Book Review – The Psychology of Money. Likely the best book I read this year

I waited for this book to come out for a while, and it surely doesn’t disappoint. The Psychology of Money by Morgan Housel is an excellent book on personal finance, our thinking towards money and how that drives a lot of our decisions in life. Not only does the book contain a lot of wisdoms and high quality content, but it is also well and crisply written that you can finish it in a weekend, unlike a lot of other books that are unnecessarily lengthy.

If you care about growing your net worth, investing and making important decisions in your life (who doesn’t?), I really recommend this book. It will transform what you think about money and life. Below are a few nuggets from the book. Have a nice weekend!

The premise of this book is that doing well with money has a little to do with how smart you are and a lot to do with how you behave. And behavior is hard to teach, even to really smart people.

Few people make financial decisions purely with a spreadsheet. They make them at the dinner table, or in a company meeting. Places where personal history, your own unique view of the world, ego, pride, marketing, and odd incentives are scrambled together into a narrative that works for you.

Excerpt From: Morgan Housel. “The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness.”

“At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history. Heller responds, “Yes, but I have something he will never have … enough.”

The idea of having “enough” might look like conservatism, leaving opportunity and potential on the table. I don’t think that’s right. “Enough” is realizing that the opposite—an insatiable appetite for more—will push you to the point of regret.

Excerpt From: Morgan Housel. “The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness.”

Think of it like this, and one of the most powerful ways to increase your savings isn’t to raise your income. It’s to raise your humility.

Be nicer and less flashy. No one is impressed with your possessions as much as you are. You might think you want a fancy car or a nice watch. But what you probably want is respect and admiration. And you’re more likely to gain those things through kindness and humility than horsepower and chrome.

Go out of your way to find humility when things are going right and forgiveness/compassion when they go wrong. Because it’s never as good or as bad as it looks. The world is big and complex. Luck and risk are both real and hard to identify. Do so when judging both yourself and others

Less ego, more wealth. Saving money is the gap between your ego and your income, and wealth is what you don’t see. So wealth is created by suppressing what you could buy today in order to have more stuff or more options in the future. No matter how much you earn, you will never build wealth unless you can put a lid on how much fun you can have with your money right now, today

Excerpt From: Morgan Housel. “The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness.”

Jim Simons, head of the hedge fund Renaissance Technologies, has compounded money at 66% annually since 1988. No one comes close to this record. As we just saw, Buffett has compounded at roughly 22% annually, a third as much. Simons’ net worth, as I write, is $21 billion. He is—and I know how ridiculous this sounds given the numbers we’re dealing with—75% less rich than Buffett.

Why the difference, if Simons is such a better investor? Because Simons did not find his investment stride until he was 50 years old

Excerpt From: Morgan Housel. “The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness.”

Savings in the bank that earn 0% interest might actually generate an extraordinary return if they give you the flexibility to take a job with a lower salary but more purpose, or wait for investment opportunities that come when those without flexibility turn desperate.

If you have flexibility you can wait for good opportunities, both in your career and for your investments. You’ll have a better chance of being able to learn a new skill when it’s necessary. You’ll feel less urgency to chase competitors who can do things you can’t, and have more leeway to find your passion and your niche at your own pace. You can find a new routine, a slower pace, and think about life with a different set of assumptions. The ability to do those things when most others can’t is one of the few things that will set you apart in a world where intelligence is no longer a sustainable advantage

Excerpt From: Morgan Housel. “The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness.”

The idea is that you have to take risk to get ahead, but no risk that can wipe you out is ever worth taking. The odds are in your favor when playing Russian roulette. But the downside is not worth the potential upside. There is no margin of safety that can compensate for the risk.

Room for error does more than just widen the target around what you think might happen. It also helps protect you from things you’d never imagine, which can be the most troublesome events we face.

Excerpt From: Morgan Housel. “The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness.”

Look for books to read? Check out those I have read lately

The Anatomy of The Swipe: Making Money Move

We are so accustomed to having quick card-based transactions that if a transaction takes more than a couple of seconds, it will be a terrible customer experience. What many folks don’t know is that there are a lot of things that happen behind every transaction. It involves several parties, including but not limited to a cardholder, an issuing bank, an issuer processor, a network, a merchant processor, a merchant bank and a merchant. During the brief couple of seconds when a cardholder waits at a cashier, information goes from a card reader all the way back to at least an issuer processor through a card network (Visa, Mastercard) and a merchant processor, and back to the card reader. But it’s not finished yet. The process continues at least a couple of days after the transaction when the involved parties go through the clearing and settlement steps.

The payment world is so complex that there are startups that decouple individual steps of the whole process and carve out a niche market for themselves by specializing in such steps and improved efficiency. Take neobanks for example. They offer checking accounts with virtually no fees because they aren’t regulated and can operate without fixed costs such as branches.

I tried in the past to learn about payment systems, but not until this book did I find a reliable source that can break down abstract concepts in a digestible manner. If you are interested in payments or fintech, do yourself a favor and read this book

The reason why you can take money out of just about any ATM is because of the Durbin Amendment and its requirement that every debit card must have a secondary unaffiliated network. This law was put in to give consumers more choice in finding an ATM network. For example, if you have a debit card from Visa and the ATM doesn’t support Visa’s ATM networks, then it can run on Mastercard’s ATM network, Cirrus.

The term “Clearing” is used primarily by Issuers, but can also be referred to as “Capture” by Merchant Acquirers. Clearing happens toward the end of the day for most Merchants and will factor in tips, transaction reversals, and returns. This is basically the Merchant confirming these transactions are valid and that these funds are ready to be moved or “settled.”

Settlement is the actual movement of money from the cardholder’s bank account, the Issuing Bank, to the Merchant’s bank account, the Acquiring Bank. This movement of money typically happens via Fedwire as instructed by the payment networks.

Key term: 3D Secure

This is a standard for offering cardholders one more layer of security for online transactions. When card numbers are entered into a website to pay for something, 3D Secure will require the cardholder to enter one more form of authentication, such as a one-time-use PIN or passcode, similar to how two-factor authentication works for websites. More recently, the card networks are requiring Merchants and card Issuers to roll out a service called 3D Secure. The technology is standard in Europe but not yet in the US.

More recently, the card networks are requiring Merchants and card Issuers to roll out a service called 3D Secure. The technology is standard in Europe but not yet in the US.

The main reason is that these new “neo-banks” aren’t actually banks but rather tech companies that partner with regional banks such as Sutton Bank, Bancorp, or Meta Bank. These regional banks have less than $10 billion in assets and are able to charge a higher Interchange rate because they are considered exempt from the Interchange rules set forth in the Durbin Amendment and are considered “unregulated.”

TAPE SUCKS: Inside Data Domain, A Silicon Valley Growth Story

This book was written by Frank Slootman, former CEO of Data Domain. Frank took the company public and was the CEO when it was sold to EMC. He then went on to take the rein at ServiceNow and is currently assuming the top job at Snowflake. This book is his account of his time as CEO at Data Domain. It is a pretty short book, but it includes an honest and crisp account of how he scaled the company and dealt with startup issues. I like this book because it isn’t lengthy. I think it’s because of his direct nature as a Dutchman. Frank wrote about the lessons he learned along the way with little “fat” or lengthy unrelated anecdotes. He was straight to the point. His lessons outlined in the book should be helpful to aspirational entrepreneurs and CEOs.

Snowflake is expected to go public next week. If you are interested in that company and its CEO, you should give it a read.

My morning routine

The author interviewed a plethora of celebrities and successful folks to learn about their productivity hacks in the morning. Humans are creatures of habits. We all have our habits and routines and these successful men and women aren’t any exception. I don’t think what this book offers is unique in a sense that you can find these hacks on Google at any time. What it does is perhaps to catalogue all these hacks in one place so that you can choose to look at the routines of the folks you like. Plus, if you already studied about productivity tips before, it’s very likely you’d know what to do in general. What is missing is just our determination and discipline.

