Creative Selection

A Brief Book Review of Creative Selection by Ken Kocienda

“Gentlemen, we have a great deal of ground to cover. We’re going to do things a lot differently than they’ve been done here before… [We’re] going to relentlessly chase perfection, knowing full well we will not catch it, because perfection is not attainable. But we are going to relentlessly chase it because, in the process, we will catch excellence.” - Vince Lombardi

“Most people make the mistake of thinking design is what it [a product] looks like. People think it’s this veneer—that the designers are handed this box and told, ‘Make it look good!’ That’s not what we think design is. It’s not just what it looks like and feels. Design is how it works.” - Steve Jobs

“Look for ways to make quick progress. Watch for project stalls that might indicate a lack of potential. Cut corners to skip unnecessary effort. Remove distractions to focus attention where it needs to be. Start approximating your end goal as soon as possible. Maximize the impact of your most difficult effort. Combine inspiration, decisiveness, and craft to make decisions.” - Ken Kocienda

If you ever wanted a deep, detailed look inside Apple and the workplace culture that enabled the creation of the greatest consumer products in history, this book is for you. Creative Selection (2018) is written by Ken Kocienda, who was a Principle Engineer of iPhone Software at Apple. Kocienda played key roles in numerous inventions that, at the time, were incredibly novel, differentiated, and difficult to create but today are almost taken for granted. These inventions include the Safari web browser, the keyboard for the original iPhone, and touchscreen autocorrection features on iOS.

We learn a lot in this book. We learn about the importance of pushing for simplicity and incorporating self-explanatory elements into whatever you create. To do this requires a lot of work. Explaining how it’s done, Kocienda repeatedly evokes Thomas Edison’s famous quip that invention is “one per cent inspiration and ninety-nine per cent perspiration”. This entire book is essentially a case study in support of that notion. It is written in praise of the unavoidable necessity of “unglamorous grunt work”. I discussed this topic at length in my essay The Slog last year.

Kocienda takes us into the Apple conference rooms where the software powering the iPhone and the iPad were invented. Conference rooms with names like Diplomacy, Between, A Rock, and A Hard Place. Conference rooms with as much character and aesthetic displeasure as a thirty-year-old Peter Pan bus stop annex, with sparse seating consisting of bean bag chairs and beat-up old Ikea furniture—basically as different and unpolished as the inviting, airy, and beautiful Apple Stores we see today.

In these rooms, The Man (i.e., Steve Jobs) and the rigid hierarchy beneath him are ever present. But just as present and just as important is a culture built around demos. Yes, demos. If there is one thing that seems to stand out in Apple from this book, it is a superabundant focus on the power of demos. But not just any demos. A constant flow of demos that build upon previous iterations. Demos that provide “concrete and specific examples” that spur discussion and actionable feedback that leads to progress for the next iteration of the demo. Demos that someday become the seamless, integrated products that wow you. Apple seems a culture focused on tangible progress, not empty brainstorming sessions. It probably helps that everyone from the company mentioned in the book is world class at whatever their role is and tireless in their devotion to their craft.

We also learn of the importance of imbruing “craft, taste, and empathy” into everything we do; the importance of “dogfooding” our creations (i.e., living with them from a user’s perspective); and the importance of embracing the idea that “when software behavior is mysterious, get more organized.”

We also learn about the danger of “Seagull Managers”, namely a “top executive who is rarely around but flies in occasionally and unexpectedly from who knows where, lands on your beach, squawks noisily, fans its wings all over the place, launches itself back into the air, circles overhead, drops a big poop on everyone, and then flies away, leaving the rest of the team to clean up the mess, figure out what it all meant, and wonder what to do about the inevitable follow-up visit.” Yikes. If this sounds like you, work on yourself; try not to be like that. 

There are a lot of great, useable insights in this engaging and welcome book. -

The Wall Will Tell You

A Brief Book Review of “The Wall Will Tell You” by Hampton Fancher

I picked up this book on a whim. I was at a bookstore and mainly attracted to it because I was curious what the screenwriter for Blade Runner (1982) and Blade Runner 2049 (2017) had to say about writing. It’s so thin I almost didn’t notice it on the shelf, it disappearing in the slim darkness in-between bigger books next to it. I’m glad I found it. It didn’t disappoint. Hampton Fancher has written a brief, punchy, encouraging, vivid book. It’s less a series of essays on writing and more hundreds of fortune cookie-length philosophies and strongly-worded scriptures on how to create compelling narratives, build sympathetic characters, and engage an audience. I might mine this for quotes, such as:

“Try to make a life of trying. You want to be smart and successful, but what you are is not so smart and you fail, and if you’re afraid of being a failure and you don’t try not to be, a failure is what you’ll be. When you’re failing is when you’re learning. Learning how you failed teaches you how to succeed.”

Dreamland

A Brief Book Review of “Dreamland: The True Tale of America’s Opiate Epidemic” by Sam Quinones

From The New York Times:

“Over the past two decades, more than 200,000 people have died in the United States from overdoses involving prescription opioids, according to the Centers for Disease Control and Prevention. About 200,000 more have died from overdoses involving illegal opioids, like heroin.”

From Dr. Nathaniel Katz, a pain specialist in Boston:

“My instructors told me that when you take opioids for pain you can’t become addicted because pain absorbs the euphoria. That was at Harvard Medical School. It was all rubbish, we all know now. Why do we listen to those messages? Because we wanted them to be true.”

In a book filled with powerful, tragic stories, there’s one story in particular at the core of crime reporter Sam Quinones’s book Dreamland (2015) that might elicit some of the deepest, most frustrating sighs. It goes something like this: In 1980, the prestigious New England Journal of Medicine (NEJM) published a one-paragraph letter to the editor from a doctor at Boston University named Hershel Jick. In the decade prior, Dr. Jick grew highly interested in using statistical data to track the effects of various drugs on patients at area hospitals. Technologically illiterate, he would hire computer technicians to run his studies. Out of the many studies he ran, one in particular took on a monstrous influence far beyond his wildest nightmares. With the help of a graduate student named Jane Porter, Jick investigated the number of people who had developed addictions after being given narcotic prescriptions while hospitalized. Findings in hand, Dr. Jick wrote a paragraph in longhand and gave it to his secretary to type. It stated that of the 12,000 or so patients treated with opioids while in area hospitals before 1979, and who had records in his database, only four had grown addicted. On page 123 of the January 10, 1980, edition of the NEJM, the findings of Porter and Jick were published. The paragraph was soon forgotten by the authors themselves. 

Four out of 12,000. It would be remarkable if generally true, and if widely applicable. Sadly, it was neither generally true nor widely applicable. As Quinones writes in a blog entry on “the findings of Porter and Jick” published after the book was released:

“Remember this was data taken from the 1960s and 1970s, a time when narcotic painkillers were rigorously controlled, and never given to patients to take home with them. So it stands to reason that patients, under such strict controls and administered the drugs only in hospital, would rarely develop addictions – as the letter’s headline in the journal read when it was published: Addiction Rare in Patients Treated With Narcotics.

“They simply didn’t have access to large supplies of narcotics, and especially drugs to take home with them, as patients routinely do today. Hence they didn’t run much risk of addiction. (The whole thing, btw, helped change my mind about what ignites a scourge of addiction, which I now believe is not demand, but supply. Supply first sparks demand.)

“The problem came not with how the letter was written, but how it was interpreted, then used, by others.”

In the two decades that followed, the innovative marketers-cum-entrepreneurs-cum-scientists-cum-corporate-drug-dealers the Sackler family, their company Purdue Pharma, and their army of well-incentivized sales reps used Porter and Jick to ignite a revolution in how hospitals treated pain, how pharmaceutical drugs were marketed, and how Americans consumed opioids. This little paragraph in an elite publication, forgotten by the authors themselves, was used continuously to buttress the idea that prescription opioids were safe and non-addictive. Ignored was the reality that the study was only about patients in controlled situations. Ignored was the reality that this wasn’t some rigorous study but a throwaway paragraph about initial findings. The findings of Porter and Jick were published in a time before the NEJM digitized and made easily searchable its records; moreover, doctors on the receiving end of marketing messages that opioids are safe didn’t have the time, access, or incentives to check paper publications on this much cited research to see it was largely meaningless. Today, we know the hypothesis that opioids are not addictive is false. There is a time and place for opioids in medical care. It's just not what's been marketed the last thirty years.

In the process of using a tiny paragraph as a cornerstone to build deceptive and destructive marketing messages, the Sackler family amassed a wealth of over $14 billion. They became world-renowned philanthropists, using their dirty money to buy museum wings and access to elite institutions like Ivy League universities. U.S. attorneys general are trying to claw back some of that money today. In the process, the Sacklers aggressively introduced millions of Americans to what Quinones calls “the morphine molecule,” setting the stage for the other epidemic that followed in its wake. 

