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.”

Review of my 2021

Here is the scorecard for my 2021.

Investing

The last couple of months wasn’t nice to my portfolio, but overall I made money in the whole year. My portfolio’s total return went from 4% in 2019 to 23% in 2020, to 40% in 2021. It’s not much, but it’s honest work and I can’t say I am too disappointed. Can it be better? Absolutely.

I made some stupid mistakes with my portfolio. The first was to sell Costco. I love the business, but I was in need of some capital to invest in companies which, to me, had more potential for growth than Costco. I paid the price dearly as the stock went from $370 when I sold it back in April 2021 to $550 today. The second miss was Upstart. A good friend recommended to me when the stock was trading at $88 in January 2021. I didn’t jump on it for reasons that I still don’t fully understand. At the peak, the stock hit $390 or something and even though there was a big pull-back, I would have still made a healthy return. The third mistake is that I didn’t save enough cash on hand when the market dipped and presented great opportunity to buy.

I wrote about how Investing is hard. It really is. I am sure I will continue to make mistakes. I can’t promise that I won’t repeat the ones I made this year. What I do hope is to take my return to a new height. The good news is that I have compounding on my side.

Grade: 6/10

Books I reviewed

I read in total 15 books this year. Not bad, but not a lot either. I’ll strive to read more in 2022. Below are some of my reviews:

Richer, Wiser, Happier: How The World’s Greatest Investors Win In Markets And Life. This is the best book I read in 2021.

Obviously Awesome

Junk To Gold

Amazon Unbound

Think Again: The Power Of Knowing What You Don’t Know

The Spotify Play

Exercised: Why Something We Never Evolved To Do Is Healthy And Rewarding

Grade: 7/10

My Blog

I blogged less this year than I did in 2020. There were weeks when I only had one post, excluding the weekly reading series I always do on Saturdays, or when I didn’t write anything at all. One of the goals I have for 2022 is to increase the posting frequency while keeping the same level of quality. I am not saying that I am a good writer at all, but truth be told, what I wrote this year or in 2020 makes me cringe less than what I put out three years ago. So I’ll take that as progress and continue to work on myself as a writer. I wrote some time back about why I blog. It rang true then and it does ring true now. It helps me become a better person, a better professional and I still do enjoy the process. If you ever came across this little blog of mine and became a subscriber or left a like, you have my thanks.

My top 5 blog posts, besides the homepage:

My experience with Amazon Shopper Panel

Naval Ravikant’s take on death

Create a hover effect on Mapbox

Circadian rhythm, Melatonin, Adenosine, Caffeine and Sleep

My thoughts on Walmart Plus

Grade: 7/10

Work

2021 has been a very busy year for me at work. The pandemic has turned the team upside down with folks relocating to other cities or leaving for better opportunities. Though we tried to backfill the ones that left, the new arrivals have to take some time to acclimate to the team and the overall business. Meanwhile, the work just keeps coming. Existing business-as-usuals and new initiatives. Hence, I have had to shoulder more responsibilities and spent more time working outside the business hours more than I’d like to. But it’s not all bad news. I got promoted and had a chance to mentor interns and new teammates; which is one of the areas I really love to improve next year and beyond.

There are two main things that I want to do better in the future. The first is to sell better, whether it’s myself or my work. This year, several occasions showed me that while the work I did might be good, it didn’t come across as convincing to others as I was a lousy salesman. My self-assessment was echoed by a senior leader in the company, who was gracious enough to share his thought candidly. To be able to move up the ladder, I need to be more confident and communicate my ideas more effectively and better.

The second goal is to have a team to manage and more ownership of an entire project. I managed folks before, albeit briefly, and have been mentoring some people at work. Nonetheless, my goal in the first 2 or 3 years to have a team of my own so I can manage and lead. In addition, I don’t want just ownership of a project’s aspect. I want the ownership of an entire project that can help my company meaningfully.

Grade: 8/10

Book review: Operaatio Elop and Turning The Flywheel

Operaatio Elop

This book is based on interviews with more than 100 people who had indirect or direct experience with Nokia at the time. It’s about what happened between 2010 and 2013 under the reign of the former CEO – Stephen Elop and how Nokia fell apart in a matter of years. The book was originally in Finnish only, but some volunteers created an English version and that version was generously shared with the world for free here.

