Equity in Equities

In my early 20s, working my first job out of school, I received a promotion and a large, unexpected cash bonus. The day before the payment hit, I checked my bank accounts. I had a negative net worth and a total of $667 to my name. "One dollar more than the devil," I thought to myself. Overnight, I paid off my college loans, set up an emergency fund, and funded a brokerage account.

I then purchased a book that changed the course of my life: Roger Lowenstein’s Buffett: The Making of an American Capitalist (1995). I learned of the book after reading an interview with the Black fund manager John W. Rogers Jr., who recommended it strongly. In those pages, I saw the blueprint of the life I wanted to lead. I'd never owned a share of stock, though, and I didn't think I was ready to. I studied the business press daily and read several other books, including Philip A. Fisher’s Common Stocks and Uncommon Profits (1984) and Benjamin Graham and David Dodd’s Security Analysis (1934).

My timing couldn't have been better. It was 2008, and as the financial markets came undone, I was learning how businesses worked and how to analyze them, earning money, and saving. Several months later, I felt ready to invest.

I made my first investment on November 11, 2008. It feels like centuries ago technologically. My broker at the time had no online platform to invest. So, I went into my office in Manhattan, up to the 33rd floor, stood in an empty conference room overlooking the Hudson River, and made a phone call. I placed an order for shares in Rocky Mountain Chocolate Factory. I'd never been to one of the company's locations or sampled its products. I read its financial statements in detail, though, and I understood its value proposition and competitive advantages. My weighing of the probabilities suggested the business was underpriced. As I still do today, I wrote my reasoning down. Before I sold out a few years later, I made a handsome return. Other, more profitable investments would soon follow.

I reflected on this as I read a Wall Street Journal article today about rising interest in stocks among Black American youth. This is a good thing, especially if most are accessing equity markets through low-cost, diversified ETFs.

I once wrote in an investor update for The Mutoro Group about the appeal of financial markets to me as a young Black American. From my Q3 2016 Letter:

What I am trying to say is that all investors eventually learn that the public markets do not care where you went to school, what your zip code is, or how much money you or your friends have. Nor will any of these help you. I have always welcomed this. The impersonality in the vicissitudes of markets can also be viewed as a lack of bias. To a young African-American man such as myself—living in a world where he is told on the one hand that his race does not matter, but confronted with more examples than he can count where it clearly does—trying to build a record of achievement through taking advantage of an environment truly disinterested in your background is inspiring.

When I shared this, an old white guy who was very well-established and connected in the investment management industry emailed me to complain. He said he didn't understand this paragraph. Why was I bringing up race? I was disappointed but not surprised. This guy—who managed billions of dollars—apparently didn't have basic reading comprehension or was so ignorant of lived experiences beyond his own that he couldn't appreciate other perspectives.

So, I'll repeat it more simply. What I love about investing is the markets don't care who you are. What I love about owning financial securities is my share of Berkshire is valued the same as your share of Berkshire, and I can get the same terms buying or selling shares as you can. That’s not true elsewhere.

It is well-established that real estate appraisers often value the assets of Black property owners less. It is also well-established that job seekers with more stereotypically white names will receive more opportunities than those with stereotypically Black names. And unlike me making a phone call to buy stocks, this isn't ancient history. Despite what billionaire morons like Elon Musk and Bill Ackman would have you believe, the greatest threat to American society is hardly DEI. Corporate America has a long way to go in promoting not just diversity, equity, and inclusion, but also belonging. I could write a whole book about the ridiculous racial biases I've seen and experienced in just the last five years. We have yet to reach the world MLK famously imagined in his “I Have a Dream” speech during the 1963 March on Washington for Jobs and Freedom. What I love about investing, though, is that if you're a regular person investing in the public markets, you receive no benefit or reduction in the value of your holdings because of your race, sex, religion, etc. (It is more complicated as a professional investor, where your job is investing, and well-established biases in fundraising and investor commitments come into play. But that is for another note.)

Racism is the disease of the person being racist, not mine. So, I focus on what is within my circle of competence and that I can influence strongly. For me, it means I gravitate to entrepreneurship and long-term investing in public markets. And I try to remember MLK’s words from his Street Sweeper speech:

"What I'm saying to you this morning, my friends, even if it falls your lot to be a street sweeper, go on out and sweep streets like Michelangelo painted pictures; sweep streets like Handel and Beethoven composed music; sweep streets like Shakespeare wrote poetry; sweep streets so well that all the hosts of heaven and earth will have to pause and say, 'Here lived a great street sweeper who swept his job well.'"

Uneasy Street

A Brief Book Review of Uneasy Street: The Anxieties of Affluence by Rachel Sherman

“Start my day up on the roof / There's nothing like this type of view / Point the clicker at the tube / I prefer expensive news” - Frank Ocean, “Super Rich Kids” (2013)

“I don't want much, f***, I drove every car / Some nice cooked food, some nice clean drawers” - Jay-Z, “Heart of the City (Ain’t No Love)” (2001)

There’s an Onion headline I like—and which I’m going to butcher—that goes something like this: “Woman Seated at Bar Upset That Couple Nearby Arguing in Hushed Tones Instead of More Loudly So She Can Follow Along.” For those who have ever empathized with this hypothetical woman yearning for a stronger sip of tea, this book is for you. Rachel Sherman has done a remarkable job entering, describing, and deconstructing the lives of young affluent families in New York City. By “affluent” she means those in households making more than $250,000, and with more than $1 million in assets. (Most of the families she interviewed though had far more in both income and wealth.) For those reading these numbers and thinking, “That’s not that much in New York,” this book is also for you (if not perhaps about you). (Sherman reminds us that the median household income in New York is approximately $50,000 to $60,000.) She contends that one of the most reliable behaviors of the relatively well-off is to justify their status by contextualizing it in comparison to those with more or less. To explain this, Sherman introduces a useful framework: Her subjects are typically either upwardly oriented or downwardly oriented. These are not hard and fast categories, but flexible vantage points through which the affluent in America, whether it came through earned income or inherited wealth, try to legitimize their occupancy of privilege. Essentially those with an upward orientation think, “I’m a good person because of how I behave; there are people with more resources who behave worse.” Those with a downward orientation think, “I’m a good person because of how I behave; there are people with less than I have who I am kind towards on a regular basis.” An upward orientation tends to come along with a conservative or apolitical view of society. Conversely, a downward orientation tends to imply a liberal or progressive political bent.