Given how expensive prescription opioids are, it was no surprise that once addicted to them, addicts, pulled largely from the white middle and upper class, turned to something cheaper and stronger. They found that in black tar heroin. Quinones does a remarkable job showing the parallels between networks of corrupt doctors and “pill mills” in places like southern Ohio, Appalachia, and Oregon who distributed the creations of the Sackler family and the Xalisco Boys (Ha-LEES-koh), a network of a families from a small state in Mexico that similarly revolutionized the illegal opiate trade. Using industry innovations such as novel branding, premium service, sales discounts, and decentralized management, the Xalisco Boys did for heroin what Walmart did for almost everything else. Reading their story felt like reading a bizarro version of Sam Walton’s great memoir Sam Walton: Made in America (1992).

Quinones here clearly holds special contempt for the Sacklers but does not demonize the small-time heroin traffickers who benefited from the addiction frenzy the Sacklers created. Nor does he demonize the addicts whose brain chemistry fell victim to these drugs. But he does raise interesting questions. Why do we usually demonize the street dealer but not the corporate drug dealer executive? The only difference he sees is one can afford better lawyers and posher surroundings. Moreover, America has had other epidemics before this one. Why was the reaction to this one different? (See, Racism). The crack epidemic ravaged inner cities and post-industrial communities that had similarly lost jobs the way Appalachia had. But it was also largely considered an epidemic among black Americans. It was not until the neighbors and children of white legislatures fell prey to addiction through prescription opioids and illegal heroin that the state and media became more interested in rehabilitation versus incarceration, in addiction as a chronic mental illness rather than as a character flaw. 

This is a challenging, stimulating book and I think an important one for learning a crucial aspect of American society of the last three decades.

The Way of the Writer

A Brief Book Review of “The Way of the Writer: Reflections on the Art and Craft of Storytelling” by Charles Johnson

Charles Johnson is a gifted storyteller and probably best known for his works of literary fiction, especially the National Book Award winner Middle Passage (1990). However, in this collection of 42 essays, The Way of the Writer: Reflections on the Art and Craft of Storytelling (2016), he comes across more as a hardworking, determined, and successful teacher. Though his essay style gravitates more toward professorial lecturing than emotional persuasion, this book works best when Johnson is sharing personal anecdotes. It is most instructive when he elaborates on his relationship with his mother, his mentorship by the late writer John Gardner, his wide-ranging enthusiasms as a reader and cartoonist, the utility of working in journalism, and some of his techniques and tools for masterful storytelling. I found it less compelling during the essays on philosophy later in the book, in which he tackles ideas such as the similarities and differences between Buddhism and French philosopher Jean-Paul Sartre’s existentialism. That said, I am grateful Johnson wrote and published this collection of essays. You will learn a lot about the “[seductive] beauty of a blank page” and how to become a better writer, whatever your genre of expression. To hear Johnson tell it, a writer needs personal experience (live a little), systematic study (read a lot), humility (revise continuously), and an open and inquisitive mind (buy a dictionary; no, seriously, buy a dictionary). I have already acquired some books referenced in this (including a dictionary) and will likely acquire more.

Woman World

A Brief Book Review of “Woman World” by Aminder Dhaliwal

After reading Michael Findlay’s wonderful book The Value of Art (2014) and feeling inspired to see more visual art in person, I walked into the Museum of Arts and Design in Columbus Circle one afternoon, it being next to my office. Currently in the museum on the third floor is a work by renowned American feminist artist Judy Chicago from 2004. On capitalized, black lettering on two poster-sized white tapestries are the words, “What If Women Ruled the World.” The words are all the more provocative and captivating by the images they frame. I’d describe those images, but you should just see it for yourself.

The entire work and those words and images were fresh in my mind when I later went into a bookstore and stumbled upon this lovely book Woman World (2018) by Aminder Dhaliwal, a Canadian-born cartoonist living in Los Angeles. Woman World is a hilarious, thoughtful, and engaging graphic novel about a post-apocalyptic world in which men no longer exist and are a fading memory and women rule the world. While the topics covered in the many vignettes within the book aren’t always light, they are explored with aplomb and the pages are filled with jokes while tackling many contemporary and universal issues of womanhood. Dhaliwal is a talented artist and the vast majority of her visual and written punchlines and ideas land well. A fun, stimulating book.

The Value of Art

A Brief Book Review of “The Value of Art: Money, Power, Beauty” by Michael Findlay

“We know what art is: it’s paintings of horses!” - Jack Donaghy, “30 Rock” (TV Show)

Meandering through the visual arts section of the Strand Bookstore in Manhattan after dinner last Friday, I came across Michael Findlay’s book The Value of Art: Money, Power, Beauty (2014). Briefly scanning the table of contents, I soon realized this was the sort of book I had long been meaning to read. This is somewhat ironic in hindsight; upon finishing this book, you get the strong feeling that reading about art is a very poor substitute for looking at it. Because of Findlay’s persuasive encouragement, you feel empowered to look at art in person as often and as slowly and as quietly as possible.

A Scotland-born veteran art dealer in his seventies working in New York City, Findlay sets out to describe the international art world of the last fifty years. In the process, he is at turns charming, hilarious, sarcastic, biting, democratic, and inspiring in his assessments of the world he inhabits and the individuals, institutions, and cultures within it. It shouldn’t be surprising to glean such understanding from this book. Findlay writes with some claims to authority. He is a Director of Acquavella Galleries and has been the head of the Impressionist and Modern Art Department at Christie’s and a member of its Board of Directors. He also serves on the Art Advisory Panel for the Internal Revenue Service and has been a friend, colleague, and competitor to many notable individuals in the art world. His long, diverse career affords us a book full of captivating stories, such as of art world criminals who used museum donations to facilitate insurance fraud, of unassuming regular librarians who quietly purchased and held iconic paintings which their neighbors thought reproductions, and of artists like Henry Moore, who though reclusive, played the art world so well that his collectors often felt he was doing them a favor when he sold them his sculptures.

The book is segmented into three main sections covering the commercial, social, and intrinsic values of art. Findlay tells us, “The basis of this book is that the value of art is threefold: the possibility of maintaining or increasing its commercial value; the society of like-minded enthusiasts; and the private enjoyment of contemplating the work itself.” Findlay makes the astute point that for any particular work or category of art, none of these three values is constant, as they are “enhanced or diminished by the fluctuating mores and tastes of different times and cultures.”

The first section, on the commercial value of art, is a powerhouse, a thorough and incredibly helpful description of value chains within the art world. As an investor and heavy consumer of various forms of industry research, I only wish more people wrote as clearly and deeply about market structures as what you find here. Refreshingly, Findlay comes across not as jaded or cynical but a wry-witted realist. He tells us that “the price of art, whether sold in the primary or secondary market, is governed by supply, demand, and marketing.” And he dives into each of these three areas in primary and secondary markets with great detail and gusto.

In the “supply” section, we learn about how an individual artist’s total output in their lives is one of the few meaningful empirical variables in assessing the potential commercial value of the body of work he or she produces in a lifetime. This figure is captured in the “catalogue raisonné” (or critical catalogue) and varies greatly from artist to artist. For example, Claude Monet, who is considered prolific, lived until he was 86 years old, painted every day, and produced roughly 2,000 paintings. Whereas Vincent van Goh, who died at age 37, and Jackson Pollock, who lived until age 44, created 864 and 382 paintings, respectively. Other important variables include a work’s Provenance, Condition, Authenticity, Exposure, and Quality. However, before we think an algorithm can be easily used to make forecasts of art prices, Findlay explains how collectors, working in concert, often in private market transactions not covered by journalists or discussed at live auctions, intentionally prop up or diminish the commercial value of art without the public becoming aware. Illiquidity, steep transaction costs, and corruption have front seats in this market.

While it is important that the best artists display “mastery of the medium, clarity of execution, and authority of expression,” we also learn in the “demand” and “marketing” sections how the scarcity principle is employed to the advantage or disadvantage of various parties. Indeed, dealers, artists, collectors, museums, art galleries, auction houses, art fairs, and the general public all play a part, willingly or unwittingly, in increasing the volume of activity, the market price of items sold, and the commissions and fees skimmed from the top.

I said earlier that Findlay is at times biting. That may be an understatement. He reserves special animosity for art investment funds; for listening to audio guides at museums; for feeling compelled to read curator captions of a work of art rather than spend the time to figure out ourselves whether or not we like it and why; for the commissions, preening, and often goofy attempts at prestige of auction houses; for the lack of chairs and benches at museums; for short attention spans and scurrying through exhibits rather than lingering with a few items. Findlay spills the most ink on this lattermost idea. He makes the claim that a single painting can often take an artist as long to create as the full production schedule of a Hollywood movie; yet while a movie is typically digested in a couple hours, a painting might often be viewed for only a few distracted seconds at most, though does not lack versus the movie in its layers of narrative and meaning.

In the end, the third aspect of art, its intrinsic, or personal, value, is what Findlay keeps saying is the most important aspect to weigh. And given “beauty is in the eye of the beholder,” it is probably the most stable; though that isn’t saying much given how deep commercial and social influences often play on our individual tastes and preferences, and how our tastes and preferences can change over our own lifetimes. One gets the impression that Findlay only became a dealer because he wanted to make a living following his passion, which was viewing art, and stumbled upon realizing he also was regarded as a trusted broker. He seems someone who has found a way to be happy with the art world irrespective of the peaks and troughs in the commercial and social values of art. We are fortunate he decided to write about his personal experiences.

