This is probably the best business book that I am going to read all year, seriously. It’s way better than The Lean Startup, a book I reviewed two weeks ago.
Rework is crisp and to the point. It’s written by the founders of37signals.com, a very successful tech company that’s produced productivity tools for small businesses such as Basecamp, Highrise, Backpack and Campfire.
Over and above what they say in the book there was one overriding message that I sensed: they always go with their base instincts and adapt to changing circumstances as they arise.
On business plans, they say they are a waste of time and lead to inflexibility and inaction. I agree. They do not disagree with having a rough plan but they think you shouldn’t get bogged down in it. Every number is a guess that won’t materialize anyway.
On failure, they say people who fail are just as likely to fail again as people who haven’t embarked on anything before. It’s success, not failure, that leads to success.
On being a workaholic, they say go home and get some sleep! You’ll be more creative and work more productively after. Consistently working late is not a badge of honor, it’s a mark of inefficiency. I agree. I am a workaphile in that I enjoy work and spend my weekends writing, reading and website building, but not in the sense of the number of hours I do: I go to bed at 10pm almost every day. Yes, even on Fridays!
On starting a business, they say scratch your own itch, create a product that you yourself need, you will be better able to market it. I so agree on this point. I have a friend who’s built a website on healthy eating and weight loss but he has never had a weight issue himself nor is he interested in the subject in itself.
On seed money, they say using other people’s money is plan z. Don’t resort to it until you really have to. Once you have external investors they start to control you. Are you going into business to be your own woman (or man) or to be a slave to someone else’s short term profit goals?
On constraints or limited resources, they say these are good things. Having limitations force you to think outside the box. Startups with endless cash end up spending money poorly because it is oh-so-easy to spend someone else’s dough.
On an exit strategy, they say do you go into a marriage with divorce in mind? What’s the point of going into a business if you are already thinking about how you are going to get out? I so agree.
On quitting, sometimes it’s a good thing. Don’t flog a dead horse.
On large tasks, break them into small bite-size pieces. I have been living by this principle myself since high school.
On one-upping the competition: a waste of time. Dare to be different.
On the competition: don’t obsess over what they may or may not be doing.
On drug dealers, imitate them. They know their wares are sooo good that they’re willing to give some away for free. LOL!
On marketing, ignore New York Times, Wall Street Journal and all the other Big Girls, they have no time for you! Target niche bloggers and publications. The big players usually go surfing for new stories in these niche places.
They also talk about the benefits of saying NO; the efficiency of creating long uninterrupted periods for work; building an audience; teaching your fans things rather than just selling to them; doing everything yourself first before you delegate so that you know how hard it is; apologizing sincerely; looking beyond potential employees’ formal education and valuing their other experiences; test driving employees first and giving cover letters more weight than résumés and CVs.
I say: buy buy buy!
Mother Teresa, CEO: Unexpected Principles for Practical Leadership
Rating: 4.5* out of 5
When I think of Mother Teresa I think of a little, old lady going around Calcutta feeding and loving the dispossessed. I do not think of a high-powered business woman. The concept of Mother Teresa as a business woman is almost alien to me, yet, she did start the organization, Missionaries of Charity, which at the time of her death had 594 missions in over 100 countries.
I like to read business books because although there is a lot of overlap between books, I find that occasionally I discover something completely new and many times I am forced to ponder something more deeply or to experience someone else’s take on a common business principle. In Mother Teresa, CEO, the authors explain the principles Mother Teresa lived by and how these can be translated into business life.
Mother Teresa was a doer. She had a vision and she followed it through. She was authentic and she lived the values that she preached. The eight principles that the book elaborates are:
There were two principles that I particularly liked: four and eight.
You would never believe it was true but even Mother Teresa had doubts. She never doubted her vision of helping the poorest of the poor but apparently her personal diaries talk about the moments of doubt that she had in God; as well as the loneliness that she faced as a result of dedicating her whole self to the mission.
The book talks about using doubt to question yourself and to avoid paralyzing fear. I feel encouraged by Mother Teresa’s belief that we may feel that what we are doing is just a drop in the ocean but that the ocean would be less without that drop.
The second important thing I discovered was using the power of silence. This is something I hardly do or don’t do enough. I do, however, agree that stepping away from the hustle and bustle of daily life, meditating and just being you have to be good for you.
Overall, I would recommend this book. I used the audio version from Audible which is a mere 2 hours and 7 minutes long. It’s a very short book, only 144 pages, so you should be able to get through it in no time at all.
THE CLEVER GUYS THAT SAW THE CRISIS COMING
Dr Michael Burry
Michael Burry, founder of Scion Capital was the first person with a strong enough opinion of how crap subprime mortgage bonds were to buy insurance against them in the form of CDS (credit default swaps).
I have written a separate blog about Michael Burry.