With that being said, if you are new to the productivity improvement game, this book may be of value. However, it’s pretty pricey compared to the two books I listed above, given the value and satisfaction in return. I’d try to Google the topic before I book this book

7 Powers: The Foundations of Business Strategy

This is a classic book about business strategy. It covers 7 aspects of a successful strategy framework developed by Hamilton Helmer. The aspects include Economies of Scale, Network Effect, Counter Positioning, Switching Costs, Branding, Cornered Resource and Process Power. I think it’s a valuable read to anyone who is interested in analyzing businesses and companies. Of course, the book would be more valuable to newcomers than those who already studied strategy before. For instance, if you are familiar with the concept of Network Effect, Porter’s Five Forces and Switching Costs, this book will serve more as a reminder than a revelation. Nonetheless, it costs only $9 for a Kindle version from which you can take great notes on business strategy.

The Motley Fool Investment Guide

Even though this book costs $15 for a Kindle version, I actually think if you are new to investing and you want to grow your net worth, you should start reading this book. This book covers very important topics of investing. It talks about why you should invest in or avoid mutual funds. It also discusses the appeal of blue chips and small-cap stocks. If you haven’t learned much about the main financial statements (income statement, cash flow or balance sheet), the book provides an overview of these statements and what they mean in general. In my personal experience, although news outlets have coverage of companies’ financials, as an investor, you should do your own homework and practice reading reports as well as financial statements. Additionally, this book touches upon options such as shorting and longing a stock. They aren’t my preferences, but it doesn’t hurt to know what they are and what they do. Of course, the book has to talk about the power of compound interest, which is why we need to invest early and be patient.

I really recommend this book if you want to venture into investment.

Book Review: Essentialism: The Disciplined Pursuit of Less

The book is about essentialism, the idea that you should take control of your life, have the courage to choose to do what’s only the most important and essential to you and ignore the rest. In a sense, I think it’s pretty similar to minimalism because they both emphasize the need to remove what’s not essential and the need to keep what is. While minimalism seems to be associated more with design or art, essentialism seems broader as it can be applied to work or life. The ability to focus on only what’s important and maintain the power of choice in life will help make a person happier and more fulfilled.

The book has four main parts: 1) it discusses the concept in general, 2) it talks about how to differentiate the vital from the trivial, 3) it lays out how we can remove the trivial and 4) it offers tips on how to make the viral easier to practice. Under each part are some sub-chapters that discuss a factor that contributes to the big topic at hand such as the importance of sleep, the value of having a child-like mind, why we should build in buffer in whatever we do while anticipating for unpredictable trouble. Even though some may lament the various topics he touched upon as lengthy and unnecessary, I do think it’s helpful to break down a big topic into smaller chunks and look at an issue from different angles to have a better understanding. There’s nobody stopping audience from skipping a few pages, you know.

If a reader reads about minimalism or the value of focus, he or she will unlikely be wowed by the book. Experienced readers, especially in the topic that this book is about, will say that this book should be only 20 pages long, instead of 200. But if somebody hasn’t been very well-versed in essentialism, focus or minimalism, this book may be of value.

“Essentialism is not about how to get more things done; it’s about how to get the right things done. It doesn’t mean just doing less for the sake of less either. It is about making the wisest possible investment of your time and energy in order to operate at our highest point of contribution by doing only what is essential.”

Excerpt From: Mckeown, Greg. “Essentialism: The Disciplined Pursuit of Less.” Apple Books.

“The word priority came into the English language in the 1400s. It was singular. It meant the very first or prior thing. It stayed singular for the next five hundred years. Only in the 1900s did we pluralize the term and start talking about priorities. Illogically, we reasoned that by changing the word we could bend reality. Somehow we would now be able to have multiple “first” things. ”

Excerpt From: Mckeown, Greg. “Essentialism: The Disciplined Pursuit of Less.” Apple Books.

Essentialism the more clearly I have seen courage as key to the process of elimination. Without courage, the disciplined pursuit of less is just lip service. It is just the stuff of one more dinner party conversation. It is skin deep. Anyone can talk about the importance of focusing on the things that matter most— and many people do, but to see people who dare to live it is rare

Excerpt From: Mckeown, Greg. “Essentialism: The Disciplined Pursuit of Less.” Apple Books.

Before I sign off, here are a few examples of essentialism in business

Netflix

Read the following to see how Netflix is focused on only thing

Google

Do you notice how simple and completely focused Google’s interface is on only searches?

Apple

Notice the infinity screen on iPhone and the no-fee feature of Apple Card

Aldi

I wrote about the intense focus of Aldi to lower costs and pass on savings to consumers

Book review: The Wealthy Barber Returns

I saw a hedge fund manager recommend this book on Twitter, but accidentally grabbed the newer version instead of the recommended original. Nonetheless, here is my review. This short and easy-to-read book which is a compliment contains some common sense regarding personal finance. If you just begin to dip into the personal finance space, this book can be a good place to start, though I am sure there are better books. If you want to enrich your personal finance knowledge, there may be some ideas from the book that can be interesting. If you live in Canada, this book may even be more interesting as the author spent a significant part of the book discussing matters specific to the Canadian systems only.

The two main take-away points from this book, if that’s all you will leave it with, are this: 1/ live below your means and 2/ save early.

There is no surer way to approach financial independence than keeping your expenses below your income. In fact, the lower your expense is than your income, the better. It’s quite common to see folks who spend most or all of their income every month. Those are the paycheck-to-paycheck folks. When life throws them a twist as it very often goes, there will be no saving for a rainy day. If you look at the current pandemic (as it is still going on), not only is it not a rainy day, it is a freaking storm. People lose jobs and health insurance. Income is gone, but bills are still there to pay. In fact, 40% of Americans are reported not to have $400 for an emergency. That’s so crazy to think about. Even though the idea of living below your means is so laughably obvious, the reality clearly shows that it is a foreign concept to many.

The book emphasizes a key trick in making sure that you save money every month: save before you spend the rest, not spend and save the rest. Say, if you earn $3,000 a month, put 10-20% somewhere as savings and spend the rest. That approach allows you to save at least $300 a month. After two months, at least you can say that you are NOT among people who don’t have $400 in cash for an emergency. On the other hand, if you decide to save whatever is left after the first 28-29 days of the month, you likely won’t save much. As human beings, we are terrible in self-control.

“You don’t have to become a miser and live a life of austerity. You just have to exercise a little discipline and a little common sense. You’re probably wondering, “If that’s the case, why aren’t there more successful savers? Why haven’t we all been able to slightly reduce our spending?” The blunt answer? A little discipline and a little common sense are a little more than most of us can muster.”

Excerpt From: David Chilton. “The Wealthy Barber Returns.” Apple Books.

The second key take-away is that you should start saving early. The earlier and more consistent you save, the better. Instead of typing out why you should, I’ll let these charts from JP Morgan demonstrate the power of compounding interest, which is usually called “the 8th wonder of the world”

chart jp morgan retirement
Source: Business Insider

As you can see, the earlier and longer you save, the more compounding interest works in your favor. To reach $1 million at retirement, you can either save $361 monthly, starting at the age of 20, or save $1,400+ a month at the age of 40. Which one do you feel is more daunting? Especially given the more responsibilities and expenses that come with being older? Exactly!

There are other topics addressed in the book such as:

  • If someone asks you to do something that involves spending, practice saying “I can’t afford it”
  • When you should take out a line of credit
  • What is good debt and what is bad debt?
  • A basic primer on index funds and why you should strongly consider them as an investment vehicle

Overall, I think the book does offer value. I can see that it’s even more helpful to teenagers who are interested in building wealth and strategizing their life to financial independence and happier life. To those who may argue that saving fir the future will come at the expense of today’s sacrifice and the enjoyment of life, here is what the book argues, which I agree with

One of the most damaging misconceptions in personal finance is that saving for the future requires sacrifices today that lessen people’s enjoyment of life. Surprisingly, it’s quite the opposite! People who live within their means tend to be happier and less stressed. That’s true not only for the obvious reason — they know their financial futures look bright — but also because they’re not consumed with consumption. They’re not in the emotionally and financially draining race to acquire the most stuff they possibly can. A race that, it should be noted, has no finish line and thus no winner.