Rather than being a straight forward book about the lifestyles of the rich and anonymous, Sherman, a feminist scholar at the New School focused on domestic labor, devotes the second half of the book to understanding the power dynamics in couples arising from differences in income, wealth, and how they value unpaid household labor. It’s all fascinating. Thankfully the couples being interviewed aren’t speaking in hushed tones. The conclusion Sherman guides us toward is troubling for anyone worried about inequality in American society: whether couples ethically negotiate with each other about the societal and domestic legitimacy of their income, wealth, and unpaid household contributions (e.g., “lifestyle labor”), this is usually muted once kids enter the picture. At this point couples begin making decisions that advantage their families irrespective of society at large. With children giving them new found reason for investing in themselves and (intentionally or unintentionally) perpetuating inequality (e.g. ‘schooling’), they tend to not spend time challenging structural and systemic biases that give them privilege in the first place. They also often take as a personal attack any conversations about solutions to inequality. If a reduction in equality is to come, Sherman leads us to believe that it seems unlikely without active government intervention and higher taxation. As one interviewee in the book says, “I was gonna be a revolutionary, and then I had that first massage.”

This book goes well with Matthew Desmond’s brilliant Evicted: Poverty and Profit in the American City (2016), which focuses on the other end of the income and wealth spectrum, following some of the poorest families in Milwaukee trying to make ends meet and pay rent. As well as J. Paul Getty’s How to Be Rich (1965), which despite its title is not an instruction manual on earning wealth but a forceful meditation on the responsibilities of it. I’d also suggest Margo Jefferson’s Negroland (2015), which follows the author’s upbringing in a Black affluent enclave in Chicago of the 1950s and 1960s and the ways in which wealth and race mixed to amplify and trouble her life.

June 11, 2020

“All living is listening for a throat to open. The length of its silence shaping lives.” - Claudia Rankine, Citizen: An American Lyric (2014)

Never before have tempest and tranquility coexisted so beautifully. Never before. In my life, perhaps never again.

What is the first thing you think of when you hear the name “George”? I think of my older brother George Z. Bakuli. Since he passed away six years ago, I think about him literally every single day. Every single day. I am blessed to have had him in my life. I am blessed to continue to have him in my thoughts. But the heartbreak lingers, especially with each passing year; the feeling grows of just how young he was when he died. Just 29 years old. Just beginning his life in so many ways.

When I think of George, I think of his social courage. His steady moral compass. His independence of mind. I think of his indomitable will. His loyalty to those he loved and who loved him. His pride in his Blackness, his ancestry, and his family. I think of his big smile; how he playfully lorded over me that, unlike me, he had a great smile without ever needing braces. How he encouraged me to stand up for myself and to never brook the opinion that I wasn’t capable. I think of how he knew, like I knew, that the odds were stacked against us; and how he encouraged me not to mind if pursuing my dreams or doing the right thing made other people feel uncomfortable about themselves, especially white people. I think of how every time after I achieved some big goal growing up, whether an A on an essay or victory in a school election, I would tell him, “Next time, y’all best bring kryptonite”. I think of how, many years later, just a few months before he passed, on New Year’s Eve, after midnight, he unexpectedly texted me, “Next time, y’all best bring kryptonite! That’s your saying. Don’t ever forget that!” I think of how grateful I was and am that he remembered and appreciated details from our lives. I think of his arena-sized laugh. I think of his beautiful energy and ambitions and hopes and dreams. I think of how those were cut short, at just 29 years old, because of mental illness. I think of how it was not his fault. I think of how he fought for his life and his dignity. I think of how the health care system failed him. I think of how his employers and human resources failed him. I think of how even six years after he died, too many people continue to use language that stigmatizes mental health, unaware or uninterested of words besides “crazy” or “insane” to describe something negative. I think about so very, very much.

Above all, though, when I think about George, I think about courage. I think about how before he got sick, his courage to live better was his greatest gift to me. I think about how courage is the real wellspring of any meaningful change in our lives, communities, and societies. Since he passed away, on his birthday, June 11th, I’ve tried to meditate on courage. I try to remind myself to live courageously. This year was no different. If anything, the reminders were heightened. Because when I think about “George,” I also think about George Floyd. Unlike my brother, I don’t know intimate details of Floyd’s life. He was a Black man too. He had energy and ambitions and dreams. He had people he loved and who loved him. He also died too soon. In many ways today he is a symbol. A symbol of so many Black lives unjustly ended. Whether at the protests I have joined or on social media, when I see all the glorious signs for him and Breonna Taylor and Eric Garner and Tamir Rice and too many Black lives lost trying to say they mattered, I can’t help but think of my brother George, whose life mattered so much to me.

I’ve read a lot of late from white strangers, friends, and acquaintances about what they are doing to help make change happen and to prove that Black lives matter. They seek a better criminal justice system. Some even go further; they understand we will not have a better criminal justice system without other forms of justice, whether social, medical, or, above all, economic justice.  This will take stamina, resolve, and courage. They are signaling they are ready to actively join a fight so many of us have been battling every single day of our lives. When I think about courage, though, I can’t help but think how unaware or uninterested so many of these strangers, friends, and acquaintances seem to be to opportunities to be courageous in their daily lives. It seems so much easier for people to stand in solidarity with people they have never met, and will never meet, than people in their own lives and communities. Black people in their own lives and communities. I don’t have a lot of answers for how to improve criminal justice. But I have some thoughts around how to improve economic justice. Here are a few: 

Hire and retain Black people. Promote Black people. Fund Black people. Become a customer of a variety of Black businesses. Compensate Black people justly. Don’t steal Black people’s ideas and efforts and then erase their contributions. Don’t make excuses for, give special treatment to, or put on a pedestal non-Black people if you wouldn’t do likewise for Black people. Don’t penalize Black people for things you wouldn’t penalize others for. Don’t label Black people “angry” or “agitators” when they display the courage to specify their experiences as relates to being Black. Don’t gaslight Black people when they hold you accountable for your words, policies, and actions.

These aren’t hypotheticals. These are tangible choices in response to events I’ve both experienced and witnessed firsthand.

One thing in particular is critical: It’s not giving implicit special treatment to white people. I’ve seen over and over again white people say they are “acknowledging [their] privilege” and “learning to use [their] privilege well”. On the wide spectrum of say John Brown to Jefferson Davis, it is a gesture on the progressive side of things. But it is hardly enough. It just perpetuates in new ways the problems that got us here in the first place. I can’t help but think, “There’s no universal law that you should have privilege in the first place. How about a world in which white privilege doesn’t exist?” That seems to me a truly courageous idea and series of actions worth publicly speaking up about and fighting for. As a Black woman I work with said so well, “Rationalizing or compartmentalizing racism because it preserves privilege is a form of racism.” Rather than recognizing how good you have it undeservedly, and benevolently using that goodness for the benefit of Black people, how about a world in which you don’t undeservedly have it so good? Wouldn’t that be truly courageous?