Zen in the Art of Friendship

“Yell. Jump. Play. Out-run those sons-of-bitches. They’ll never live the way you live. Go do it.” - Ray Bradbury (1994)

In January 2017, I bought a remarkable collection of essays by the legendary writer Ray Bradbury at The American Book Center in Amsterdam. It was titled Zen in the Art of Writing (1994). The quote above comes from the preface. Bradbury tells of how in October 1929, when he was in the fourth grade, he was teased by some of his classmates for liking the comic books of Buck Rogers. Peer pressured and wanting to fit in, he tore his comics apart, tears streaming down his face. A month later he realized his mistake. It wasn’t his comics he should’ve torn up, it was friendships that didn’t value him or his enthusiasms. He went back to his comics. Later Bradbury writes: “Who are your friends? Do they believe in you? Or do they stunt your growth with ridicule and disbelief? If the latter, you haven’t friends. Go find some.” Thank god the young Bradbury found that courage to believe in himself. If not, we wouldn’t have had Fahrenheit 451 (1953), The Illustrated Man (1951), and other classics of American fiction.

When I read Zen in the Art of Writing, I thought a lot about my good friend Mike McCoy. He and Bradbury had the same curiosity, courage, and fighting spirit, not just in themselves but in others. It’s the Ides of March, and Mike would be 34 years old today. I think everyone if they’re lucky in life has a friend like Mike and is a friend to themselves like Bradbury was to himself. Mike was one of the most curious, kind, witty, morally courageous, and intellectually hardworking people I have ever met. It was Mike who encouraged my enthusiasms and said it was okay to try to be the best version of myself; who said it was perfectly fine to talk about Nas and William Wordsworth in the same sentence; to enjoy music, sports, movies, and poetry as much as science, business, politics, and history; to see connections between all where many saw none. So I look forward to his birthday. To toast and celebrate him with beer and barbecue and to remind myself to live with his Bradbarian inspiration: To yell, jump, play, and out-run those sons-of-bitches.

Universal Flex

A Brief Book Review of “The Three-Body Problem” by Liu Cixin

“It’s however you feel, g’head, you swing / Your arms too short to box with god / I don’t kill soloists only kill squads” - Nas (2001)

There’s a scene toward the end of The Matrix (1999) that came to mind after finishing this book. Our protagonist Neo, having gained his full powers and become The One, defeats the evil program Agent Smith by jumping into him and essentially tearing him to pieces from the inside out. The final setting of this battle for the future of humanity was staged in the most mundane of places, a dark hallway in a drab private apartment building. Afterwards, a triumphant Neo flexes his muscles, and the entire universe flexes with him. Such was also how I felt after finishing this thrilling, colossal battle of a book, The Three-Body Problem (2006). I actually flexed. (Apologies to anyone watching.) It is a testament to the narrative powers of author Liu Cixin; he takes you on such an epic journey that in the small conversations and struggles he describes he leaves you too feeling like you just witnessed and won numerous battles for humanity in the most unlikely of places. The story is told with a non-linear, interplanetary, and inter-dimensional narrative that works surprisingly well in holding the reader in suspense while teasing out the beautifully told strands of action to come.

The book begins in the late 1960s during the Chinese Cultural Revolution. A physicist and professor at Tsinghua University, Ye Zhetai, is being forced to atone publicly for teaching his students theoretical physics instead of applied physics. The young communist Red Guards who have confronted him believe he has violated principles of the revolution because his area of study depends perhaps too directly on the exchange of ideas with thinkers from capitalist Western societies. One of his daughters witnesses his degradation and murder, and it profoundly shapes her for decades to come.

We follow that young woman, Ye Wenjie, as she ages and finds herself one day a physicist too; she is trying to solve some highly technical and relatively mundane questions about interstellar communication. Her clever answer to these questions, which employs the Sun to massively amplify radio communications from Earth to other solar systems, dramatically shapes the future of human civilization as we know it.

Lest we cheer Ye Wenjie, a modern Newton, we are faced with some startling questions: Given it takes years on Earth to send and receive communications with the nearest solar systems, what would happen if the first person to communicate with another intelligent civilization was vindictive toward her fellow man, even if that feeling of revenge were in many ways valid? When is vengeance appropriate and solace preferable? How many drafts would you think appropriate to write before sending our first interstellar email or text? What if you screwed up and sent the wrong message? (Damn it, Siri.) What could go wrong or right in the intervening years between call and response? What sort of civil wars or tensions might break out among humans as we try to find one voice to represent ourselves to an alien civilization?

While pondering these wonderfully meaty questions, we also meet Wang Miao, a nanomaterials researcher, and Shi Qiang, a corrupt cop, who form an unlikely duo as protagonists who unfurl the mysteries and battles at the core of this story. They are aided by representatives of the major economies of Earth as well as the United Nations and NATO. The action here and stakes up for grabs are why former President Barack Obama in a 2017 interview with The New York Times just before he left office described The Three-Body Problem as “immense” and “fun” and that it made his "day-to-day problems with Congress seem fairly petty”.

Liu has a talent to take minor interpersonal struggles and show how the fate of the universe can hang in the balance. I once enjoyed an excellent book structured around special relativity called The Forever War (1974) by Joe Haldeman, a writer and professor at MIT. This book takes similar ground. While at the heart of The Forever War is an interstellar love story revolving around the sacrifices of warfare, at the heart of The Three-Body Problem is the topic of intergenerational trauma, on individual and societal levels, and the deep, real, and philosophical consequences of it. In the process, you learn a lot about Chinese intellectual, political, and social history as well as astrophysics and the history of science. This was a remarkable, sweeping story, and I look forward to reading the other two parts of this trilogy.

A Short History of Financial Euphoria

A Brief Book Review of “A Short History of Financial Euphoria” by John Kenneth Galbraith

Cassius: ”Men at some time are masters of their fates. / The fault, dear Brutus, is not in our stars, / But in ourselves, that we are underlings.” — Julius Caesar (1623)

John Kenneth Galbraith is another one of these thrice-named economists like John Maynard Keynes who often had something instructive to say and said it in a charming way. In this brief book, A Short History of Financial Euphoria (1990), he does just that. In roughly 100 pages he recounts the constant patterns within various episodes of financial euphoria and devastation over several hundred years. He provides the reader something of “considerable practical value [in] aiding understanding and prediction.”

We learn that although market participants love to cast the blame for market speculation and crashes at everything and everyone but themselves, “financial deprivation and larger desolation are […] inherent in the system.” We also learn that there are two principle groups of actors necessary for euphoria to occur in the first place: (1) Those who believe some new and wondrous asset has been introduced to the world and that its proper value will be ever higher than its current price levels and that any price is a good one to pay for it (i.e., a group Galbraith calls fools). Also, (2) a smaller group who skeptically believe a speculative fervor has undertaken the former group but that they can comfortably ride that wave and exit before the asset prices in question crash (i.e., people the fools think geniuses). That latter group tends to include bankers, government officials, famous speculators, or more generally, “intellectually questionable men in intimate and protected association with large assets.” The means by which they both allow euphoria in asset prices and benefit from it has always been leverage, though it usually takes on many different names, disguises, and reasons. 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.”

I really enjoyed this book for the same reason I enjoyed Charles P. Kindleberger’s Manias, Panics, and Crashes: A History of Financial Crises (5th Edition; 2005), The Go-Go Years: The Drama and Crashing Finale of Wall Street’s Bullish 60s (1973) by John Brooks, Roger Lowenstein’s When Genius Failed: The Rise and Fall of Long-Term Capital Management (2000), and Robert J. Shiller’s Irrational Exuberance (2005). It seems important to try to learn of debacles in financial history to increase your odds of not repeating them. Maybe something to consider the next time your cousin or an Instagram celebrity suggests you buy into an ‘initial coin offering’. Galbraith is even more specific in his prescription for the reader: “The only remedy, in fact, is an enhanced skepticism that would resolutely associate too evident optimism with probable foolishness and that would not associate intelligence with the acquisition, the deployment, or for, that matter, the administration of large sums of money.” I think that is wise counsel.

The Seven Pillars of Statistical Wisdom

A Brief Book Review of “The Seven Pillars of Statistical Wisdom” by Stephen M. Stigler

All of learning is managing forgetting. That’s something I’ve been saying a lot the last year, especially after I read the remarkable book Make It Stick: The Science of Successful Learning (2014) by Peter C. Brown, Henry L. Roediger III, and Mark A. McDaniel. The meaning of this concept could be considered in two ways. The first is that of employing strategies to help enable the resurfacing of knowledge and wisdom as their stickiness fades with our memory. To explain this, I have borrowed an idea I think I took from the authors: Imagine any idea or unit of knowledge or learning as an object adrift among many in a great sea, with that sea being your general intellect. Whether we like it or not, we each then face the task of trying to find a way to keep that object of knowledge afloat and at the surface, even though time, aging, distraction, etc., conspire to push it below the surface. Brown et al. make the claim that “desirable difficulties” such as low-stakes quizzes, flash cards, or purposeful reflection through writing are great ways to do this. Reading their work helped me double down on deciding to occasionally write reviews after reading books.