Excerpt From: David Chilton. “The Wealthy Barber Returns.” Apple Books.

Book review: The art of thinking clearly

I don’t really remember how this book landed in my iBooks collection, but I am quite glad it did. The book features 100 common thinking errors that we usually encounter in real life. Each chapter is dedicated to one particular error. A chapter consists of one or more anecdotes that we can easily relate to, a brief explanation on the error at hand, some insights into why the error takes hold of us and some advice to avoid it in the end. Unlike other books in this genre, this book, fortunately, doesn’t bombard readers with tons of examples that basically make the same point. Each chapter is only 3-5 pages and is written to keep readers engaged. However, 99 chapters with a lot of errors can wear readers out as the book progresses. You may have a feeling: well, how can I live error-free? The author specifically addresses this question in the end. His approach which I think makes sense is that he spends a lot of time thinking about a problem if the problem is serious and the consequences can be huge. With trivial matters, he acts intuitively.

Overall, I think the book is really helpful. If you are interested in how to improve your thinking, this book is a great start. It offers a helpful selection of common thinking errors; a foundation from which you can dive more into each error. I will likely read it again. A few highlights that I noted for myself below

Hindsight bias

“So why is the hindsight bias so perilous? Well, it makes us believe we are better predictors than we actually are, causing us to be arrogant about our knowledge and consequently to take too much risk”

“If you’re still with me, I have one final tip, this time from personal rather than professional experience: Keep a journal. Write down your predictions—for political changes, your career, your weight, the stock market, and so on. Then, from time to time, compare your notes with actual developments. You will be amazed at what a poor forecaster you are. Don’t forget to read history, too—not the retrospective, compacted theories compiled in textbooks, but the diaries, oral histories, and historical documents from the period. If you can’t live without news, read newspapers from five, ten, or twenty years ago. This will give you a much better sense of just how unpredictable the world is. Hindsight may provide temporary comfort to those overwhelmed by complexity, but as for providing deeper revelations about how the world works, you’ll benefit by looking elsewhere.”

Excerpt From: Rolf Dobelli. “The Art of Thinking Clearly.” Apple Books.

Chauffeur Knowledge

“According to Charlie Munger, one of the world’s best investors (and from whom I have borrowed this story), there are two types of knowledge. First, we have real knowledge. We see it in people who have committed a large amount of time and effort to understanding a topic. The second type is chauffeur knowledge—knowledge from people who have learned to put on a show. Maybe they have a great voice or good hair, but the knowledge they espouse is not their own. They reel off eloquent words as if reading from a script.”

“To guard against the chauffeur effect, Warren Buffett, Munger’s business partner, has coined a wonderful phrase, the “circle of competence”: What lies inside this circle you understand intuitively; what lies outside, you may only partially comprehend. One of Munger’s best pieces of advice is: “You have to stick within what I call your circle of competence. You have to know what you understand and what you don’t understand. It’s not terribly important how big the circle is. But it is terribly important that you know where the perimeter is.” Munger underscores this: “So you have to figure out what your own aptitudes are. If you play games where other people have the aptitudes and you don’t, you’re going to lose. And that’s as close to certain as any prediction that you can make. You have to figure out where you’ve got an edge. And you’ve got to play within your own circle of competence.”

“True experts recognize the limits of what they know and what they do not know. If they find themselves outside their circle of competence, they keep quiet or simply say, “I don’t know.” This they utter unapologetically, even with a certain pride. From chauffeurs, we hear every line except this.”

Excerpt From: Rolf Dobelli. “The Art of Thinking Clearly.” Apple Books.

Induction

“Induction seduces us and leads us to conclusions such as: “Mankind has always survived, so we will be able to tackle any future challenges, too.” Sounds good in theory, but what we fail to realize is that such a statement can only come from a species that has lasted until now. To assume that our existence to date is an indication of our future survival is a serious flaw in reasoning. Probably the most serious of all.”

Excerpt From: Rolf Dobelli. “The Art of Thinking Clearly.” Apple Books.

Twaddle tendency

“In conclusion: Verbal expression is the mirror of the mind. Clear thoughts become clear statements, whereas ambiguous ideas transform into vacant ramblings. The trouble is that, in many cases, we lack very lucid thoughts. The world is complicated, and it takes a great deal of mental effort to understand even one facet of the whole. Until you experience such an epiphany, it’s better to heed Mark Twain: “If you have nothing to say, say nothing.” Simplicity is the zenith of a long, arduous journey, not the starting point.”

Excerpt From: Rolf Dobelli. “The Art of Thinking Clearly.” Apple Books.

News illusion

“I would predict that turning your back on news will benefit you as much as purging any of the other ninety-eight flaws we have covered in the pages of this book. Kick the habit—completely. Instead, read long background articles and books. Yes, nothing beats books for understanding the world.”

Excerpt From: Rolf Dobelli. “The Art of Thinking Clearly.” Apple Books.

Book Review – No Filter: The Inside Story of Instagram

Instagram is so popular in our life that it became part of our vernacular: Instagrammable. I wanted to learn more about a young startup that was founded in the beginning of the 2010s, got acquired by Facebook for a monstrous amount at the time and eventually grew to become one of the biggest social networks in the world. This book provides a good insight into the history of Instagram.

The history of Instagram started with Kevin Systrom, a Standard graduate. He passed up an opportunity to join two startups in their early days that would become multi-billion companies (Facebook and Twitter). He worked for a short time at Google before venturing out on his own. Along with Mike Krieger, a graduate student from Brazil, he developed an app called Burbn that attracted interest and capital from some of the angel investors in Silicon Valley. Burbn was later pivoted to become Instagram after a soul-searching discussion between the two founders. After 18 months of hard work, Instagram was bought by Facebook for $1 billion. The Instagram team and the two co-founders managed to keep their relative high level of independence within the Blue Brand for about 5-6 years. A score of disagreements over strategic decisions and a realization that it was Zuckerberg that effectively owned Instagram, the two founders left the company.

What fascinates me about the book is the chronicle of important decisions that the founders made along the way, especially decisions on product development. From the onset of Instagram, the founders, especially Systrom, wanted to focus on genuine and quality connections with users. While Facebook cheapened the relationship with users by prioritizing the sharing of news and articles, Instagram took time and effort to preserve the unique qualities of Instagram. For instance, they refused to have a share feature because they wanted users to have a genuine connection with whom they followed. Specifications for photos on Instagram were stricter than on Facebook. Systrom emphasized the importance of aesthetic quality of Instagram by personally approving Instagram ads at first, limiting to one advertiser a day originally, guiding celebrity users on how to post nice photos and setting up the tone for the culture as well as how users perceive Instagram.

One can argue that Instagram’s founders sold it too soon, but the counter argument is that without Facebook’s resources and infrastructure, Instagram wouldn’t like have achieved the growth it did that quickly. In the end, the hierarchy and essentially cultural clash with Facebook drove the founders out.

The book provides an exciting story of how little features, care for users, commitment to quality and great decisions can lead to a great product, especially when put in contrast to Facebook. I have been super annoyed by the amount of ads on Instagram. You can’t scroll more than 3 or 4 posts without an ads. I don’t think the founders would have approved that, but in the end, it wouldn’t have been their choice to make either.

If you are interested in a popular company’s history, entrepreneurship or product development/strategy, this book will be a nice one to pick up on a slow hot weekend. Isn’t it interesting to learn why there is no share button, why there is only one place you can post a hyperlink, why little details on Instagram came into beings? The book also sheds some light onto Mark Zuckerberg, who cast a long show over much of Instagram’s history.

“When Systrom joined in 2006, it had almost 10,000 employees. Google, far more functional and established than tiny Odeo, was led mostly by former Stanford students making data-based decisions. It was the culture that drove homepage leader Marissa Mayer, who later became CEO of Yahoo!, to famously test 41 shades of blue to figure out what color would give the company’s hyperlinks the highest click-through rate. A slightly purpler blue shade won out over slightly greener shades, helping boost revenue by $200 million a year. Seemingly insignificant changes could make a huge difference when applied to millions or billions of people.”

