Book Review: Soul In The Game: The Art Of A Meaningful Life

This book came to me at the right time.

Soul In The Game was written by Vitaliy Katsenelson, who was born in a remote and cold city in Russia before migrating to the US in 1991. Tragedy came at a young age when his mother died from brain cancer. A few years after the death of his mother, he moved to the US with his father, settled down in Denver and despite knowing little English when he arrived, Vitaliy has gone on to become a successful businessman and investor. Currently the CEO of IMA, a Denver-based investment firm, he is also an author of multiple books and an award-winning writer.

Soul In The Game is a collection of essays and stories about life, Stoicism and a little bit of classical music. A big portion of this book is dedicated to the school of philosophy whose famous proponents include Seneca, Epictetus and Marcus Aurelius. Readers will get to know these historical characters a little bit and many chapters end with a quote from them. I find it very cool. Vitaliy did a great job making the topic interesting through his own experiences and interaction with folks around him, especially his children. Some of the points and lessons from this book are profound enough that they require that you drop the book for a day or two so that they can marinate on you.

I was in a rough patch recently. I dropped a few good habits that I worked hard to build. I let frustration at work negatively impact my emotions and personal life. My pandemic cat, which adds so much joy to my life, became distant to me because I spent most time in the office and didn’t spend enough time with him. This book is a much needed reminder of what I can and should do, to feel happier and find what is truly valuable to my life. If you are looking for a book on Stoicism or life lessons, I highly recommend this book. Both the content and the writing are great. It gains some additional points from me as several stories speak to what I am going through. Here are a few excerpts that I took note of

“Artisans constantly strive for improvement. Jiro has been making sushi for over 70 years and is still learning. He says, “Even at my age, in my work… I haven’t reached perfection… There’s always a yearning to achieve more. I’ll continue to climb, trying to reach the top, but no one knows where the top is.”

“Artisans have a very narrow, single focus. Jiro said, “I do the same thing over and over, improving bit by bit.” Stoic philosopher Epictetus said, “You become what you give your attention to.” Single focus combined with a drive for constant improvement, while being a student of life, adds up to an incredibly powerful force.”

“There are so many other things I could be doing. But a while back, I realized that there is a finality to everything in life and especially to kids being… well, kids. This changed my perspective on life. Instead of looking at driving my daughter to tournaments as an obligation and feeling victimized for being forced to do it, I choose to do it. And I really, honestly look forward to doing it. As we drive, Hannah and I listen to music and podcasts, and we talk. We go to lunch. We spend time together.”

Excerpt From: Vitaliy Katsenelson. “Soul in the Game: The Art of a Meaningful Life.”

“I know that in two hours they’ll wake up. We’ll have breakfast and I’ll drive them to school. Jonah (my 16-year-old) will be bargaining with me about what music we’ll listen to – classical will not be his first choice. Hannah will be on Jonah’s side. Mia Sarah (my almost-four-year-old) will offer her preference, which is always the same: “Wheels on the Bus Go Round and Round.” We’ll compromise. Jonah has a learner’s permit, and he’ll be driving us through a beautiful park. I’ll hug and kiss them, drop Jonah off at high school, Hannah at middle school, and Mia Sarah at preschool.

I am overwhelmed with emotions just writing this. This is all finite. One day they’ll all be grown up. The house will be empty and days like today will be distant happy memories. I never want days like this to end. I really don’t want my kids to grow up, and a bat mitzvah is another reminder that they are! Someday I will no longer be hugging and kissing them in the morning and driving them to school.

The stock market, economics, politics somehow seem so trivial next to this”

“Tim Urban estimated that by the time you finish high school, you have spent 93% of the total time you’ll ever spend with your parents. Today I spend at least six hours a day with my kids and another 20 hours on weekends. When kids live in your house they are completely dependent on you, especially younger ones.”

Excerpt From: Vitaliy Katsenelson. “Soul in the Game: The Art of a Meaningful Life.”

“When writing is a habit, I do not have to force myself to write. Writing is part of my identity. I am a person who gets up every morning and writes. After not writing for a month, I realize that without it my brain is complete chaos. Just like working out is exercise for my body (I feel mushy when I skip workouts), writing is exercise for my brain. It is not something I do in addition to investing. No, it’s a necessity for me; it’s how I keep my brain tuned and how I connect and organize my otherwise chaotic thoughts.”

“I write a few hours every single day. When I’m done writing I have a similar feeling to the one I have after I work out at the gym. When I’ve worked out hard, the micro-tears in my muscles leave me with a feeling of fullness and growth.”

Excerpt From: Vitaliy Katsenelson. “Soul in the Game: The Art of a Meaningful Life.”

“The problem with a normal budget is that though it captures well ongoing daily expenses like a mortgage, the cable bill, groceries, etc., it ignores future expenses. Let’s take your car, for example. It’s paid for, which is great. But in five years this car will need to be replaced and “suddenly” you’ll discover that you have a one-time $20,000 expense, which should not be sudden and is actually anything but one-time unless you are planning to drive this car for the rest of your life.”

“Sit down together and identify all of your expenses, current and future. Once you have identified your future major expenses, create a sinking fund for each one of them. Once you’ve identified your future expenses, create your budget; and I guarantee that you’ll discover that your true income is much lower than you thought. Just because these expenses are going to happen in the future doesn’t make them less real.”

“By bringing all current and eventual expenses into our monthly spending budget, we got rid of unwelcome surprises. Also, when unexpected things happened – a car accident, a significant repair to the house – since money had been saved in the “emergencies” sinking fund and it came out of a different savings (and mental) account, writing a check was a lot less painful.

I realized over the years what Mark saw then: That our wants are unlimited and will always exceed our income. No matter how much money you make, without a system your insatiable wants (if not controlled) will always outpace your income.”

Excerpt From: Vitaliy Katsenelson. “Soul in the Game: The Art of a Meaningful Life.”

“Stoicism seeks to minimize unnecessary negative emotions, which in turn amplifies positive emotions.”

“Nassim Nicholas Taleb put it so well: “A Stoic is someone who transforms fear into prudence, pain into transformation, mistakes into initiation, and desire into undertaking.”

“Stoicism was started in ancient Greece around 300 BC by Zeno, a wealthy merchant who lost all his wealth in a shipwreck and barely made it out alive himself. Throughout this book I constantly make this point: Pain often unlocks creativity. It must have been a devastatingly painful experience for Zeno to lose everything overnight. Nevertheless, he later wrote: “My most profitable journey began on the day I was shipwrecked and lost my entire fortune.”

For a while Zeno’s philosophy was called Zenoism – but maybe because Zeno did not want it to become a cult of Zeno, he named it after a place in Athens where he and his students gathered, the Stoa Poikile (“painted porch”).”

Excerpt From: Vitaliy Katsenelson. “Soul in the Game: The Art of a Meaningful Life.”

“Some things are up to us and some are not up to us.” This is how Epictetus introduced the dichotomy of control framework”

“He continues: “Within our power are opinion, aim, desire, aversion, and, in one word, whatever affairs are our own. Beyond our power are body, property, reputation, office, and, in one word, whatever are not properly our own affairs.”

“As Epictetus said, “Men are disturbed not by the things that happen, but by their opinion of the things that happen.” We just need to remember that opinion is completely up to us. We can reframe it in a way that minimizes our suffering.”

“Richard Feynman, Nobel laureate physicist, said, “You have no responsibility to live up to what other people think you ought to accomplish. I have no responsibility to be like they expect me to be. It’s their mistake, not my failing.”

Excerpt From: Vitaliy Katsenelson. “Soul in the Game: The Art of a Meaningful Life.”

 

Books on Payments

The payments industry is one of the most complex and interesting out there to me. A lot happen behind the scenes whenever we send out a rent payment through a checking account or buy a coffee with a swipe of our credit card. As consumers, we don’t know much about such complexities. Plenty of innovation over the years has gone into providing optionality as well as a smooth experience to consumers while helping out merchants and financial institutions achieve their business goals. It can be daunting and difficult to start learning about an industry as complex as payments, especially when there are numerous abstract concepts and jargon. But if you are really interested, I’d recommend these three books. They touch upon the general concepts, operational details of each payment method and more importantly, these books are written for laypeople like you and myself

The Anatomy of The Swipe

This book is focused more on credit and debit cards. You’ll learn about key concepts such as interchange, settlement, authorization, chargebacks, Know-Your-Customers (KYC), the parties involved in a card transaction and so on. You’ll learn about how money moves in a card transaction and how a merchant gets paid ultimately. The author did a great job explaining abstract concepts in an easy-to-understand manner. In fact, I gave this book to our intern who had had zero knowledge on payments as a crash course to our industry. He loved it. Hence, I think you too can learn a lot about card payments from this book. Check out my review here.