Nokia was at the peak of its power back in 2005 to 2007. At the time, there were seismic changes in the cut-throat personal phone industry with the introduction of Android and iOS, the iPhones, iPad and the App Store. Nokia, at the time, started to realize it had problems at hand and the CEO wasn’t up to the task. The search for a new CEO culminated with the appointment of a Canadian named Stephen Elop. Stephen introduced a host of initiatives during his time, but couldn’t turn around the fortune of the Finnish giant. The tumultuous reign ended with the controversial acquisition of Nokia by Microsoft, a shocking fate for a brand that just a few years prior had been among the top 5 in the world.

Nokia had a lengthy list of problems. The Board had insufficient industry experience and the Chairman was widely regarded as one of the main culprits for the fall of Nokia. Their go-to-market strategies faltered. For example, Nokia couldn’t have the same relationship with network providers in the US. It didn’t launch early enough the dual SIM feature in India. It also missed a critical Lunar New Year shopping period in China one year. Moreover, their product development couldn’t deliver. They didn’t have the advanced chip used by other competitors at the time. Their feature phones slowly became a thing of the past, but their smartphones couldn’t sell. Nokia couldn’t get developers to develop apps for their new phones and as a consequence, the lack of useful apps rendered their phones less appealing to consumers. The vicious cycle kept going on. Their partnership with Microsoft wasn’t perfect as Windows had a modest market share and developers didn’t have a lot of love for Microsoft at the time.

Nokia had many capabilities and assets at the time. Yet, it failed to address internal problems and respond appropriately to the changes in the external environment. This is a lesson for businesses. Past achievements mean little for survival when there is a lack of responses to the changing environment.

The author made it clear that the book mainly offered another perspective on Nokia and its collapse, rather than had exclusive truth on what actually happened. Also, even though many could fault Elop for the collapse and they might be right, given his managerial blunders, the book made it clear that with all the challenges the company faced at the time, it’s unclear if anyone could do better than him. That’s kinda what I feel. Hindsight bias is the easiest. Anyone could look back and critique others on what they should or shouldn’t have done, especially all these analysts I see on Twitter. The fact and the matter is that inside a company, there is a lot going on. Managing a multi-national company is no easy feat. We can and should keep the powerful honest and in check, but we shouldn’t be too arrogant.

Out of the three members of the appointment committee, only Ollila had experience in the technology industry, but even he, according to many, was not in touch with the service-driven internet-age mode of operation.

“Two of Nokia’s fiercest competitors, Apple and Google, obviously had boards more competent in global technology and internet knowhow than Nokia. To aggravate the situation, the Nokia Board of Directors was manned more with fine titles than substance. Scardino was the only American on the board despite the fact that the highest level of software competence was found in the US”

Excerpt From: Pekka Nykänen. “Operation Elop.” Apple Books.

The situation was worst for the company’s biggest money maker, its smartphone operating system Symbian. With over 6 million lines of code, the software platform had become unmanageable. Hardware design and Symbian software development were almost in a state war and were at each other’s neck daily.

Excerpt From: Pekka Nykänen. “Operation Elop.” Apple Books.

“For example, the normal trial-and-error software development technique was no longer used in Symbian software development. A person who was in charge of software development says that the problem was in the management which adjusted and fine-tuned projects ad nauseam. Even according to Nokia’s internal evaluation, the projects with the least management level involvement were the ones best on schedule. When the engineers were left alone to do their work, the results came forth.”

An employee working in the strategy department resorted to check the true status of upcoming phone projects from a friend working in development, because the official status given could not be trusted. Nokia was the emperor with new clothes, but nobody dared to say it out loud.

Excerpt From: Pekka Nykänen. “Operation Elop.” Apple Books.

“In just three months Nokia had made the decision that would seal its destiny. This decision were prepared by a man who had only worked for the company for five months — a CEO who had come from outside the industry.”

Excerpt From: Pekka Nykänen. “Operation Elop.” Apple Books.

“The N9 became an awkward pain point to Elop. Critics liked the phone but Nokia could not promote it because there was a fear that it would dilute the success of the Lumia phones. It looked like the success of the N9 came as a surprise to Elop. It would have been difficult to imagine how consumers would be interested in a device that was a dead end with a limited supply of applications. When Elop had been asked in London why anyone would buy the first and the last MeeGo phone, the man with a flu had responded: “I guess you just answered your own question.”