The second meaning for the notion that learning is about managing forgetting is far more radical, even today, a few hundred years after its formal finding. And that’s through the statistical concept of aggregation. Aggregation, as explained by the University of Chicago’s Stephen M. Stigler in his fascinating book The Seven Pillars of Statistical Wisdom (2016), is the idea that “discarding information can increase information”. What he means by this is that statistical summaries, such as a mean, median, or mode, are powerful because they purposefully instruct us to take all of our many observations of some event as a whole and to forget the unique information found in each observation. A statistical summary provides us new information not common in the individual observations. To make useful forecasts of the future you will have to try to understand what is typical and to make some thoughtful generalizations. To do this requires discarding some of the unique attributes of your distinct observations.

Investors Benjamin Graham and David Dodd both knew and understood this. They write in the second edition of Security Analysis (1940) about the usefulness of not judging a company’s earning power by its most recent period of reported results. They often employed statistical summaries stretching across several years, or comparing three-year periods set years apart, as a means of finding out what performance is typical for a company—something unlikely to be gleaned or evident from any individual quarter or year of its life. Yale Professor and Nobel Laureate Robert J. Shiller reprised this idea decades later in his cyclically adjusted P/E ratio (or CAPE). Clearly, all understood the perils of the approach popular today of focusing on assessing earning power based on next twelve months (i.e., NTM), last twelve months (i.e., LTM), or run-rate earnings.

While to some the many aspects of this principle of aggregation might seem obvious, it is clear from headlines and modern capitalist advertising that it is not to many. On one end of the spectrum you have people upset about the data collected on each of us by companies such as Alphabet, Facebook, and Amazon and how their data capture and use might erode our privacy. And this is a valid concern made real by the clumsy statements and aggressive strategies of these companies. But it is also true that these companies have become highly valuable because the data they have on each of us individually to them is worthless. It is only our data in aggregate that is valuable to them and that allows them to serve advertisement space to mass advertisers. No individual advertiser wants to specifically reach you, dear reader; they want to reach a big group of people like you who share your interests or politics. This is all to say that, absent being incredibly wealthy or famous, the value of one person’s data to one of these behemoths is essentially worthless. When you individually choose to leave the social hive of Facebook, its profit engine continues unfettered. When we all leave, it ceases to exist. It is only our data aggregated that is incredibly valuable.

On the other end of the spectrum, we have companies actively suggesting that your individual data is actually incredibly valuable to them. These companies, such as American Express or boutique hotel chains like Kimpton or Canopy, claim that you are neither just a number with them nor a statistic and that you will get the individual attention you and your hard-earned dollars deserve. They are reacting very profitably to the notion that many people do not want to be grouped or feel grouped for statistical summaries. Perhaps this is something these consumers choose to forget when they complain to the Alphabets and Facebooks of the world about the treatment of their data. But I digress. This concept is explored well in Ben Thompson and James Allworth’s wonderful Exponent podcast as well as Yuval Noah Harari’s great Homo Deus: A Brief History of Tomorrow (2015), which I reviewed last year.

Stigler has written a strong book and is an expert on the history of statistics. Starting with aggregation, he deftly explains its place as a pillar supporting statistics as a data science since antiquity, bringing in Thucydides in a charming section. Stigler goes on to explain the importance of the other six pillars, Information Measurement, Likelihood, Intercomparison, Regression, Experimental Design, and the idea of the Residual.

The book is written in an accessible style, but it probably should not be a first-read in statistics; much is presumed on the part of the reader and much is only suggested. For example, in explaining the importance of Sir Frances Galton and his work Hereditary Genius (1869) to the history of statistics, Stigler writes, “Not all of that book enjoys high reputation today, but the statistical method was sound.” Hmm. As Stigler was born near Minneapolis and taught at the University of Wisconsin-Madison, this might be a very Minnesota-nice way of saying something else; namely that while Galton was important in the development of modern statistics, unfortunately, he was also the father of eugenics and promoted incredibly racist ideas among white intellectuals that we are still fighting today. This isn’t the book for learning that, at least explicitly. (If I am wrong on this point then I will purify myself in the waters of Lake Minnetonka.)

In a longer book, perhaps Stigler would have done away with the passive, drawing-room allusions and discussed more of these historical controversies head on. Or maybe that’s not his style. But it felt like something was missing here in ignoring how these important statistical principles, and even much of scientific discovery, are not inherently good. Their goodness seems to depend on the context of their usage and the beliefs of their users.

Moments like that aside, I am glad I read this book as it seemed to provide a useful framework for thinking about statistics and the ever-changing importance (and unimportance) of various ideas in the history of science. It also had a good bibliography I will likely mine for more books, including others written by Stigler.

A Man for All Seasons

A Brief Book Review of “A Man for All Markets” by Edward O. Thorp and “The Education of a Coach” by David Halberstam

“The museum has mustered an anthology of fragments, a heap of austere evidence for a truth we keep forgetting: that genius demands labour. Bronzino’s brilliant fancies didn’t leap fully fledged from his brain but crawled through a series of studies. Each time he homed in on the ridges of a fist, the hollows between toes or the bulges of fat at the top of a thigh, he refined his imagination and tempered it through technique.” – Ariella Budick (2010)

“I never brag how real I keep it, cause it’s the best secret / I rock a vest, prestigious, Cuban-link flooded Jesus / In a Lex watching Kathie Lee and Regis, my actions are one with the seasons” – Nas (1996)

It was halfway through reading mathematician Edward O. Thorp’s wonderful memoir a couple weeks ago that it dawned on me that when I was done, I should restart a book I had begun reading roughly a decade ago but never finished. That book was the late David Halberstam’s excellent biography of the sometime boy-genius-made-good Bill Belichick. The Super Bowl was about to be played, and while the bungling ownership of the NFL has through its deep ineptitude diminished the league the last few years, as a long-time fan of the New England Patriots gearing up to support the team in their 10th Super Bowl in my sports-viewing lifetime, I wanted to deepen my knowledge of their head coach. But beyond that topicality, I found much in Thorp’s narrative that sparked thoughts of Belichick. While a memoir of a life that revolved around academia, Las Vegas, and Wall Street could on the surface seem very different than a biography of a professional football coach, I found the lessons in both highly complementary. These lessons were only strengthened by the common work ethic, competitiveness, and love of learning the subjects of the two books seem to share. 

Both books featured the trials and inventions of original, creative, and cerebral men at the top of highly competitive industries. To be sure, there are marked differences in personality. While Belichick is famously taciturn publicly, distrustful of modern sports media, and unwilling to play along with them on their terms, Thorp has always shown an understated showmanship for marketing his groundbreaking ideas, titling symposiums, papers, and books in ways that always draw an audience. It speaks to Halberstam’s esteem and remarkable abilities as a reporter—as well as their being Nantucket neighbors—to get Belichick to sit down in the summer of 2005 and open up for this book. I have previously read Halberstam’s incredible book The Breaks of the Game (1981) about the 1979–1980 season of the Portland Trail Blazers, which like this book is also a fascinating history of a sport and America, not just a team or a person.

While Thorp and Belichick have taken very different paths in their approaches to sharing the findings of their work, those closest to them seem to consider both innately pensive and private, great teachers, and highly deliberate in building adaptive organizations and learning systems that have earned them and their partners remarkable success. Both Thorp and Belichick are essentially concerned with the economic processes at the core of all decision making; namely the allocation of scarce resources among competing ends, whether those scarce resources be one’s purse at a casino table, the assets under management in one’s portfolio, the endowment of a university, a franchise’s salary cap, a team’s roster and lineup, or one’s own attention span. They are at their hearts hobbyists and amateur theorists who led the professionalization of their passions and became highly successful businessmen. Their similarities are more profound than their differences. In many ways, this speaks to the influence that the older of the two, Thorp, has had on decision theory in the last fifty years.

Coming from families deeply scarred by the Great Depression and that slogged through volatile and low-paying work coming out of it, both men seemed to intimately learn the value of frugality and resourcefulness from an early age. Belichick had the good fortune of being the son of probably the first great scout in football history, Steve Belichick. And in many ways, Halberstam’s book is also a biography of the father. The son of Croatian immigrants, Steve Belichick spent hard-scrabble years as a football player and assistant coach bouncing from frustration to frustration navigating the petty politics and narrow-mindedness of football before finding stability on staff at the Naval Academy in Annapolis, Maryland.

From an early age, Bill was drawn to the game his father loved. He learned quickly how to view and “break down” film of football games and to learn the strengths and weaknesses of opposing teams and players. It was a foundational skill that would serve him well his entire football life, helping him survive the short-tenured jobs of a coach’s career. He turned this exceptional skill at watching game tape into a serious competitive advantage, preparing his teams better than any other in the league and learning his opposition better than they knew themselves. Rather than try to exploit the weaknesses of his opponents, his goal was always to find their strengths and try to take them away, making them uncomfortable and in a position of having to do things they weren’t as used to doing. 