The Field Guide To The Global Payments

Launched earlier this month, The Field Guide to Global Payments covers more payment methods than just cards and it touches up on other countries than just the US. Because of the number of topics that it tries to cover, in my opinion, I don’t think it has the same depth as the other two books. Nonetheless, there are very interesting facts, stats and concepts covered that will trigger more research and investigation.

One of the earliest noted uses of the term “credit card” dates all the way back to 1887. In his utopian novel Looking Backward, Edward Bellamy described the concept of using a card for purchases; he used the term “credit card” eleven times in the novel. In 1946 the first bank card, Charg-It, was introduced by Brooklyn- based banker John Biggins. A user’s bill was forwarded to Flatbush National Bank, and the bank settled the amount with the merchant directly and collected the funds from the user’s bank account. Only a small number of merchants were supported by the program – those in a specific two-square-block radius – and the card could only be used by those who banked with FNB.

On the checkout page, the shopper fills in their payment details. Typically these are the PAN (payment account number, the sixteen digits on their card), the expiry of their card, the CVV (the three or four-digit security code), and their billing address. Pro tip: if you don’t send the AVS data (billing address information) in the authorization, you may get an interchange downgrade, which means, in short, that the transaction will cost you more as a merchant.

Taking on PCI compliance is a large decision – there are more than 1,800 pages of documentation and more than three hundred security controls, alongside yearly audits. There are four levels of PCI, which each have their own requirements that apply to different use cases. Partnering with a gateway, PSP, or standalone vendor to outsource PCI scope is the decision many merchants make because of this.

Merchants do, however, have a lot of agency in improving decline rates. Overall, in-store (POS) transactions tend to have very low decline rates, while ecommerce transactions can have 5 to 10 percent decline rates. Note that the prevalence of declines goes up for recurring transactions, like a subscription payment, or for cross-border transactions. High-risk merchants, like gambling or escort services (what many dating apps are considered by the card networks!), have even lower benchmark auth rates.

Visa’s excessive chargeback program is called the VDMP – Visa Dispute Monitoring Program. They divide the previous month’s chargebacks by that month’s total Visa transactions. If a merchant has 100 chargebacks and a chargeback ratio of at least 0.9 percent they are added to the program to be monitored. Mastercard has the ECP – Excessive Chargeback Program. The ECP divides the number of chargebacks in a single month by the total number of transactions in the previous month over Mastercard. Their threshold for entering the program is one hundred chargebacks and a ratio above 1.5 percent. In the event that a merchant hits these thresholds, they are notified by their acquirer who may also help them to get fraud levels below the threshold.

Signature debit cards get their name from the fact that a customer must sign the receipt during an in-store payment, and a merchant must subsequently authenticate that the signature on the receipt matches the signature on the back of the card. Signature debit transactions clear funds from the cardholder’s checking account same-day and are usually processed over Visa or MasterCard’s networks. PIN debit cards, however, are authenticated when the cardholder enters their PIN number on a point-of-sale device. Though the funds are also pulled from the cardholder’s checking account, they don’t always clear the same day. These transactions are also eligible for cashback. When you buy groceries and ask for $20 cash back, that transaction will be processed as a PIN debit transaction. There are many more PIN debit networks than the signature networks.

Payments Systems in The US

This book provides an overview of payments systems in the US with great details. First, it talks about payments and payments systems in the US in general. Then, it discusses each core system in details, ranging from the history of the system to what happens behind the curtain and what it is like today. The systems discussed in this book include checking, cards, ACH, wire transfer and cash. Then, it also provides the perspective of consumers as well as the banks before closing out with thoughts on payments innovation. It’s quite a long book, but if you are nerdy about payments, I’d recommend it.

In a net settlement system, the net obligations of participating intermediaries are calculated by the payment system on a periodic basis—most typically daily. At the end of the day, a participating intermediary is given a net settlement total and instructed either (a) to fund a settlement account with that amount, should it be in a net debit position, or (b) that there are funds available to draw on in its settlement account, should it be in a net credit position. Checking, card payments systems, and the ACH are all net settlement systems in the United States.

In a gross settlement system, each transaction settles as it is processed. With the Fedwire system, for example, a transaction is effected when the sending bank’s account at a Federal Reserve Bank is debited and the receiving bank’s account at a Federal Reserve Bank system is credited. No end-of-day settlement process is necessary in a gross settlement system.

Signature debit card interchange is lower than credit card interchange, and PIN debit interchange is even lower for unregulated debit card issuers. Larger debit card issuers (with over $10 billion in assets) receive regulated interchange rates that do not distinguish between signature or PIN debit usage.

Debit card authorization is more challenging than credit card authorization, as the bank must check against an ever-changing account balance. In the early days of debit, banks would authorize transactions (or have a processor authorize them) against a “shadow file” that could be hours or even days out of date. Now, however, most large banks handle authorizations dynamically against the “real” balance in the checking account.

Some payments networks are heavily resourced (i.e. have lots of money), enabling network-level investment in product definition, brand, risk management, and exception processing requirements. Visa, Mastercard, American Express and PayPal are all examples of what we call “thick model” networks. Other networks are thinly resourced, and manage only minimal interoperability issues, leaving functions such as product definition and brand to intermediaries. Check clearing houses, the ACH, and PIN debit networks are all examples of this “thin model.”

Closed loop networks, such as American Express, have card issuance policies similar to some provisions of the open-loop card network rules, so as to ensure interoperability for merchants and other users of the payments system. Merchant agreements, for similar reasons, are much like those of open-loop card networks. But a closed loop network is free to change such policies and agreements without the involved processes used by open-loop networks.

Closed loop systems have the advantage of simplicity. As one entity sets all of the rules and has a direct relationship with the end parties, it can act more quickly and more flexibly than the distributed open loop systems, which must propagate change throughout the system’s intermediary layers. The disadvantage of closed loop systems is that they are more difficult to grow than open loop systems; the payments system must sign up each end party individually.

Book Review: Trillion Dollar Triage

I got to know this book because it was recommended by Warren Buffett and Ted Weschler. Indeed, the read didn’t disappoint. Trillion Dollar Triage is a gripping account of how the Fed, led by Jerome Powell, reacted to the Covid-19 crisis under the intense pressure from Wall Street, an unpredictable and bullying President in Trump and Congress. Jerome Powell never has a PhD in economics, something that many people presume is a prerequisite of being the Fed Chairman. But his Emotional Intelligence, communication skill and willingness to take bold actions seemed to be exactly what the country and the Fed needed in the time of unprecedented challenges in 2020.

I am not going to lie. I thought the book would be dry and bore me after a few chapters. Instead, I was hooked. What happened behind the scenes was recounted with exceptional details; which shows that the author did his homework and conducted a thorough research. I learned a great deal about the Fed, how it generally works and the tools that it has at its disposal such as rate adjustments, quantitative easing (QE) – the purchase of assets that are riskier than the Treasury bills, international swap lines – which makes the US dollars available to foreign banks, lending to certain parties in the economy etc…Interestingly, the author and the book were kind to Steve Mnuchin. I didn’t like the former Treasury Secretary, but he was portrayed as someone who was a reasonable deal-maker and an intelligent and hard-working person. You don’t get that kind of impression whenever he went on TV back then, do you?

If you are interested in macro economics and politics, this book will be a good choice.

“The central bank announced the Treasury-Fed accord on March 4, 1951, in an unexceptional, two-paragraph bulletin. Its significance would grow over time because it marked the beginning of what many commentators refer to as Fed independence. Going forward, the Fed would set interest-rate policy to ensure the economy functioned well rather than to support cheaper financing for the government, as the Fed had done since 1942 to support the war effort. Those boundaries have largely remained to the present day. The Treasury manages all of the money the government receives and pays out, while the Fed manages the supply of money in circulation to keep the economy stable.”

Excerpt From: Nick Timiraos. “Trillion Dollar Triage.”