Excerpt From: Sarah Frier. “No Filter.” Apple Books.

“Krieger and Systrom started the exercise by making a list of the top three things people liked about Burbn. One was Plans, the feature where people could say where they were going so friends could join them. Another was photos. The third was a tool to win meaningless virtual prizes for your activity, which was mostly a gimmick to get people to log back in.

Not everybody needed plans or prizes. Systrom circled “photos.” Photos, they decided, were ubiquitous, useful to everybody, not just young city dwellers.

“There’s something around photos,” Kevin said. His iPhone 3G took terrible pictures, but it was only the beginning of that technology. “I think there will be an inflection point where people don’t carry around point-and-shoots anymore, they’re just going to carry around these phones.”

Excerpt From: Sarah Frier. “No Filter.” Apple Books.

“Their first prototype was named Scotch, a relative to bourbon. It allowed people to swipe through photos horizontally and tap to like them, similar to a Tinder before its time. They used it for a few days before going back to the Burbn idea, doubting their instincts. And then they tried a new concept that would allow people to scroll through photos vertically, showing the most recent post first, like Twitter.

All of the photos would use as few pixels as possible, so that they would load quickly, helping solve problem number one—only 306 pixels across, the minimum required to display a photo on an iPhone with 7-pixel borders on each side. The photos would be square, giving users the same creative constraint for photography as Systrom’s teacher in Florence gave him. It was similar to how Twitter only let people tweet in 140-character bursts. That would help solve, but not fully solve, problem number two.”

Excerpt From: Sarah Frier. “No Filter.” Apple Books.

“The founders picked their first users carefully, courting people who would be good photographers—especially designers who had high Twitter follower counts. Those first users would help set the right artistic tone, creating good content for everyone else to look at, in what was essentially the first-ever Instagram influencer campaign, years before that would become a concept.”

Excerpt From: Sarah Frier. “No Filter.” Apple Books.

“Krieger did build a re-share button but never released it to the public. The founders thought it would violate the expectations you had when you followed someone. You followed them because you wanted to see what they saw and experienced and created. Not someone else.”

Excerpt From: Sarah Frier. “No Filter.” Apple Books.

“Instagram, on the other hand, was trying to build a premium experience, brainstorming directly with advertisers about their ideas and manually placing their ads. They knew that this system couldn’t work forever, but Systrom and Krieger always urged people to do the simplest thing first, the way they had when they first built the app. Working manually on a small version of the product made more sense than spending precious engineering resources and navigating politics with Facebook’s ads sales team, for a system that might not ultimately work.

Using a strategy similar to that he’d employed when he founded the company—picking launch partners like Burberry and Lexus who would get it—Systrom personally approved every ad. Especially since now Instagram’s brand was too precious to risk letting anyone and everyone advertise however they’d like.”

Excerpt From: Sarah Frier. “No Filter.” Apple Books.

“Only one brand per day, Systrom had decided—that felt right. It was nonnegotiable: if Louis Vuitton called wanting the twentieth of the month, they would decline if Ben & Jerry’s already had the slot. All the names of the early advertisers were mapped out in red marker on a whiteboard calendar. An employee would print the potential ads out; then Systrom would go through them, one by one, deciding what was good enough and what wasn’t. If an ad wasn’t good enough, he would protest.

At one point Systrom was concerned that the food in one of the branded posts looked unappetizing, especially the French fries, which appeared soggy. “I don’t want to run it like this,” he told Jim Squires, his new ads lead, who had come over from Facebook.”

Excerpt From: Sarah Frier. “No Filter.” Apple Books.

New employees of Instagram, especially those coming from Facebook, would regularly suggest sharing tools to help increase the amount of posts on the app, only to be shot down by Systrom and Krieger. Public re-sharing was such a popular request that other entrepreneurs built apps like Regrann and Repost to attempt to fill the need, but these were no substitute for an in-app function. This made it harder to get noticed, but in some ways made it easier to build a personal brand. All your posts were yours. That was what the founders wanted.

Excerpt From: Sarah Frier. “No Filter.” Apple Books.

Trump had outspent Clinton between June and November, paying Facebook $44 million compared to her $28 million. And, with Facebook’s guidance, his campaign had operated like a tech company, rapidly testing ads using Facebook’s software until they found the perfect messaging for various audiences. Trump’s campaign had a total of 5.9 million different versions of his ads, compared to Clinton’s 66,000, in a way that “better leveraged Facebook’s ability to optimize for outcomes,” the employee said.

Excerpt From: Sarah Frier. “No Filter.” Apple Books.

“By December 2016, Instagram was letting users turn off comments for posts entirely if they wanted. Systrom’s willingness was in stark contrast to the attempts by Facebook and Twitter to err on the side of leaving content up, in an attempt to promote environments they said were neutral and open, but that in practice were rarely policed.

The same ideas, of letting users turn off comments or block them according to keyword, had been suggested several times at Facebook over the years. But it had never stuck. If there were fewer comments, there were fewer push notifications, and fewer reasons for users to come back to the site. Even on Instagram’s team, the former Facebook employees promised Systrom that they would find a way to build out the tool so it was difficult to find, and applicable only to one post at a time. That way, it wouldn’t be used as often.

Thanks but no thanks, Systrom said. He explained that he wasn’t worried about losing engagement, that the team was thinking too short-term. Over the long term, if the tool was easy to find and well publicized, people would have more affinity for Instagram, and the product would better weather storms of bad publicity, like the kind Facebook was starting to receive.”

Excerpt From: Sarah Frier. “No Filter.” Apple Books.

“So that summer, Zuckerberg directed Javier Olivan, Facebook’s head of growth, to draw up a list of all the ways Instagram was supported by the Facebook app. And then he ordered the supporting tools turned off.

Systrom again felt punished for Instagram’s success.

Instagram was also no longer allowed to run free promotions within the Facebook news feed—the ones that told people to download the app because their Facebook friends were already there. That had always brought a steady stream of new users to Instagram.

Another of the new changes would actually mislead Facebook users in an attempt to prevent them from leaving for Instagram. In the past, every time an Instagram user posted with the option to share on Facebook, the photo on Facebook said it came from Instagram, with a link back to the app. Instagram’s analysis showed that between 6 and 8 percent of all original content on Facebook was cross-posted from Instagram. Often, the attribution would be a cue for people to comment on the photo where it was originally posted. But with the change mandated by the growth team, that attribution would disappear, and the photo would seem as if it had been posted to Facebook directly”

Excerpt From: Sarah Frier. “No Filter.” Apple Books.

Book review: The Innovation Stack

Similar to the most recent books, this one came to me by chance when somebody I follow retweeted someone else who read it. I gave it a chance and I am glad I did. The book is penned by Jim McKelvey, the cofounder of Square. The book should be recommended by business schools and read by anyone who wishes to improve their competitiveness as a business or a company. It is a straightforward, easy-to-read, genuine and informative book. What I like the most about the book is the author’s genuineness. He doesn’t seem to try to immortalize entrepreneurs or make wild exaggerations. For instance, one of his main points is to copy what worked in the past. In my personal experience at business schools, I often listened to professors talk about “blue ocean” or “doing something unique”. I always find it hard to come across something that has never been done before. Perhaps, I am not smart enough. That’s why it’s refreshing to listen to a billionaire who admitted that he copied everything he could at Square.

Jim’s Innovation Stack simply refers to the process of companies trying to solve a problem which leads to two more problems and so on. By tackling each problem, successful entities come up with a unique mix of elements that only they can possess, elements that make them competitive. Any competitor that wants to copy an Innovation Stack has to somehow copy every single element of the Stack, not just one or a few. That makes a solid Innovation Stack defensible and difficult to emulate.

The same concept can also apply to individuals. For instance, speaking English may not give anyone a competitive advantage. However, combining English with other skills such as fluency in Latin and professional training in archaeology makes a person “more unique” and harder to compete.

