As I currently own a 5% poisiton in (special situation) Biotech company Actelion, I thought it makes sense trying to learn at least a little bit about Biotech.
By chance I came across the book “Genentech – The Beginnings of Biotech” which recounts the history of Genetech from the very early beginnings in the 1970s until the company went public in October 1980.
´So far, my blog has been 99,9% “Trump Free”. As a German, I haven’t really followed what Trump did and said over the last decades so I think I am not able to form a qualified opinion about him or what he will do as POTUS.
I think it is also waste time to watch TV shows where German politicians debate what Trump will do or not because most of them don’t have a lot of background knowledge either. As with stock analysis, I am a big fan of “Primary resources” and so I decided that I should at least read one book co-authored by “his Trumpness” himself. There are many Donald Trump books out there but the first one from 1987 is “the Art of the deal”. I thought that maybe the first one is also the most authentic one.
The book starts with the description of a typical week of Donald Trump in early 1987. Clearly this is meant as a name dropping exercise to impress the readers about the then not so famous Mr. Trump. Indeed the list is quite long and interesting.
Michael Lewis is clearly “THE” author for financial books at the moment. His books are usually great to read, very well researched and a few of them have already turned into movies like “The Big Short”.
“The Undoing Project” is the story of Amos Tversky and Daniel Kahneman, two Israeli professors who developed the so-called “Prospect Theory” which deals with the behavioural “biases” that the human mind shows when deciding under uncertainty. And for which Kahneman got the Nobel Prize in 2002 (Tversky unfortunately died some years before that).
Up until Prospect Theory, the human mind was assumed to be perfectly rational for most theories dealing with human behaviour and decision-making. As stock investors we all know that human behaviour in the stock market is anything but rational, however only following the groundbreaking work of those two guys, we now have a more structured way to understand how the mind really works.
The book covers the story of this “unlikely” pair of academics who started this revolution plus some side stories about people who were greatly influenced by them, for instance in Basketball and Medicine.
The book describes in very great detail how the relationship between Tversky and Kahneman developed, how it was interrupted by the different Israeli wars, how they moved from Israel to the US and how it ended. To be honest, I found this a little too much detail. It is an interesting story , no doubt, but I guess a few pages less would have made the book better.
Towards the end I really had to force myself to finish the book when Lewis describes in great detail how they tried more or less successfully to counter their critics. I think this was my first Michael Lewis book where I seriously thought about not finishing it.
All in all I would say it is an OK book for people who like those kind of biographic books, however for people interested in the theory and topic itself, Kahneman’s book “Thinking Fast and Slow” in my opinion is the much better choice.
Normally I don’t read that many books “fresh of the press”, but this one really interested me. First, because it was from Dan Ariely and second, because it deals with a very important topic in my opinion: What motivates people (to work).
Those two books might be somehow unusual for a blog dedicated to Value investing, but I do believe that especially for value investors it is very important to understand what is happening elsewhere and those two books provide plenty to learn and apply even (or especially) for value investors.
“Venture Deals – Be smarter than you lawyer and Venture Capitalist”
“Venture Deals” is a rather technical but nevertheless very interesting book and in my opinion a “Must” for anyone directly involved in start-up funding, either as an investor or founder.
First a big “thank you” to the reader who sent me an EMail and pointing me to this book.
Everyone who works in a big company knows the feeling: You had a really stressful day with many meetings etc. but by the end of the day you go home and are frustrated because you got nothing done. Or you have those colleagues who are always busy but if you need something from them, you never get an answer. Or you have been watching the Bloomberg screen on a really bad day all day long and achieved exactly nothing.
“Shoe Dog” is the memoir of Phil Knight’s early years as founder and CEO of NIKE.
As a University track runner, he got the idea to import sport shoes from Japan. Without much preparation he flew to Japan and actually managed to get the importer contract for the Japanese Tiger brand.
The first shoes he sold on track & field competitions literally out of the trunk of his car. For the first years, he worked as a CPA at day and financed the shoe business with his salary. The creation of the NIKE brand was more or less a “forced coincidence” when the Japanese company tried to kick them out of their deal.
As the company was founded with very little equity, (only 1000 USD, with his former coach as 49% partner), the company was for many years always on the brink of bankruptcy and was saved once by the parents of an employee and another time by a Japanese trading company.
I was very surprised how well the book is written. I am not sure but I think most of the memoir is written by Phil Knight himself. The book reads much more like a Thriller than like a (somewhat boring) “How I did it” memoir. For the first 200 pages or so I couldn’t put the book down. Although the end of the story is well know it is nevertheless fascinating to read how the first 10 years or so they limped from one near death experience to the other.
What I also find interesting is that Phil Knight mostly describes the mistakes he made. If you read the book you get the impression “What the hell did he actually do ?” for NIKE to become so succesful. In his descriptions it is almost always his employees or his former partner who came up with the best ideas. His leadership style seemed to be very team oriented and “Hands off”, a nice contrast to the “maniac detail obsessed” guys like Bezos and Jobs. My interpretation is that he basically was responsible for the general direction and strategy and let his employees do whatever they thought was the right thing to do.
My learnings from the book:
- Those days were great days for banks. They were the kings and start-ups like Nike the ones begging for money. Raising money back then was really difficult, capital was scarce.
- A value investor woul dhave never invested in this company as it was debt only, free cash flow negative and with little observable competitive advantages for the first 10-15 years.
- Nike was actually saved by a Japanese trading company which funded the expansion after the bank refused to finance a strongly growing but cashflow negative company
- The brand “Nike” and the “swoosh” were much more coincidence than strategic planning
- Nike and Knight were at the right place at the right time. When people started to wear sneakers as everyday shoe, Nike was just there. They didn’t foresee it and didn’t plan for it.
- Phil Knight’s leadership style seems to have been very “hands-off”, much less detail obsessed than for instance Jobs or Bezos. A good example that a founder doesn’t need to be an egomaniac asshole to be succesful.
- Amazon these days is able to charge more for the Kindle copy than for the paperback. Remarkable.
- From a personality point of view the founders and initial team seem to have been “outsiders”. A guy in a wheelchair, an obese guy and a more or less autistic running freak were the first employees and later also the top management. Not your typical Fortune 500 top management.
Overall I can only recommend this book. I think it makes a perfect and surprisingly “thrilling” read especially for the summer holidays.