“Most economists, including Yellen and others at the Fed, were guided by basic beliefs: first, that there is a direct inverse relationship between inflation and unemployment—if one goes down, the other must go up—and second, that there is a “natural rate of unemployment,” a level that evenly balances the supply and demand for labor. When unemployment falls below it, companies must compete for workers by driving up wages at a rate that can feed into higher prices. In order to tamp down an overheating economy, the Fed had traditionally raised interest rates.”

Excerpt From: Nick Timiraos. “Trillion Dollar Triage.”

“Ever since Marriner Eccles’s reforms in 1935, Fed policy had officially been decided by the sometimes-unwieldy Federal Open Market Committee. But policy gets shaped before the FOMC meetings by just three people, informally known as the Fed Troika: the Fed chair, the vice chair, and the president of the New York Fed, who also serves as vice chair of the FOMC. The Troika sets the agenda for each FOMC meeting. They refine the policy options and decide which papers or briefing memos should go out to committee members before each meeting. They steer the FOMC toward consensus. This was the power center of the Fed, and Powell had a historic opportunity to influence the selection of the Troika’s other two members.”

Excerpt From: Nick Timiraos. “Trillion Dollar Triage.”

Powell’s conversational style reflected his desire to reach an audience he felt the Fed at times overlooked—average citizens who didn’t work in markets and whose livelihood didn’t require hanging on every word of the Fed chair. They knew the Fed was important, but they might not know much more than that. At his briefings, Powell delivered short answers, used simple language, and spoke in a breezier manner than his academic predecessors—“a Jimmy Stewart of monetary policy,” as a former senior Fed economist put it.

An important part of communicating with the outside world focused on the 535 people who could make Powell’s life more difficult, or easier, if the going got tough: the lawmakers on Capitol Hill. And he wasn’t shy about letting people know that he thought this was one of the most important things the Fed chair could do. “I’m going to wear the carpets of Capitol Hill out by walking those halls and meeting with members,” he said in a July 12, 2018 radio interview.”

Powell also urged humility. The Fed should “give serious consideration to the possibility that we might be getting something wrong,” he said at his formal swearing-in ceremony”

Excerpt From: Nick Timiraos. “Trillion Dollar Triage.”

“Mnuchin, who was reviewing and approving specific provisions on his own. Democrats mostly saw Mnuchin as a fair and candid broker, though he sometimes yelled at Senate aides when they dared to explain the finer points of capital-markets mechanics: “I’ve worked on Wall Street! I know this!” Mnuchin wasn’t fazed when a Democratic senator, Ohio’s Sherrod Brown, joined the negotiations by speakerphone and launched into a political diatribe about how terrible Trump was—the kind of speech usually reserved for the cameras.”

“Lawmakers were both impressed—Mnuchin showed up in person and rolled up his sleeves—and dismayed: his reluctance to delegate slowed progress. “This was $2.3 trillion, and I was working on behalf of the president, and I wanted to make sure I knew exactly what was in the deal,” said Mnuchin”

“Mnuchin’s zeal for delving into the most intricate lending details earned him the moniker “Secretary Minutiae” among some Fed and Treasury staffers. He was also reluctant to delegate, with the exception perhaps of Muzinich. White House staffers were routinely bemused at sending something to a Mnuchin deputy only to receive a call from the secretary himself, offering his input. Fed officials concluded they were able to pull Mnuchin their way more often simply because their teams of dozens of analysts could outwork him. “The guy was really smart, really hardworking, had a mind like a steel trap,” said a Fed official. “But he’s just one man.”

Excerpt From: Nick Timiraos. “Trillion Dollar Triage.”

Book Review: After Steve: How Apple Became A Trillion-Dollar Company and Lost Its Soul

“After Steve” by Tripp Mickle is about Apple and how it transformed after the death of Steve Jobs. The book shed light on what went on behind the scenes at arguably the most valuable company in the world through two main characters: Tim Cook and Jony Ive. With Cook, we see a then-lieutenant become the ultimate force and voice at Apple. Early in his tenure, Cook had to face investor doubt on whether he could fill the giant void that Jobs’ death left behind. How could he avoid that when his former boss was larger than life? He also had to deal with the precarious political storms both at home in the US and in China. The contrast in how he handled delicate political engagements and how Steve did before showed the difference between two men. There is also a challenge of managing Ive and the growing workforce which meant that the previous culture was no longer a fit. The once-influential Design team which colleagues jokingly referred to as Gods had to see their influence wane and give way for the Finance and Ops teams. Such a transition could only happen under Tim Cook’s watch. The financial results and market valuation of Apple is testament to the excellent job that Cook and his teams have done in the past 12 years. His appointment to CEO was the right call for Apple.

Regarding Jony, the talented artist craves creativity. However, even though he wanted to retain control over all things creative at Apple while not fully mourning Steve’s death, he felt suffocated by the corporate responsibilities, a barrage of meetings and internal fights with other teams. After Apple Watch and Apple Campus, Jony felt burned out and needed to turn a new chapter. Hence, he left the company where he spent most of his adult life. The author reported that after the departure of Jony, the Design team became liberated by not relying on Jony, who wasn’t fully present and committed in the last months of his time there. I do think it worked out for both Apple and Jony that he left. Jony is immensely talented and has world-class taste, but his lack of focus and commitment was detrimental to his teams and colleagues.

If you don’t follow Apple closely but are interested in the company, I think “After Steve” will be a good read. In addition to the evolution of the two characters and Apple itself, there are business lessons that one can take away. First, attention to detail.

Tim Cook is maniacal on details. Becoming a CEO doesn’t mean that he cares only about strategy. At work, I often see executives talk high-level without drilling into details. For me, details matter. They require careful investigation which leads to deep understanding and better decision-making. Here are a few examples:

“The operations team, hollowed out by departures after Jobs’s return, detailed the headway they had made as Cook peppered them with questions: “Why is that? What do you mean?”

“I saw grown men cry,” said Joe O’Sullivan, who was the acting head of operations when Cook arrived. “He went into a level of detail that was phenomenal.”

“Joe, how many units did we produce today?” Cook would ask. “It was ten thousand,” O’Sullivan would answer.

“What was the yield?” he asked, referring to the percentage of units that passed quality assurance before shipment. “Ninety-eight percent.” Unimpressed by the efficiency, Cook would probe deeper. “So how did the two percent fail?”

Excerpt From: Tripp Mickle. “After Steve.”

“He continued waking up each morning before 4:00 A.M. and reviewing sales data. He drilled down into small details, discovering through questions that one model of iPhone was outselling another in a small city in Georgia because the AT&T stores there were running different promotions from those being run in the rest of the state. He held a Friday meeting with operations and finance staff, which team members called “date night with Tim” because it would stretch for hours into the evening, when Cook seemed to have nowhere else to be.”

Excerpt From: Tripp Mickle. “After Steve.”

Another lesson is that a different business life stage cultivates changes in culture and culture fit is important. Under Steve, secrecy and “need-to-know” basis were prevalent. Steve made decisions based on his instinct and was the final voice on many things. Tim Cook, on the other hand, encouraged collaboration and deferred to his reports in areas where he is not strong at, such as creativity. If you work for Cook, you are expected to be able to think strategically and be detail-oriented. Angela Ahrendts, the former CEO of Burberry, left Apple after 5 years because she was reportedly not a fit in Cook’s executive team. Others who are detail-oriented like Cook rose through the ranks like Deirdre O’Brien or Jeff Williams.

I was under impression that Apple’s leaders were excellent at thinking way ahead of time in terms of products or services. This book kinda changed my mind. There are several examples in which the company changed direction when they realized the initial strategy didn’t work. For example, Jony Ive insisted on positioning Apple Watch as a fashion accessory and making it exclusive to cultivate the luxury position. But it only took off when it was sold through normal sales channels and positioned as a fitness product. There was also the drama involving Apple Music and Taylor Swift. Taylor’s criticism forced Apple to change the compensation formula to artists. Otherwise, who knows what would have happened to the service? Last but definitely not least, nobody thought of Apple Watch or Airpods as significant sources of revenue for Apple. One look at the Wearables line item on Apple’s financial reports will tell you that they indeed are.

Overall, I enjoyed the book.

“Jobs had had a designer’s eye. He had once walked past a prototype of a forthcoming iPhone and barked, “What is this shit?” The curvature and polish of the prototype had been changed only slightly during manufacturing, but he had caught the differences with a glance and been repulsed. He had demanded that it be fixed. Without him, the team lost the feedback that fueled their work.”