There are other gems in the book that I believe will be useful to readers. If you are looking for a short quality read over this weekend, give it a try. It’s worth it.

“BEFORE stalking got such a bad reputation, I was pretty good at it. My target was always the same: some famous businessperson. Entrepreneurship was not taught in school at the time,* so I had to invent a way to get instruction. My technique was simple: I would wait until some famous entrepreneur came to St. Louis to give a speech. After the speech I would catch the speaker as he or she left the stage and offer a ride to the airport.”

Excerpt From: Jim McKelvey. “The Innovation Stack.” Apple Books.

“A couple of ratios help illuminate the crime scene. Credit card vendors were making 0.04¢ on every dollar ($0.3 billion / $788 billion) they processed from their large merchants. Now compare this to 1.8¢ on the dollar, the profit they were making on small merchants ($2.4 billion / $130 billion). Their profit margin from small businesses was forty-five times higher than from billion-dollar corporations. I rechecked my math three times before that number sunk in. Small businesses pay forty-five times more than the giants do. We had identified a big problem and a good reason to start a company.”

Excerpt From: Jim McKelvey. “The Innovation Stack.” Apple Books.

The problem with solving one problem is that it usually creates a new problem that requires a new solution with its own new problems. This problem-solution-problem chain continues until eventually one of two things happens: either you fail to solve a problem and die, or you succeed in solving all the problems with a collection of both interlocking and independent innovation. This successful collection is what I call an Innovation Stack

Excerpt From: Jim McKelvey. “The Innovation Stack.” Apple Books.

“But this book’s subject is the exploration of the unknown; so, as a consolation prize for readers expecting between five and seven bulleted steps to success, I will now tell you the universal formula for success in any existing industry. This formula works from building bridges to selling soap. This formula has worked for millennia and it will give you the ability to succeed in any known field of endeavor. Even better, you have been practicing the fundamental skill it requires since before you were born, and are almost certainly a master.

Ready?

Copy what everyone else does.”

Excerpt From: Jim McKelvey. “The Innovation Stack.” Apple Books.

“In 1973, Braniff cut its fare between Dallas and Houston to $13, half of what Southwest charged. The Dallas–Houston run was Southwest’s primary source of profit—competing at that rate, even with its Innovation Stack and greater cost efficiency, would be disastrous. Braniff’s pricing attack violated US antitrust law, but the executives hoped to drive Southwest out of business before Herb could take them to court. Winning in court wouldn’t matter if Southwest was dead, so Herb needed a fast solution. He and his team devised a plan by looking at their customers.

Southwest knew that most of the passengers on the Dallas–Houston route were businesspeople. These businesspeople flew Southwest primarily for the convenience of multiple flights, easy changes, open seating, and on-time performance. Braniff could set any price it wanted, but it could not replicate the other effects of Southwest’s Innovation Stack. These business fliers were not choosing Southwest simply because of the low price, a price their employers reimbursed them for anyway. So Southwest offered fliers the option of paying only $13, or they could pay the full fare of $26 and get a complimentary bottle of Chivas Regal scotch, Crown Royal whiskey, or Smirnoff vodka. Most of the passengers stayed with Southwest and chose to pay the full fare and get the booze. Southwest managed to outsell Braniff at twice the price, and for the length of that promotion became the largest liquor distributor in Texas.”

Excerpt From: Jim McKelvey. “The Innovation Stack.” Apple Books.

“Disruption has become nearly as threadbare a concept as entrepreneurship. The two words could be roommates at rehab. When Clayton Christensen first popularized the disruption concept back in 1997, the idea was novel and interesting. But what Christensen originally called disruptive innovation has now been shortened to just disruption and the oversimplification is profound. Two decades later, disruption has become the high-fructose corn syrup of business, an overused ingredient sprayed on pitches and injected into keynotes in the hope of disguising the familiar taste of conformity.”

Excerpt From: Jim McKelvey. “The Innovation Stack.” Apple Books.

“IS DISRUPTION BAD? Not by itself. But disruption has also never been the focus of good entrepreneurs. The entrepreneurs profiled in this book set out to build and not to destroy. To focus on disruption is to look over one’s shoulder into the past. But if you are trying to solve a perfect problem or expand a market, shouldn’t you study that industry? No, you look at your customers, or I should say your potential customers, for they do not even know your product or service is possible.”

Excerpt From: Jim McKelvey. “The Innovation Stack.” Apple Books.

But now that you have read this book you have lost something as well. You can no longer look at a problem and say, “Nothing can be done.” You can’t even say, “I can’t do it because I am lacking (fill in your excuse du jour).” You can only say either, “I’m not going to do anything” or “I am going to solve this problem.” Because we have seen how world-changing entrepreneurs had few if any qualifications when they began their journeys. 

Excerpt From: Jim McKelvey. “The Innovation Stack.” Apple Books.

Book that I would NOT recommend: Disunited Nations: The Scramble for Power in an Ungoverned World

I noted this book shortly before it was released as someone I followed on Twitter recommended it. I forgot about it until someone brought it up again on Twitter, saying that if you haven’t read the book, you don’t live the 21st century. Ok, what a big endorsement! So I picked the book up and started reading. Oh boy, what a disappointment.

The author briefly discussed the past before going into details the state of a few countries such as China, Japan, France, Germany, etc…After each chapter for each country, he has a summary in the form of a report card that includes his position on each country on Borders, Resources, Demography, Military Might, Economy and Outlook. The introduction part is fine. My issues with the book started in the first chapter.

Overstating America’s involvement in WWII

“During the Imperial Age, the Europeans had been at each other’s throats” Peace among them had been possible only because of American involvement in World War II, American financial support in the postwar rebuilding effort, American strategic overwatch during the Cold War, and the de facto American subsidization of their economies since 1945 via the Order. Without the Americans, there could not be a European Union, much less a euro. And to thank the Americans, the Europeans decided to launch a common currency expressly designed to chip away at American preeminence in global trade and finance.

Excerpt From: Peter Zeihan. “Disunited Nations.” Apple Books.

While the US did contribute to the defeat of the Nazis in World War II, the claim that America was the sole deciding factor in World War II is a bit too much. The US didn’t get involved until the late stage of the war. More importantly, thousands of Europeans and Soviet Union citizens died to keep the Nazis at bay before defeating them. The condescending tone in the last sentence is cringe-worthy. It is at best debatable and likely incorrect. Not everything that everybody does is about the US.

On America’s role in “bailing out” Europe

The rise of the euro complicated European-American relations, particularly when the Europeans came to Washington hat in hand for help in dealing with the European Financial Crisis, a crisis that would have not been nearly as severe if not for the euro’s creation.

The problem I have with this is that the financial crisis started from the US and rippled throughout the world. Additionally, there is no substantiating evidence to back up the claim that EU crawled out of the crisis hole solely by virtue of the US.

On America’s military might over China

Any Chinese expansion that would replace (much less overturn) the American position doesn’t simply begin after a long American head start, but must overcome an American naval global footprint that would take over a century to establish through force of arms—a footprint that is not replicable without complete victory in a world-spanning war that somehow manages to leave the Chinese mainland untouched. This is meant less as a slam against the Chinese as it is a recognition of global naval realities. After all, aside from the Americans, no one floats even a single fully functional supercarrier, much less a supercarrier battle group, much less a global naval force.

Beyond carriers, China is indeed floating an impressive number of missile frigates and destroyers that combine reach and lethality, but what the Chinese fleet lacks is operational range. Of China’s three hundred–plus naval vessels, only one-ninth of them are major surface combatants that can operate over a thousand miles from shore (a little less than the distance from Shanghai to Tokyo) under ideal circumstances—ideal, as in no one shooting at them.

Excerpt From: Peter Zeihan. “Disunited Nations.” Apple Books.