This strategy led him to his first major assistant coaching position when he formed partnerships with coach Bill Parcells and linebacker Lawrence Taylor; those partnerships resulted in the New York Giants winning two Super Bowls. It also led him to his first head coaching gig and a few years with the hapless, bumbling Cleveland Browns, where he made the mistakes he would need to learn from to enable his future success. That success would come in his partnership with the Kraft family of the New England Patriots and the quarterback Tom Brady. In Foxboro, MA, they created a system that has so far led to nine Super Bowl appearances and six championships. Belichick is without a doubt the greatest football coach of all time, and arguably the greatest coach or manager in the history of sports (other contenders in my opinion: Red Auerbach, John Wooden, and Sir Alex Ferguson).

Thorp grew up poor near Chicago and in Southern California and demonstrated a love of learning from an early age. He had an impressive curiosity and drive for scientific knowledge, entertaining family friends and relatives by making “rapid approximate calculations” whenever asked or recalling impressive and arcane facts from books he had read seemingly without much trouble. To make his knowledge of physics and chemistry more intuitive, and because to him it was fun, he conducted scientific experiments and pranks at home as a way to test and prove the theories he found in books. Entire textbooks he could devour cover-to-cover and then would mentally review nightly before bed, a habit he has practiced his entire life. 

From this early mental hygiene, which privileged experimentation and thoughtful, patient deliberation, Thorp would become a college professor and then go on to invent a profitable system for beating Las Vegas casinos at blackjack, roulette, and baccarat. He would also in time make a fortune inventing highly profitable processes for pricing and trading options. This led to years of outsized success for his hedge funds, most notably Princeton/Newport Partners, before he, like Belichick, faced his own mid-career hiccup. Though for Thorp, that came in the Cleveland Browns personified, then U.S. Attorney Rudy Giuliani.

Whether dealing with casinos or the volatility of Mr. Market, like Belichick, Thorp prioritized the first principal of focusing on understanding his opposition’s strengths as a way to minimize their powers and maximize his advantage. Thorp too comes across as a very thorough thinker, eager than most to turn over more stones in search of understanding. We see this in how he independently discovered that Bernie Madoff was running a Ponzi scheme several decades before the financial crisis and the rest of the world found out. Thorp sat side-by-side with winners of the Nobel Prize, whether in Economics (Myron Scholes) or Physics (Richard Feynman), and was able to solve things they thought they could not or before they did. This came from his willingness, honed first as a child and mastered throughout his life, to test the hypotheses of conventional wisdom even if it meant laborious and repetitive trials.  

The insights I gained from these books could be grouped into seven principle themes. Those center around the importance and power of (1) actively embracing a probabilistic view of the world, (2) continuously trying to identify and capture “edge” in competitive environments, (3) building repeatable, adjustable, self-reinforcing systems, (4) privileging the advantages of calm rationality over those of ego, (5) self-studying with the help of technology (i.e., preparation, organization, detail-orientation, and diligence; in the case of Belichick that’s game tape, whereas with Thorp that’s miniature models and computational statistical analysis), (6) playing for long-term survival over near-term success, and (7) making an enemy of complacency.

The stories of both Thorp and Belichick prove that you can, with the slightest edge stretched out over enough hands, downs, plays, seasons, years, or what have you, find the advantage in what seem like brutal games of chance and occasionally turn them into games of skill.

 

Thick

A Brief Book Review of Thick by Tressie McMillan Cottom

Three percent of America’s 1.8 million postsecondary faculty members are black. A professor of sociology, Dr. Tressie McMillan Cottom is one of them. She is a black woman who thinks and writes for a living, and she does it very, very well. I cannot recall exactly when she came into my awareness, but I am sure it was years ago through Twitter. As is her habit, she had probably said something in 140 characters or less that was funny or provocative or insightful (or all of the above) that was in turn retweeted by several thousand people. I probably soon thereafter joined the masses retweeting and liking her posts.

While I don’t spend much time on Twitter, she was and remains one of my favorite follows. But I am not sure I had ever read any of her opinions beyond tweets until I picked up this just-released collection of her essays, Thick (2019). I only wish I had dived into her longer-form work sooner. I don’t have anyone other than myself to blame for that, her work having been featured in The Washington Post, The New York Times, The Atlantic, and in her book Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy (2017). Then again, I haven’t even read Harry Potter yet so <emoji man with dark skin tone face-palming>.

In eight essays that are at times hilarious, challenging, and brilliant, she unpacks and shares how and why she became the thinker she is today and how, in her own words, she uses data and research to tell “evocative stories that become a problem for power.” In Thick, she tackles concepts and topics such as Big Beauty (“beauty isn’t actually what you look like; beauty is the preferences that produce the existing social order”), social locations, knowing your whites, structural vulnerability, the tragic paradoxes of competence, presentability versus acceptability, black girlhood, hard-to-measure dividends, and many others. Her writing voice is so clear and engaging I couldn’t put Thick down, skipping out on a 50-mile bike ride to curl up on my couch and thumb through these pages.

If you want to understand the world better, whether through the lenses of race, gender, education, or capitalism (or all of the above), Dr. Cottom is a worthy guide. A voracious reader (she has 14 designated reading spots in her home), a deep thinker, and an industrious writer, her work should be taken seriously. She is willing to think for herself even if it makes her a problem sometimes. Fortunately for us, reading her work often feels more like a blessing.

We Should All Be Feminists

A Brief Book Review of We Should All Be Feminists by Chimamanda Ngozi Adichie

At 50 pages in length, Nigerian-born writer Chimamanda Ngozi Adichie’s We Should All Be Feminists (2014) is a brief read. Yet I would argue it is brimming with more compelling narration, humor, theses, characters, entreaties, and inspiration than other “classic” books I have read that are longer. (Sorry, Kate Chopin.) It’s brief enough where you could read it on train rides to and from work as I did today. If you’re looking for something to read bite-sized and stimulating, this is a great choice, irrespective of your gender.

If you haven’t read We Should All Be Feminists yet, you’re probably familiar with it. In her spectacular song “Flawless” from her self-titled album Beyoncé (2013), Beyoncé Giselle Knowles-Carter sampled Adichie’s lecture at a TEDx conference on Africa from 2012 that forms the basis of this manuscript. That connection is also one of the small unexpected pleasures of reading We Should All Be Feminists, particularly in the second half, when the lines that Beyoncé’s production team sampled appear. After that moment I challenge you to read We Should All Be Feminists without Hit-Boy’s beat in your head and saying to yourself “god damn, God Damn, GOD DAMN“. Go ahead; try. I’ll wait.... Exactly. Told you. But we digress.

This book is more than just the parts sampled for “Flawless”. It’s a reflection on gender roles in two of the most populated countries in the world, the United States and Nigeria, and the causes of, and potential solutions to, inequality based on birth outcomes. The core thesis of the book, beyond what is true and obviously made explicit in the title, is that while there are biological differences between men and women, socialization and restrictive and fictitious (yet normalized and powerful) cultural attitudes exaggerate those differences. This creates stereotypes that actively harm individuals and society as a whole. We, men and women, do this by narrowly defining what it means to be a man and masculine and what it means to be a woman and feminine. As such, boys and girls grow up connecting masculinity with things such as money and aggressiveness, femininity with things such as deference and domesticity, and believe that rather than being themselves (which can and often does line up with these traits), they must match these stereotypes to be whole. Sadly, women have historically borne the brunt of these horrible collective fictions in ways violent, limiting, and demeaning. That’s not okay.

In making these points, Adichie asks a lot of challenging questions of both men and women to provoke us into ending our complicity in the propagation of sexist social structures. Above all, she asks us to dream of what that world would look like with gender equality and to have the courage to act on making it a reality. Laws and policies matter, but they reflect power structures, which arise from beliefs. Collectively believing in the world Adichie aspires to and acting on those aspirations would be a great start. As a feminist, I’m for it.

Hungry Readers

A Brief Book Review of Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies by Geoffrey West

“I consumed fiction as if it were breakfast cereal.” — Don DeLillo (2010)

The best reading seems to encourage us to do more reading. It does not claim to be the final word on any topic of human interest, no matter whether that topic is as large and heavy as a blue whale or as small and light as a shrew. It is as though within the DNA of a good book were genetic strands interested in their own reproduction and the rise of young seedling offspring that grow into new, differentiated, and individual books. Well, of course there are. We have met those genetic strands, and they are us.

Praise be to the authors but also to the readers; were it not for the latter, the process of production and consumption and reproduction would stop, and the world would be the lesser. For what are the best authors if not the best and most voracious readers? It is they, the hungry readers, and their insatiable consumption of the best of that brood of sapling books and their metabolism of the generous fruit of the ideas, data, formulas, analyses, analogies, lyrics, and narratives those books bear, that arise again new readings. These readings in turn trouble the comfortable laze of their established forebears, applying and updating ancient wisdom to and for modern problems and shining new light on the dimmer areas of our mental wisdom maps. The process of literary energy and entropy continues on, and on, and on.

I say this all perhaps as an excuse for why after finishing Geoffrey West’s wonderful book Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies (2017), I ordered six other books. Some are very old (what up, Galileo), while others are relatively new and familiar (how you been, Taleb). Inspiration to learn more and not grow complacent in what I know and the wisdom of the sources I value is the gift of this book and others like it.