“When the first prototype was finished, Ive exited his glass office and strolled to the table to review it. He twisted the shimmering silver camera in his hands and brushed his fingers across a toggle button on the rear of the unit that looked like a Nintendo controller. It was there to enable users to scroll through digital photographs on the camera’s display. But he didn’t like the buttons. They protruded too much. He told the team that he wanted the knobs to be as flush and smooth as the aluminum case itself.

It was a challenging ask. Keats spent days inserting 100-millimeter sheets of plastic film called Mylar on each side of the rear toggle, trying to raise the buttons the minimal amount necessary to make them discernible while keeping them practically flush with the exterior of the case.

The camera design took more than nine months and required 561 different models before Ive was satisfied. Apple estimated that fifty-five engineers had spent a combined 2,100 hours on it. The company reused some of the manufacturing techniques in future Apple products, including the laser-etching process for MacBook speakers. Keats did the final assembly by hand and traveled to Germany to have Leica’s engineers ensure that the camera worked”

“At various points over the years, the company’s leadership team had discussed the possibility of buying Disney, Netflix, or Time Warner, which owned HBO. But the rocky integration of Beats showed how difficult it could be to import companies into Apple’s rigid culture. Cook favored proceeding alone. His preference led to what became known inside Apple as Project North Star, a $1 billion bet that Apple could make its own Netflix.”

Book Review: Just Keep Buying

If you are a normal Joe like me and want to learn about investing as well as personal finance, do yourself a favor and get “Just Keep Buying“. The lessons contained in the book are popular and well-covered by many other authors. So don’t expect any earth-shattering discoveries there. But great lessons remain great and it’s always delightful to regularly re-acquaint with them.

Just Keep Buying covers essential issues from rent vs buying a house, focusing on income instead of expense control to dollar-cost-averaging vs buying the dip, traditional IRA vs Roth IRA, individual stocks vs ETFs, REITS vs stocks vs bonds etc…The book doesn’t give a deep dive into each of these issues. Instead, it analyzes the pros and cons or when an investment option makes and when it doesn’t. The arguments are supported by recent data and written in a way that each a dummie like me could understand. If you are new to investing or personal finance, great. Take it as a great inspiring starting point. If you are relatively experienced in some investment areas, there may still be some valuable learnings to gain from the book.

What I also like about “Just Keep Buying” is that Nick offered some great personal perspectives with refreshing honesty. He talked about missing his saving goal by the time he was 30. He mentioned that he didn’t feel rich years ago because unlike his classmates, he never visited Europe. These admissions, if you will, make the book more relatable and credible. It’s a rare quality in books, I find.

All in all, I highly recommend this book, along with The Psychology of Money, to anyone who is interested in money, investing and personal finance. Below are a few highlights from the book

“The first tip is what I call The 2x Rule. The 2x Rule works like this: Anytime I want to splurge on something, I have to take the same amount of money and invest it as well.

So, if I wanted to buy a $400 pair of dress shoes, I would also have to buy $400 worth of stocks (or other income-producing assets).” This makes me re-evaluate how much I really want something because if I am not willing to save 2x for it, then I don’t buy it.

“When it comes to housing as an investment, unfortunately, the data isn’t that promising. Robert Shiller, the Nobel Prize-winning economist, calculated the inflation-adjusted return on U.S. housing was “only 0.6% a year” from 1915–2015. More importantly, most of that return came after the year 2000. Anytime you look at U.S. housing as an investment, you have to compare it to what an investment in another asset would have done over the same time period. This is known as the opportunity cost of the investment.”

“For example, my grandparents bought their $28,000 home and paid a $280 monthly mortgage from 1972 to 2001. Around 2001, their home was valued at around $230,000. If they had put $280 a month into the S&P 500 from 1972 to 2001, they would have had over $950,000 by 2001, after reinvested dividends. And this doesn’t even include their down payment! Had they invested their down payment as well, they would have had over $1 million by 2001.”

“Given that the transaction costs of buying a home are 2%–11% of the home’s value, you will want to ensure that you stay in the home long enough to make up for these costs. For practical purposes let’s choose the middle of this range and assume that the transaction cost of buying a home is 6%. Using Shiller’s estimate for real U.S. housing returns of 0.6% per year, this means it would take ten years for the typical U.S. home to appreciate enough to offset this 6% transaction cost.”

“Just 4% of stocks from 1926–2016 created all the excess return for stocks above U.S. Treasury bills. In fact, “just five firms (ExxonMobil, Apple, Microsoft, General Electric, and IBM) account for 10% of the total wealth creation.”

“As Geoffrey West calculated, “Of the 28,853 companies that traded on U.S. markets since 1950, 22,469 (78 percent) died by 2009.” In fact, “half of all companies in any given cohort of U.S. publicly traded companies disappear within 10 years.”

“The main purpose of this chapter is to reiterate that saving up cash to buy the dip is futile. You would be far better off if you Just Keep Buying.”

“For example, if you had picked a random month since 1926 to start buying a broad basket of U.S. stocks and kept buying them for the rest of the following decade, there is a 98% chance that you would have beaten sitting in cash and an 83% chance that you would have beaten 5-Year Treasury notes as well. More importantly, you would have typically earned about 10.5% on your money while doing so.”

“And if your net worth exceeds $93,170, which is similar to the median net worth in the U.S., that puts you in the top 10% globally. I don’t know about you, but I would consider someone in the top 10% to be rich”

“There is no right answer, because being rich is a relative concept. Always has been and always will be. And that relativity will be present throughout your life.”

“I would be willing to bet that not one of you, if you were offered every dollar of Warren Buffett’s fortune, would trade places with him right now… And I would also bet, by the way, that Buffett would be willing to be 20 years old again if he was broke.” Consider Attia’s trade for a moment. Imagine having Buffett’s wealth, fame, and status as the greatest investor on earth. You can go anywhere you please, meet anyone you want, and buy anything that can be sold. However, you’re now 87 years old (Buffett’s age at the time). Would you make the trade?”

Book Review: A Shot To Save The World

A Shot To Save The World is a riveting book on how different biotechnology companies raced against one another and time to produce the world-saving Covid-19 vaccines. The author did a good job telling the stories of not only what happened in the past two years, but also what transpired leading to the astonishing achievements that our modern scientists unlocked. The stories are broken into 19 chapters, each of which covers a period ranging from 1979 to 2021 and a character whose professional and personal struggles would eventually contribute to the birth of Covid-19 vaccines. Audience will get to know Katalin Kariko, Drew Weissman, Luigi Warren, Stephane Bancel (current CEO of Moderna), Ugur Sahin or Ozlem Tureci, just to name a few. Some of them are more famous than others, but each had a role in to play in the invention of the current vaccines we have today. It’s interesting to learn about their professional as well as personal journeys.

I usually review a book by sharing some of the content that I deem noteworthy, but for this book, I am going to share below some of the things I took away and leave the interesting read to you.

A career in biotechnology is not for everyone

Throughout the book, readers will come to see how difficult it is to work as a scientist in biotechnology. Long hours, countless experiments, constant pressure to deliver results and perennial lack of funding. For example, Kariko and Weissman started working together in 1998 on mRNA and were determined to find a way to sneak it past our immune system. Their breakthrough only came several years later, culminating in a published paper in 2005. In the meantime, Kariko had to take an undeserved demotion to keep her dream alive while battling health issues. Even after the paper was published, they still didn’t gain the recognition of their work at the time and still struggled to further their discovery because of the resource constraints.

In 2001, Uguer Sahin and Ozlem Tureci together started a company called Ganymed. Seven years later, with financial support from a couple of German billionaires, the couple founded BioNTech. As of 2011, neither Ganymed nor BioNTech had anything in even the early stage trial. By 2017, nine years and a lot of investor money after its founding, BioNTech only had one drug in the medium stage trial with no sight on any revenue stream.

If you are used to the corporate world where results are much quicker to come by, imagine how difficult it is to work relentlessly for years without any concrete results. You basically have to run on blind faith that the breakthrough will come some day. There is no guarantee. There is little short-term reward. Just faith and conviction. If that’s not challenging, I really don’t know what is.

Investing in biotech firms is extremely risky

Because it usually takes a long time for scientists to make a breakthrough, if they even make one in the first place, it’s risky to be an investor in biotechnology. The Struengmann brothers are German billionaires and early backers of BioNTech. A decade after pouring millions of euros into the startup and the Turkish couple, the brothers had nothing to show for their money. One of them even questioned why they believed in Sahin and Tureci in the first place.