Murakami

A Brief Book Review of Killing Commendatore by Haruki Murakami

Here’s the thing. I’ll keep it simple. Haruki Murakami’s Killing Commendatore (2017) is a very, very long book. This tale of supernatural hauntings in mountainous rural Japan clocks in at about 730 pages. It feels long less because of its page length, though, and more because it drags at times. Like, a lot of times. I’d be lying if I said this book moved quickly. The first 300 pages move slower than a Republican congressman’s pulse in a Trump corruption scandal. Murakami gives us way too much detail. For example, with no meaningful relevance to the plot or character development, we learn, step-by-step, how a main character prepares omelets. We also learn how that character always starts the wash cycle for his laundry while he exercises, and how he starts the dry cycle when he’s finished lifting. Seriously. It’s surprising Murakami didn’t tell us whether the character also pretreats stains before each load, separates whites and colors, and uses a high-efficiency detergent... Thank god for editors. 

After a pretty slow first 300 pages, over the next 400+ pages, things take a turn into the world of magical realism, which is welcome. Though the unnecessary detail remains—at several points our lead wonders if he should check his tire pressure!—the pace happily quickens. The expanding complexity of metaphors and plot twists is welcome, and is often thrilling, funny, and inspiring. (I enjoyed the constant refrain, “Time is on your side.”) But the metaphors weren’t fully baked, the prose is often dry, and the interactions between the listless men and the two-dimensional women characters are often painful. (This obviously failed the Bechdel test.) 

If you can stomach the first 300 pages, you’ll meet a plot that feels a combination of Fitzgerald’s “The Great Gatsby”, Wilde’s “The Picture of Dorian Grey”, and James’ “The Turn of the Screw”. I can’t promise that you’ll think it’s worth it, though. I’m definitely no expert on Japan’s deep, rich history of writing. That said, I did study Japanese literature and history in college for four semesters. It gave me enough exposure to say with confidence that there is better from Murakami to choose from as well as other modern Japanese writers. Murakami has 17 other works of fiction; I’d say prioritize other (shorter) works first.

Housekeeping

A Brief Book Review of Housekeeping by Marilynne Robinson

I first encountered Marilynne Robinson through her wonderful novel “Gilead”. I followed this by reading an excellent collection of essays she wrote titled “When I Was a Child I Read Books”. After that I came across a stimulating conversation in the New York Review of Books between her and President Barack Obama, who while he was in office flew to her home in Iowa to speak with her. This is all to say that my encounters with Marilynne Robinson have all been distinct and pleasing experiences. “Housekeeping” is no different. This book is beautiful and terrific. The story is set in the Pacific northwest and is about family and sisterhood and loss and reemergence and memory and community and mental health and independence and so much more. It’s a lot. Robinson’s writing is so vivid, so thoughtful, and so biblical that I found myself rereading passages for the shear pleasure of soaking in her artistry. The best way to enjoy her writing is slowly. Even if you think you read quickly, her style forces you to slow down and sit with her characters and scenes and ideas. And for this she rewards the patient. Her writing crescendos in the most wonderful ways. Some favorite excerpts below:

“She did not speak to me, or look back. The absolute black of the sky dulled and dimmed and blanched slowly away, and finally half a dozen daubs of cloud, dull powder pink, sailed high in a pale-green sky, rust-red at the horizon. Venus shone a heatless planetary white among these parrot colors, and earth lay unregenerate so long that it seemed to me for once all these blandishments might fail. The birds of our world were black motes in that tropic.” (p. 117)

“I had seen two of the apple trees in my grandmother’s orchard die where they stood. One spring there were no leaves, but they stood there as if expectantly, their limbs almost to the ground, miming their perished fruitfulness. Every winter the orchard is flooded with snow, and every spring the waters are parted, death is undone, and every Lazarus rises, except these two. They have lost their bark and blanched white, and a wind will snap their bones, but if ever a leaf does appear, it should be no great wonder. It would be a small change, as it would be, say, for the moon to begin turning on its axis. It seemed to me that what perished need not also be lost. At Sylvie’s house, my grandmother’s house, so much of what I remembered I could hold in my hand—like a china cup, or a windfall apple, sour and cold from its affinity with deep earth, with only a trace of the perfume of its blossoming. Sylvie, I knew, felt the life of perished things.” (p. 124)

Simple News That Nature Told

A Brief Book Review of Selected Poems of Emily Dickinson by Emily Dickinson

I was born in Nairobi, Kenya, but I grew up in Amherst, Massachusetts. For six years—from the seventh grade through my senior year—during the academic year I took essentially the same route to and from school. Whether by bus or by car, I almost always traveled along Main Street. And on Main Street I would pass an imposing yellow brick building on a hill: the Dickinson Homestead. The Dickinson Homestead is the house the 19th century poet Emily Dickinson grew up in. There she spent much of her life and wrote most of her poetry. I would always pass the property with a measure of awe. I was aware a world-renowned poet had resided there, someone, to quote Fitzgerald, with “a heightened sensitivity to the promises of life.” Despite that abundance of sensitivity, Dickinson spent much of her life in seclusion; only ten of her poems were published during her lifetime, and even those were published anonymously and without her permission. Her presence in Amherst today is public and notable, a relatively recent mural of her right in the center of town. And yet, despite my awareness of her place in the history of American poetry, and despite the immediacy of seeing her home nearly every day for years, it was not until this month, years after leaving Amherst for Williams College and then New York, that I finally read her works. Friend, it was tremendous. At turns charming, inspiring, defiant, resigned, beautiful, and hopeful. But consistently thoughtful and vivid. There are 177 poems in this collection of Dickinson’s poetry. Scores of those poems I loved and will revisit again in more depth. An example of a favorite, right on the first page:

This is my letter to the world,
That never wrote to me,—
The simple news that Nature told,
With tender majesty.
Her message is committed
To hands I cannot see;
For love of her, sweet countrymen,
Judge tenderly of me!