West, a British-born theoretical physicist at New Mexico’s Santa Fe Institute, seems first and foremost a dedicated teacher. And he seems also a broad thinker, a ravenous reader, and a witty writer; and thankfully, these traits make his lessons that much better. This book contains volumes. It contains personal memoir, business theory, urban planning and design, cartography, architectural criticism, science history, and meditations on aging and the seductive dangers of linear thinking. (And if you read the afterword you might be surprised to learn it was also edited by the novelist Cormac McCarthy.) Most abundantly, it contains entertaining and accessible lectures on the surprising regularities and connections between topics in biology, mathematics, and physics, such as self-similarity, network geometry, nonlinearity, quarter-power scaling laws, and invariant terminal units. 

Self-similarity? Invariant terminal units? These concepts are deftly explained in service of answering some big questions. West wants to find out if there are some simple, regular laws that all complex systems must obey, whether those systems be organisms such as plants and animals or social networks such as cities and companies. His hope is that this will lead to a quantitative, predictive framework for addressing many of the issues that humanity has grappled with its entire existence. He’s off to an excellent and enlightening start. 

Over the course of almost 500 pages, West teaches us plenty. For example, he teaches us that the same reasons dictate that a faucet in a small Berkshire cabin is the same size and shape as a faucet in a significantly larger man-made structure, such as the Empire State Building, as dictate that the smallest blood vessels in mammals, the capillaries, are the same size in mice as they are in whales. Moreover, for similar reasons, mice have the same blood pressure and total number of heart beats in their relatively shorter, faster-beating lives as humans do and, astonishingly, as whales do in their longer, slower-beating lives. West extends his explanation of the sublinear scaling (i.e., economies of scale) of mammalian metabolism with respect to size to help us understand the very mortal lives of companies and how the superlinear scaling (i.e., increasing returns to scale) of socioeconomic forces explains the almost immortal lives of cities. All this he does better than I could summarize here. But he does not pretend that his is the final word.

The history of science—if not everything—seems to teach us that we present folk and those before us do not know everything that has come before us or is yet to come. For example, it is only within the last 60 years did we come to understand that the length of an object is not objective but is highly subject to the resolution of the device being used to measure it. It is only in the last 40 years that emerged the now commonly accepted theory that a large asteroid hitting the Yucatán peninsula caused the mass-extinction of dinosaurs. It is only in the last 15 years that the medical profession embraced the idea that simple to-do lists could significantly reduce the risk of infecting patients in the course of treatment and save thousands of lives. And it is only every couple years it seems that many learn (or relearn) that asset prices can and do fluctuate and crash with great indifference to our best laid plans.

Clearly, ideas we might take for granted today did not always spread easily. Many were widely mocked or ridiculed before they were widely accepted. (See also marriage equality, desegregation, climate change, etc.) Right now, there are most likely new notions scientific and social flowering that seem unimportant or perplexing but will become ideas that powerfully shape our futures and be accepted as gospel. This history of almost everything also seems to teach us that learning and collaborating across disciplines, cultures, and borders will probably yield some of our greatest and most remarkable future challenges, pleasures, and achievements. If you want a taste of what those interdisciplinary, international, and intercultural achievements might be, West seems one of the most capable tutors. But I, for one, am hungry for more.

Blitzscaling

A Brief Book Review of Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies by Reid Hoffman and Chris Yeh

GITTES: How much are you worth?
CROSS: I have no idea. How much do you want?
GITTES: I just want to know what you’re worth — over ten million?
CROSS: Oh, my, yes.
GITTES: Then why are you doing it? How much better can you eat? What can you buy that you can’t already afford?
CROSS: The future, Mr. Gittes — the future.
Chinatown (1974)

GRUBER: And when Alexander saw the breadth of his domain, he wept, for there were no more worlds to conquer.
Die Hard (1988)

Poor Alexander the Great; King of Macedon, bent on world domination, but—as our fictional villain tells it—frustrated by natural limits to applying his warrior and leadership skills. Alexander should have been born a couple millennia later. He would have loved our modern business world, especially its constant fight for “complete market dominance”, as explained and instructed by Reid Hoffman and Chris Yeh in Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies (2018).

Throughout the book the imagery of violent ends and the language of nation-building and military conquest are repeatedly called upon to make clear and serious the ambitions and stakes of startups, their founders, and their financial backers. What is blitzscaling? Well, you are welcome to read 300 pages to find out clearly but I’ll give you my best retelling of the thesis here. It’s an aggressive program of strategies and tactics that embraces chaos and uncertainty to “prioritize speed over efficiency”. That’s it in a nutshell—speed over efficiency, and aggression. This is at its heart a love letter to aggression, particularly the lifecycle of aggressive entities, which move fast and break things in their early years before, if successful, later holding hat in hand to ask for forgiveness and patience, as humble monopolists focused on “progress”, “making the world better”, and the future. Ahh, the future, Mr. Gittes, the future. The “ever enigmatic future” as Benjamin Graham called it. Let’s unpack this.

The speed part of “speed over efficiency” doesn’t require much unpacking: Our Networked Age enables more extreme growth than ever before; this means quicker decision making, regrets, and rebirth. Hoffman and Yeh have an easy time making this case with stories of ruthless competition right from the first page. Indeed, the first words of the Introduction are, “They’re probably going to kill you,” in reference to a competitive threat Airbnb faced in 2011 from a European fast-follower. When Hoffman tells stories like this of seemingly dire consequences (for the businesses at question, not the mortality of the founders), you believe him. He co-founded PayPal and LinkedIn, was an early investor in Facebook, and he currently sits on the boards of Airbnb and Microsoft; so he writes with command and authority both from personal experience and close secondary sources. It is to unpack the trade-off of speed for efficiency, namely which types of efficiencies you are likely to trade for at different stages of a company’s life to continue your extreme growth, that Hoffman and Yeh essentially dedicate the following 299 pages.

What do they mean by efficiency? Merriam Webster provides us with two useful definitions: “Effective operation as measured by a comparison of production with cost (as in energy, time, and money)” and “the ratio of the useful energy delivered by a dynamic system to the energy supplied to it”. What these both say is that efficiency is the act of optimizing processes to reduce input relative to output. That means getting a lot of bang for your buck. It also means reducing waste in a system. The authors contend that while this might be fine for established companies in “slow, boring industries”, it would be death-knell for others, primarily those in marketplaces with winner take-all or winner take-most dynamics, such as the two-sided marketplaces which Uber, Airbnb, and LinkedIn sit atop.

One way to gauge the stage a company is at and the type of blitzscaling strategies it might use competitively is by employee count. The authors suggest five successive stages for start-ups by this measure: Family (1 to 9 employees), Tribe (10s of employees), Village (100s of employees), City (1000s of employees), and Nation (10000s of employees). In each of these five stages companies must try to figure out what they can do that their competitors can’t or won’t do. If, conversely, they do the same as their competitors, chances are the winner will be the competitor with the most resources (i.e., people and money). This is to say that if you’re a David and you learn that Goliath also has a sling shot you better figure out another way to fight.

There are three types of innovations necessary to fight and make it through each of these stages without dying, which Hoffman and Yeh call the expected outcome for most start-ups. Those are (1) Business Model Innovations, (2) Strategy Innovations, and (3) Management Innovations. It is the first part, Business Model Innovations, that I found most compelling of the three and the richest source of stories, as it is essentially a catalog of how well-known companies faired through their lifetimes along a matrix of six key factors: (1) Market Size, (2) Distribution (which is captured by either (a) leveraging existing networks or (b) viralness), (3) Gross Margins, (4) Network Effects (which are either (a) direct, (b) indirect, (c) two-sided, (d) local, or (e) standards-based), (5) Product/Market Fit, and (6) Operational Scalability.

While the book does a great job describing with examples the ‘how to’ and ‘when to’ of blitzscaling, I think it suffers a bit on the ‘why to’. It makes clear why it works when it works but has trouble providing a reason for why people should choose to blitzscale in the first place. The authors try to make the case that it’s a “race to build things that make the world a better place”. But if several competitors are trying to make the world a better place at the same time, why go through the trouble of going so much faster if you possibly destroy lives, communities, careers, the economy, or the environment to get there? Is it always worth the trade off? The authors answer “no”, but I think they could have spent more time on this. Understanding ego-inflation and outsized wealth and prestige attainment as goals of many would-be conquerors would go a long way toward better framing the motivations of some and the responsibilities of others.

The authors have a chapter toward the end called “Responsible Blitzscaling”, which comes across almost as a surgeon general’s warning on the danger’s for a company and society of those that blitzscale improperly or at the wrong time. But it feels a little callous. It is unclear if blitzscaling is a term which can be applied to bad actors or is only applied to those who attempt to aggressively grow and then happily succeed. Do the losers not blitzscale? Or do they just blitzscale less well? More case studies of blitzscalers (other than Webvan) who didn’t become industry-dominant like the Microsofts and Amazons of the world would have been wonderful. The example of Theranos—chronicled in John Carreyrou’s magnificent Bad Blood (2018)—which more than any recent company I can think of made offerings at the temple of ‘speed over efficiency’ is nowhere in this book but would have been a great addition. Nor is Enron, Long-Term Capital Management, Countrywide Financial, or AIG. They all seem to be blitzscalers but are missing here.