Excerpt From: Pekka Nykänen. “Operation Elop.” Apple Books.

Carolina Milanesi is an analyst who has been following Nokia for several years. She believes the crucial mistake at Nokia was to cling to Symbian for too long. The end result could have been different if the Symbian ramp-down had begun in already early 2010 and all development and marketing investment shifted to MeeGo.

“The credibility vanished. Developers were faced with a dilemma: Why build Symbian applications when the market fell from under the platform? Why build Windows Phone applications when there was no market?”

Excerpt From: Pekka Nykänen. “Operation Elop.” Apple Books.

Missing the Chinese New Year — the best shopping season of the year — was a pivotal mistake by Nokia in a situation where their market share on the Chinese smartphones market was already less than one percent.

The most significant markets for Nokia’s mobile phones were in India. Nokia made a critical mistake in bringing dual-SIM phones late to the market. According to Ramashish Ray, who was responsible for retail sales in India, Nokia was two years late: “Slow reaction to market reality, leadership bureaucracy and the diffusion of the decision making to too many forums”, Ray lists the reasons for the delay of the dual-SIM phones.

Excerpt From: Pekka Nykänen. “Operation Elop.” Apple Books.

Nokia’s phones were not killed off by a murderer from Canada. What killed them was the arrogance born in Nokia’s own country, concentrating on costs, unclear responsibilities, and bad decisions made by the company’s board.

Excerpt From: Pekka Nykänen. “Operation Elop.” Apple Books.

Turning The Flywheel

Unlike Operaatio Elop, Turning The Flywheel is a very short book. It is a summary of the Flywheel concept that Jim Collins discussed at length in his previous book: Good to Great. This concept essentially looks at a few select activities that a company must do, in relation to one another, so that the company can stay competitive. For instance, Amazon manages to sell goods at a lower price and in a big variety. That attracts consumers; which in turn attracts merchants to Amazon. Because of the bigger bargaining power, Amazon can lower the prices and expand its catalogue. The cycle keeps going on.

Each pillar in the Flywheel can constitute several critical capabilities of a company. I consider this concept as a useful practice for management to really think about what a company can do and should focus on. By no means does it mean that the Flywheel is an answer to everything. Businesses still need to pay attention to the external environment. We already saw with my review of Operaatio Elop above that Nokia, despite having resources and capabilities, still failed to adapt to the changing environment and collapsed. It’s the job of the management to constantly assess whether the current capabilities are still up to date and can help the company respond to the external challenges.

The book should serve as a launchpad and guide readers to more materials and references on business strategies and the Flywheel concept. If you’re new to it, it should be a helpful read.

Book: The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company

Admittedly, before reading this book, I already had vested interest in Disney. I am fascinated by the transformation that the company has been going through and I own its stock in my humble portfolio. Nonetheless, it is one of those books that I have read with more focus than I have others.

The book offers interesting insights into the transformation Disney had to go through to revive its Animations and fend off the disruption in the Entertainment industry. Through the words of Bob Iger, the delicacy of M&A negotiations is put on display, including prices paid for companies, the process to get the sellers to sell and the politics that come with acquisitions. To a fan of business strategies and technology, it’s fascinating to read.

One of the things I like about the book is the relationship between Bob Iger and the late great Steve Jobs. Bob repeatedly mentioned his admiration and love for Steve, even long after the late co-founder of Apple died. If you live your live so well that people fondly remember you long after you die and that you change lives while you live, it’s a life magnificently lived. Almost 10 years since his death, Steve is still an inspiration to me.

Bob’s account is an example of how patience and hard work can be rewarding in the long run. He used to be a guy grabbing coffee for Frank Sinatra. In his 50s and 60s, he ran one of the most iconic and influential companies in the world. He also gives away his leadership lessons which I will quote below.

All in all, if you are looking for an easy and good read, you won’t be disappointed with this one.