Dickinson reads like one of those American writers—Melville comes to mind—who seemed to know not only all the words in the English language, but also how to make good use of them. I think she made best use of her words on grief, whether in reflection or anticipation of it. This is important. We live in a country today that largely doesn’t know how to talk about death and loss. This is not without visible efforts on a mass scale. The highest grossing movie of all time, Avengers: End Game (2019), is squarely about grief, with therapy sessions and many scenes and conversations about healthy and unhealthy ways to cope with loss. Perhaps the most well-known athlete in the history of the world, Michael Jordan, took off two entire years from the sport of basketball at the height of his powers to grieve the death of his father. The most popular musicians celebrate fallen friends regularly in songs (Nas: “Rest in Peace, Ill Will”). And yet you probably unfortunately still hear too many stories of social groups and families that “just don’t talk about it.” In Dickinson’s poetry, we see someone unafraid to pick up and examine the most universal and troubling of human experiences. Here’s an example that evokes Samuel Taylor Coleridge’s albatross:

Bereaved of all, I went abroad,
No less bereaved to be
Upon a new peninsula,—
The grave preceded me,
Obtained my lodgings ere myself,
And when I sought my bed,
The grave it was, reposed upon
The pillow for my head.
I waked, to find it first awake,
I rose,—it followed me;
I tried to drop it in the crowd,
To lose it in the sea,
In cups of artificial drowse
To sleep its shape away,—
The grave was finished, but the spade
Remained in memory.

Here’s another:

Softened by Time’s consummate plush,
How sleek the woe appears
That threatened childhood’s citadel
And undermined the years!
Bisected now by bleaker griefs,
We envy the despair
That threatened childhood’s citadel
So easy to repair.

Another one:

To fight aloud is very brave,
But gallanter, I know,
Who charge within the bosom,
The cavalry of woe.
Who win, and nations do not see,
Who fall, and none observe,
Whose dying eyes no country
Regards with patriot love.
We trust, in plumed procession,
For such the angels go,
Rank after rank, with even feet
And uniforms of snow.

Do yourself a favor and consider Emily Dickinson.

Surely, You're Joking

A Brief Book Review of Surely, You’re Joking, Mr. Feynman by Richard Feynman

It’s unexpectedly quite enjoyable to read a memoir of Richard Feynman so soon after reading a biography of Isaac Newton. It’s a study in contrasts. In James Gleick’s “Isaac Newton”, which I read a couple weeks ago, we meet an orphaned, hermetic, terminally intense, celibate, ultra-competitive mathematician, theologian, alchemist, and government minister. In Feynman—who won a Nobel Prize for physics more than 250 years after Sir Isaac invented calculus and modern physics—we meet a playful, bongo drumming, areligious, prank pulling, safe cracking modern man who hated most philosophy and had no patience for government bureaucracy. I could go on. The surface differences are legion. What’s similar about these two men, though, is their intense curiosity and independence, love of scientific experimentation, and exceptional ability to discover and explain natural phenomena. I read another Feynman memoir a couple of years ago titled “What Do You Care What Other People Think?” That was good. I remember being touched by Feynman’s relationship with his father, his reflections on the illness and death of his first wife, and his work in helping solve the mystery of the Challenger Space Shuttle explosion. But this memoir I enjoyed a lot more. You gain a more full (and entertaining) view of the man, from his days at MIT, Harvard, Princeton, Cornell, and CalTech, to life at Los Alamos helping create the nuclear bomb, to his time in Brazil, to shenanigans in Las Vegas, and so much more, especially about how to learn, practice, and teach science. The essays I liked the most were “He Fixes Radios by Thinking!”, “The Chief Research Chemist of the Metaplast Corporation”, “Monster Minds”, “A Different Box of Tools”, “Los Alamos from Below”, “Safecracker Meets Safecracker”, “Lucky Numbers”, “Judging Books by Their Covers”, “Found Out in Paris”, and “Cargo Cult Science”. Highly recommended.

Isaac Newton

A Brief Book Review of Isaac Newton by James Gleick

I really enjoyed this biography of Isaac Newton. The author, James Gleick, in his often lyrical style of writing, draws a portrait of Newton based on the correspondences and journals of the Englishman and other biographies of him. You will learn about the history of scientific thought for sure from this book. More interestingly, you will learn about Newton the man. And the man who emerges I was surprised to meet. Newton is obsessive. A secretive and celibate recluse, he is at all points focused and at work; at work on experimenting, measuring, studying, and describing nearly all things. He wrote millions of words in journals that never saw publication, such as his ironically named “Waste Book” in which he essentially invented calculus. Beyond natural philosophy, which was what we today call science, he is also unexpectedly obsessed with alchemy and theology, spending countless hours experimenting with metallurgy and studying biblical scholarship. What drives the plot of this biography, though, is less his intellectual passions and witnessing Newton’s developing “strength of mind”, and more his social battles. The Newton we meet is “unsocial”, “competitive”, and “ruthless” in besting contemporary thinkers of his day vying for the acclaim and giant-hood of which he thought himself singularly worthy. This aspect of his personality I had not known before. In his searing intellectual “duels” with Hooke and Leibniz we see Newton more fully. It seems only because of his faithful disciple Edmond Halley (the mathematician and astronomer famous for using Newton’s math to predict the path of a comet), is Newton coaxed out of his unsmiling seclusion into publishing his works and beginning to join society more fully. He eventually became Master of the Mint for England, in charge of printing coin for the kingdom. A position he held until his death and which made him a fortune he bequeathed to no one. A fascinating, well-crafted biography of a man, his time, and the world he wrought.

Billion Dollar Whale

A Brief Book Review of Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World by Tom Wright and Bradley Hope

Warren Buffett in a speech to University of Florida MBA students in 1998 suggested you could assess a person by three traits, namely their integrity, intelligence, and energy. To stress the comparative value of those traits, he then made a provocative point: He said that if you could only pick two of those three traits to maximize in who you hire, you would be wise to choose integrity as one of the two because a person with intelligence and energy but no integrity would ruin you. This is a book about such a person. It’s about Jho Low, an intelligent and energetic young man with zero integrity. Low used global financial systems and deep human desires for money and prestige to commit one of history’s most brazen frauds. In just a few years, using lavish spending the modern world had perhaps never seen before, he gained the confidence and following of well-known celebrities like Leonardo DiCaprio, Jamie Foxx, and Miranda Kerr. This allowed him to access Middle East royal wealth, who, despite their money, didn’t have his penchant for courting Hollywood celebrities. These wealthy Middle East connections in turn gained Low the backing of leading banks, law firms, and auditors, allowing him the cover he needed to bilk billions from the people of Malaysia. The conman is still at-large. A great, supremely detailed, and well-reported book of modern power and corruption.

