The choice of “Capital” by Thomas Piketty may have been slightly crazy to choose, at close to 700 pages. Larry, LuMarie and I read between 100 and 300 pages each. Hikaru read the entire book last year for a class at Kalamazoo College and filled in some of the points. Thanks to LuMarie, we also had the following articles to browse while waiting at the Michigan News Agency: “The short guide to Capital in the 21st Century,” “Piketty’s “Capital,” in a Lot Less than 696 Pages,” and Tom the Dancing Bug (cartoon). You can find these articles and more at the publisher’s website.
Our particular discussion included the point that Piketty used literature to study wealth since not many metrics existed otherwise. In fact, it was noted that there was a high amount of Jane Austen moments. Piketty also referenced Balzac quite a bit. What the literature angle suggests is that the general population was aware of the differences, and expected certain incomes for certain positions. It was also noted in our discussion that not much changed in the 19th century, yet going back 50 or 60 years now would not work without converting the difference to be able to compare.
Big changes came because of World War I, World War II, and a population growth (that has since slowed down). One addition mentioned at our discussion was the effect of labor unions. We also returned to the point of education. Could education be the answer? Piketty’s suggestion is to have a world tax.
The articles mentioned above do a great job of clearly summarizing the book. Knowing that, is the book worth reading? What I liked was how the book was organized, and that you don’t need to be an expert in economics for it to make sense. While LuMarie still plans on finishing “Capital” because it is being considered such a keystone book, I may pass, at least for now, and move on to the next one. However, I definitely recommend reading what Piketty wrote if you have the time to do it.
A few other points to note:
- Some inequality is desirable cause it provides incentive to improve.
- People with capital have power to make better investments.
- A question that came up: Is there a huge inequality in non-capitalistic countries? One conclusion is that it is human nature and does not specifically exist in a capitalistic society, which many are interpreting from the study.
Is there an answer to the question of evening out the difference between the wealthy and the poor? Will the wealthy continue to inherit and be the most powerful? What are your thoughts?
Thanks for reading!
Stacy (a.k.a. “The Book Lady”)
Sam Altman, CEO of Y Combinator, offered an awesome class in the Fall at Stanford on “How to Start a Startup.” The book “Zero to One” was recommended during one of the early lectures. For class #5, Peter Thiel, the author of “Zero to One,” was a guest lecturer. I had put the book on my list to read, and even though the homework for his lecture included the first three book chapters, I opted to wait until I could read the entire book. Since I made the choice to wait, I wasn’t sure I would actually like reading the book, based on the video. I was wrong.
The first point to know is that although it makes sense, if you do watch the video, the presentation has been condensed compared to the information in the book.
The second point to know is that Thiel offers many opposing views compared to what we are used to in the mainstream. He presents all of it well (book and video). In fact, even if you disagree with what he says, how he explains his points are clear and include evidence that is more than just his opinion. For these reasons, I highly recommend reading “Zero to One.”
Some other points:
- Horizontal progress=globalization – taking things that work somewhere and making them work everywhere (p7)
- Vertical (0 to 1) progress=technology – any new and better way of doing things (p7)
- A Startup is the largest group of people you can convince of a plan to build a different future. (p10)
- Why monopolies are important – see video above
- You can expect the future to take a definite form or you can treat it as hazily uncertain. (p61) Shape vs randomness.
This one is longer (and more important) than a bullet point (p90): “The power law is not just important to investors; rather, it’s important to everybody because everybody is an investor. An entrepreneur makes a major investment just by spending her time working on a startup.” Also: “But Life is not a portfolio: not for a startup founder, and not for any individual. An entrepreneur cannot “diversify” herself.”
I took over three pages of notes, which is quite a bit and the content is barely included here. The last part I am going to write about before encouraging you to read the entire book are the 7 questions Thiel states that every business must answer (p153-154):
- The engineering question: Can you create breakthrough technology instead of incremental improvements?