Moderna was founded in 2010 with early backing from Noubar Afeyan and other investors. The company had the biggest IPO in biotech industry’s history in 2018 at $23 share. The stock traded at $18-19 in 2019 and early 2020, lower than its IPO price. One of its early investors, Viking Global Investors, dumped almost all of its stocks, about 5% of the company, at the end of 2019, signaling a lack of trust in the company’s outlook. The fate of Moderna took a major turn when the pandemic hit and the company bet everything on its ability to produce a vaccine. Had the pandemic not come or had Moderna failed at its effort, there is no telling where the company would be today.

“As 2020 began, Novavax was conducting late-stage trials for yet another vaccine from Smith and his research team, which was now down to fewer than twenty people. This time, they were tackling the flu. Early data was impressive, but existing flu shots were largely effective, and no one was willing to fund Novavax’s program.”

“We were down to not a lot of people, no facilities, no money, no confidence,” Glenn says

“The flu vaccine was the company’s last chance. Erck had managed to keep Novavax going for over a decade, pulling his team off the mat after each failure and frustration. Even he was getting gloomy, though.”

Novavax was trading at $3 – $4 a share in 2019 and early 2020 before skyrocketing during the pandemic

If you are an investor, ask yourself whether you have the stomach to go through what those investors went through. To me, difficult as a word is not enough and I, unfortunately, don’t have the vocabulary to do it justice.

Fate is a magical thing

Many scientists working on mRNA benefitted from the work that Kariko, a Hungarian immigrant, and Drew Weissman did. They, in turn, likely couldn’t have had their breakthrough in 2005, had it not been for the work that others did before them. For Kariko, she wouldn’t have been able to stay in the U.S, had a scientist at the Bethesda Naval Hospital not given her a job when she was on the verge of deportation and nobody else took a chance on her.

The Struengmann brothers, rich as they were, gambled on a young Turkish couple, even when there was scant evidence of what they could achieve. Without their backing, who’s to say whether BioNTech would even exist and whether we would even have a vaccine from them to save millions around the world?

During its early years, Moderna struggled to create a drug using mRNA. Everything they tried at the time failed and the company was on the brink of collapses. Then, a staff named Eric Huang came with the idea that instead of a drug, Moderna should start making a vaccine. The technical challenges that Moderna faced at the time were features of a vaccine. Why not pivoting? Fortunately for us, Stephan Bancel and the Board of Directors of Moderna agreed with Eric. Otherwise, who knows where Moderna or we would be today?

These are just a few examples of countless events that had to happen and in the right sequence so that we and the world could be saved from a deadly pandemic. The course of history would change dramatically if one of these events hadn’t happened. None of us could write this script. Only the magical fate could. And thankfully it did.

I hope by now I made you a tad more interested in the book. I think it’s great. The stories are persona, appealing and inspiring. I finished the book feeling inspired and grateful for all the work and sacrifices that so many scientists had to make for the good of science and our society. It’s easy now to just walk into a Walmart or Hy-vee to get a vaccine. But only by reading this book did I understand the work leading to the birth of that vaccine is full of blood, sweat, tears and sheer luck.

Book Review – The Body: A Guide For Occupants

I don’t remember how I picked up The Body: A Guide For Occupants, but I am very happy that I did. The book offers a scientific and anatomical look at a human body from top to bottom, from outside to inside. It’s full of details and discoveries that I didn’t know before. We often say that we know our body most, but do we? Of course, we can tell if something is wrong, but many of us, I believe, don’t possess a basic understanding of how our body works. If this is something that you are interested in, pick up this book and give it a try.

There are two things that I really like about this book. The first is that the author managed to tell a compelling story about our body so that even laymen like myself can follow and understand. Every chapter’s content is driven by research and some are more technical than others, but overall, even without background in physiology or anatomy, readers can expect to leave this book knowing more about a human body. I also love some of the historical stories that give spotlight to unsung heroes who contributed massively to science but didn’t get the credit that they fully deserve. For instance, Albert Schatz worked tirelessly to discover streptomycin, one of the great microbiological breakthroughs of the previous century. Nonetheless, he didn’t receive credit as well as financial rewards that a discovery of that magnitude should warrant him. I wouldn’t know about him if I hadn’t read this book and for that, I am grateful to the author.

I took a lot of notes throughout the book and here are some of them:

Composition of our body

“Altogether, according to RSC calculations, fifty-nine elements are needed to construct a human being. Six of these—carbon, oxygen, hydrogen, nitrogen, calcium, and phosphorus—account for 99.1 percent of what makes us, but much of the rest is a bit unexpected. Who would have thought that we would be incomplete without some molybdenum inside us, or vanadium, manganese, tin, and copper? Our requirements for some of these, it must be said, are surpassingly modest and are measured in parts per million or even parts per billion. We need, for instance, just 20 atoms of cobalt and 30 of chromium for every 999,999,999½ atoms of everything else.

Thorium costs over $3,000 per gram but constitutes just 0.0000001 percent of you, so you can buy a body’s worth for thirty-three cents. All the tin you require can be yours for six cents, while zirconium and niobium will cost you just three cents apiece. The 0.000000007 percent of you that is samarium isn’t apparently worth charging for at all. It’s logged in the RSC accounts as costing $0.00

“Cadmium, for instance, is the twenty-third most common element in the body, constituting 0.1 percent of your bulk, but it is seriously toxic. We have it in us not because our body craves it but because it gets into plants from the soil and then into us when we eat the plants. If you are from North America, you probably ingest about eighty micrograms of cadmium a day, and no part of it does you any good at all.”

Microbes and viruses

“Luckily, most microbes have nothing to do with us. Some live benignly inside us and are known as commensals. Only a tiny portion of them make us ill. Of the million or so microbes that have been identified, just 1,415 are known to cause disease in humans—very few, all things considered. On the other hand, that is still a lot of ways to be unwell, and together those 1,415 tiny, mindless entities cause one-third of all the deaths on the planet.”

“More recently, Dana Willner, a biologist at San Diego State University, looked into the number of viruses found in healthy human lungs—somewhere else that viruses were not thought to lurk much. Willner found that the average person harbored 174 species of virus, 90 percent of which had never been seen before. Earth, we now know, is aswarm with viruses to a degree that until recently we barely suspected”

“The common cold is not a single illness but rather a family of symptoms generated by a multiplicity of viruses, of which the most pernicious are the rhinoviruses. These alone come in a hundred varieties. There are, in short, lots of ways to catch a cold, which is why you never develop enough immunity to stop catching them all.”

Penicillin and two unsung heroes

“With Britain preoccupied by World War II and the United States not yet in it, the quest to produce bulk penicillin moved to a U.S. government research facility in Peoria, Illinois. Scientists and other interested parties all over the Allied world were secretly asked to send in soil and mold samples. Hundreds responded, but nothing they sent proved promising. Then, two years after testing had begun, a lab assistant in Peoria named Mary Hunt brought in a cantaloupe from a local grocery store. It had a “pretty golden mold” growing on it, she recalled later. That mold proved to be two hundred times more potent than anything previously tested. The name and location of the store where Mary Hunt shopped are now forgotten, and the historic cantaloupe itself was not preserved: after the mold was scraped off, it was cut into pieces and eaten by the staff. But the mold lived on. Every bit of penicillin made since that day is descended from that single random cantaloupe.”

“In 1945, he shared the Nobel Prize in Physiology or Medicine with Ernst Chain and Howard Florey. Florey and Chain never enjoyed the popular acclaim they deserved, partly because they were much less gregarious than Fleming and partly because his story of accidental discovery made better copy than their story of dogged application. Chain, despite sharing the Nobel Prize, became convinced that Florey had not given him sufficient credit, and their friendship, such as it was, dissolved.”

Pharmaceutical patens include clinical trials. Hence, exclusive patent protection is usually just five years

“Yet as the problem has grown, the pharmaceutical industry has retreated from trying to create new antibiotics. “It’s just too expensive for them,” Kinch says. “In the 1950s, for the equivalent of a billion dollars in today’s money, you could develop about ninety drugs. Today, for the same money, you can develop on average just one-third of a drug. Pharmaceutical patents last only for twenty years, but that includes the period of clinical trials. Manufacturers usually have just five years of exclusive patent protection.” In consequence, all but two of the eighteen largest pharmaceutical companies in the world have given up the search for new antibiotics. People take antibiotics for only a week or two. Much better to focus on drugs like statins or antidepressants that people can take more or less indefinitely. “No sane company will develop the next antibiotic,” Kinch says.”

