with Western powers. But, you know, we haven’t lied about those things. We’ve been fairly transparent and there’s just there’s only so much in life you can control.
HEIDI VOGT: Would you take U.S. money at this point?
MOHSENI: Well, I don’t think the U.S. has given us any money yet, but if we have to — it depends. It also depends on the laws inside of Afghanistan. I mean, if we operate in Afghanistan and they may make it very restrictive and you can’t operate the entertainment channel, will you operate your news network? I say yes. But then we will be forced to abide by local Afghan laws. We have to assess whether that’s good for us, whether it’s good for our brand or sometimes it’s just easier to shut shop and leave.
VOGT: And that is an option?
MOHSENI: Always an option.
He is rather matter of fact when it comes to talking about shutting down being a realistic option in spite of the potential economic impact. Difficult decisions can often be catalyzed when the pain of doing nothing finally overwhelms the fear of making the difficult decision. If at some point the personal safety of the employees is at great risk or they can no longer provide objective coverage of life in Afghanistan then it may be time to fold.
Towards the end of the interview, Mohesni sees the writing on the wall that Afghanistan is going to lose many well-educated people which will be a great setback to the country. The interview wraps up with a question about how effective the government will be in restricting access to social media.
MOHSENI: Yeah, absolutely, I think the state can create obstacles, but the consumer always finds a way around it. Whether it’s use of VPNs or satellite dishes, you can always get around the obstacles that the government can create. But will the government be restrictive? Yes, absolutely. Let’s not underestimate the Taliban. They will. I’m sure they’ve thought through how they can monitor things if they decide to become — as we think — a strong centralized system that will rule Afghanistan with an iron fist.
So there you have it. At the end of the day, he believes that the Taliban will ultimately use its power to centralize control and rule with an iron fist. That’s how he really thinks the third phase will end.
We will be embarking upon our annual planning at CWS over the next few months and I will definitely keep this interview in mind. Of course, we don’t face anywhere the same kinds of risks and challenges that Mohseni’s company does in Afghanistan as well as much of its population. What we do face, however, is committing errors of optimism. After all, times have rarely been this good in the apartment business. This does not mean that conditions won’t continue to improve but we must acknowledge that we benefit from the good times continuing in many ways so it’s imperative that we look at the world very realistically and make sure we are well aware of what assumptions we are making about the future and spend a great deal of time on what threats may be looming in the environment that may impact our business negatively. It’s possible that we will conclude that it’s still all systems go but we want to do everything we can to reach that conclusion after taking a sober and very realistic assessment of the environment and trends we see that may impact our business and the investment climate.
I will conclude by returning to the Washington Post article highlighting key numbers related to our nearly 20 years in Afghanistan.
- Number of Presidents who presided over the war: 4
- Number of Americans who served: 800,000
- Number of Americans killed: 2,352
- Number of Americans wounded: 20,000
- Estimated number of Afghan military and police killed: 66,000
- Number of Afghan civilians killed: 47,245
- Number of countries who have fought in Afghanistan: 51
- Number of Allied service members killed: 1,144
- Number of humanitarian aid workers killed: 444
- Number of journalists and media workers killed: 75
- Estimated number of opposition fighters killed: 51,191
- Total ongoing cost: $2,261,000,000,000
- Total U.S. spending on reconstruction programs: $145 billion
- Number of Afghan soldiers trained by the United States: 300,000
- Number of Afghan refugees who have fled the country: 2,500,000
- Number of children out of school: 3,700,000 (60% are girls)
- The number of days it took the Taliban to assume power: 10