- The timing question: Is now the right time to start your particular business?
- The monopoly question: Are you starting with a big share of a small market?
- The people question: Do you have the right team?
- The distribution question: Do you have a way to not just create but deliver your product?
- The durability question: Will your market position be defensible 10 & 20 years into the future?
- The secret question: Have you identified a unique opportunity that others don’t see?
Thiel states the bottom line as being able to see the world new and fresh as if for the first time and creating the change which will make the future different and better.
Thanks for reading!
Stacy (a.k.a. “The Book Lady”)
The book, “Purple Cow,” by Seth Godin, was nothing to sneeze about. Or was it? A topic that the five of us continually returned to while seated in the back of The Michigan News Agency was the group Godin referred to as the “sneezers.” These are the people who seek out the new ideas and not only try them out, they spread the word, too. These are the people who will be your early adopters if you have come up with a “Purple Cow.”
A “Purple Cow,” then, is another way of saying that something is remarkable. This means that your business is doing something different and original and it’s worth being noticed and talked about. By the way, Godin states that the opposite of remarkable is “very good.” Another way of stating that would be “boring,” “average,” or “nothing special.” The Purple Cow, on the other hand, stands out, at least for a little while. Just like everything else, there are cycles for the Purple Cow products. The goal is for the early adopters (sneezers) to help move it to mass use and create a “cash cow.” After that, Godin states, let the team who is good at “milking the cow” continue on while you reinvest towards the next time of doing it again. What happens if it fails?
Failure was another topic we discussed as part of why there are not more Purple Cows. According to Godin, in America, we learn to fail in first grade. It is where we realize it is best to try to fit in and color inside of the lines. In general, we are raised with the belief that criticism leads to failure and that being noticed gets us sent to the principal’s office, not to Harvard.
How are remarkable products discovered? The group discussed crowdsourcing, and Kickstarter as sources, which are newer ways of spreading the word. One question was if venture capitalists were specifically looking at those areas for investments or if it really is more of a grassroots support.
A few more points:
- (p21) The old rule is to create safe, ordinary products and combine them with great marketing. The new rule is to create remarkable products that the right people seek out.
- (p113) Marketing is in the core of the product and sharing the value. The better description for previous versions would have been advertising.
- Reference to the book “Business Brilliant” by Lewis Schiff – the difference between dwelling and analyzing failures is what is learned. Or, as mentioned through a quote by Thomas Edison, “I have not failed. I’ve just found 10,000 ways that won’t work.”
I ask again…have you seen a Purple Cow?
Stacy (a.k.a. “The Book Lady”)
One of the best parts of a group book discussion is what is learned from others who are at the discussion. Someone else may express a point that you didn’t think about or missed, adding to the value of the meetup. It’s also great when new people are introduced and to find out their impressions. Tonight, five of us (with one who was brand new!) sat in a circle of chairs in the back part of the Michigan News Agency (in Kalamazoo, MI). Our discussion revolved around the book “Blink” by Malcolm Gladwell.
Anything by Gladwell is bound to be controversial. In fact, one point near the beginning of tonight’s discussion was that Gladwell is trying to increase his credibility in the scientific community through the examples he provides. Much of this book (and many of his books) may seem redundant since he actually only has a few points, and then lots of examples. Overall, for “Blink,” the consensus of the four of us who read it was that the stories weaved the points together well throughout the book.
The concept behind blink is that the subconscious mind processes more than the conscious mind, leading to a history of stored experience. It is that history that makes what seems like a spontaneous and random reaction actually not random. The question is: “When is it good to use that “intuition” or “gut feeling” for a quick decision and when is it better to take time and research through a lengthier decision process?”
To go along with the previous questions, we discussed the following points:
- Basketball is an example of needing more analysis since everything on the court cannot be experienced.
- Editing data vs filtering data and the fact that sometimes “less is more.”
- Analytic vs intuitive in the military and war games examples.