If teenagers are reckless, it’s likely because of their brains

“The brain takes a long time to form completely. A teenager’s brain is only about 80 percent finished (which may not come as a great surprise to the parents of teenagers). Although most of the growth of the brain occurs in the first two years and is 95 percent completed by the age of ten, the synapses aren’t fully wired until a young person is in his or her mid- to late twenties. That means that the teenage years effectively extend well into adulthood. In the meantime, the person in question will almost certainly have more impulsive, less reflective behavior than his elders and will also be more susceptible to the effects of alcohol. “The teenage brain is not just an adult brain with fewer miles on it,” Frances E. Jensen, a neurology professor, told Harvard Magazine in 2008. It is, rather, a different kind of brain altogether.

“The nucleus accumbens, a region of the forebrain associated with pleasure, grows to its largest size in one’s teenage years. At the same time, the body produces more dopamine, the neurotransmitter that conveys pleasure, than it ever will again. That is why the sensations you feel as a teenager are more intense than at any other time of life. But it also means that seeking pleasure is an occupational hazard for teenagers. The leading cause of deaths among teenagers is accidents—and the leading cause of accidents is simply being with other teenagers. When more than one teenager is in a car, for instance, the risk of an accident multiplies by 400 percent.”

Stigma around Monosodium Glutamate may be exaggerated

“Monosodium Glutamate or MSG has had a hard time of it in the West since 1968 when The New England Journal of Medicine published a letter—not an article or a study, but simply a letter—from a doctor noting that he sometimes felt vaguely unwell after eating in Chinese restaurants and wondered if it was the MSG added to the food that was responsible. The headline on the letter was “Chinese-Restaurant Syndrome,” and from this small beginning it became fixed in many people’s minds that MSG was a kind of toxin. In fact, it isn’t. It appears naturally in lots of foods, like tomatoes, and has never been found to have deleterious effects on anybody when eaten in normal quantities. According to Ole G. Mouritsen and Klavs Styrbaek in their fascinating study, Umami: Unlocking the Secrets of the Fifth Taste, “MSG is the food additive that has been subjected to the most thorough scrutiny of all time,” and no scientist has ever found any reason to condemn it, yet its reputation in the West as a source of headaches and low-grade malaise now appears to be undimmed and permanent.”

Diabetes

“Diabetes comes in two varieties. Indeed, it is really two diseases, with similar complications and management issues but generally different pathologies. In type 1 diabetes, the body stops producing insulin altogether. In type 2 diabetes, insulin is less effective, usually because of a combination of decreased production and because the cells on which it acts don’t respond as they normally would. This is referred to as insulin resistance. Type 1 tends to be inherited; type 2 is usually a consequence of lifestyle. But it’s not quite as simple as that. Although type 2 is unequivocally associated with unhealthy living, it also tends to run in families, suggesting a genetic component. Similarly, although type 1 diabetes is associated with a fault in a person’s HLA (human leukocyte antigen) genes, only some people with the fault get diabetes, indicating that there is some additional, unrecognized trigger. Many researchers suspect a link to levels of exposure to a range of pathogens in early life. Others have suggested an imbalance in the victim’s gut microbes or possibly even a connection to how comfortable and well nourished one was in the womb.”

The liver

“NOT ALL GLANDS are tiny, of course. (For the record, a gland is any organ in the body that secretes chemicals.) The liver is a gland and it is, compared with the rest of our glands, gigantic. When fully grown, it weighs about 3.3 pounds, roughly the same as the brain, and fills much of the central abdomen just below the diaphragm. It is disproportionately large in infants, which is why their bellies are so delightfully rounded.”

“It is also the most multifariously busy organ in the body, with functions so vital that if it shuts down, you will be dead within hours. Among its many jobs, it manufactures hormones, proteins, and the digestive juice known as bile. It filters toxins, disposes of obsolescent red blood cells, stores and absorbs vitamins, converts fats and proteins to carbohydrates, and manages glucose—a process which is so vital for the body that its dilution for even a few minutes can cause organ failure and even brain damage”

Perhaps the most wondrous feature of the liver is its capacity to regenerate. You can remove two-thirds of a liver and it will grow back to its original size in just a few weeks. “It’s not pretty,” the Dutch geneticist Professor Hans Clevers told me. “It looks a bit battered and rough compared with the original liver, but it functions well enough. The process is something of a mystery. We don’t know how a liver knows to grow back to just the right size and then stop growing, but it is lucky for some of us that it does.”

Benefits of exercise and the harm of too much sitting

“Study after study since then has shown that exercise produces extraordinary benefits. Going for regular walks reduces the risk of heart attack or stroke by 31 percent. An analysis of 655,000 people in 2012 found that being active for just eleven minutes a day after the age of forty yielded 1.8 years of added life expectancy. Being active for an hour or more a day improved life expectancy by 4.2 years.”

“And how much exercise should we get? That’s not easy to say. The more or less universal belief that we should all walk ten thousand steps a day—that’s about five miles—is not a bad idea, but it has no special basis in science. Clearly, any ambulation is likely to be beneficial, but the notion that there is a universal magic number of steps that will give us health and longevity is a myth. The ten-thousand-step idea is often attributed to a single study done in Japan in the 1960s, though it appears that also may be a myth. In the same way, the Centers for Disease Control’s recommendations on exercise—namely, 150 minutes per week of moderate activity—are based not on the optimal amount needed for health, because no one can say what that is, but on what the CDC’s advisers think people will perceive as realistic goals.”

“Amazingly, and alarmingly, it doesn’t seem to matter how much you exercise the rest of the time. If you spend an evening on the seductive padding of your gluteus maximus, you may nullify any benefits you gained during an active day. As James Hamblin put it in The Atlantic, “You can’t undo sitting.” In fact, people with sedentary occupations and sedentary lifestyles—which is to say, most of us—can easily sit for fourteen or fifteen hours a day, and thus be completely and unhealthily immobile for all but a tiny part of their existence.”

Sugar – Fruits may not be as healthy as we think

“By one estimate, about half the sugar we consume is lurking in foods where we are not even aware of it—in breads, salad dressings, spaghetti sauces, ketchup, and other processed foods that don’t normally strike us as sugary. Altogether about 80 percent of the processed foods we eat contain added sugars. Heinz ketchup is almost one-quarter sugar. It has more sugar per unit of volume than Coca-Cola.”

Many of our fruits and vegetables are nutritionally less good for us than they were even in the fairly recent past. Donald Davis, a biochemist at the University of Texas, in 2011 compared the nutritive values of various foods in 1950 with those of our own era and found substantial drops in almost every type. Modern fruits, for instance, are almost 50 percent poorer in iron than they were in the early 1950s, and about 12 percent down in calcium and 15 percent in vitamin A. ”

Excerpt From: Bill Bryson. “The Body: A Guide for Occupants.” Apple Books.

Book review: Richer, Wiser, Happier: How the World’s Greatest Investors Win in Markets and Life

This book is up there among the best that I have ever read. You won’t find the technical advice or methods to determine whether a stock is a good buy/sell or when. Instead, it’s full of nuggets of wisdom drawn from some of the best investors or thinkers in the world such as Howard Marks, Nick Sleep or Charlie Munger. Whether you are a successful investor has more to do with your patience, your temperament, your thinking and your process than with your IQ, your maths prowess or your ability to build sophisticated financial models. Don’t get me wrong. Those factors definitely help, but if they were the role determinators of success in the investing world, then why would professional traders fail to beat S&P500 all the time and why wouldn’t we have more millionaires?

Because how you approach investing, your patience, your ability to detach emotions from decisions, your character and your thinking affect significantly impact the outcome of your portfolio, they also shape how happy and wise you are in life. On the other hand, learning to be a better investor also helps you understand about yourself better and become wiser & happier. This book is all about that.

Even though the investors interviewed in this book are highly successful and legendary, all the lessons and advice aren’t applicable universally. Everybody’s make-up is different. The audience will have to decide for themselves which lesson works and which doesn’t. Case in point, there are a few investors that are more tolerant of risks and have high concentration of their portfolios in a few stocks, while others consider more diversification acceptable. Some investors feel more comfortable through the volatilities of the markets while others prefer a smooth ride.

