Business

Audiobooks

Invention: A Life


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In Invention: A Life, James Dyson reveals how he came to set up his own company and led it to become one of the most inventive technology companies in the world. It is a compelling and dramatic tale, with many obstacles overcome. Dyson has always looked to the future, even setting up his own university to help provide the next generation of engineers and designers. For, as he says, “everything changes all the time, so experience is of little use.”

Whether you are someone who has an idea for a better product, an aspiring entrepreneur, whether you appreciate great design or a pause-resisting story, Invention: A Life offers you inspiration, hope, and much more.

Available on Audible, etc.

Books

How to get rich | Donald J. Trump


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Published in: 2004

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The book was written in 2004, at a time when Trump was at the height of his real estate career and a well-known for his attandence on the popular TV-show “The apprentice”. The book is about Trump’s recipies for success in business as well as in life.

DEALMAKING 101. Dealmaking is about persuasion, not power. A great negotiator is a chameleon, changing strategy depending on the person on the other side of the table. He or she also understands the counterpart very well. What are their primary goals? How do they usually negotiate? Also keep your cards close to your chest – the less you reveal the more flexibility you will have as you gather information on the potential deal. To speed up a deal, one tactic is to show a lack of interest in it – this will often make the other side put in some effort to get something going.

“If the other party to the transaction wants to acquire something you own, let them convince you that you really don’t want it or need it. In doing so, they’ll convince you of just how badly they want it.”

STAY FOCUSED. In the 1980s magazine headlines read “Everything he touches turns into gold” and Trump believed it. He had gone straight from school to richness and had begun to think it was easy. In the late 80s he lost focus and was traveling to Europe to attend fashion shows. Then the real estate market crashed. Trump lost everything and was $9.2bn in debt with personal guarantees. When he passed a homeless man in the street, Trump realized that that man was $9.2bn richer than himself. With a lot of work and the help of some understanding bankers Trump survived the early 90s and got back on track. But he learned the lesson: stay focused.   

DON’T LOSE MOMENTUMIn the 1950s a man name William Levitt was the king of real estate. In the late 50s he sold his company for $100m and retired. He married what later turned out to be the wrong woman and moved to France. Years later, he got a chance to buy back his old business, after the new owners had run it into huge problems. He got it back cheaply and thought he could easily turn it around – which was not the case, and he ran it into bankruptcy. In 1994, Trump saw Levitt at a party and asked how he was doing; “not good, Donald, not good – I lost my momentum”. “I was out of the world for 20 years, I came back, and I wasn’t the same”. If you lose your momentum, others will pass you, and you might not be able to get it back.

BRAND YOURSELFTrump was originally going to call the Trump Tower “Tiffany Tower”. He asked a friend about the decision and got the answer: “when you change your name to Tiffany, call it Tiffany Tower”. Branding yourself will hurt a bit now and then, but will pay give huge rewards over time.

OPTIMISTIC BUT PREPAREDIn business as well as life, there will be a lot of ups and downs. They are inevitable and part of the game. If you are prepared, you can ride them out and maybe eventually even prosper from them. If you don’t know every aspect of what you’re doing, down to the smallest details, you’re setting yourself up for future problems. Know what is going on in your market and be the most knowledgeable player in your field.

“Can I handle it if it doesn’t go well? Will I be asking myself later, why did I ever do that? What was I thinking? I’m actually a very cautious person, which is different from being a pessimistic person. Call it positive thinking with a lot of reality checks.”

AN EYE FOR AN EYETrump is well-known for his revengefulness. He stays on his guard and says that it often pays to be paranoid. He believes that if someone hurts you, you should go after them as fiercely as you can.

“I know this observation doesn’t make any of us sound very good, but let’s face the fact that it’s possible that even your best friend wants to steal your spouse and your money.”

HAVE AN EGO. Trumps believes that having a well-developed ego is a positive attribute. The ego is the center of our consciousness and gives us a sense of purpose. A person with no ego will seldom get much done. But a person with too big of an ego will often get into problems. So there need to be some balance to get the right force.

GET A PRENUPTIAL AGREEMENTThe statistic of marriage speaks for signing a prenuptial agreement. But signing one does not mean that you do not believe in your relationship. It means that you understand that a relationship is a complicated matter and that a lot can happen in the future. Trump has seen many failed marriages, without prenuptial agreements, leading to disastrous and infected outcomes.