The author made his claims about how the US is still superior to China in terms of military. However, if you read the book: The Kill Chain, which I reviewed here and which was written by the top advisor of John McCain, the then-chair of the Armed Services Committee in the Senate, the picture cannot be more different. The author of the Kill Chain obviously knows what he was talking about as he was on the inside and he insisted that the US is going to be, if not already, behind China and time is running out. If I have to choose between Peter Zeihan and the guy who had access to classified military documents at the highest level in the government, I’ll pick the latter any day of the week. Here is what Christian Brose said, sorry for the long excerpts which, unfortunately, are necessary to make my point

“Cyberattacks would grind down the logistical movement of US forces into combat. The defenseless cargo ships and aircraft that would ferry much of that force across the Pacific would be attacked every step of the way. Satellites on which US forces depend for intelligence, communications, and global positioning would be blinded by lasers, shut down by high-energy jammers, or shot out of orbit altogether by antisatellite missiles. The command and control networks that manage the flow of critical information to US forces in combat would be broken apart and shattered by electronic attacks, cyberattacks, and missiles. Many US forces would be rendered deaf, dumb, and blind.”

“While these attacks were under way, America’s forward bases in places like Japan and Guam would be inundated with waves of precise ballistic and cruise missiles. The few defenses those bases have would quickly be overwhelmed by the sheer volume of weapons coming at them, with many leaking through. Those bases would have no defense against China’s hypersonic weapons, which can maneuver unpredictably, fly at five times the speed of sound, and strike their targets within minutes of being launched. As all of these missiles slammed into US bases, they would destroy fighter jets and other aircraft on the ground before US pilots could even get them airborne. They would crater runways, blow up operations centers and fuel storage tanks, and render those US forward bases inoperable. If any aircraft did manage to escape the Chinese missiles, it would be forced to relocate to another base in the region, which itself would come under attack. It would look like a US evacuation.”

“A similar dynamic would play out with America’s sea bases. Once the war started, US aircraft carriers in the region would immediately turn east and sail away from China, intent on getting more than a thousand miles away from the opponent’s long-range anti-ship missiles. But from that far away, none of the aircraft on the flight deck would be capable of reaching their targets without aerial refueling, so the Navy would find itself on the horns of the same dilemma the Air Force faced: its stealthy fighter jets would be pushed so far back that they could only get to their targets with the help of non-stealthy, defenseless refueling aircraft that would be shot down in large numbers.”

That assessment was echoed by a bipartisan commission of military experts that McCain had established through legislation that year to provide an independent examination of US defense strategy. They rendered their judgment to Congress shortly after McCain’s death in 2018. “America’s military superiority… has eroded to a dangerous degree,” they wrote. “The U.S. military could suffer unacceptably high casualties and loss of major capital assets in its next conflict. It might struggle to win, or perhaps lose, a war against China or Russia.”

Excerpt From: Christian Brose. “The Kill Chain.” Apple Books.

On America making all strategic decisions for Europe!???

The only way the Europeans have ever discovered to prevent this never-ending cycle of wars is to change the game. To bring in an external security guarantor who forces everyone to be on the same side. Who makes all major strategic decisions for everyone. Who enables access to raw materials without needing to resort to war. Who allows for the mass export of Germany’s always destabilizing volumes of manufactured goods to somewhere beyond Europe. That’s the United States. That’s the Order.

Excuse me?

False claim on Germany’s electricity source

Germany receives less than 10 percent of its electricity needs from green power.

One quick check on Google can prove that this is false

Graph shows renewables share in gross power consumption 1990-2019. Graph: CLEW 2020.
Source: Clean Energy Wire

Overly optimistic view of the US

“OUTLOOK: The Americans excel at missing opportunities due to domestic squabbling, but there is nothing in what’s left of the international system that will threaten the American heartland either militarily or economically before 2050.”

This is the theme throughout the book. Peter Zeihan is overly optimistic and borderline delusional about the US’ outlook. It is still the richest country on Earth, but claiming that the country faces no military or economic threats before 2050 is simply wrong. China is projected to overtake the US economically in the near future. It is now the second biggest economy in the world and the gap is closing. As mentioned above, China’s military IS already a threat to the US. and it’s not me that said so. It’s the people who served at the highest level of the government that did.

I jumped into this book with excitement and curiosity which were quickly evaporated by bold yet unsubstantiated claims, omission of human factors, delusional outlook on the US, false statements and the condescending tone towards others. This book is music to the ears of the folks who claim that despite what is going on in the country, the US is still the greatest in the world. To others who are more pragmatic, especially those with international exposure like me, it is less so. To be fair, the world needs America, but as much as America needs the world. Despite all the advances and great things that this country produces, it faces monumental threats such as eroding global standing among allies, rising income inequality, outdated infrastructure, a dysfunctional government, voter suppression, corruption, bitter and severe divide in America’s society, healthcare, etc…

Not everyone who points out America’s shortcomings has malicious intent. Many, myself included, are forthcoming and honest about what America can do better because we want the country to improve and to be better. I’d not be here if I didn’t like America. I do love it less now, but it doesn’t mean I want it to fail. I want to see it succeed and to do so, I prefer folks saying “Look, America has problems, but we can fix them and be better” to “To hell with all problems, America is still the greatest”. Since this book is blindly and condescendingly pro America, it may as well be labeled that way.

To be fair, the book has some good thought-provoking bits, but they are not worth the time spent on 300 pages and the frustration I detailed above. Long post short, I would NOT recommend this book.

Book review: The Kill Chain: How Emerging Technologies Threaten America’s Military Dominance

I picked up this book after reading about it briefly on one of the news outlets. At first, I had a suspicion that it was a partisan book as everything was politicized nowadays in the US, but I still decided to give it a try. I am sure glad I did. The book was written by a senior advisor to John McCain, the former GOP chair of the Senate Armed Services Committee. The author’s tone and viewpoint throughout the book, in my opinion, were fair and made sense. He talked briefly about what he considered mistakes by both President Obama and Trump, in their failure to modernize the military and foreign relations policies. He tackled several aspects of the changing landscape that makes the US’s once insurmountable dominance on the verge of being completely eliminated, especially by China. He painstakingly explained why Russia and particularly China would present a peer and a threat that the US has never had before.

He used his insider knowledge and experience working under McCain to explain why even though the US spends billions of dollars a year on military and defense, it’s more about “how you spend money” than “how much money you spend”. A great deal of money is wasted every year by the bureaucracy, the corruption and the self-serving parties involved in the national defense business. While new technologies are already here, the US still plows an incredible amount of money into equipment, technologies and processes that belong to the past. Overall, this book is a wake-up call on how the US’s military is being left behind by arch rivals. It’s an informative read by someone who knew what he was talking about.

Threat from Russia and China with their technological advances

“As it stood, the Chinese Communist Party knew far more about the US military and its vulnerabilities than the American people and their elected representatives did.”

Excerpt From: Christian Brose. “The Kill Chain.” Apple Books.

“That assessment was echoed by a bipartisan commission of military experts that McCain had established through legislation that year to provide an independent examination of US defense strategy. They rendered their judgment to Congress shortly after McCain’s death in 2018. “America’s military superiority… has eroded to a dangerous degree,” they wrote. “The U.S. military could suffer unacceptably high casualties and loss of major capital assets in its next conflict. It might struggle to win, or perhaps lose, a war against China or Russia.”

Excerpt From: Christian Brose. “The Kill Chain.” Apple Books.

“One story from a Ukrainian officer stuck with me. His fellow commander was known to the Little Green Men as a highly effective fighter. One day during the conflict, the man’s mother received a call from someone claiming to be the Ukrainian authorities, who informed her that her son had been badly wounded in action in eastern Ukraine. She immediately did what any mother would do: she called her son’s mobile phone. Little did she know that the call she had received was from Russian operatives who had gotten a hold of her son’s cell phone number but knew that he rarely used the phone for operational security reasons. This Ukrainian commander, being a good son, quickly called his mother back, which enabled the Little Green Men to geolocate his position. Seconds later, while still on the phone, he was killed in a barrage of precision rocket artillery.”

Excerpt From: Christian Brose. “The Kill Chain.” Apple Books.