I really learned a lot from this book and expect to read it again soon. Really recommend to anyone who is interested in self-improvement or investing. Below are a few of my favorite excerpts. It’s not really easy to pick out these because I literally took note all over the book.

Learn from other people

I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart. —Charlie Munger

“Yet Pabrai’s success both as an investor and a philanthropist is built entirely on smart ideas that he has borrowed from others. “I’m a shameless copycat,” he says. “Everything in my life is cloned.… I have no original ideas.” ”

Luck & humility

One way that Marks keeps his own ego in check is by reminding himself of the starring role that luck has played in his life. After reading Malcolm Gladwell’s book Outliers, which explores various causes of success, Marks compiled a list of lucky breaks that have helped to propel him to where he is today. His streak began with the “demographic luck” of being born to white, middle-class parents in the United States at the start of a golden era of postwar growth.III Nobody in his family had a college degree, but he was fortunate that his parents valued learning, bought an encyclopedia, and encouraged him to go to college. His high school grades were nothing special, so he thinks he was also lucky that Wharton accepted him. And it was Wharton that exposed him to finance, leading him to jettison his earlier ambition of a career in accounting.”

“I once gave an interview in which I mentioned that Marks has a high IQ, which has no doubt contributed significantly to his success. In response, he sent me a charmingly modest email, remarking, “People who don’t fully acknowledge their luck miss the fact that being intelligent is nothing but luck. No one does anything to ‘deserve’ a high IQ.”

There’s one other great benefit to acknowledging his luck: it makes him happy. “I walk around with this incredible feeling that I’m a lucky guy,” Marks confides. “If you’re a negative person, you might say, ‘Well, I’ve been lucky in my life and that really sucks because it means that my success is undeserved and may not continue.’ But I say, ‘Gee, what a great thing to be lucky. And, you know, I really owe it to somebody, whether it’s God or chance or whatever.’ ”

Patience

“Instead, says Pabrai, they “place many bets, small bets, and frequent bets.” The trouble is, there aren’t enough compelling opportunities to justify all of this activity. So Pabrai, like his two idols, prefers to wait for the most succulent salmon. During a conversation in his office in Irvine, he says, “The number one skill in investing is patience—extreme patience.” When the market crashed in 2008, he made ten investments in two months. In more typical times, he bought just two stocks in 2011, three in 2012, and none in 2013.”

Fourth, said Templeton, successful investing requires patience. When he bought US stocks at the outbreak of World War II, he knew how cheap they were, but he couldn’t predict how long it would take for the market to agree with him. His edge lay not just in his superior insight, but in his willingness to wait year after painful year for the situation to play out as he’d predicted.”

Margin of safety

How, then, can individuals reduce their vulnerability and bolster their resilience? Following Buffett’s lead, we should always keep enough cash in reserve so we’ll never be forced to sell stocks (or any other beleaguered asset) in a downturn. We should never borrow to excess because, as Eveillard warns, debt erodes our “staying power.” Like him, we should avoid the temptation to speculate on hot stocks with supposedly glorious growth prospects but no margin of safety. And we should bypass businesses with weak balance sheets or a looming need for external funding, which is liable to disappear in times of distress. None of this is brain surgery. But it requires us to take seriously that oft-forgotten commandment Thou shalt not depend on the kindness of strangers.”

“Kahn became Graham’s teaching assistant at Columbia in the 1920s, and they remained friends for decades. I wanted to know what he’d learned from Graham that had helped him to prosper during his eighty-six years in the financial markets. Kahn’s answer: “Investing is about preserving more than anything. That must be your first thought, not looking for large gains. If you achieve only reasonable returns and suffer minimal losses, you will become a wealthy man and will surpass any gambler friends you may have. This is also a good way to cure your sleeping problems.”

As Kahn put it, the secret of investing could be expressed in one word: “safety.” And the key to making intelligent investment decisions was always to begin by asking, “How much can I lose?” He explained, “Considering the downside is the single most important thing an investor must do. This task must be dealt with before any consideration can be made for gains. The problem is that people nowadays think they’re pretty smart because they can do something quite rapidly. You can make the horse gallop. But are you on the right path? Can you see where you’re going?”

“Second, to achieve resilience, it’s imperative to reduce or eliminate debt, avoid leverage, and beware of excessive expenses, all of which can make us dependent on the kindness of strangers. There are two critical questions to ask: “Where am I fragile? And how can I reduce my fragility?” If, say, all of your money is in one bank, one brokerage, one country, one currency, one asset class, or one fund, you may be playing with a loaded gun. With luck, you can get away with anything in the short term. With time, the odds rise that your vulnerability will be exposed by unforeseen events.

Third, instead of fixating on short-term gains or beating benchmarks, we should place greater emphasis on becoming shock resistant, avoiding ruin, and staying in the game. ”

Hard work

“Second, said Vinik, “There’s another constant through the twelve years, and that’s very, very hard work. The more companies you can analyze, the more cash-flow statements you can go through—and go through every line of—the more good ideas you’re going to find and the better the performance is going to be. There’s no substitute for hard work.”

“The best predictor of success is often nothing more mysterious than the unflagging fervency of a person’s desire”

Incremental yet sustainable improvement

What’s distinctive is the indomitable consistency of his discipline. Most people get fired up for a few days, then flame out. I own a kettlebell and a skipping rope, neither of which I’ve used more than three times. The primary purpose of their existence is to make me feel guilty. Yet Gayner keeps plugging away, never perfect, but always directionally correct. The key, he says, is that he is “radically moderate” about everything he does. “If I make extreme changes, they’re not sustainable. But moderate, incremental changes—they’re sustainable.”

Resounding victories tend to be the result of small, incremental advances and improvements sustained over long stretches of time. “If you want the secret to great success, it’s just to make each day a little bit better than the day before,” says Gayner. “There are different ways you can go about doing that, but that’s the story.… Just making progress over and over again is the critical part.”

“In short, there’s nothing flashy or grandiose about Gayner. Yet it would be hard to find a better role model in the investment world. After all, his “satisfying, slow, and steady” method of building wealth relies heavily on common sense and well-chosen habits, not esoteric skills or daredevil risks. When I ask him what regular investors should do to get rich, he offers the least exotic advice imaginable: “Live on less than you make. Invest the difference at a positive rate of return. You cannot fail if you accomplish those two tasks.” He adds, “If you’re living on less than your means, you’re rich right now.”

It’s more important to avoid idiocy than to try to be smart

“I don’t have any wonderful insights that other people don’t have. I just have slightly more consistently than others avoided idiocy. Other people are trying to be smart. All I’m trying to be is non-idiotic. I find that all you have to do to get ahead in life is to be non-idiotic and live a long time. It’s harder to be non-idiotic than most people think.”

“None of this would have happened if Buffett and Munger weren’t so committed to challenging their beliefs. Munger has always disdained “heavy ideology” in everything from investing to politics, denouncing it as “one of the most extreme distorters of human cognition.”

“While other billionaires collect art, vintage cars, and racehorses, Munger describes himself as a collector of “absurdities,” “asininities,” and “inanities.” His daughter Molly recalls listening in her youth to his many cautionary tales “about people doing stupid things,” which often included “a tinge of ingratitude and poor moral judgment.” A typical story would feature the cosseted heir to a fortune who turned with bitter resentment against his father. Molly Munger remarks, “It’s stupid at every level: ungrateful, self-sabotaging, unrealistic, egotistical.”

This habit of actively collecting examples of other people’s foolish behavior is an invaluable antidote to idiocy. In fact, it’s the second great anti-stupidity technique we should learn from Munger. It’s a perverse hobby that provides him with endless entertainment and insight, enabling him to catalog in his head all of the “boneheaded” moves to excise from his playbook. Anyone can benefit from this practice, he tells me, “but I don’t think you get it unless you have a certain temperament. A lot of what I do is not IQ. It’s something else. Temperament. Attitude.”

How our brains receive messages & implications

Do you have trouble communicating your ideas or land your sales pitch? Do you understand why human attention is fleeting & difficult to maintain? Read on because this entry may give you an answer.

Before I move on, I want to give a shout out to the book “Pitch Anything” by Oren Klaff. Everything I am saying below is based on this really interesting book that can have a tremendous impact on readers’ professional and personal lives.