Decades after I stopped working for Roone, I watched a documentary, Jiro Dreams of Sushi, about a master sushi chef from Tokyo named Jiro Ono, whose restaurant has three Michelin stars and is one of the most sought-after reservations in the world. In the film, he is his late eighties and still trying to perfect his art. He is described by some as being the living embodiment of the Japanese word shokunin, which is “the endless pursuit of perfection for some greater good”

When Iron Man 2 came out, Steve took his son to see it and called me the next day. “I took Reed to see Iron Man 2 last night” he said “It sucked”

“Well thank you. It’s done about $75 million in business. It’s going to do a huge number this weekend. I don’t take your criticism lightly, Steve, but it’s a success and you’re not the audience” (I knew Iron Man 2 was nobody’s ida of an Oscar winner, but I just couldn’t let him feel he was right all of the time

Later, after we’d closed the deal, Ike told me that he’d still had his doubts and the call from Steve made a big difference to him. “He said you were true to your word” Ike said. I was grateful that Steve was willing to do it as a friend, really, more than as the most influential member of our board. Every one in a while, I would say to him, “I have to ask you this, you’re our largest shareholder” and he would always respond, “You can’t think of me as that. That’s insulting. I’m just a good friend”

After the funeral, Laurene came up to me and said, “I’ve never told my side of that story.” She described Steve coming home that night. “We had dinner and then the kids left the dinner table, and I said to Steve, ‘So did you tell him?’ ‘I told him’. And I said, ‘Can we trust him?’ ” we were standing there with Steve’s grave behind us, and Laurene, who’d just buried her husband, gave me a gift that I’ve thought about nearly every day since. I’ve certainly thought of Steve every day. “I asked him if we could trust you” Laurene said. “And Steve said, ‘I love that guy’ “

No matter who become or what we accomplish, we still feel that we’re essentially the kid we were at some simpler time long ago. Somehow that’s the trick of leadership, too, I think, to hold on to that awareness of yourself even as the world tells you how powerful and important you are. The moment you start to believe it all too much, the moment you look yourself in the mirror and see a title emblazoned on your forehead, you’ve lost your way. That may be the hardest but also the most necessary lesson to keep in mind, that wherever you are along the path, you’re the same person you’ve always been

Value ability more than experience, and put people in roles that require more of them than they know they have in them

“Avoid getting into the business of manufacturing trombone oil. You may become the greatest trombone-oil manufacturer in the world, but in the end, the world only consumes a few quarts of trombone oil a year!” He was telling me not to invest in small projects that would sap my and the company’s resources and not give much back.

At its essence, good leadership isn’t about being indispensable; it’s about helping others be prepared to step into your shoes – giving them access to your own decision-making, identifying the skills they need to develop and helping them improve, and sometimes being honest with them about why they’re not ready for the next step up

Technological advancements will eventually make older business models obsolete. You can either bemoan that and try with all your might to protect the status quo, or you can work hard to understand and embrace it with more enthusiasm and creativity than your competitors.

Book: Year of Yes

On my way to Austin last weekend, I had a few hours to waste while in transit and on the plane. If you are one of the normal folks, like I am, those hours are not particularly the time when we experience a spurt of efficiency in getting work done. So I took out my beloved Kindle and chose a book to read. Happy that I chose “Year of Yes: How to Dance It Out, Stand In the Sun and Be Your Own Person” by Shonda Rhimes. 

Having read business and science-related books for a while, I figured something like a memoir would be a refreshing change of air. Plus, I’d love to know more about the architect behind some of my favorite shows: Scandal and How to get away with murder.

What I like the book is its realness. Shonda’s writing is genuine that I got a feeling I was listening to her story in person. From her struggle as an introvert, self-awareness of the time when she got fat, the allergy with public events. You might find some parts a bit long-winded, but I guess it’s part of the charm. Other highlights for me are her Year of Yes concept, perception of motherhood and commencement speech at Dartmouth. It’s real. It’s rough. It’s honest. And that’s why it is appealing. 

Below is a sneak peek of her perception on motherhood.

“But being a mother is also a job, Shonda”. You know what I say to that? NO. IT IS NOT. 

Being a mother is not a job. Stop throwing things at me. Being a mother isn’t a job. It’s who someone is. You can quit a job. I can’t quit being a mother. Mothers are never off the clock, mothers are never on vacation. Being a mother redefines us, reinvents us, destroys and rebuilds us. Being a mother yanks our hearts out of our bodies and attaches them to our tiny humans and sends them out into the world, forever hostages. 

Please don’t try to tell me it’s the most important job I’ll ever have as a way of trying to convince me to stay at home with my children all day. Don’t. The most important job to a woman who has rent, has a car note, has utility bills and needs groceries is one that pays her money to keep her family alive. Let’s stop trying to make ourselves indulge in the crappy mythological lady-cult that makes being a mother seem like work. 