The Insider

A Brief Book Review of Catch and Kill: Lies, Spies, and a Conspiracy to Protect Predators by Ronan Farrow

“Tough stories don’t get told without companies being willing to weather the storm.” - Ronan Farrow

“‘Tortious interference’? That sounds like a disease caught by a radio.” - Al Pacino as Lowell Bergman in The Insider (1999)

There’s a thread running through Ronan Farrow’s masterful Catch and Kill: Lies, Spies, and a Conspiracy to Protect Predators (2019) that felt like déjà vu. In the book, executives at NBC News, Farrow’s employer during most of the events of the book, are trying to explain to him why they’re blocking his reporting efforts. Farrow was attempting to gather evidence related to the sex crimes and coverups of Hollywood producer and political fundraiser Harvey Weinstein. Despite making much progress securing the trust and participation of some of Weinstein’s victims, Farrow was ordered by NBC News brass to stop. NBC News feared being accused of something called “tortious interference”. For those unacquainted with the term, “tortious interference” is the legal notion that a third-party might be financially liable if it interferes with the contract of two others. In this case, the contractual interference might be encouraging Weinstein’s victims to violate the non-disclosure agreements they had signed with Weinstein in exchange for hush money after his crimes. Threatening to pursue damages for interference is a tactic powerful, wealthy bullies often use. It’s in service of the goal of silencing whistleblowers and the journalists hoping to tell their stories. Well, to be more accurate, it’s not usually the journalists who get intimidated; it’s the business leaders of the companies they work for.

This intimidation was dramatized tremendously well in Michael Mann’s brilliant film The Insider (1999), based on a true story of tobacco industry malfeasance and coverups at CBS News. In the film, a producer for CBS’s weekly news program 60 Minutes, Lowell Bergman (played by Al Pacino), confronts CBS News leadership unwilling to air a damning interview with a tobacco industry whistleblower, Jeffrey Wigand (played by Russell Crowe). The unwillingness of CBS corporate leadership stemmed from threats they received from tobacco industry lawyers that showing the interview would amount to “tortious interference”. It’s essentially a film about two industries, big tobacco and broadcast journalism, and the legal nexus between them. The film was nominated for seven Academy Awards and is one of my favorites. The leadership and legal apparatus of CBS comes across incredibly poorly, temporarily putting profits ahead of the public good.

My déjà vu arose because so much of the dramatic tension in The Insider around contractual duties and whistleblower intimidation emerges in Catch and Kill. Along with Farrow, his boyfriend Jonathan, and his collaborator Rich McHugh, I scratched my head wondering whether NBC leadership had ever seen The Insider, really valued profits over the public good, or were in cahoots with Weinstein. Given their likely knowledge of ongoing sexual assault and coverups among their own staff, most notably lead morning anchor Matt Lauer, it’s possible it was some combination of all of the above. As with CBS’s more than twenty years earlier, NBC’s efforts here to delay and hinder whistleblowing reflect poorly, not just on its business leadership but also its pretenses to journalistic integrity. As with The Insider, this is a tale of two industries: Hollywood and broadcast journalism. But more broadly, it is a tale of modern political and economic power networks and the serious investment of energy and time it takes to expose and defeat them.

Farrow has written a remarkable book. One I couldn’t put down. The core story here is heartbreaking, thrilling, disturbing, frustrating, and revelatory. It’s not just about serial rapists and the powerful network of allies and interests that keep them going but also about living with fear but persisting, nevertheless. It’s full of courage. The courage and bravery of the women in this story, such as Ambra Gutierrez, Mira Sorvino, Brooke Nevils, Rosanna Arquette, and Rose McGowan; the courage of the reporters who doggedly worked to tell their stories, and the organizations that gave them a platform to do so, such as The New Yorker.

Memories of Future Work

A Brief Book Review of How to Win in a Winner-Take-All World by Neil Irwin

“If you take a sailboat out for a cruise, there are some things you can control, like how you position the sails and guide the rudder. There are others you cannot, like the winds and the currents. Still, to get where you’re looking to go, it’s essential to understand the winds and currents. Successful sailors adapt the things under their control to react intelligently to the winds and currents that are not. In our careers, we can control the jobs we apply for, the training and education we seek out, the assignments for which we raise our hands. But our fortunes are shaped significantly by huge economic and technological shifts that are remaking nearly every industry. This book is a guide to understanding those winds and currents.” - Neil Irwin

“The future is already here—it’s just not very evenly distributed.” - William Gibson

Quite often I have found myself in business meetings with veteran bores fluent in condescension and willful ignorance. I steel myself by imagining future memories of the moment 30 years hence. With all likelihood, in the final calculation, the moment, not to mention the entire existence of my slumberous interlocutor, won’t even be decimal dust in the tally of my joys and pains.

In this way, farsightedness and financial compensation can be quite consoling. Every professional who has worked a day in her life can probably relate. Such is the history of work. The stimulating book How to Win in a Winner-Take-All World: The Definitive Guide to Adapting and Succeeding in High-Performance Careers (2019) is concerned with the future of work. Its author is Neil Irwin, a senior economic correspondent at The New York Times. But you won’t find in the book any mention of businesses like The We Company, the organization behind the shared-office brand WeWork featured in headlines daily; in its government filings for its pending IPO it claims to “reinvent the future of work.” I think The We Company’s absence is for a good reason. To understand why let’s briefly go back in time before we go forward.

It’s 2010. I’m fresh off successes investing during the financial crisis. Being a man with a hammer seeing nails all around, I decided to investigate the commercial real estate industry for ideas. I learned of a little company named Regus. It is today known as IWG and is the only global competition at scale for The We Company. I was serious enough about Regus that I read its financial regulatory filings and toured some of its Manhattan locations. I looked at it not only as someone who might invest in it, but also someone who might use their services someday as an entrepreneur. As a potential business investment, I noticed that during the dot com recession, Regus had been decimated. But it seemed chastened by this experience and smarter about managing the maturities and magnitudes of its liabilities. It had also backed off the idea of top-line growth at all costs. While business slumped in 2007-2009, the company remained solvent. Looking at Regus from the perspective of a customer, its value proposition was appealing. The flexibility and breadth of services on-site were enticing, including shared meeting rooms, virtual office services, and dedicated video conferencing studios. Nevertheless, I passed on the opportunity. (I invested instead in WH Smith, a British newsstand business that had unique customer capture with its real estate footprint in high street and airport locations. That was a great investment.)

What does this have to do with The We Company and more generally the future of work? Well, what’s fascinating to me about WeWork is they aren’t doing anything different than Regus did then. Yes, you get colorful common spaces, upbeat music piped into bathrooms, fruit-flavored water, and free bourgeois coffee. But nothing else that Regus wasn’t offering in 2010 and can’t today. I think partly for this reason The We Company is a distraction on the road to ‘the future of work’. It seems a bad investment today given its incredibly high valuation versus Regus and how seemingly corrupt ownership is. But that’s not the same as saying it won’t survive for decades. There will always probably be some companies who aspire for access to real estate to house growing headcount to encourage face time between staff. But I think this will be less and less, especially after reading Irwin’s book.

