I read a lot of business books. I don’t know why, because they mostly suck. But folks keep asking me what books they should read. I like a good story and hope to learn something - business is the new intrigue. I try to do this in my own books like my latest, The End of Medicine.
It’s the investor in me. I having this hankering/desire/thirst to see into the future. If I can see patterns, I have a fighting chance of recognizing them again before others. Here are five that I found useful:
I read lots of history books like Walter Isaacson’s Benjamin Franklin or William Manchester’s The Last Lion about Churchill. Fun reads, but I only care so much for the past, unless there are lesson for the future.
For me, it’s all about investment ideas. I won’t read “get rich quick” books or “how to invest” books. Nothing there for me. Read my old friend Jim Cramer’s Real Money and John Mauldin’s Just One Thing (I wrote a chapter) and then move on. I also don’t read management books: Winning, Good to Great, Execution, First Break All the Rules are all competent, and line the shelves of middle managers everywhere in an attempt to show one’s promote-ability to upper middle management, if such a thing even exists. There has got to be some important investment theme uncovered. Here are a few that have value for me as an investor:
Everything Bad is Good for You by Steven Johnson – The media is about halfway through being digitized and turned completely inside out. If you invest in technology, you had best understand it, especially broadcast TV. I have had a long standing opinion that TV is lowest common denominator programming. George Gilder likes to say that TIVO or Directv are “makeup on the corpse of television.” But this book changed my mind. Johnson tracks IQ scores and thinks intelligence has gone up over time, because TV and video games are actually getting more sophisticated, not less, meaning we have to think more, “cognitive challenges”, following snippets of a dozen different characters over weeks and weeks on the Sopranos and Desperate Housewives, not just Jeannie and Major Nelson. I’ve read this twice. You should too.
An Army of Davids by Glenn Reynolds – Most people know Glenn Reynolds as Instapundit and figure they already know his views. Big mistake. This book does a great job describing one of those hard to understand trends that is taking place. In Silicon Valley, the expression goes “Intelligence moves out to the edge of the network”. I always think about it in terms of voice over IP, smart phones and the like. But Reynolds gets into the cultural implications. On democracy: “Societies that encourage open communications, quick thinking, decentralization and broad dispersal of skills – along with a sense of individual responsibility – have an enormous structural advantage as opposed to societies that don’t.” On blogs: “Power once concentrated in the hands of a professional few has been redistributed into the hands of the amateur many…the blog phenomenom may be viewed as…a broadening of the community of discourse to include, well, the community.” On horizontal knowledge: “[skeptics] didn’t appreciate what lot’s of smart people, loosely coordinating their actions with each other, are capable of accomplishing.” Great stuff. Reynolds digresses to his passions of nanotech and space travel, which will probably require big centralized organizations at first, but there are a lot of gems in this book on the implications of technology and intelligence at the edge.
The Wisdom of Crowds by James Surowiecki – The New Yorker business columnist also tackles intelligence at the edge of the network. Groups of people know more than any one person. Surowiecki goes into many bad and good examples of crowds – the disturbing groupthink in the Kennedy White House during the Bay of Pigs fiasco is a wonderful story. Surowiecki dives into the stock market and tries to explain fads and bubbles. Tough call. The stock market is by definition a sum of what everyone already thinks. The way to make money is to know or have conviction on something that is different from what the crowd already thinks. Tough to do and even harder to describe but this book is worth reading to capture the nuance of crowds.
The Hypomanic Edge by John Gartner – One thing I always had problems with is assessing management of companies I was considering investing in. What were they like? What drove them? Were they lying to me? Were they in control of their team? I never really knew. The author is a psychiatry professor at Johns Hopkins and looks into the manic, almost bipolar behavior of some business successes like Columbus, Hamilton, Carnegie, Venter and others. Turns out a little manic is a good thing. Probably not if you worked for some of these folks, but maybe if you invested in them. Gartner does a great job digging into personalities of success. I enjoyed it.
Mr. China by Tim Clissold – All my venture capitalist friends have helped sell out the first class cabin of every flight between SFO and Shanghai. I hand each of them a copy of this book and hopefully it scares the crap out of them by the time they land. Clissold got to China a little early, the mid ‘90’s, and had a fund to, with the help of the Chinese authorities, invest in state owned enterprises and turn them into privately owned businesses. Just about everything went wrong – old managers set up shop across the street, he never really owned what he thought he did, worker strikes, goon squads. Very enlightening stories. A little different then investing in blogging tools.
The big three business books I found disappointing/make good doorstops are:
The World is Flat – In 2005, Tom Friedman discovers the 1990’s. Either he wasn’t paying attention or didn’t get it, but there’s not a person in Silicon Valley who didn’t live 10 years of what Friedman takes 469 pages to tell us – jobs are being created in China and India. But Friedman thinks everyone has the same job, not understanding that U.S. jobs at high margin companies pay more and create more wealth via the stock market then low margin jobs that the U.S. should be more than happy to get rid of. Oh well, he can write another one in 2015 about the iPod and search and monoclonal antibodies.
Blink – I had high hopes for this one. Malcolm Gladwell is a fine writer, but muffs this one. Instead of helping us harness the power of human intelligence and our inclination to make quick decisions, which have all sorts of benefits and warnings for investors, he somewhat turns the book into a damnation of people with preconceived notions. The stories are cutesy but the lessons confusing.
Freakonomics – They should have called this pop economics. Steven Levitt and Stephen Dubner, who can’t explain why they have the same first name spelled differently, say: let’s take some data, massage it to fit our conclusion, and then tell you about things that already happened. This is exactly the opposite of how investors should think, which is take scant amounts of data, and pre-construct what may happen next. Again, fun stories but forgettable conclusions. Their controversial abortions explain lower crime rates ignores about a million different inputs, like increasing living standards. Kinda put me off all of the rest of their conclusions.
Other books about technology and the industries that are affected by it that I found helpful:
My friend George Gilder’s The Silicon Eye.
Tom Standage The Victorian Internet.
My friend Om Malik's Broadbandits.
Peter Bernstein’s Against the Gods: The Remarkable Story of Risk.
Any of Larry Lessigs books, especially The Future of Ideas.
Wall Street books that I enjoyed are Barton Biggs Hedgehogging, John Steel Gordon’s The Great Game, Robert Rubin’s In An Uncertain World and slightly off topic but insightful, Ron Chernow’s Titan. If you want to understand Bill Gates charitable work, this book chronicle’s John D. Rockefeller’s life in three parts: how he got started, how he made his fortune, and how he gave it away. Fascinating.
Happy reading. Tell me what books you've like or hated in the comments.