Greg Lippmann at Deutsche Bank and his quant Eugene Xu
Greg Lippmann ‘bought’ Mike Burry’s view and Michael Lewis likens him to patient zero in an epidemic. He’s the guy responsible for spreading the news that subprime mortgages were going to ‘blow-up’. Their ratings and their pricing didn’t make any sense. They were illogical, based on the wrong assumptions.
Greg Lippmann reinforced the view with numbers run by his quant, Eugene Xu, described in the book as the second smartest guy in China.
I loved Lippmann’s line: “I don’t have any particular allegiance to Deutsche Bank, I just work there.” Classic.
Most investors who heard Lippmann’s spiel weren’t comfortable enough with the idea to short subprime. Lippmann, Xu and a few others have since started their own hedge fund, Libremax Capital, LLC.
THE CAUSE OF THE FINANCIAL CRISIS
Michael Lewis goes through how the creation of financial instruments composed of money lent to people who could never afford to pay the credit back eventually led to the crisis: subprime mortgage bonds and collateralized mortgage obligations, CMOs.
Mortgages were made irresistible with low ‘teaser’ rates, no need for a down-payment and, as though that wasn’t enough, no requirement for proof of income.
Credit rating agencies on their behalf overrated the securities. They didn’t have access to the underlying mortgage data and were ‘too scared’ that ‘excessive’ demands for more information would lead banks to go to another rating agency taking away their fees. The rating agency models, too, were riddled with nonsensical assumptions.
WHO WERE THE BIG SUCKERS THAT WERE BLIND TO THE FOLLY OF SUBPRIME?
Notable characters identified by Michael Lewis as failing to see the extent of the pending crisis in addition to rating agencies are Howard Hubler who lost Morgan Stanley a shed load of money and the CEO of AIG, Joe Cassano who ruled the company like a dictator.
Overall I had two main disagreements with this book:
Lewis tarnished every banker with the same brush. It’s true that desks dealing in subprime took massive risks but they account only for a very small number of people that work in investment banks. You can’t blame every single banker for subprime because bankers that didn’t deal in subprime probably knew as little as a layman about the asset subclass. You can blame the CEOs of these banks because they are meant to maintain oversight. You can also blame the individual traders that made these investment decisions.
I disagreed with Lewis’s conclusion that allowing investment banks to list publicly led to excessive risk taking and hence their downfall. I think the incentive structure is the ultimate issue. Short-term profits are desired a lot more than long-term gains. Once people are incentivized to account for the long-haul performance of the financial industry should improve.
My recommendation? If you want to understand the 2007-2009 financial crisis: buy!
Frontpoint Capital: Steve Eisman, Vincent (Vinny) Daniel and Danny Moses
In many ways these were my favorite characters in the book. They, after much persuading and analysis agreed with Lippmann’s view that subprime asset back securities were overrated and overpriced so they put their money where their mouths were and bet on their demise.
I found Eisman especially amusing because he said the most random things. Whenever he encountered anyone who he thought was stupid he shorted whatever they were invested in. He shorted Wing Chau (who is now suing Michael Lewis for character defamation) and a host of top Wall Street entities: Moody’s, B of A, Citi and Merrills to name a few. His reason for shorting Merrills was that whenever something goes bad Merrill is always there.
Cornwall Capital: Jamie Mai and Charlie Ledley
These guys started a hedge fund, Cornwall Capital, with only USD110,000. They came to the realization of subprime products quite late. However, they did something different: whilst the first movers bet on the very worst BBB subprime mortgages, they bet on the better-rated AA layer because by that point it was clear that even that layer would fail. The bet paid off by tens of millions.
This is a 5* book.
It’s very difficult to write a non-fiction, financial saga and actually make it interesting and readable but Michael Lewis has managed to do just that in The Big Short.
The book tries to grapple with why the financial crisis of 2007-2009 happened, who saw the crisis coming and what might happen now.
Today, I finally spring cleaned my bedroom and it’s finally showroom material: now I have the rest of the house to deal with. As you might know, I am more than a little obsessed about being efficient so I listened to the audio version of The Lean Start-up by Eric Ries as I cleaned.
I have mixed feelings about this book. Firstly, normally, I bond with my authors but by the end of this book I felt rather indifferent to Eric Ries. Maybe it’s because I could sense that he wasn’t smiling as he narrated or perhaps the absence of examples of female entrepreneurs embittered me. I think he mentioned a woman like once in the entire book - an executive at a large corporation, not even a real startup. Don’t tell me there aren’t any because there most definitely are.
Nonetheless, I would give the book 3.5 out of 5. I liked it because it had a lot of examples about different companies, the problems that they encountered and the innovative solutions that took them out of these situations or the inaction that led to their demise.
Overall, Mr Ries is trying to create a theory for what leads to successful enterprise. He thinks it is a formula that can be learnt. Personally, I do not subscribe to this view. The most difficult aspect of starting a business is actually starting and for that you need guts, a lot of guts. Whilst there may be common traits amongst entrepreneurs, I don’t think you can put them into a box. Every entrepreneur teaches me something totally different.
