Author: shyam

The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success (Amazon,) tells the story of quantitative CEOs and the effect they hand on their companies and their industries. (Excerpts)

Thoughts

I have always maintained that the only thing that matters is Return on Capital (ROC.) However, most people are focused on ‘busy work’ and playing ‘boss’ that they focus overly on growth, at the expense of returns. It is oftentimes better to be small and enjoy a high level of return on capital than grow and forgo margins.

The book is careful in portraying the CEO’s as ruthless psychopaths but in the words of Stiritz, “Leadership is analysis.” Indeed.

The Only Game in Town (Amazon,) walks us through how Central Banks picked up the slack when elected governments dropped the ball after the global financial crisis. Excerpts are here.

Thoughts

Central Banks acted as drug dealers when both banks and governments binged on credit. Greenspan and his Fed were so Randian that they turned a blind eye toward the principal-agent and moral-hazard problems that their endless bailouts and light-tough regulation was stoking. When the system imploded, their actions prevented a much-need rewrite of the status quo. We now have a world economy that is even more deeply hooked on easy credit, thanks to Central Bank interventions. Central Banks continue to enable governments to sweep deep-rooted problems under the rug. They do not deserve credit for “saving” the global economy that they collectively pushed over the cliff.

“I tried to drown my sorrows, but the bastards learned how to swim…” ~ Frida

In-N-Out Burger: A Behind-the-Counter Look at the Fast-Food Chain That Breaks All the Rules (Amazon,) lays out the inside story of the family behind the California-based hamburger chain with a huge cult following. Excerpts are here.

Thoughts

Father starts a business. Son expands it. Grandson destroys it. It is an extremely common story. From the book:

According to the Family Business Forum at the University of North Carolina, only 30 percent of all family businesses are successfully transferred to the second generation, while only 12 percent make it to the third. After that, less than 3 percent make a successful transition to the fourth generation.

The saving grace of the In-N-Out Burger story is that they did not IPO or take in outside capital. Unlike so many of family owned Indian businesses that plough through minority shareholders (United Breweries, the Tata conglomerate, the Congress Party, etc…)

Scions of successful business family should be allowed to cash their trust fund checks while sipping cocktails in the Côte d’Azur. Either leave the business to be run by professions or sell out. Life is too short to be spent in a golden cage.