Biz Books

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:

Everything Bad is Good for You by Steven Johnson
An Army of Davids by Glenn Reynolds
The Wisdom of Crowds by James Surowiecki
The Hypomanic Edge by John Gartner
Mr. China by Tim Clissold

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.

Two I am looking forward to: Chris Anderson’s The Long Tail and Bill Taylor and Polly LaBarre’s Mavericks at Work.

Happy reading. Tell me what books you've like or hated in the comments.

Comments

[Rob]

Great Call on Freakonomics
Steven Levitt calls himself a genius rogue economist, his "open minded ideas" remind me of thoughts that would creep into the head of anyone sitting down in front of the FOX NEWS with a bong and a couple beers.

[Andrew Schmitt]

One Billion Customers by James McGregor. Excellent case studies of doing business in China. Plus it's entertaining. Anyone who has done extensive work there will read it and shake their head "yeah, that happened to ne".

Amazon link:
http://www.amazon.com/exec/obidos/ASIN/0743258398/nyquistcapita-20/

Agree on "The World Is Flat". He also falls into the revenue based trade deficit issue rather than profit based deficit, though I guess to some that is a matter of opinion. Business books that feel the need to invent a new analogy are a little silly.... The 'Waterfalls' you talk about in Running Money were the only thing I didn't enjoy about the book.

Another good read is Empire of Wealth, by John Steele Gordon. Each chapter covers a pivotal economic event in the history of the US. Good financial historcal fiction can be more valuable than forward looking books.

Amazon link:
http://www.amazon.com/exec/obidos/ASIN/0060093625/nyquistcapita-20/

[Ben Casnocha]

"Under the Banner of Heaven" by Jon Krakauer -- about fundamentalist Mormonism but teaches any business person a lot about belief systems.

"The Blank Slate" by Steven Pinker -- awesome, about nature vs. nurture and cog science.

I agree that business books mostly suck, and you can often learn more from non-business books.

-Ben Casnocha
Entrepreneur, Writer, High School Student

[Larry]

Recommendations:

Conspiracy of Fools, about the Enron debacle. Reminds one how screwed up even apparently successful companies can be; how incompetent even apparently successful executives can be; and how cold-blooded ruthless and dishonest people can be.

There Must Be a Pony In Here Somewhere, about Time-Warner's horrible purchase of AOL. Same lessons as Conspiracy of Fools, though lighter on the dishonesty.

Disney Wars: Same lessons, though this one illustrates how shockingly childish execs can be. No reason, really, to read all three since the keep reinforcing the same points, but all are well written & interesting.

When Genius Failed, about the Long Term Capital Management meltdown. Reminds us of the danger of hubris, and also illustrate tremendous leverage available in derivatives.

Andy - I listened to all these using audible.com. Any chance your books will be available there? (In my case, you will not lose a customer as I've purchased (but not yet read) all of your books).

[Chris Yeh]

It's out of print, but "The Entrepreneur's Manual" by Richard White is the best book on entrepreneurship there is.

If you can't find a copy, let me know, and I'll loan you mine.

[mike]

How Customers Think: Essential Insights into the Mind of the Market
http://www.amazon.com/gp/product/1578518261/

From what I gather about 'Blink' (not having read it), this book deals more comprehensively with the pre-conscious nature of many consumer decisions. The first part of the book covers the cognition studies at the foundation of Zaltman's consumer theory, studies whose implications provoke thought well beyond customers and markets.

[Peter]

Don't overlook "Thirteen Days" by Robert Kennedy & Arthur Schlesinger, Jr. Best case study on negotiation, brinksmanship, and crisis management. Reads even better knowing how history turned out.

[anonymous]

bad call on the freakonomics... sure it may not be a good book for investing, but its a great book for economics, and breathes some life into what kinds of problems one can solve with economics... in this case pop <> bad

[chris]

Reminiscenes of a Stock Operator. by edwin Lefevre

[iain]

* World is Flat - Was fast start, tough sloggin middle, and good ending. Will be interesting how the outsourcing experiment works out in next decade. I liked the discussion of possible political problems caused by the new wealth in China/India via outsourcing
* Freakanomics -- I really like the discussion of "tournaments". It amazing how many places this scenario applies
* Battele's book on Search/Google was a great review of an important industry.
* Broadbandits and Bull are mandatory reading for any tech exec/middle manager. Each of these books reminded me of how small the tech world is ( it is definitely 1-degree of separation) and how "ridiculous" very smart people can be ...
* Fun --- I would add any PG Wodehouse book as an interlude to all the seriousness ;-)
* Family --- And since we're supposed to have a life -- Joan Didion's Year of Magical thinking ... Just read it ...