- Why entrepreneurs have to make snap decisions most of the time.
Some other points that we discussed:
- Pepsi vs Coke and why New Coke evolved in the first place (do you know?)
- How the packaging, environment, and previous experience of a product effect the taste, plus wondering if this idea also effects the wine tasting experience.
- The jam story and the relation to the regret decision theory, where more choices means being regretful for what wasn’t chosen. For example, more jam was sold when there were only 6 choices compared to 24. Is this why restaurant menu choices are getting smaller?
- Why tryouts for orchestras have screens.
- Why Warren Harding was chosen for (the worst) President ever, and the question of how we vote today – if it is by sound bytes, how is that different than Harding being chosen because of his “presidential look?”
Probably one of the most important points was priming, and how we associate what we do, and even why many self-help books include affirmation and other reinforcement statements. If you want to check out the test that is used for an experiment, click here for the Implicit Association Test (IAT) and comment below on your thoughts from the results.
Stacy (a.k.a “The Book Lady”)
Suggestions for business books originate from a variety of people and resources. Choosing “The Talent Code” by Daniel Coyle was based on a list of life changing books that one of the members, Sophia, found and sent. Sophia did not seem to care which book I chose since she wanted to read them all. I decided for the book club we would go with the one at the top, which was “The Talent Code.”
According to the blog post, “life-changing” for the author meant that when certain challenges arise he would know what to do based on flashbacks from a book he has read. (It did not say what he was trying to do for this particular one). Larry and LuMarie and I started the conversation with that idea. We all agreed that the main point of learning in chunks, or breaking things down into pieces, and practicing with corrections is an interesting concept. In fact, it actually put a name to what I had been doing when practicing for a presentation. Also, it is the same concept that Toyota uses, Kaizen, where anyone can stop the line when there is something to correct. Larry did like that it proved we could be doing a better job of learning. One part we all thought was missing was having a “how-to” type guide. The concept and the examples were great. Tools to use these ideas were not included.
This led us back to books we had already read. Here are the ones that would be included on our “life changing” list:
- “How to Win Friends and Influence People,” by Dale Carnegie. LuMarie chose this one because it was basically a guide throughout, and it especially helped those who ever felt socially awkward before reading it.
- Larry’s choice was “Business Brilliant” by Lewis Schiff. He chose this book because it gives practical ideas to go from middle class to millionaire.
- “The Autobiography of Ben Franklin” also made LuMarie’s list, at least when she read it in high school, because it made her more aware and purposeful in her choices.
- The one I chose was “The Big Short” by Michael Lewis, which was one of the first KBBC book choices. My reason is that I not only liked reading it, I learned more about finance from that book than I had in my finance classes during grad school. Plus, I still remember much of it a year and a half later.
Other notes we discussed about “The Talent Code”:
- Would a person with kids like it more? Many of the examples were about sports and music. Also, children are wired to absorb new information. It is more challenging to learn as we age.
- One example that wasn’t was sports or music was the writings of the Bronte sisters and how they created their stories.
- Coyle mentions that at different times of our lives we absorb new information better, although that does not mean those are the only times. One discussion comment is that there seem to be mental jumps in life, such as junior year in high school, and possibly odd numbered years.
- The chapter on “ignite a hotbed” and KIPP school, plus the importance for those who are the first ones in their family to go to college.
- The disturbing example of how pilots used to be considered fit to be one (not puking during a ride) and how they were trained before flight simulators.
The next KBBC discussion will be on “Blink” by Malcolm Gladwell. What would be a book on your “life changing” list?
Stacy (a.k.a. “The Book Lady”)
When I decided to officially start the Kalamazoo Business Book Club nearly two years ago, one of the most important points discussed was the difference between quantity and quality. I believe in the quality of the discussion over the quantity of the people involved. Tonight’s was another awesome one featuring “SUPERFreakonomics” by Steven D. Levitt and Stephen J. Dubner.