Podcasts

Sir James Dyson – Tim Ferris Podcast


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Sir James Dyson is the founder and chairman of Dyson. Through investment in science and technology and working alongside Dyson’s 6,000 engineers and scientists, he develops products that solve problems ignored by others. James is the author of the new book Invention: A Life, the story of how he came to be an inventor himself and built Dyson, leading it to become one of the most inventive technology companies in the world.

Books

Dear Chairman | Jeff Gramm


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Published in: 2015

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Dear Chairman is about shareholder activism in the United States over the past century. The book is written by Columbia professor and fund manager Jeff Gramm and consists of eight studies based on investor letters, newspaper clippings and interviews. According to Gramm, the starting point for shareholder activism was Benjamin Graham’s collision with the Northern Pipeline in 1926. As America then became richer and shareholding more widespread, more and more disputes over corporate control broke out.

STARTS OUT IN THE 1920SIn 1926, Benjamin Graham discovered that the profitable Northern Pipeline (NP) had $90/share in bonds while the stock price was $65. NP held its AGM in Oil City, Pennsylvania, far from the company’s headquarters – probably so that the board and management would get work undisturbed. Graham went there but had forgotten to pre-register his case and had to go home unheard. After working with major shareholders and after several rounds with the board, Graham got hold of two of five board positions. He then got the company to distribute the excess capital to the shareholders.

THE SALAD-OIL SCANDAL IN THE 1960S. Buffett started his partnership in 1956, and experimented in the beginning with everything from activism to short selling and pair trades. A classic story is that of American Express’s (AE) salad-oil scandal that erupted in 1963. The share price fell sharply and Buffett realized that the scandal did not damage AE’s highly profitable core business and invested 40% of the partnership’s capital in the company. He then began to persuade management and the board not to fight against the compensation of the swindlers. Legally, AE did not have to pay any compensation and shareholders loudly began to complain that a payment would still take place. Buffett realized that a lack of compensation could damage AE’s good brand and customer confidence and in the long run overthrow the company. If they took a big “one off”, AE would quickly be on the track again – which got to be the case.  

THE RANSOM LETTERS OF THE 1980S. The 1980s were the decade of “corporate raiders” and the big names on Wall Street were Carl Icahn, Michael Milken and T. Boone Pickens. “Bear hug letters” (an unwelcome but generous takeover bid), greenmail (targeted buyouts by individual shareholders), hostile takeovers (takeover attempts without board / management approval) and poison pills (a protection against hostile takeovers – often via the articles of association) were new words used extensively in the financial press. The activist investments of the decade were to a large degree made possible by cheap capital from Michael Milken. He was the “father of junk bonds” (high-yield bonds with little security) and through this built up a fortune. After a too long time in the grey zone, the happy 1980s resulted in 10 years in prison and a $600m fine for Milken. In the end, however, he came out after only two years.    

THE TOWN-HANGINGS OF THE 2000S. In the late 1990s and early 2000s, hedge fund manager Daniel Loeb introduced a new type of activism – public shaming. Loeb’s approach was to take a position of power in problem companies and replace inefficient management to reverse the negative development. To get the attention of key people, he sent out open letters in which he clearly expressed how management exploited the shareholders through passivity, dishonesty, or laziness. The open letters contained everything from personal attacks to curse words and proved to be highly effective. Loeb had found the key point of key people – if there is one thing CEOs and board members care about, it is their reputation.

”Sometimes a town hanging is useful to establish my reputation for future dealings with unscrupulous CEOs”
– Daniel Loeb

ACTIVISM IS NOT ALWAYS A GOOD THING. Studies have shown that activism is generally value-creating. However, not all outcomes will be good. Gramm takes up the example of BKF Capital, where activists ran a marginally profitable fund company into non-existence. The activists felt that earnings were burdened by unusually high staff costs and saw potential for quick gains if wage levels were trimmed. But when wages were reduced, the staff disappeared and with the staff, the investors disappeared. The fund company’s AUM fell rapidly and after only a few years the business was wound up.