What has changed since 2010 is the nature of work and the jobs-to-be-done in the employee and employer relationship. From this vantage, The We Company actually seems not to be that imaginative or inventive. What’s changing about work is that over time employers won’t be asking (1) “How do I scale this company and keep real estate costs low?” but rather (2) “How do I scale this company and have literally zero real estate costs?” Instead of (1) “Where do I house my growing workforce and employee base?” the question becomes (2) “How do I grow without taking on employees at all?” In each question pair, The We Company answers the first but not the second.

Many disruptions are emerging from the combination of the mass availability of Wi-Fi, powerful laptops, smartphones, abundant productivity apps, and the movement of group administration to the cloud. One of those disruptions is that remote “knowledge economy” workers and freelancers are capturing more share of mind and wallet in employment. Imagine “flexible real estate” as just a stepping stone toward the true corporate aspiration, “flexible workforce”. This will mean more business for companies that make this latter aspiration and its prerequisites possible; such as the easy facilitation of payments between corporations and independent contractors, the vetting of both sides to freelance relationships, the keeping of reputation records, etc.

Why does this matter to the investment analyst or manager? It matters because the companies that can successfully answer the second questions above will have a cost advantage on those that cannot or do not. And that cost advantage will likely translate into offering lower prices or being able to invest in other moat-expanding activities. This, in turn, increases their odds of surviving and thriving. Here’s a quote from Irwin about how this disruption is playing out:

“Meanwhile, in the commercial arena, GE has long been a huge customer of very expensive consulting firms like McKinsey and Bain—but sometimes the types of questions they have been hired to take on could be better answered with other approaches. If you’re trying to sell equipment to electrical utilities and need to analyze pricing strategies, maybe a short-term contract with a utility CFO who is between jobs could generate more useful recommendations than a dozen young MBAs slaving away for six weeks.

“Many companies aspire to be the dominant platform to match freelance workers with companies that might wish to engage them. Thanks to the internet, it is easier than ever to find someone with just the right technical expertise or history to provide temporary help.”

Why does this matter to employees? It matters because in the future there will probably be many more opportunities (and pressures) to be the sort of person with hybrid skills in areas such as management, branding, sales, strategy, and finance. The days are diminishing of being able to increase one’s compensation and stature by being a corporate bureaucrat or focused on one silo of activity and just managing more people. Acquiring various skills will probably mean taking lateral movements in your career to face new challenges and learn new skill languages. It will probably also mean learning the various skills necessary to freelance occasionally and perform independent consulting work. There are benefits and drawbacks to this, but it is a clear trend. It probably will require a stronger government social safety net for workers to withstand fluctuations in their income.

Such are some of the ideas presented in Irwin’s book. With examples of individuals from companies like Goldman Sachs, Procter & Gamble, Google, Netflix, and others, he makes a strong case for aspiring to be “Pareto-optimal”. This means, among many things, being someone who views their relationship with their employer as a contract rather than a marriage, who approaches each day hungry to acquire new skills, and who maintains a growth mindset through thick and thin. Highly recommended.

The Lessons of History

A Brief Book Review of The Lessons of History by Will and Ariel Durant

“You have to be an independent thinker because you can’t make money agreeing with the consensus view, which is already embedded in the price. Whenever you’re betting against the consensus, there’s a significant probability you’re going to be wrong, so you have to be humble.” - Ray Dalio

At times this book reveals its age and the zeitgeist in which it was written, with thoughts to a modern reader that would be very dated and very backward (e.g., its descriptions in one chapter of what constitute sin). At other times, though, it feels like a gift, with some beautiful writing on history. To the latter point, this example:

“Human history is a brief spot in space, and its first lesson is modesty. At any moment a comet may come too close to the earth and set our little globe turning topsy-turvy in a hectic course, or choke its men and fleas with fumes or heat; or a fragment of the smiling sun may slip off tangentially—as some think our planet did a few astronomic moments ago—and fall upon us in a wild embrace ending all grief and pain. We accept these possibilities in our stride, and retort to the cosmos in the words of Pascal: ‘When the universe has crushed him man will still be nobler than that which kills him, because he knows that he is dying, and of its victory the universe knows nothing.’”

And this:

“Our blood remembers millenniums.”

After a few chapters you kind of see why Ray Dalio counts this among his favorite books, especially in its handling of political history; such as when the Durants write,

“The fear of capitalism has compelled socialism to widen freedom, and the fear of socialism has compelled capitalism to increase equality.”

A worthwhile, stimulating read that I will likely revisit.

Story Man Gets Paid

A Brief Book Review of Stories of Your Life and Others by Ted Chiang

Of the eight works in Ted Chiang’s collection of science fiction short stories titled Stories of Your Life and Others (2002), I thoroughly enjoyed three. Those three being “Understand”, “Story of Your Life”, and “Liking What You See: A Documentary.” The first of my three favorites, “Understand”, is a thrilling exploration of how one man chooses to change his world after becoming super intelligent. The second, “Story of Your Life”, is the basis for Arrival (2016), an excellent alien contact film with a non-linear plot revolving around linguistics. My third favorite, “Liking What You See: A Documentary”, is a cheeky, dystopian exploration of a cure for the oldest of human social biases, “lookism”. When you think about it, three favorites out of eight is a pretty good record. If Chiang were a professional basketball player taking three-point shots, this would be a good shooting performance (3 out of 8, or 37.5%). (“Kobe”) For comparison, when I read Ray Bradbury’s immaculate The Illustrated Man (1951), I found favorites in eight of the 18 stories (44.4%). Ray is the best, though. (“Steph”) If they were shooting free throws, this would be very bad. I’m willing to wager, though, that successfully writing popular science fiction is more analogous to hitting contested professional threes.

While all eight stories were stimulating and Chiang is an inventive storyteller with broad knowledge, the other five stories were a bit disappointing; some started out hot but clanged against the rim. “Hell Is the Absence of God” could’ve been a thoughtful, creative exploration of grief, faith, and salvation. Instead, through employing ignorant, stigma-perpetuating tropes about mental health, Chiang airballs into the stands. Even Carlton Banks didn’t miss this badly. For such a polymath, Chiang should know better. That said, when Chiang is good, his writing is among the best science fiction I’ve read. “Understand” and “Stories of Your Life” were incredible. They alone motivate me to want to read his other short story collections.

Frankenstein

A Brief Book Review of Frankenstein by Mary Shelley

Like many people in the western world, I thought I knew most things about the fictional character Victor Frankenstein and his monster. The term “Frankenstein” today permeates the English language and suggests someone who has created a thing that is an albatross for its creator. But to actually read Mary Shelley’s Frankenstein (1818) revealed a more surprising origin to these characters and their story than I realized. To put it succinctly, if you haven’t read this before, it might not be the novel you probably think it is—at least it wasn’t for me. In highly stylized gothic prose and an incredibly dramatic plot, Shelley has created a surprisingly intense sermon on love, friendship, grief, revenge, science, ambition, loyalty, and kinship.