[China Law Blog]

I liked Blink. The book I am always recommending on China is One Billion Customers, by James McGregor. I would find myself nodding along to virtually all of the stories and to nearly all of the end of the chapter suggestions on how to conduct business in China. It was not until I finished the book, however, and really started thinking about it that I realized that well over 90% of my Chinese business encounters are very different from those described in the book. This caused me to realize that this is not really a book about doing business in China so much as it is a book about doing big business in China. Among other things, the book eloquently details the difficulties of establishing a foreign wireless network, a foreign media empire, and a large scale foreign investment bank, but it never delves into the nitty gritty of the small and medium sized manufacturing and service businesses that operate so successfully in China. So while this is the best book I have read for understanding the Chinese business persona, the China picture it paints does not really apply to most foreign businesses coming in to China. Indeed, early on, the book reveals that nine out of the ten most successful brand names in China are foreign. If everything were indeed so bad there, this obviously could not be true.

I also loved The Koreans, Who They Are, What They Want and Where Their Future Lies,by Michael Breen. I love reading books on different peoples and this is the best one out there.

[Adam]

Check out A Random Walk Down Wallstreet.
http://www.amazon.com/gp/product/0393325350/ref=pd_lpo_k2a_1_img/104-2345025-1885524?%5Fencoding=UTF8

[Ward]

I enjoyed the Misbehavior of Markets by Benoit Madelbrodt. It is a much more clear explanation of the failures of MPT than anything else I've read and it gives a sense of how a scientist approaches these problems. In general I find popular science writing gives me a somewhat different perspective on financial markets a longer view of technological change maybe. In that regard Matt Ridley is the best there is Nature via Nurture is a wonderful book about the growing awareness of the interplay between our heredity and our environment. I dislike his chicken-little-ism but Guns, Germs and Steel is really fine book too. In history, I found the new bio of Jay Gould fun and fascinating account of that lawless time.

[Marcus]

If anyone's interested, Under The Banner of Heaven (mentioned in the comments above) is sensationalism and a bunch of lies mixed with a bunch of truths. Being a Mormon, I'd definitely recommend something less sensational, or at least do your homework and research the author and text if you're going to read it.

[Ron]

The Hedge Fund Edge by Mark Boucher is terrific.

Hot Commodities by Jim Rogers provokes plenty of ideas.

Intermarket Technical Analysis by John Murphy remains a classic.

Anything by Jack Schwager.

[Anthony]

My own list of must-reads focusing more on management than investments:

Anything by Henry Mintzberg, and especially

The Strategy Process, by Mintzberg, Lampel, and Quinn. The best book on management period. Mintzberg and crew manage to cover the entire realm of business theory in one book.

The Strategy Safari, by Mintzberg. Where the Strategy Process is more broad, this book zeros in on strategic thinking by categorizing, explaining and contrasting the dominant views on strategy.

More well known are Michael Porter's book, Competitive Strategy and Competitive Advantage, but both are also worthwhile reads.

And just for fun, my personal favorite is a more recent Mintzberg book,

Managers Not MBAs: A hard look at the soft practice of management and management development.

I wouldn't call it a must read, but its certainly entertaining and witty. Mintzberg takes on the business schools in full force.

[m]

mr.china is my all time favorite.......funny- most people in the states havent really heard about it.

[Manny Mendelson]

I have a wall of motivational books and tapes, but there are few that enabled me to make actual measurable progress. This one did: “Flawless Execution” by James D. Murphy. I am a trader, and the use of the techniques in this book transformed my trading. The resultant change in my equity curve is available on my website www.tradebettenow.com Murphy’s techniques are use by fighter pilots. They will help you capture any scrap of positive results you achieve, and spin those results into vastly improved outcomes. Similarly, you will be able to codify your errors and address them, so as to minimize those errors. Highly recommended.

[Simon Jung]

To echo with Andy's "How we got here", I found this book which I thought it's pretty good. It's more economics analysis based. Enjoy!

http://www.amazon.com/gp/product/1843763311/102-4222021-9469767?v=glance&n=283155

[RickHap]

The Prize : The Epic Quest for Oil, Money & Power by Daniel Yergin

[RichL]

I disagree about Hedgehogging; it is a waste of time. Biggs was always a good writer at Morgan, but this book didn't say anything of interest to me.

[Jack]

Try Empire of Debt by Bill Bonner. A great take from a realistic non-partisan viewpoint.

[David Lilienfeld]

My two personal favorites are:

Cadillac Desert by Marc Reisner and Wondercillin by Frank Lee Emmett. The former is the true story of how the federal government set up water rights in the American West, and what were the business consequences. Wondercillin is a novel looking at the pharmaceutical industry from the perspective of drug safety. Both good reads.

[Brian]

Mr. China is a very interesting read, as well as any Jim Rogers book.

Andy's 'Running Money' was also very entertaining and informative, especially for those young'ns with a short attention span.

I would also like to throw out, Liar's Poker as required reading, even though I'm sure most of you have read it. This book really links the Wall Street of the past to the Wall Street of today. It's amazing to see how Wall Street itself went from rags to riches so to speak, or from Polytec High School to Harvard.

[Peter]

Fooled by Randomness by Nassim Nicholas Taleb. Fortune called it one of the smartest books of all time.