ACTIVISM AS AN ASSET CLASS. According to Gramm, activism entered the institutional world in the late 1980s after GM, through greenmail, bought out major owner Ross Perot. The purchase took place at a large premium and Perot’s billion profit was financed at the expense of other shareholders. Thereafter, the major institutional shareholders increasingly began to side with the activists. It was also in connection with this that greenmail was banned. Nowadays, even normally passive institutions are open to follow successful activists.

Books

The Dhando Investor | Mohnish Pabrai


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Published in: 2007

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The value investor Mohnish Pabrai presents in the book what he calls a Dhandho framework for investing – how to get a high return at low risk. Since the launch of Pabrai Investment Funds, a copy of Buffett’s partnerships in the 1950s, Pabrai has outperformed all major indices and 99% of all funds. Dhandho means in Indian “endeavors that create wealth”, and with an annual return of 28% after fees, that is exactly what Pabrai has done.

Einstein has said: “Compounding is the 8th wonder of the world.”… “We, the compounders, agree with Einstein. It is all about the doubles. How long does it take to get a double and how many doubles can I get in a lifetime?” – Pabrai

HEADS I WIN, TAIL I DON’T LOSE MUCH. Pabrai sums up his investment philosophy as a constant pursuit of situations with minimal risk and maximum return: ”Heads I win, Tails I don’t lose much”, as oppose to the maxim ”high risk, high reward”.

RISK AND UNCERTAINTY. Financial risk can be defined in several ways: (1) risk of losing money permanently, (2) volatility and (3) uncertainty. The best situations arise when uncertainty is high but the risk of losing money is low. Low risk / high uncertainty can be identified in entrepreneurs such as Ray Kroc (McDonalds), Herb Schultz (Starbucks), Richard Branson (Virgin) and also Buffett and Munger. For example, the only capital ever to go into Microsoft was $500k. It can therefore not be said that Microsoft was a high-risk project. But it had high uncertainty. Bill Gates ended up in an extreme place on the “bell curve” but he took no greater risk of ending up there.

LOW RISK, HIGH UNCERTAINTY. Risk and uncertainty are two different concepts. A company’s future may be uncertain. But when you have carefully thought through possible future outcomes and come to the conclusion that the risk of permanent loss of capital is very low, you may have found a lucrative low-risk / high-uncertainty situation. When extreme fear strikes, stock markets can act irrationally. Bad news leads to extreme fear and low valuation as a result. Look for simple businesses that have temporary problems. Look for companies with low valuations and previous profit warnings. Lower expectations may actually mean lower risk of losing your money on the investment.

BUY EXISTING BUSINESSES. Pabrai believes that owning a few listed companies is the best way to build wealth. No major effort is required and in the stock market, a patient investor can occasionally find big discounts. There is also no need for a large amount of capital and there is a gigantic supply of investment opportunities. In addition, the transaction fees are relatively low.

SIMPLE BUSINESSES. “The Dhandho Way” is simple, which is also its power. To fight against your own psychological forces, you must, according to Pabrai, buy businesses that are so painfully easy to understand that in tough times you can remind yourself why you bought the stock. If you need a cumbersome spreadsheet and more than a short paragraph for your thesis, you should look for another investment opportunity.

SUSTAINABLE MOAT. Only businesses with a sustainable moat – ie sustainable competitive advantages – can earn an above average return on invested capital. Over time, the moat tends to shrink. Charlie Munger has said that of the 50 most important companies on the NYSE in 1911, there is only one left today – General Electric. The average life expectancy of a company on the S&P 500 has decreased from just over 60 years in the 1960s to 15-20 years in the last ten years.

FEW BETS, BIG BETS, INFREQUENT BETS. Warren Buffett has said that diversification can be seen as protection against ignorance. Having a portfolio of 100 companies makes it difficult to beat the indices. According to Pabrai, investing as well as gambling is: ”looking out for mispriced betting opportunities and betting heavily when the odds are overwhelmingly in your favor is the ticket to wealth”.

MARGIN OF SAFETY. The larger the discount to the intrinsic value, the lower the risk. And the bigger is also the upside. Stocks are often valued at or above the intrinsic value. Investors should be patient and wait until they find cheap stocks with a large margin of safety, low risk and potentially large upside. In the long run, the cost of permanent losses is high due to the interest-on-interest effect.