And So Can You

A Brief Book Review of You Can Be a Stock Market Genius by Joel Greenblatt

In August 2012, I moved back to New York from San Francisco and set up a sole proprietorship, Mutoro Group, LLC. I began investing my own money full-time. It wasn’t much money. But it was mine, and it worked. For three years, I ate what I killed, so to speak, given I didn’t have any other earnings besides the income I generated through my investment ideas. I ate pretty well. I took an idea I had found in Joel Greenblatt’s poorly titled but quirky and incredible book You Can Be a Stock Market Genius (1997), which I had first read in July 2010, and applied it with success. He described several approaches for investment gains. One in particular caught my attention. He described how if you found publicly traded companies mispriced in the market and selling at a discount to their value, you should study the options on their shares. In particular, you should investigate their long-dated, out-of-the-money call options because these might be even more underpriced. That $1 you found selling for 70 cents might be selling for 25 cents if you acquired its long-dated options instead.

I went about applying a somewhat more involved version of this useful framework from Greenblatt’s book. I made multiples of my money on the computer manufacturer Dell, on the giant, beleaguered insurer AIG, and on the home security company ADT. I was compounding money at an attractive rate and increasing my net worth faster than it ever had grown. The biggest challenge I had was making sure I kept enough capital on the sidelines to cover my living expenses and taxes, while plowing more money into investments. I spent the bulk of my time reading and thinking. In the course of a year, I might unearth one or two ideas that I had high convictions about and then make a large allocation toward them. It was challenging, and not every idea worked; I took a loss on a Chinese textile company with corrupt management I had not vetted thoroughly enough, and I made a poorly reasoned investment into a leveraged natural gas driller before the energy industry bear-market. I learned important lessons on my own dime from these two misadventures. Even considering those losses, the whole operation was profitable and, in many ways, blissful. 

Rereading You Can Be a Stock Market Genius this week felt like a refreshing reunion with an old, wise friend.

Seven Brief Lessons on Physics

A Brief Book Review of Seven Brief Lessons on Physics by Carlo Rovelli

I really enjoyed this book by the Italian theoretical physicist Carlo Rovelli, Seven Brief Lessons on Physics (2014). On its surface, it is an explanation of gravity, general relativity, quantum mechanics, black holes, and other topics. But a few layers below, at its heart, it is a love letter to modern physics and the history of scientific thought, debate, and exploration. Rovelli does a great service to the public in wonderfully describing the successes, failures, challenges, opportunities, and ambitions of the field. I think he speaks best for himself, so I’ll share this quote below from the book:

“When we talk about the big bang or the fabric of space, what we are doing is not a continuation of the free and fantastic stories that humans have told nightly around campfires for hundreds of thousands of years. It is the continuation of something else: of the gaze of those same men in the first light of day looking at tracks left by antelope in the dust of the savannah - scrutinizing and deducting from the details of reality in order to pursue something that we can’t see directly but can follow the traces of. In the awareness that we can always be wrong, and therefore ready at any moment to change direction if a new track appears; but knowing also that if we are good enough we will get it right and will find what we are seeking. That is the nature of science.

“The confusion between these two diverse human activities—inventing stories and following traces in order to find something—is the origin of the incomprehension and distrust of science shown by a significant part of our contemporary culture. The separation is a subtle one: the antelope hunted at dawn is not far removed from the antelope deity in that night’s storytelling.

“The border is porous. Myths nourish science, and science nourishes myth. But the value of knowledge remains. If we find the antelope, we can eat.

“Our knowledge consequently reflects the world. It does this more or less well, but it reflects the world we inhabit. This communication between ourselves and the world is not what distinguishes us from the rest of nature. All things are continually interacting with one another, and in doing so each bears the traces of that with which it has interacted: and in this sense all things continuously exchange information about one another.”

Junk

A Brief Book Review of Junk by Ayad Akhtar

If you read the Wall Street Journal or Financial Times with any regularity, it’ll be hard not to think of a few things if you read this play, Junk (2017) by Ayad Akhtar. It’ll be hard not to think of Michael Milken when the financier Robert Merkin speaks, Ivan Boesky when the arbitrager Boris Pronsky enters a scene, or Rudolph Giuliani when we meet the prosecutor Giuseppe Addesso. These fictional characters and the drama described are clearly pulled from the real characters mentioned and headlines of 1980s Wall Street. For someone well versed in this period in the history of finance, this can get a bit distracting. Worse, at times it can make the comings and goings around the emergence of junk bonds feel derivative.

For a general audience not familiar with Barbarians at the Gate: The Fall of RJR Nabisco (1989) or Oliver Stone’s movie Wall Street (1987) and other productions about this era, this will likely be a thrilling introduction to a period in American history. A period where newly relaxed standards around leverage changed the country massively. To Akhtar’s laudable credit, he has imagined a more multiracial, multicultural, and woman-welcoming version of the heights of Wall Street than the pathetic demographics of the industry would suggest exists today or did 30 years ago. And his Shakespearean ambition to describe something more eternal about power, masculinity, and succession is admirable.

If Junk piques your interest, it might be worth it afterward to read John Kenneth Galbraith’s brief but great book A Short History of Financial Euphoria (1990). As I described in a review of it this year: 

Galbraith contends that whenever someone is said to be a genius in financial markets, they probably are not, and whenever something is said to be new, it probably is not. “The rule,” he writes, “is that financial operations do not lend themselves to innovations. […] The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version.”

Quality and How to Attain It

A Brief Book Review of What I Learned Before I Sold to Warren Buffett: An Entrepreneur’s Guide to Developing a Highly Successful Company by Barnett C. Helberg, Jr.

“If you don’t know me by now, I doubt you’ll ever know me. I never won a Grammy, I won’t win a Tony. But I’m not the only MC keeping it real. When I grab the mic to smash a rapper, girls go ‘Illlll!’” - KRS One (1995)

“Games are won by players who focus on the playing field — not by those whose eyes are glued to the scoreboard.” - Warren Buffett

“Be glad I pushed my album back, I did y’all hoes a favor.” - Lil’ Kim (1999)

 “To me, it’s obvious that the winner has to be very selective. It’s been obvious to me since very early in life. I don’t know why it’s not obvious to very many other people.” - Charlie Munger 

The world has no shortage of business books. And if we’re being honest, as in any field, most of these books probably aren’t wholly original or remotely remarkable. For every Security Analysis (1940), When Genius Failed (2000), or Shoe Dog (2016) there are many more also-rans. But that doesn’t mean these books aren’t worth reading. It doesn’t mean they don’t contain the kernels of some truths ignored or forgotten that when remembered, reinforced, or applied better could be significant.