Blitszcaling sounds effective and exciting, as does dominance, though the authors spend very little time on what one does once one is dominant other than worry about being dominated in turn. (Maybe they need a chapter on anti-antitrust-innovations?) I hope in any follow-up books they write, they can take a page from J. Paul Getty’s excellent How to Be Rich (1965), which while having sections on ‘how to win’ also tackles what your responsibility to society is once you’ve ‘won’.

There Will Be Theory

A Brief Book Review of The Innovator’s Solution by Clayton M. Christensen and Michael E. Raynor

John Stuart Mill famously said, “Sound theory is the only foundation for sound practice.” Another John with a four-syllable name, Maynard Keynes, later quipped: “Practical men who believe themselves to be quite exempt from any intellectual influence are usually the slaves of some defunct economist.” Clayton Christensen and Michael Raynor would probably agree wholeheartedly with both statements. They begin and end this brief but dense book, The Innovator’s Solution (2003), with the idea that whether we are conscious of it or not, all business people, whether the managers of established enterprises or the entrepreneurs and investors of new companies, have mental models and theories guiding their business decisions and actions; and not all of these models and theories are good. The best theories are those which are based on pattern recognition that evolves as the patterns it observes evolve. The worst theories tend to be simple inventories of seemingly fixed attributes. While the best theories are grounded in existing circumstances, they also reflect that circumstances change, and as such, they themselves should change too. The good theory this book hopes to build is around the question of growth, namely why it is so hard for companies to sustain their success. To this end, I would argue its most important chapter is its sixth, which attempts to provide guidance on “How to Avoid Commoditization”.

But let’s back up for a second. To quote the great writer Roger Lowenstein, the trouble begins, “as it often will, in a remote and seemingly minor colony of the corporate empire”. A manager at a large, established company is tasked with finding growth. But not the natural rate of growth the large, established company is used to; she is tasked with finding growth that surprises outside investors by exceeding their expectations. In short, she is searching for innovation. Oh, Wall Street; can’t you ever leave well enough alone?

Enter Christensen and Raynor. They begin their theory-building by reprising a framework from the prequel to this book that Christensen wrote, The Innovator’s Dilemma (1997). The authors hold that there are two types of innovations: There are those that are sustaining in nature to the company’s value network (read: its entire business ecosystem) and its place within it, and there are those that are disruptive in nature. With sustaining innovations, a better product is being introduced to an existing market, and this is done best by established, integrated companies providing greater functionality and reliability to their most profitable customers. However, the disruptive innovations are where the largest future rewards are, and these arise from two different situations.

The first is low-end disruption; here a new company with modular or cobbled-together aspects is able to create a lower-margin cost structure to attract customers from the existing market who have been “overserved” on functionality and reliability and just want better speed and responsiveness. The second is new market disruption; a new company—instead of competing with the Goliaths by eating their low margin businesses and forcing them to flee up-market—competes with “nonconsumption” by finding a new “basis of competition” separate from established value networks. It does this by essentially serving new customers or situations that had previously been ignored. Christensen and Raynor spend ample time making the point that to figure out the latter type of disruption involves not asking customers why they like your product but what they hire it to do (the concept of “jobs-to-be-done”). To quote them later, “Competitiveness is far more about doing what customers value than doing what you think you’re good at.” This is not simple stuff to figure out or implement. Few outside of founder-led companies have done it well repeatedly. But it is imperative to know.

If our hypothetical manager is the right type of manager—as Christensen and Raynor spell out in an enlightened chapter on staff selection—it is not because she is deeply experienced in the new areas of disruptive innovation. Rather, it is because she has shown “the ability to learn what needs to be learned” to succeed here. But she still will face problems. The main problem is that the most exciting opportunities of tomorrow are small today and hard to sell within the traditional operations of a large, established company. Why? Because its resources, processes, and values are inextricably intertwined with benefiting its current value network of customers, distributors, and suppliers so that it can in turn make as much money as possible and sustain and grow its largeness.

I know this pretty well. I have advised several Fortune 500 companies on how to create and scale businesses and business models around sustaining and disruptive innovations. I have also served as the outsourced CFO for startups within several of these larger organizations, helping four promising early-stage startups recently raise $14.3 million from C-suites of their parent companies. The core challenge to overcome exists in what Christensen and Raynor refer to as “asymmetric motivations” within “resource allocation processes”. Essentially, the cost structures and values of large, established companies are geared toward prioritizing and incentivizing activities that raise the company up-market to higher margin business lines and keep their current customers happy; this comes at the opportunity cost of attracting new and (currently) less-lucrative customers who are the bedrock of new markets and future disruptive growth. The authors provide useful guidance for how to overcome these problems that aligns well with my own experiences.

This book is dense with ideas, and in many ways it is several books crammed into one. But it is absolutely worth reading. The section on how companies should be patient for growth but impatient for profit—rather than impatient for growth and patient for profit—is wonderful, as is the admirable employment of so many case studies; from the motorcycle, steel, airline, disk drive, automobile, milkshake, and PC industries, as well as repeated use of a Wayne Gretzky quote that would make businessman-theorist Michael Scott of Dundler Mifflin proud.

If you’d like to know how these theories have been sampled and remixed, head over to Ben Thompson’s blog Stratechery, where he has done an admirable job to challenge, update, and apply Christensen’s and Raynor’s powerful and eloquent theories for the ever-changing circumstances of our present time.

The Education of a Value Investor

A Brief Book Review of The Education of a Value Investor by Guy Spier

There is an unexpectedly touching and humble message at the core of this memoir, which is essentially an extended Prodigal Son parable and thank you letter from Guy Spier, the founder and manager of the Aquamarine Fund, to a few key folks in his life; those folks are Spier’s father and the investors Warren Buffett, Charlie Munger, and Mohnish Pabrai. It is unexpectedly touching and humble because, for one, Guy will admit that he drives a convertible Porsche and has never had to take out mortgages to purchase homes in some of the wealthiest neighborhoods in the world. More importantly, the book starts with Spier fresh out of Harvard Business School and Oxford (where he was top of his class and friends with David Cameron), admittedly arrogant about his intellectual powers.

Spier thought his brainpower was like a parachute that could bail him out of any free-falling situation or like an oxygen tank to help him climb to the top of any environment; sadly, Spier thought wrong. After a stint at a (probably corrupt) Wall Street investment bank, he learned that’s not true; environment is stronger than he appreciates, and often the best move is to switch our environments rather than try to influence them. This is perspective he unfortunately did not find within the ivy-clothed buildings of his adolescence.

From this stark awakening, he begins to model the behaviors of Buffett and Munger, which becomes especially pronounced after he and Pabrai—author of the solid book The Dhandho Investor—successfully win an auction to have lunch with Buffett, which Spier calls “the ultimate capitalist master class”. The memoir then begins to read as an almost uncomfortably rose-tinted hagiography of Buffett before Spier thankfully has another awakening; he realizes that his goal in life and as an investor isn’t to blindly imitate Buffett but to become more authentically himself and embrace and work around his own idiosyncrasies (e.g., his ADD, his need to show how smart he is, etc.). How? I think there are three key ideas at the center of his hard-earned wisdom:

(A) We are significantly more likely to be changed by the environments we are in and the peers we associate with than to change them, so we should be thoughtful and careful about what environments we spend time in and gravitate toward people who are “better than us”. Books help, but real flesh-and-blood people help even more;

(B) Having a lot of intellectual horsepower is less important than understanding and knowing how to manage our inner emotional landscapes. It’s important to be reflective and introspective about who we are, especially if we are fortunate enough to be investors, whether of our own capital or that of others. The financial markets expose our vulnerabilities, which is not to say that we should try to be free of any, but is to say that we should confront our vulnerabilities and structure our lives to minimize the deleterious aspects of them. Often it pays more not to work to increase our rationality but to structure our lives to limit our irrationality so whatever rationality we do have can compound over time. To highlight this, Spier dives into some admirable and honest detail to explain actions such as why he uprooted his family to Zurich from New York; why he goes to therapy; why he eschews debt; and why he, Pabrai, and Buffett all take naps in their offices; and

(C) You can’t do the remarkable by aspiring to be conventional. Moreover, the unconventional doesn’t have to be wild; it can be the simple, “boring”, hard stuff (e.g., Munger, despite being a billionaire, is always one hour early to every meeting; Buffett does not have an email address; Pabrai will not sell anything within two years of buying it; Spier does not publicly discuss his current portfolio holdings, etc.).

Saw this at the NYSIB library in midtown and then ordered my own copy online. Glad I did. Full of lessons; marked this up like a graffiti artist.

How to Become a Rainmaker

A Brief Book Review of How to Become a Rainmaker by Jeffrey J. Fox

Bias is strong, and often hard to recognize and check. I came into this book, Jeffrey J. Fox’s “How to Become a Rainmaker”, with some pretty strong biases. I half expected it to be the book version of one particularly cringeworthy but hilarious 90-second scene from Will Ferrell’s magnum opus “Step Brothers”; in the scene Ferrell tries to convince Adam Scott and Rob Riggle’s characters that he’s the right man for running the Catalina Wine Mixer, “the biggest helicopter leasing event in the Western Hemisphere since 1997.” To sell them on the idea, Ferrell pretends to be a douche, and it works. Would I be a douche after reading a book about rainmakers? In hindsight, no. This book is actually really good and refreshingly brief.