COPYCAT RATHER THAN INNOVATORS. According to Pabrai, innovation is a gamble while cloning is safe. Therefore, successful cloning is the best business. Look for businesses run by people who have demonstrated that they can learn and copy from the innovators time and time again.

Books

To Sell is Human | Daniel Pink


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Published in: 2013

Amazon Goodreads

Physicians sell patients on a remedy. Lawyers sell juries on a verdict. Teachers sell students on the value of paying attention in class. Entrepreneurs woo funders, writers sweet-talk producers, coaches cajole players. Whatever our profession, we deliver presentations to fellow employees and make pitches to new clients. We try to convince the boss to loosen up a few dollars from the budget or the human resources department to add more vacation days. In 16 OECD countries – including France, Mexico, and Sweden – more than 90% of businesses now have fewer than ten employees. And a world of entrepreneurs is a world of salespeople.

THE AMBIVERT ADVANTAGE. Adam Grant collected data from a software company that operates call centers to sell its products and tracked the sales representatives’ revenues over the next three months. Not surprisingly, introverted sales reps didn’t perform as well as the extroverted ones. But neither did nearly as well as a third group: the ambiverts. These are people who are neither overly extraverted nor wildly introverted. On a scale on the 1-to-7 scale he found that revenue peaked between 4 and 4.5.

LEARNED HELPLESSNESS. Martin Seligman pioneered the concept of “learned helplessness”. First with studies on dogs, and later with research on humans, Seligman demonstrated that after extended experiences in which they were stripped of any control over their environment, some individuals just gave up. Even when conditions returned to normal, and they possessed the ability to seek gain or avoid pain, they did not act. They had learned to be helpless.

MONITOR YOUR POSITIVITY RATIO. The secret numerical code of the satisfied: 3 to 1. Seligman’s work demonstrated that how we explain negative events has an enormous effect on our buoyancy and performance. When something bad occurs, ask yourself: is this permanent? Is this pervasive? Is this personal? The more you explain bad events as temporary, specific, and external, the more likely you are to persist even in the face of adversity.  

FRAMING MATTERS. Clarity depends on contrast, which Robert Cialdini calls “the contrast principle”. We often understand something better when we see it in comparison with something else. The less Frame, i.e., less is more, is especially important in a world saturated with options and alternatives. Framing people’s options in a way that restricts their choices can help them see those choices more clearly instead of overwhelming them. Other frames mentioned in the book is the experience frame, the label frame, the blemished frame, the potential frame.

PRACTICE YOUR SIX PITCHES. The purpose of a pitch is not necessarily to move others to immediately adopt your idea. The purpose is to offer something so compelling that it begins a conversation, brings the other person in as a participant, and eventually arrives at an outcome that appeals to both of you. The pitch is often the first word, but its rarely the last word.  Ask people to describe your invisible pitch in three words. What is my company about? What is my product or service about? What am I about?

THE ONE-WORD PITCH. Write a fifty-word pitch. Reduce it to twenty-five words. Then to six words. One of those remaining words is almost certainly your one-word pitch.

THE QUESTION PITCH. The classic Reagan question “are you better off now than you were four years ago”. Use this if your arguments are strong. If they are weak, make a statement. Or better, find a new argument.

THE RHYMING PITCH. We remember from the O.J. Simpson trial “if it doesn’t fit, you must acquit”. Pitches that rhyme are more sublime. Go online and find a rhyming dictionary (for example rhymezone.com).

THE SUBJECT LINE PITCH. Review the subject lines of the last twenty e-mail messages you sent. Note how many of them appeal to either utility or curiosity. If that number is less than ten, rewrite each one that fails the test. Utility and curiosity are about equally potent, but they seem to operate independently of each other.

THE TWITTER PITCH. The best pitches are short, sweet, and easy to retweet.

THE PIXAR PITCH. Once upon a time ___. Every day, ___. One day___. Because of that___. Because of that___. Until finally___.    

IMPROVISE. Beneath the apparent chaos of improvisation is a light structure that allows it to work. Understanding that structure can help you move others, especially when your astute perspective-taking, infectious positivity, and brilliant framing don’t deliver the results you seek. In those circumstances, you’ll do better if you follow three essential rules of improvisational theater: (1) Hear offers, (2) Say “Yes and”, and (3) Make your partner look good.