There are a few other things I liked but rather than showcase them all here I will suggest you get the book and see what you can glean from it for yourself. In addition read up on the Toyota way. This Wikipedia link is a great place to start.
One idea I didn’t like was the idea of student-of-one. Apparently, some people are trying to redesign the education system so that learning is customized to the person and children learn at their own speed. It sounds good in theory but since when has acquiring knowledge been the sole premise of school? What about learning to tolerate and interact with others? What about emotional intelligence? I am definitely not a Luddite but I think there is a fundamental flaw in moving from having teachers teaching kids through to impersonal videos that send feedback to the teacher via internet.
If you are wondering who Eric Ries is, he is a multimillionaire and founder of a company called IMVU. I don’t really get what value IMVU adds to a life. People create avatars of themselves in a virtual world and spend money building up their little lives. Hmm? I’m quite anti- needless consumerism but each to his own.
The Lean Startup theory is primarily built off of Toyota’s methodologies. The key things I learnt are:
I have never read this book before (it wasn’t compulsory reading on the British curriculum) and I absolutely loved it. It’s not only an interesting story, it’s extremely well written and has fantastic characterization.
Everyone on my commute officially thinks I am a mad woman because Tom consistently made me laugh with his ideas and amazing ability to sell stuff he was making up as he went along. I found his love for the limelight endearing. He wanted to be admired by everyone but most of all by little Becky Thatcher.
Mark Twain's ‘cave’ debacle caught me completely unaware but I won’t say too much on this point because I don’t want to give the plot away.
A lot of stories that I read nowadays are good plots but the writing isn’t particularly an art in itself. Indeed, I read so many such books that sometimes I forget what good writing is. I will share a few of my favorite lines:
When Tom ‘tricked’ the boys into painting the garden wall for him: “He had discovered a great law of human action, without knowing it – namely, that in order to make a man or a boy covet a thing, it is only necessary to make the thing difficult to attain.” Personally, I felt like Tom taught me something here too; so cunning, so funny.
On Sundays Tom wore “his “other clothes” – and so by that we know the size of his wardrobe.”
When his affections transferred from Amy to Becky, “conscience-smitten too – he could not meet Amy Lawrence’s eye, he could not brook her loving gaze.”
And then the poignant moment when Amy realizes that her ‘boyfriend’ likes somebody else: “Amy Lawrence was proud and glad, and she tried to make Tom see it in her face – but he wouldn’t look. She wondered; then she was just a grain troubled; next a dim suspicion came and went – came again; she watched; a furtive glance told her worlds – and then her heart broke, and she was jealous, and angry, and the tears came and she hated everybody. Tom most of all (she thought).” You will agree that such beautiful, well-crafted prose is nowadays rare.
At the point of meeting Tom, Becky said she knew he was “Thomas Sawyer” but he corrected that swiftly: "“That’s the name they lick me by. I’m Tom when I’m good. You call me Tom, will you?”"
I found Tom’s superstitions and ‘black magic’ very funny. “The truth was, that a superstition of his had failed, here, which he and all his comrades had always looked upon as infallible…Tom’s whole structure of faith was shaken to its foundations.”
When Tom and his friend decided they weren’t loved: “As the two boys walked sorrowing along, they made a new compact to stand by each other and be brothers and never separate till death relieved them of their troubles. Then they began to lay their plans. Joe was for being a hermit, and living on crusts in a remote cave, and dying, some time, of cold and want and grief; but after listening to Tom, he conceded that there were some conspicuous advantages about a life of crime, and so he consented to be a pirate.”
When Tom returned from ‘the island’” “What a hero Tom was become, now! He did not go skipping and prancing, but moved with a dignified swagger as became a pirate who felt that the public eye was on him.” Tom’s behavior was so beyond his age. Indeed, “at school the children made so much of him and Joe, and delivered such eloquent admiration from their eyes, that the two heroes were not long in becoming insufferably “stuck-up”."
When Tom convinced Huck to join him in one of his crazy pursuits, “Huck was willing. Huck was always willing to take a hand in any enterprise that offered entertainment and required no capital, for he had a troublesome superabundance of that sort of time which is not money.”
The above isn’t even a quarter of what I highlighted in this book. It seemed as though every other line was precious but I will leave you with this one innocent scene. When Huck his good friend suggested they take the guns that were in the ‘treasure cave’ Tom said:
“No, Huck – leave them there. They’re just the tricks to have when we go to robbing. We’ll keep them there all the time, and we’ll hold our orgies there, too. It’s an awful snug place for orgies.”
“I dono. But robbers always have orgies, and of course we’ve got to have them, too.”
Aww. So innocent. If you haven’t read this, it’s my biggest recommendation in 2012 so far. It’s free on Amazon kindle.
By Heather Katsonga-Woodward
Time allowing, I love to read. If I read anything interesting, I will blog about it here.