Working or staying home, one is still a mother. One is not better than the other. Both choices are worthy of the same amount of respect. Motherhood remains equally, painfully death defying and difficult either way. 

I am not a mother, but she makes sense there, doesn’t she? Here is her awesome commence speech

Born a crime

If you haven’t read “Born a crime“, I urge you to. It’s a great book by Trevor Noah. He chronicled his story growing up in South Africa in an insightful and humorous manner. It cracked me up a couple of times. As the books I read are quite serious, the humor, positivity and his experience in the book give me a quick escape sometimes, especially on bad days. Like today. Here are some quotes I particularly love:

“Being chosen is the greatest gift you can give to another human being.”

“I don’t regret anything I’ve ever done in life, any choice that I’ve made. But I’m consumed with regret for the things I didn’t do, the choices I didn’t make, the things I didn’t say. We spend so much time being afraid of failure, afraid of rejection. But regret is the thing we should fear most. Failure is an answer. Rejection is an answer. Regret is an eternal question you will never have the answer to. “What if…” “If only…” “I wonder what would have…” You will never, never know, and it will haunt you for the rest of your days.”

“When you shit, as you first sit down, you’re not fully in the experience yet. You are not yet a shitting person. You’re transitioning from a person about to shit to a person who is shitting. You don’t whip out your smartphone or a newspaper right away. It takes a minute to get the first shit out of the way and get in the zone and get comfortable. Once you reach that moment, that’s when it gets really nice. It’s a powerful experience, shitting. There’s something magical about it, profound even. I think God made humans shit in the way we do because it brings us back down to earth and gives us humility. I don’t care who you are, we all shit the same. Beyoncé shits. The pope shits. The Queen of England shits. When we shit we forget our airs and our graces, we forget how famous or how rich we are. All of that goes away.”

“Language brings with it an identity and a culture, or at least the perception of it. A shared language says ‘We’re the same.’ A language barrier says ‘We’re different.’ The architects of apartheid understood this. Part of the effort to divide black people was to make sure we were separated not just physically but by language as well…The great thing about language is that you can just as easily use it to do the opposite: convince people that they are the same. Racism teaches us that we are different because of the color of our skin. But because racism is stupid, it’s easily tricked.”

Two legitimate ways to save tons of money on books

This piece can be helpful to everyone, but it will be more to college students who have to pay hundreds of dollars every year for books that are useful for only 8 or 16 weeks. Understanding that finding digital version of books on the Internet is a controversial issue, I’d like to stay away from that and focus on two tactics that have helped me tremendously and hopefully will do the same for others.

Buy International/Global version of books

In case you have a burning desire to own physical books for future references or a dominant preference for ink and paper, this tactic is for you.

In my experience, books share essentially the same content across versions. The biggest difference perhaps is examples and redistribution rights. Despite sharing the same content, International or Global version is much cheaper than the North America version. Take the book below for example. Same edition. Same authors. Same content. The price difference is a staggering 100 dollars

This is a book I had at school. I have nothing against it or no relation with the author or the publisher. This is just to give an example

As a student, I can speak from first-hand experience that students don’t find much motivation to actively resell books. Even if one manages to resell a book, it will be at a significant discount. Given that much knowledge nowadays is accessible thanks to the Internet and people’s willingness to share via blogs and social media, I don’t think it’s worth it to make a sizeable investment upfront in books and likely a loss eventually.

With International/Global version, there will still be expenses involved. However, the damage is much smaller and if you don’t have the time or will to find a buyer for your books, you probably won’t have to lose much sleep over it.

Public libraries

I have borrowed many books from the public library and saved hundreds of dollars in the process. Books, even some latest releases, are available for free for a few weeks. Renewals are possible, depending on the availability of the books and how coveted they are. At some libraries such as the public one in Omaha, you can even suggest titles for the library to purchase. Of course, the library’s management retains the discretion to approve or decline such suggestions. As part of your taxes goes to funding for public libraries and you can save a lot of money, there is no reason not to take advantage of that.

As students in the US are saddled with a lot of student debt/loans, every dollar saved on books can count tremendously in the future due to a little thing called “compound interest”. Do yourself a favor and find a way to save as much as possible!