Books

The Almanack of Naval Ravikant | Eric Jorgenson


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Published in: 2020

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The author, Eric Jorgenson, compiled this book out of transcripts, Tweets, and talks by Naval Ravikant – an icon in Silicon Valley and in the start-up culture. The book covers many areas of life, but this “Brief” focus on the section of wealth creation – how to get rich without getting lucky. Briefs on other part’s of this book may appear in the future.

AVOID “ZEROS”. Stay out of things that could cause you to lose all of your capital, all of your savings. Don’t gamble everything on one go. Instead, take rationally optimistic bets with big upsides. 

HOW TO RETIRE. Retirement is when you stop sacrificing today for an imaginary tomorrow. When today is complete, in and of itself, you’re retired. You get there by (1) have so much money saved that your passive income – without you lifting a finger – covers your burn rate, (2) you drive your burn rate down to zero – you become a monk, or (3) you’re doing something you love – you love it so much, it’s not about the money.

WHAT WEALTH IS, AND HOW IT IS CREATED. Wealth is having assets that earn while you sleep. Money is how we transfer time and wealth. You’re not going to get rich renting out your time. You must own equity – a piece of a business – to gain financial freedom. You could own equity as a small shareholder where you bought stock or as an owner where you started the company. Without ownership, your inputs are very closely tied to your outputs.

FORTUNES REQUIRES LEVERAGE. Business leverage comes from capital, people, code or media. Let’s begin with the first two forms of leverage. Capital means money, and to raise money, you must apply specific knowledge with accountability and show good judgement. Labor means people are working for you. It’s the oldest and most fought-over form of leverage. Labor leverage will impress your parents, but don’t waste your life chasing it.

CODE AND MEDIA LEVERAGE. You can create software and media that works for you while you sleep. An army of robots is freely available – it’s just packed in data centres for heat and space efficiency. Use it to build products with no marginal cost of replication. If you can’t code, write books and blogs, record videos and podcasts to build products and content with no marginal cost of replication.

PERMISSONED AND PERMISSIONLESS LEVERAGE. Capital and labor are permissioned leverage. Everyone is chasing capital, but someone has to give it to you. Everyone is trying to lead, but someone has to follow you. Code and media, however, are permissionless leverage and the leverage behind the newly rich.

PATIENCE AND PERSISTANCE. You wait for the moment when something emerges in the world and you’re uniquely qualified. Build your brand in the meantime on Twitter, on YouTube, and by giving away free work. You make a name for yourself, and you take some risk in the process. When it is time to move on the opportunity, you can do so with the maximum amount of leverage possible.

SPECIFIC KNOWLEDGE. You will get rich by giving society what it wants but does not yet know how to get. At scale. Learn to sell. Learn to build. Arm yourself with specific knowledge, accountability and leverage. Specific knowledge is knowledge you cannot be trained for. If society can train you, it can train someone else and replace you. Specific knowledge is often highly technical or creative. It cannot be outsourced or automated.

PRODUCTIZE YOURSELF. ”Yourself” has uniqueness. “Productize” has leverage. “Yourself” has accountability. “Productize” has specific knowledge. If you want to be wealthy, you want to figure out which of those things you can provide for society that it does not know how to get, but it will want, and providing it is natural to you, within your capabilities. Then, you have to figure out how to scale it. Escape competition through authenticity. The internet enables any niche interest, as long as you’re the best person at it to scale out. Because every human is different, everyone is the best at something – being themselves. 

100% DEDICATED. Become the best in the world at what you do. Keep redefining what you do until this is true. It takes decades to execute, where the better part of a decade may be figuring out what you can uniquely provide. You can only achieve mastery in one or two things. It’s usually things you’re obsessed about. If you’re not 100% into it, somebody else who is 100% into it, they will outperform you by a lot because compound interest and leverage applies.

LEVERAGE IS A FORCE MULTIPLIER FOR YOUR JUDGEMENT. Judgement requires experience but can be built faster by learning foundational skills. Imagine someone comes along who demonstrably has slightly better judgement. They’re right 85% of the time instead of 75%. You will pay them $50 million, $100 million, $200 million, whatever it takes, because 10 percent better judgement steering a $100 billion ship is very valuable. CEOs are highly paid because of their leverage. Small differences in judgement and capability really get amplified.