“Cyberattacks would grind down the logistical movement of US forces into combat. The defenseless cargo ships and aircraft that would ferry much of that force across the Pacific would be attacked every step of the way. Satellites on which US forces depend for intelligence, communications, and global positioning would be blinded by lasers, shut down by high-energy jammers, or shot out of orbit altogether by antisatellite missiles. The command and control networks that manage the flow of critical information to US forces in combat would be broken apart and shattered by electronic attacks, cyberattacks, and missiles. Many US forces would be rendered deaf, dumb, and blind.”

Excerpt From: Christian Brose. “The Kill Chain.” Apple Books.

How outdated US’s military is

“And yet, when members of our military put on their uniforms and report for duty, hardly any of this technology is available to them. Instead, they consistently have to do dangerous and important jobs with technology that might be many years behind what they use in their daily lives. This was reinforced again for me at a major Air Force conference last year, where I spoke on a panel about how new technology could help build better networks of military systems. An airman in the audience asked the panel how this would be possible when most servicemembers currently deal regularly with long network outages that leave them disconnected from email and the internet. Nearly everyone in the audience, more than one thousand people, erupted in applause.

Excerpt From: Christian Brose. “The Kill Chain.” Apple Books.

“It is a story of how the worlds of national defense and high technology in America increasingly grew apart. At a deeper level, it is also a story of how the United States was spoiled by its own dominance—a cautionary tale of how a prolonged period without real geopolitical competition bred a false sense of invincibility. In short, it is a story of how the United States got ambushed by the future.”

Excerpt From: Christian Brose. “The Kill Chain.” Apple Books.

“The bigger issue is that most of these allegedly information age military systems struggle to share information and communicate directly with one another to a degree that would shock most Americans. For example, the F-22 and F-35A fighter jets cannot directly share basic airborne positioning and targeting data despite the fact that they are both Air Force programs and built by the same company. They were architected with different means of processing and transmitting information that are not compatible. It is as if one speaks Greek, and the other speaks Latin.”

Excerpt From: Christian Brose. “The Kill Chain.” Apple Books.

“Unlike some leading American technology companies, Nvidia is open to doing business with the Department of Defense. I asked how many of its graphics processing units were operating on fielded US military systems. I was not surprised by the answer: none.

As the answer suggests, most US military systems are many years behind the state-of-the-art technology that commercial companies such as Nvidia are developing. The most capable computer onboard a US military system is the core processor in the F-35 Joint Strike Fighter, which has earned it the nickname “the flying supercomputer.” The processor can perform 400 billion operations per second.1 By comparison, the Nvidia DRIVE AGX Pegasus can conduct 320 trillion operations per second right onboard a commercial car or truck.2 That is eight hundred times more processing power.”

Excerpt From: Christian Brose. “The Kill Chain.” Apple Books.

“The information that most US military machines collect is not actually processed onboard the machine itself. It is either stored on the system and then processed hours or even days later when the machine returns from its mission. Or it is streamed back to an operations center in real time, terabyte by terabyte, which places a huge burden on military communications networks. Either way, it is the job of humans, not machines, to comb through most of that data and find the relevant bits of information. In 2020, that is the full-time job of literally tens of thousands of members of the US military. When they are off-duty, they may use Nvidia’s technology to play video games or even assist them on their drive home. But in uniform, they are essentially doing the same jobs that their grandparents did in World War II.”

Excerpt From: Christian Brose. “The Kill Chain.” Apple Books.

“A friend of mine who recently did targeting in the US military told me that the best way his unit could get on one page in identifying a target was with Google Maps. They had to gather up all of their different streams of information about the target from their assorted sensor platforms, come to a time-consuming decision on where the target actually was located, and literally drop a pin in Google Maps to direct their shooters where on earth to fire their weapons. This was around the time that the Google employees wrote their open letter to their leadership demanding that the company cut ties with the Department of Defense lest their technology contribute to lethal military operations. “If those folks only knew how many bombs the US military has dropped using Google Maps,” my friend told me, “their heads would explode.”

Excerpt From: Christian Brose. “The Kill Chain.” Apple Books.

How a great deal of money is wasted every year on military spending and how much bureaucracy there is in Washington

“Over the past two decades, during the peaks of the wars in Iraq and Afghanistan, multiple new weapons programs were started and ultimately canceled with nothing to show for them. The Center for Strategic and International Studies stopped counting the different programs at eighteen, acknowledging that the real number is far higher. All told, the Pentagon and Congress spent more than $59 billion on these programs during the 2000s and got no usable capability by the time the programs were canceled.”

Excerpt From: Christian Brose. “The Kill Chain.” Apple Books.

Many companies resented making these changes, which they felt forced into. But change they did, and they often used their influence in Washington’s byzantine acquisition system to their own advantage: They underbid on contracts to develop technology and then overran on the actual costs and time to produce it. They promised things they could not deliver. And they used their political clout in the Pentagon and Congress to make it harder for new companies and new technologies to displace their programs of record. Put simply, the US government created incentives for defense companies to do the wrong things, and that is often what happened.”

Excerpt From: Christian Brose. “The Kill Chain.” Apple Books.

“That simply does not happen with US military systems, where hardware has always been king and software largely an afterthought. For most military systems, the schedule for hardware updates determines the schedule for software updates. After all, most of the companies building these systems are hardware companies, not software companies. This has created multiyear software development cycles that are doomed to failure. Think of how well your mobile device would work if its software and apps were updated only every several years. That’s how it is for military systems. I cannot tell you the number of defense programs I came across during my time in the Senate—on which the US government had spent billions of dollars over many years—that were failing for the simple reason that their builders were not proficient in how to develop suitable, scalable, adaptable, and constantly improving software. And the result, time and time again, is that members of the US military are handed equipment whose functionality is inferior to what they use in their everyday lives.”

Excerpt From: Christian Brose. “The Kill Chain.” Apple Books.

“A good example of how defense acquisition can go wrong is the Army’s attempt to buy a new pistol a few years ago. It issued a request for proposals that ran over 350 pages of cumbersome details and envisioned years of costly development and testing before soldiers would ever get a new sidearm. Even Army leaders were surprised. They learned about it when McCain and I told them, and then they were as outraged as we were. “We’re not figuring out the next lunar landing,” said an outraged General Mark Milley at the time, when he was chief of staff of the Army. “This is a pistol. Two years to test? At $17 million?” he vented. “You give me $17 million on a credit card, and I’ll call Cabela’s tonight, and I’ll outfit every soldier, sailor, airman, and Marine with a pistol for $17 million. And I’ll get a discount on a bulk buy.”

Excerpt From: Christian Brose. “The Kill Chain.” Apple Books.

“Even basic tasks that used to be routine bodily functions in Congress, such as passing a federal budget, have become nearly impossible. Indeed, over the past ten years, Congress has managed only once to pass spending legislation for the Department of Defense by the start of the fiscal year. When Congress fails to do its job in this way, it passes a “continuing resolution,” which requires the military to spend money on only the things it spent money on the prior year. Not only does this waste billions of dollars in misallocated resources, it literally locks the military into the past and prevents it from implementing its plans for the future. This is how the Department of Defense has spent nearly one thousand days of the past decade. The US military now plans to start each fiscal year without an appropriation of funding. Pentagon planners painstakingly negotiate contracts and structure programs to avoid critical payments in the first quarter of each fiscal year so they do not end up in breach of contract when they inevitably get stuck on a continuing resolution. Even then, problems arise. When Congress failed to pass a budget for six months at the start of the fiscal year, for example, the Navy had to renegotiate roughly ten thousand contracts, which senior Navy leaders estimated cost them roughly $5.8 billion in wasted buying power. That could have bought three destroyers.”

Excerpt From: Christian Brose. “The Kill Chain.” Apple Books.

Book: Tim Cook The Genius Who Took Apple To The Next Level

First of all, I own Apple stocks in my personal portfolio and I blogged many times about the company before. I picked up this book because I wanted to read something light and know more about the guy who runs the company which I admire and have a vested interest in. To be frank, the book was written by an author who seems to have a favorable view on Apple. Some suggested that his writing was biased towards the Cupertino-based company. I leave that to the readers to judge.