Humans brains drive communication as that’s where messages are developed, presented, received and processed. Anatomists will say that a human brain is highly complex, but for sake of simplicity, consider it having three main parts: Neocortex, Midbrain and The Old Brain or Crocodile Brain.

The human brain consists of Neocortex, Mid-brain and the Crocodile Brain
Figure 1 – The three parts of a human brain. Source: Pitch Anything by Oren Klaff

The Old Brain/Crocodile Brain is responsible for the initial basic filtering of all incoming messages. As a physically weak and small species compared to others in the wild, our ancestors, for their survival, relied on ability to detect threats early. This Crocodile Brain is the part that does that detection job and tells the rest of the body whether something is a threat or not. Over the ensuing thousands of years, while our human body evolved a lot with the time and communication became more sophisticated and nuanced than just “yeah it’s dangerous/no it’s actually friendly” responses, this Old Brain hasn’t, staying largely as primitive as it was.

Above this Crocodile Brain are Mid Brain, which “determines the meaning of things and social situations”, and the Neocortex, which evolved with our society over time and allows us to reason and think in complexity. Neocortex is where we develop ideas, reasons to back those ideas up and language to present . In other words, everything that we can’t do with Crocodile Brain.

You can already see the root-cause reason why communication fails sometimes. In any exchange, a message that is developed by the most advanced or smartest part of the brain is initially perceived by the 5-million-years-old most primitive part. If the amygdala part of the Crocodile Brain considers a message as threatening to our survival, it will essentially shut down the brain and ignore the message in question. If the message is too novel and complex, the Crocodile Brain, which is high-maintenance, dumb compared to the Neocortex and lazy as it doesn’t like to work a lot, will get bored and refuse to let it go to the upper parts of our brain.

That’s why professional writers say that the beginning of an article or paragraph is super important in persuading us to keep reading. We tend to lose focus and attention quickly if something is not simple, easy to understand nor concrete. Our Crocodile Brain will shut down if it is forced to process jargon, remotely unknown words or abstract concepts.

That’s why you hear some professional presenters want us to open every presentation with a bang, something make us laugh, something that we can relate to or something that is positively shocking yet concrete (like a statistics). If a presentation’s first few slides don’t have a shock-and-awe element, the Crocodile Brain will get bored and attention will wane.

That’s why when a chart or a table contains loads of data and information, it’s better to highlight the part where audience should focus on. Remember, the Crocodile Brain is lazy. If you ask it to scan a lot of information quickly, it will get bored.

That’s why a relatable and known brand in business is a highly valuable asset. The Crocodile Brain will be more at ease when it recognizes a familiar logo or a familiar brand name.

That’s why in some cases even well-intentioned & well-reasoned messages aren’t received. They never get to Neocortex (Your bosses are NOT that dumb to not understand you. They just don’t receive the communication the way we want them to).

In short, what makes pitches difficult is that our highly developed Neocortex has to persuade a lazy, primitive and dumb Crocodile Brain, which only likes clear, simple, straightforward and friendly ideas. All the communication tips or recommendations are aimed to do one thing and one thing only: to get through the Crocodile Brain and to the Neocortex without triggering fear. There are tons and tons of tips and tricks out there on improving communication. I won’t be able to get to them all in this post. I hope that I gave you the root-cause problem so that you can come up with solutions accordingly.

Book Review – Obviously Awesome – An Ugly Truth: Inside Facebook’s Battle for Domination – Stray Reflections

In this post, I’ll briefly review the three books I finished recently. Let me know in the comment if you read any of them and what you think about it.

An Ugly Truth: Inside Facebook’s Battle for Domination

Written by two award-winning New York Times journalists Sheera Frenkel and Cecilia Kang, An Ugly Truth covers Facebook’s battle with misinformation and how the company, in my opinion, has failed so far in preventing bad actors from abusing Facebook’s platforms for their agendas. The book draws from hundreds of interviews with sources, including former & current employees who courageously put their career in danger to speak the truth, and takes readers inside the company and throughout the past few years when the conflicting interests came to their heads. Facebook has perfect recipes for a disaster.

The company’s purpose is to connect everybody on Earth. It means that you’ll connect not only the good guys, but also the bad guys. To Facebook, the engagement level is always one of the high priorities. The more engaged users are, the more money the company can make from advertising. As a consequence, any idea or initiative, no matter how constructive or beneficial to the company, would be shelved if it was considered hurting the user engagement. Additionally, the company is Mark Zuckerberg’s, plain and simple. He can fire the Board of Directors if he wants to and there is nothing anybody can do about it. At first, Mark didn’t seem to believe that his creation could be leveraged for harmful purposes. He seemed to actually believe that Facebook was a positive contributor to the world in a sense that since everyone should have the freedom of expression, his platforms were there to facilitate it. It is this belief that led to some of his controversial decisions when it came to content moderation. Last but not least, the bureaucracy and office politics at Facebook also played a role in this mess. Take Stamos and his threat intel team as an example. Alex Stamos was hired by Facebook to be its Chief Security Officer. Along with his team, Stamos unearthed how Russia misused Facebook to interfere in the U.S election. They tried to sound the alarm for months, but their efforts were thwarted and ignored by the upper management team. When they finally got a meeting with Mark and Sheryl, Stamos suddenly became the culprit and scapegoat.

Combine all of those factors together and you can see why Facebook was always poised for a disaster. There are other stories in the book that could highlight how efforts to rein in misinformation always took a back seat at Facebook for various reasons. While the theme of the book may not be anything new, the behind-the-scenes stories are riveting and interesting. If you want an easy read and like to learn about the inner workings at Facebook, this should be a good one to pick up.

Obviously Awesome: How to Nail Product Positioning so Customers Get It, Buy It, Love It

Product positioning is hard. It’s virtually impossible to create a completely new product or service without any direct or indirect alternatives. The challenge then becomes: how can you position your product so that your customers know what it stands for, among all the noises and distractions? In this book, positioning expert April Dunford offers 10 concrete steps to address your positioning problems, along with specific case studies to make her points. As a business student at bachelor and Master’s degree level, I learned about marketing and positioning. So, some of the points April made are not novel to me. Yet, it’s still interesting to look at positioning from her point of view and it’s great to brush upon what I learned in the past. Personally speaking, I think this book is more suitable for B2B products/services than B2C.

Her writing is easy to understand and doesn’t involve a lot of jargon. It’s quite witty in some parts; which makes the experience more enjoyable. I kinda like the book. You can learn quite a lot from a $7 book (the Kindle version), a cost-effective option compared to hundreds of dollars spent on a few credits in college.

Stray Reflections

Jawad Mian hails from Pakistan and is the founder of Stray Reflections, a macro research firm. Two of his obsessions are writing and finding truth in life; which are the inspiration for this book. In it, Jawad shares with readers some of his intimate personal experiences, from growing up in Pakistan to adulthood and fatherhood, as well as important lessons about life that he picked up along the way. In addition to his stories, the author puts to great use some excerpts from classic literature by historical figures. In a busy society full of angst and distractions, this small book helps readers pause, catch their breath and reflect on what matters in life. Reading it was invigorating and refreshing for my soul.

“No distance of place or lapse of time can lessen the friendship of those who are thoroughly persuaded of each other’s worth.”

I’ve grown up to believe there are no coincidences in life. We are always in the right place, and everything happens at exactly the right time. Instead of obsessing about our goals or destination, maybe we should remain in the present moment and just let the universe move about. Like the river, life has its own flow; we cannot impose our own structure on it. We can’t control it—all we can do is listen to its current. Sometimes, when the outside noise dulls down, the quietness within reveals a lot, but only if you listen intently.

I beg you, to have patience with everything unresolved in your heart. Try to love the questions themselves as if they were locked rooms or books written in a foreign language. Don’t search for the answers, which could not be given to you now, because you would not be able to live them. And the point is to live everything. Live the questions now. Perhaps then, someday far in the future, you will gradually, without even noticing it, live your way into the answer.

Life is a journey, and we are all just travelers. It’s okay to fall down or not know where you’re going. Nature has marked out a path for each of us, and it won’t let us stray too far from our course. There is no shame in falling, only in failing to rise and get back up on our feet. As Paulo Coelho said, the secret of life is to fall seven times and to get up eight times. Even success, it has been well said, is nothing more than moving from one failure to the next with undiminished enthusiasm.