Consider another field entirely: sports. A championship-winning coach has in all likelihood spent her entire life reading books and articles about the game she loves. She has probably made a deeply ingrained habit of watching games live or tapes of games and weighing analyses of plays and strategies. Through an immense volume of critical consumption, she has gained a robust sense of quality and how to attain it. She has likely forgotten more than you and I will ever know about the sport. And despite this wealth of data, information, and knowledge, she still has the wisdom to know she can’t stop and the passion to not want to. Though at the top of her field, she still with enthusiasm, whether expressed quietly or vocally, picks up books and analyses on the game, whether about it broadly or about arcane aspects of it. And she almost definitely watches game tape with a level of interest bordering on obsession. If the best make time for this, I’m sure you and I probably can too.

This is by analogy why I enjoy reading business and investment books. I read poetry and novels, sure, but I always come back to business books. I have so far started three businesses, served as a temporary CFO or strategic advisor to the officers and managers of dozens of others, but I know, like our hypothetical coach, that I can’t stop learning and don’t want to. Open-minded reading and thinking seems a competitive advantage in any field.

This is a long way of saying I was glad I picked up and read Barnett C. Helzberg, Jr’s What I Learned Before I Sold to Warren Buffett: An Entrepreneur’s Guide to Developing a Highly Successful Company (2003). It got me thinking. 

As a book, it is partly family memoir, partly Berkshire Hathaway case study, and partly business self-help. It contains six sections. Those cover Managing, Decision Making, Hiring, Inspiring, Communicating, and Focusing. At times it feels like it’s almost too much for one book. But I think it serves an honorable purpose. Helzberg, Jr. clearly wanted a written record of achievement. And he did well to chart the business principles, systems, and habits that grew the small diamond business his grandfather started and that he and his father turned into an American success story. This book is rich with tips, or “Helzberg’s Hints” as they are dubbed. There are more in it than I have the time to spend here outlining. But generally, what I took away from it is this: Attaining enduring quality and success in any field isn’t a discrete event. It’s not a thing you can touch or a place you can go or a thing you can buy. It’s organizing principles and adaptive systems of habits and processes that increase and maintain one’s edge of achieving a stated objective.

Wade in the Water

A Brief Book Review of Wade in the Water by Tracy K. Smith

It was toward the end of the first poem in Tracy K. Smith’s fourth book of poetry, Wade in the Water (2018), that I scrawled in the margin of the page, “to be alive is such a gift”. Such was the response that just one of her poems met in this reader.  

The book is split into four distinct sections. The poems in these sections span more than a century in the timeline of American history, from a mosaic of the experiences of Reconstruction-era black Civil War veterans soliciting the Freedmen’s Bureau for their pensions, to the lives of black American women in the 21st century. It is truly a gift to be alive and also to see how Smith immerses the reader in each poem with beautiful imagery and novel turns of phrase. In “Garden of Eden”, about her life in Brooklyn during her thirties, we join her doing “bank-balance math and counting days” as the “known-sun [sets] on the dawning century”; in “A Man’s World” we see “the constellation of need” at the alluring and dangerous core of masculine sexuality; in “Ghazal” we learn that “History is a ship forever setting sail.” This is a long way of saying that Ms. Smith spits bars. She was appointed Poet Laureate of the United States in 2017 and is a Pulitzer Prize winner and a professor of humanities and creative writing at Princeton University. I look forward to reading her other works.

The Ten Keough Commandments

A Brief Book Review of The Ten Commandments of Business Failure by Donald R. Keogh

“I've been in this game for years, it made me an animal / There's rules to this sh*t, I wrote me a manual / A step-by-step booklet for you to get your game on track, not your wig pushed back” — The Notorious B.I.G. (1997)

At its heart, The Ten Commandments for Business Failure (2008) is about the costs and rewards in business of courage, thoughtfulness, and optimism. Three traits that author Donald R. Keough (1926-2015) seems to have had in spades. Keough had a business career one could by any measure consider blessed. After forty-plus years with the Coca Cola Company, culminating in roles as President and Chief Operating Officer, Keough began a second career as an active board member in leading companies. Among others, he served on the boards of IAC, McDonald’s, Allen & Company, The Washington Post Company, H.J. Heinz Company, Home Depot, and Berkshire Hathaway.

It was at the 2019 Annual Shareholder Meeting of the lattermost earlier this month that I picked up Keough’s book. It sat beside a dozen other titles chosen by Warren Buffett for recognition and sale to the thousands of shareholders who make the annual pilgrimage to Omaha. I had long been interested in learning more about Keough’s approach to business because of his unique relationship with Buffett.

In 1960, when Buffett was 30 years old and Keough was 34 years old, the two met. Keough had just bought a house across the street from Buffett in Omaha. Back then, both were by no means the famous executives and business leaders they would become. According to Buffett, “We were just two guys trying to make a living to feed our families.” The Oracle of Omaha, as Buffett would only later be called, was then a relatively unknown manager of a young investment partnership called Buffett Partners, Ltd. As they both retell it, Buffett knocked on the door of his new neighbor Keough and asked him to invest $10,000 or so in the partnership. Keough flat out rejected him. Despite Keough giving Buffett the Mutumbo finger wag, the two went on to form a close friendship and business relationship that lasted decades. “Don can tell you to go to hell so wonderfully you’ll enjoy the journey,” Buffett writes in the forward. Keough eventually realized the error of his ways, though, becoming a shareholder and board member of Buffett’s next investment platform, Berkshire Hathaway, the fifth largest company in the world by market capitalization, which at the time of my writing was $500 billion.

Buffett described Keough as “one of the few guys I feel I can hand the keys over to.” And Keough heaps praise on his neighbor, friend, and business associate, calling Buffett “the world’s greatest simplifier.” While these two were fond of each other and kindred spirits, Keough was his own man. A philosophy major in college who dabbled in theater and clearly had a knack for storytelling, throughout the book, Keough sprinkled beautiful quotes I’d never before encountered from the likes of George Bernard Shaw, Oscar Wilde, and William Blake. These are all in service of his central thesis, told with vigor and dozens of case studies, namely: “You will fail if you quit taking risks, are inflexible, isolated, assume infallibility, play the game close to the line, don’t take time to think, put all your faith in outside experts, love your bureaucracy, send mixed messages, and fear failure.” 

I really enjoyed this witty, punchy book. Keough won me over with his charming writing style, tactful use of inversions to make his points, and the thoroughness with which he manages to explore these ideas despite the book’s brevity. I will happily revisit this.