Matt, at the bottom in the picture, chose the book title and to lead the discussion this month. He had previously read the first book by the same authors, “Freakonomics,” and was excited to read the sequel (note: it is not important to read the first before reading the second). Matt’s enthusiasm and presentation convinced Moh’d (holding the book) to read it during, if not before, an upcoming long airplane flight. That’s a pretty good endorsement about what we do!
I love the discussions, no matter how much I am able to contribute, and usually feel more energized at the end compared to the start. People have told me that they feel like they have to read the book to join in. As Moh’d proved, you can still get something out of attending even without reading (all of) the book. The nice part when a higher ratio of attendees have read the book is the chance of a more in-depth conversation. We may remember different points or be able to clarify what someone else didn’t understand. All of these reasons make the quality count over the quantity involved. We can definitely fit a bigger group in the back of the Michigan News Agency, too. Check out this link if you want to join.
For those of you reading this who want to know more about the book itself, here are the main points of the night:
- The point of the book is that it makes you think differently on issues in general. The points being presented may or may not fully be true.
- That we like to spend lots of money to try to “fix” issues, such as global warming, and there may be cheap(er) solutions.
- It is VERY important for medical staff to wash their hands when they are working with patients (who might be dead or alive).
- If you read the book, make sure to include the epilogue! It’s about an experiment where monkeys learn to exchange currency for goods, and how HUMAN they really are.
- The answer to the question on the cover about why suicide bombers should buy life insurance.
- Intrinsic vs extrinsic rewards and how that contributes to many of the topics here.
Stacy (a.k.a. “The Book Lady”)
One of the reactions I received several times while advertising The Black Swan by Nassim Taleb during the past month was the question, “The movie?” It was not the movie at all. According to Taleb, (in the prologue), “a Black Swan is –
- an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility.
- it carries an extreme impact
- In spite of its outlier status, human nature makes us concoct explanations for its occurrences after the fact, making it explainable and predictable.”
If that sounds like a big and long explanation, it is. Taleb is a philosopher and statistician, and, as pointed out by Craig during the discussion in the back of the Michigan News Agency, the thesis is regurgitated throughout the book. The three of us agreed that the author’s thought process was apparent, and we could see why it was easy for him to write it. One of the other points is that we liked that the author’s ideas were from a different point of view than what is common.
The bottom line? People want explanations for events, even when they are truly unexplainable, and random. We tend to find some way to make connections and explain why something did happen or that it should happen. Taleb basically states that the random and unexpected occurrences are outliers – they happen outside of what is expected. It is how casinos can make money because people expect big winnings based on the few who do, for example.
Matt brought up the point of the antilibrary. Imagine a bookshelf full of books with all the knowledge you have. The books that are missing, or what you do NOT know, would be the antilibrary.
We also discussed:
- What Taleb might have thought about the market crash in 2008 related to the book “The Big Short” by Michael Lewis.
- The variety of financial information.
- That economists basically don’t have a clue and can prove anything.
- How incentives determine behaviors.
- How everyone tries to get to the middle, yet the rich keep getting richer and there’s a definite divide.
- That for the most part we already practice not watching the news, which was one of Taleb’s points since there usually isn’t anything important.
- Hedonic Happiness (my favorite point from p91): “…your happiness depends far more on the number of instances of positive feelings, what psychologists call “positive affect,” than on their intensity when they hit. In other words, good news is good news first; how good matters rather little. So to have a pleasant life you should spread these small “affects” across time as evenly as possible. Plenty of mildly good news is preferable to one single lump of great news.”
I am always happy when there are book discussions 🙂 What made you happy today?
One final note: If you live in or visit Michigan, you can see a black swan at the Kellogg Bird Sanctuary. As the definition of Black Swan suggests, the black swan is a rare bird and it is found in Australia. Thanks to John, who recommended the book and took the photograph.
Stacy (a.k.a. “The Book Lady”)