The book followed Tim Cook from his childhood in a small town in Alabama to his first job at IBM which was followed by one or two stints at others, before he ended up at Compaq. A fateful meeting with Steve Jobs shortly after he returned to the helm at Apple led to arguably one of Steve’s best hires at Apple who is now the CEO of the company. It’s interesting to read about Tim’s background in Alabama and the environment he grew up in. When he came to know his sexuality remains unclear from the book. What is clear is that his sexuality shapes his world view and what he declares as the best gift God gave him.

The majority of the book is about Apple under Tim’s leadership, even back to when he was only in charge of Apple’s supply chain. Some may be disappointed that the book doesn’t include more personal details or anecdotes on the man or any interview from the man himself. Nonetheless, he is known for being a private man and anyone’s privacy should be respected. If someone spends most of his awake time running a company, I think it’s fair to view him in the light of what others think of him and how he performs at work. Tim’s performance, when put in contrast to Steve Jobs’, should be more telling. While Steve is undoubtedly one of the best CEOs of all time, there are things that Tim did wouldn’t likely have been done by Steve such as the focus on environmental sustainability.

Tim’s actions on controversial issues such as the balance between profitability and protection of workers in the supply chain or privacy and the legal battle against FBI or his public confirmation on his sexuality should let readers know more about the man himself. Regarding his status as a CEO, Apple’s value has grown many times since he took over. The company once reached a market valuation of around $1.6 trillion. To manage a company with such operational complexity, a diverse set of products and services, a cut-throat competition and an unbridled level of scrutiny is no easy feat. No matter what you think about the book or the author’s allegedly favorable view on Apple, it’s hard to deny what Tim has brought to Apple.

“ Fast forward eight years, and under Cook’s leadership, Apple has been absolutely killing it. Since Jobs died, Apple reached the ultimate milestone, becoming the world’s first trillion-dollar company, making it the most valuable corporation in the world. Its stock has nearly tripled. Its cash reserves have more than quadrupled since 2010, to a record $267.2 billion—despite its spending nearly $220 billion in stock buybacks and dividends. For perspective, the U.S. government only has $271 billion cash on hand.”

Excerpt From: Leander Kahney;. “Tim Cook.” Apple Books.

“When we work on making our devices accessible by the blind, I don’t consider the bloody ROI [return on investment],” he said. And the same thinking applies to Apple’s environmental initiatives, worker safety, and other policies. “If you want me to do things only for ROI reasons, you should get out of this stock,” he snarled at the conservative investor. Afterward, the NCPPR issued a statement decrying Cook’s stance: “After today’s meeting, investors can be certain that Apple is wasting untold amounts of shareholder money to combat so-called climate change.” But Cook, as always, stayed true to his principles.”

Excerpt From: Leander Kahney;. “Tim Cook.” Apple Books.

“When we work on making our devices accessible by the blind, I don’t consider the bloody ROI [return on investment],” he said. And the same thinking applies to Apple’s environmental initiatives, worker safety, and other policies. “If you want me to do things only for ROI reasons, you should get out of this stock,” he snarled at the conservative investor. Afterward, the NCPPR issued a statement decrying Cook’s stance: “After today’s meeting, investors can be certain that Apple is wasting untold amounts of shareholder money to combat so-called climate change.” But Cook, as always, stayed true to his principles.”

Excerpt From: Leander Kahney;. “Tim Cook.” Apple Books.

Shortly after Cook was inducted into the Alabama Academy of Honor in 2014, he personally told Representative Todd that Apple had no intention of investing in Alabama until the state passes anti-discrimination laws. “Citizens of Alabama can still be fired based on their sexual orientation,” Cook said. “We can’t change the past, but we can learn from it, and we can create a different future.”

Excerpt From: Leander Kahney;. “Tim Cook.” Apple Books.

“Under Cook’s leadership, the amount of time that Apple’s inventory sat on the company’s balance sheet was reduced from months to mere days. In the seven months after he started work at Apple, thanks to Cook’s achievements slashing inventory turnover from thirty days to six, the company’s inventory stock was reduced from $400 million worth of unsold Macs down to just $78 million.”

Excerpt From: Leander Kahney;. “Tim Cook.” Apple Books.

To make sure that the computers shipped out to customers in an expedient manner over the all-important holiday season, Cook booked $100 million worth of air freight months in advance. This was unheard of, but it paid off in a big way. Not only did Apple get its products out to customers in a rapid fashion, but its rival PC makers, such as Compaq, suddenly found themselves struggling to secure shipping over the holidays.

Excerpt From: Leander Kahney;. “Tim Cook.” Apple Books.

“This is really bad,” Cook said. “Someone should be in China driving this.” The meeting continued for another half hour before Cook looked directly at Sabih Khan, a key operations executive, and asked, with deadly seriousness, “Why are you still here?” Khan immediately got up, left the meeting, drove to the airport, and booked a flight to China with no return date. He didn’t even stop at his home to pack a change of clothes.”

Excerpt From: Leander Kahney;. “Tim Cook.” Apple Books.

“He took conference calls on Sunday nights, was replying to emails by 3:45 a.m., and was at his desk by 6 a.m. every morning. He worked twelve- or thirteen-hour days in the office, and then returned home to answer more emails.

“I would get a couple of emails from Tim between about 3:45 and 4:15 in the morning,” and “then from 4:30 to 6:00 it would go quiet,” said his colleague Bruce Sewell, Apple’s former general counsel. “That’s when he’s at home and eating breakfast, getting up, getting ready to go to the gym.” Then from about 6:15 onward he would be at work.

It wasn’t unheard of for Cook to fly to China, work three days without acknowledging the sixteen-hour time difference, fly back, land at 7 a.m., and be in the office for a meeting at 8:30. When he wasn’t flying to China to meet with Apple suppliers, he rarely left the state of California so that he could be available at a moment’s notice.”

Excerpt From: Leander Kahney;. “Tim Cook.” Apple Books.

“Under Cook, Apple has taken a more hands-on role in launching initiatives targeting workers. In 2017 the company launched a new health awareness program intended for women working at its suppliers in India and China, offering access to services and education on self-examination for early cancer detection, nutrition, personal care, and maternal health. Jeff Williams said that by 2020, Apple hopes that this program will have reached one million women.

Apple’s financial muscle also means that it is able to dictate many of the terms of business to its suppliers. In 2018, Apple forced one of its suppliers in the Philippines to repay a total of $1 million it had charged for recruitment fees for factory jobs. ”

Excerpt From: Leander Kahney;. “Tim Cook.” Apple Books.

“iOS 7 also brought Activation Lock, a feature that prevents lost or stolen devices from being wiped and reactivated without the owner’s iCloud password. Activation Lock makes the iPhone and iPad significantly less appealing to would-be thieves, who quickly realized that they would not be able to sell what essentially became the world’s most attractive brick as soon as it was no longer in the possession of its rightful owner. Police data published in 2014 revealed that iPhone thefts in San Francisco had fallen 38 percent since Activation Lock was made available in September 2013, while thefts in London and New York City had dropped 24 percent and 19 percent, respectively.”

Excerpt From: Leander Kahney;. “Tim Cook.” Apple Books.

“Stefan Behling, a Foster partner who became one of the project leads, recalled Jobs’s specific demands: “He knew exactly what timber he wanted, but not just ‘I like oak’ or ‘I like maple.’ He knew it had to be quarter-cut. It had to be cut in the winter, ideally in January, to have the least amount of sap and sugar content. We were all sitting there, architects with gray hair, going, ‘Holy shit!’”

Excerpt From: Leander Kahney;. “Tim Cook.” Apple Books.

“Even something as simple as using an Apple Watch to unlock your Mac, which is surprisingly complex behind the scenes, is a small but telling example of innovation in the Cook era. Like Cook himself, these improvements aren’t trumpeted as big breakthroughs, but they add up to a better experience and are leading the rest of the tech industry. Indeed, many may not realize that this is the way Apple has always operated; the big breakthroughs are rare, but smaller incremental improvements are common, and sometimes they add up to big new breakthrough products.”

Excerpt From: Leander Kahney;. “Tim Cook.” Apple Books.