WSJ: Dave Kansas review of Eat People

Early in "Eat People," a business-advice book for "game-changing entrepreneurs," former hedge-fund manager Andy Kessler casts his mind back to 10th-grade chemistry to muse on the "highly reactive" nature of atoms and molecules called free radicals. Because free radicals have an unpaired electron, he says, "they are always looking for something to do, hungry for some chemical reaction—like combustion."

Mr. Kessler's heroes, he says, are the free radicals of the business world, "someone who not only creates wealth . . . but at the very same time, improves the world, makes life better, and increases everyone else's standard of living." The roster ranges from modern free radicals like Steve Jobs and Sam Walton back to Andrew Carnegie and John D. Rockefeller, though the latter two gents "at some point" stopped being free radicals and "became monopolists." Rockefeller, Mr. Kessler says, was "more likely criminal." 

It's a typically cheeky aside from Mr. Kessler, who likes to incite and amuse while getting his unvarnished free-market views across to readers. After a long and varied career in finance—he was an analyst, banker and venture capitalist in addition to managing a hedge fund—he has become an author. Much of his early writing—"Wall Street Meat" (2004), "Running Money" (2005) and "How We Got Here" (2005)—was grounded in his first-hand experience.

More recently he has strayed, unsteadily, further afield with "The End of Medicine" (2006)—about how technology will change health care—and "Grumby" (2010), a novelized account of trying to start The Next Big Thing.

Mr. Kessler's latest offering is a return to writing about what he knows best, and as a consequence he can attack the subject matter with greater confidence and verve. (Full disclosure: Mr. Kessler wrote for TheStreet.com when I was its editor in chief in the 1990s. He has clearly gone on to greater things.) The 12 rules in "Eat People" are more like 12 philosophies. They don't really provide the nitty-gritty that would help you execute a game-changing idea. Rather, they give you guideposts (some more reliable than others) to make sure that you are headed in the right direction or at least looking in the right spots.

Mr. Kessler could probably have whittled them down. "Rule #5: Wealth Comes From Productivity"—yes, OK. "Rule #9: Embrace Exceptionalism" is a riff on how culture rewards mediocrity and how Mr. Kessler's free radicals don't. And "Rule #8: Markets Make Better Decisions Than Managers" also seems obvious, though markets have come in for some banging in the past couple of years.

 

The book's early rules are the strongest and most provocative. "Rule #2: Waste What's Abundant to Make Up For What's Scarce" is a bit of a mind-bender at first, given society's intense focus on preserving, recycling and sustaining. But Mr. Kessler burns through the conventional wisdom to show how markets tell us what's abundant (it's cheap) and how that abundance, properly exploited, can lead to major breakthroughs. He relates the story of when he and a high-school friend built a personal computer before the PC boom and even thought about starting a company to make them—but didn't bother. He had failed to see, he says, that the dawning era of cheap and abundant transistors would fuel the sale of PCs in untold millions. (The need to latch onto products or services that "scale" into the millions is another of his watchwords.)

"Rule #3: When in Doubt, Get Horizontal" is also alluring. The world is moving from vertically integrated companies that do everything, he says, to companies that do certain things well and let other people do the rest. Free radicals insert their business into the "stack" of businesses that go from source to finish. It's another way to think about globalization and outsourcing. "Vertical monsters" that failed at being do-it-all corporations, he says, include IBM, AT&T and Citigroup in its bid to become a "financial supermarket"—until the bankers there discovered, catastrophically, that they didn't know much about the mortgage business.

The book's title comes from Mr. Kessler's seventh rule: "Be Soylent—Eat People," in a reference to "Soylent Green," the 1973 science-fiction movie about overpopulation. His message to "get rid of people to increase productivity" might be a hard sell at time when unemployment remains locked in at well over 9%, but Mr. Kessler holds firm: "Lose the guilt," he says. "Over time, employment grows to fill the economy . . . in the long run, better jobs are created that more than make up for those that are destroyed."

"Eat People" does outsource a bit of its argument to the futurist and technology guru George Gilder. We hear morsels of deep thought from Mr. Gilder as he sips a fine Bordeaux that Mr. Kessler brings to lunch. We get more from Gilder emails. At first it seems as if Mr. Kessler is leaning on Mr. Gilder a little too heavily—the chapter discussing Rule #2 about abundance is essentially an account of their meal-time discussion. But then I remembered a key element of "Rule #4: Intelligence Moves Out to the Edge of the Network": Be more "Tom Sawyerish" and get smart people to do your work free. "Create a sandbox for others to play in. Sit back. Add more sand when necessary. Once everyone is playing in the sandbox, then it's time to harvest what they do." Well played, Mr. Kessler.

 

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