Category: Books

Books that we read and our thoughts about them.

Book Review: Fragile by Design

Fragile by Design (Amazon) by Calomiris and Haber explains how the banking system of every country is the result of a unique set of starting conditions and how politics and culture shape their overall stability and purpose. They call it the Game of Bank Bargains.

My personal take-away from this is India is screwed. We will never get rid of our public banks who will conspire with our politicians to bleed our country dry. Politicians will find our banks ready and willing to impose an inflation tax on us. Who could blame them when hardly 2% of our population pays an income tax? We seem to have borrowed from the worst elements of US, Mexican and Brazilian banking systems. No Hope.

Read the book!

Book Review: Fantasyland

Fantasyland: How America Went Haywire (Amazon,) is about how over the years, Americans have become less rational and more prone to magical thinking.

The author, Kurt Andersen, posits that Americans have self-selected both from a genetic and cultural point of view to believe in fantasies. The rise of social media and the internet has allowed everyone to live in his “own” truth, a fantasy land. He touches upon all weird, non-scientific things that Americans believe to be true, their outlandish religious beliefs, gun ownership and so on.

The main take-away for me was this: a liberal government can keep its populace fed and make sure that the country progresses scientifically and economically. However, it cannot give its citizens purpose. Purpose is something everybody seeks. And if the government cant give it, then religions/cult/tribes will fill the void. And the more vulnerable you are economically, the more you seek out a tribe to be part of.

Read the book!

Book Review: Chaos Monkeys

Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley (Amazon,) is a meandering story about one man’s startup journey. (Excerpts.)

Thoughts

The book is entertaining but it brought little in the way of added insight. The bit that stuck a chord was:

Most VCs are playing a version of baseball in which the only way to score is to hit a home run when you’re at bat. They don’t care if you disgrace or impoverish yourself and strike out, and they don’t care if you get a solid line drive that lands you on second. To them, strikeouts and getting on base are equally pointless, and so they’ll push to proverbially “swing for the fences” no matter the count or the team you’re up against.

The reason for this all-or-nothing approach is how their funds are structured. VCs raise a fund, out of which they’ll provision some number of investments. Barring doubling down on the same company, which they might do if the fund still has money when a company raises again, those investments are effectively “fire and forget.” The fund’s total profit will be calculated from whatever those initial bets return. Unlike, say, a hedge fund portfolio manager, who rolls the winnings from one good bet into the next, compounding a series of returns into something truly huge, VCs do not take liquidity from one company’s exit and pour it into yet another’s. This, at heart, is why the go-big-or-go-home strategy makes the Silicon Valley world turn, and why entrepreneurs push themselves to be either the next Airbnb, or nothing. The entrepreneur who bucks this and creates a long-term business of recurring revenue but relatively slow growth is dismissed as running a mere “lifestyle business,” which is a dirty word among VCs.

Book Review: Boomerang

Boomerang – Travels in the New Third World (Amazon,) is about how the 2008 banking crisis morphed into a sovereign crisis. (Excerpts)

Thoughts

The 2008 Global Financial Crisis established a few things:

  1. If you fail, make sure you fail big. Bankruptcy is for the little guys.
  2. Banks are an extension of state policy.
  3. There is no getting rid of moral hazard and the principal-agent problem.
  4. It will happen again.

This book adds a 5th one to the list: a country’s banking system reflects the society within which it operates. It embodies and amplifies all the cynicism, envy and hypocrisy of its owners, regulators and customers.

After reading this book, I wonder if all banks should be forced to become utilities where the state guarantees a certain return on equity to its shareholders and the banks are allowed to take a narrow set of very specific risks. For example, the regulated power and gas utilities in the US have a guaranteed monopoly status within a region, allowed a fixed maximum return on capital and a highly regulated set of activities.

As usual, Michael Lewis does a good job of presenting his research is easy to digest chunks of wit. Highly recommend that you read the book.

Book Review: Losing the Signal

Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry (Amazon,) tells the story of RIM (Research In Motion,) the maker of the once popular Blackberry. (Excerpts.)

Thoughts

The very thing that made you successful has the potential to drag you down if you hold onto it too long. That is the tragic tale of RIM. It slayed established phone makers like Nokia, Siemens and Samsung in the corporate market with its email focused device. And just when it started to focus on the consumer market, it was dealt a body blow by Apple’s iPhone. Then Android came along and finished it off.

The following excerpt succinctly captures the challenge:

The company’s business had been disrupted on several levels, with no obvious path forward. Was RIM supposed to defend the QWERTY keyboard, or jump all-in and become a touch-screen smartphone maker? Was it supposed to challenge Apple at the high end of the smartphone market or focus on the lower end with devices like its Curve and Gemini models, which were driving heady sales gains in foreign markets where Apple wasn’t yet a factor? Should the company stick to its closed, proprietary software technology or open its platform? One of the biggest puzzles was what to do about apps. was RIM taking the right approach or should it stick to its “constructive alignment” narrative and leave the sale of apps to carriers?

It wasn’t that RIM was oblivious of Apple’s and Android’s threat to their handset business. It was that they badly bungled the response. The management was distracted and couldn’t agree on a strategy. However, with the old CEOs out and Prem Watsa’s help, $BBRY plots its next act.