I learned about it after it was mentioned in Chris Voss’s surprisingly good Never Split the Difference, and I’m glad I picked it up. Too often books of this ilk are essentially Business Insider articles that should’ve stayed as Business Insider articles and not be drawn out into 200-page woodblocks on common sense that you could learn from speaking to any high school guidance counselor. This book is actually helpful and not geared toward sales bros, but toward anyone who cares about revenue, fundraising, or customer acquisition and retention, whether at a non-profit or for-profit (read: everyone). And I enjoyed its practical advice and many case studies. There are a couple sections that are maybe overly specific and detailed (such as ‘don’t put pens in your pocket because they could explode, embarrass you, and ruin a meeting’—Hmm, okay), but the advice is useful otherwise.

Some advice is common and could be found in similar books, such as: put yourself in your customers’ shoes; do not talk about yourself but instead ask probing, detailed questions and clarify and summarize what they say; pre-plan every sales call; be flexible in your pitch, and if they say yes, take yes for an answer; do the math of how many calls it takes to land a sale and don’t start a “trip” with a customer without enough “gas in your tank”; dare to be dumb by “onionizing” your customer and continuously asking questions about their business; be polite to everyone; a shot on goal is never a bad play; don’t waste your time trying to convince people of your value who don’t already buy similar products; and ask them what you’re not asking that you should know.

Other advice is unique and I hadn’t come across elsewhere: rainmakers sell money not benefits or products (dollarize the benefits of everything for your client); give yourself the best seat in the house; encourage them to express their free will and decide for themselves; welcome customer objections or roadblocks and turn them into objectives; in the middle of a job ask for the next one; don’t negative sell, but do emphasize points of difference; anytime is a good time to reply; show the chain but sell the first link; and ask them to give it a try.

Glad I read this and will do as the author said and flip to a random page every so often and see if I can use the advice in it. I’m confident I can and you can.

Homo Deus

A Brief Book Review of Homo Deus: A Brief History of Tomorrow by Yuval Noah Harari

It is not until the end of this supremely ambitious, engaging, dense, and ultimately successful book that Yuval Noah Harari comes clean: He is not in the business of making predictions; rather, he is in the business of discussing possibilities. I say this upfront because if you read this book with the perspective of it being a window into how the world could develop rather into how it will, it reads as less frightening and immediate and as more stimulating and useful.

In the course of 400 thick pages (figuratively and literally; the publisher seems to be buying premium wood for printing this best seller), Harari touches upon seemingly every aspect of human history. At one point, he brilliantly and seamlessly employs the Romanian Revolution, Egyptian pharaohs, and the corporation commonly known as Google to urge forward his thesis. That thesis begins with the idea that what has differentiated humans from every other organism on the planet was how we developed the propensity for storytelling.

Unlike other species on this blue-green ball, we learned how to use narratives to flexibly organize large and disparate groups of humans in pursuit of collective goals that otherwise might make little sense to each of us as individuals. Most notably, it has allowed us to create “intersubjective” entities like gods, nations, and money, which became the basis of our “religions”. Because of the technological changes enabled by the scientific and industrial revolutions, we then found a new global religion in Humanism, which combined new technologies with our old skill for spinning yarns to place humans at the center of the universe. Humanism, like other religions, has sects; it has liberal humanism (e.g., capitalism), socialist humanism (e.g., communism), and evolutionary humanism (e.g., fascism), and these sometimes clash. (See World War II and the Cold War.)

What is most intriguing about our transition from believing in a god-centric view of the universe to a human-centric view is how technology made this possible both economically and politically and how the three principal sects of humanism borrowed from what came before them and from each other. Indeed, Russian revolutionary leader Vladimir Lenin claimed that communism couldn’t have come to be were it not for capitalist inventions like electrification, radio, and the railroad, which allowed the centralization of decision-making around resources. Harari claims new technology is again making possible the next sea-change in religion, taking ideas from preceding religions, and in the process, changing economics, politics, and society at large.

As we moved from animism to theism and from theism to humanism, we are now moving from humanism to a data-centric view of the universe; our new Internet-enabled world and the mountains of data it produces are rewiring how we organize our societies to be geared more toward decentralization and the freedom of information rather than the freedom of human expression. Important to this development are three key assumptions: Everything, including us, is an algorithm (a conclusion the life sciences are leading us toward), intelligence has been uncoupled from consciousness, and non-conscious algorithms can know us better than we know ourselves.

Whether the powers-that-be in this new religion, Dataism, will eventually need humans as a whole, as individuals, or as represented by some super-human elite among us, and whether our hitherto social institutions will survive, is not a mere parlor room discussion. When the investor and philanthropist George Soros claims Facebook is ruining democracy, he might actually be on to something, but not because of any nefarious ideas in the minds of Zuckerberg, Sandberg, et al., but because in the networked, algorithmic relationships that companies like the FAANG are heralding, democracy’s place in the world seems increasingly tenuous.

To be clear, each of these three assumptions hinges on recent hypotheses in the life sciences that may prove to be wrong. And Harari is not saying they are what should happen but is simply saying what the consequences of them could be. While the ramifications of each assumption for society as a whole and for each of us is unclear, Harari is happy to discuss the possibilities. And I am happy to listen.

A Dozen Lessons for Entrepreneurs

A Brief Book Review of A Dozen Lessons for Entrepreneurs by Tren Griffin

I have often enjoyed the writing of Tren Griffin. He authored a book called Charlie Munger: The Complete Investor that I liked so much I read it twice in a few months. And his blog, 25iq.com, is a treasure of insightful posts on many aspects of business; his articles on customer acquisition costs are particularly strong, and I’ve shared them with friends and business contacts repeatedly. So I‘m always excited to pick up any writing he puts out. But something felt off in this book. Perhaps it was the format and structure, or perhaps it was the subjects. Griffin has clearly studied Charlie Munger, Warren Buffett, and Howard Marks deeply. And his experiences working beside Bill Gates and Craig McCaw have sharpened his mind in ways I’d love to see him share even more. While his knowledge of these titans of business was incredibly enlightening and charming in the pages of his book on Munger, it felt repetitive and trite here—though I’m not sure it’s Griffin’s fault.

In each chapter, we are introduced to a particular start up coach or venture capitalist; after a few sentences about where they went to school or worked, we learn they either invested in household name-brand companies such as Twitter, Uber, AirBnB, Google, or in tech companies I’ve definitely never heard of (and I would doubt you have either), but we are to assume were smashing successes; we are then shown 12 out of context quotes from each which Griffin tries to add some depth to or to contextualize by comparing to ideas espoused by Munger, Buffett, Marks, et al. I don’t doubt that their ideas relate. Indeed, the term “value investor” is a misnomer; all “investors” hunt for “value”, even if the self-imposed rules of their hunt differ.

The problem is that while Munger, Buffett, Marks, et al. are well-known billionaires with public records of their successes, failures, unique stories, and backgrounds, and lovable foibles, the venture capitalists in this book largely blend into a grey, undifferentiated mass. Despite what seem to be Griffin’s efforts to have a diverse array of subjects, they are largely all of the same demographic. (Yes, that one.) Some come across as especially interesting, but they are the exception that proves the rule. Okay, okay, okay; you went to Stanford undergrad and Harvard Business School and know better than to have too large a venture fund if you want to get 3x over ten years for your limited partners, given the few venture-grade companies you are likely to meet that will have exits large enough to keep your lights on. But what are your returns? What were your worst investments, and why? What did you do to help any of those name-brand companies mentioned in your bio succeed?

We learn some useful things, as will happen in any Griffin work because Griffin is a strong teacher: We learn that missionary entrepreneurs persist longer and build better businesses than mercenary entrepreneurs; we learn that the value of a venture capitalist isn’t the check he or she writes but his or her network and the help provided to entrepreneurs around knotty questions related to fundraising, pricing, distribution, and recruitment; we learn that the only sin in business is running out of cash; we learn that great products lead to great brands, not the other way around; we learn that magnitude of success in investing is more important than frequency of success; we learn that venture capital is more cyclical and more of a crapshoot than most outside the industry realize; we learn it is better to be a learn-it-all than a know-it-all; we learn that “growth-hacking” is possibly a bullshit term for “sales and marketing”; we learn that being a visionary is easier than being an operator; we learn that there is no way to learn how to invest or run a company other than to invest or run a company; and we learn that were it not for power law outcomes, convexity, lock-ups, and strong contractual law and public markets, venture capital wouldn’t impress.

Not a bad book but not Griffin’s best either. Again, Griffin is a great teacher; but often I think the best teachers work hard to show their students that primary sources are usually more valuable than secondary sources. To this end, the book might have been improved were it structured like Jack D. Schwager’s great series of books on investing where he essentially prints the interview transcript with his subjects and works to show how their styles of investing differ from each other. Or perhaps that wouldn’t have helped because the subjects here just aren’t that differentiated.