Book Notes: Whole Earth Discipline

The following are my notes from 2014 on the book “Whole Earth Discipline” by Stewart Brand. This book was recently recommended by Marc Andreessen along with a handful of other great books related to progress and building the future.

Whole Earth Discipline: An Ecopragmatist Manifesto

Ecological balance is too important for sentiment. It requires science. The health of natural infrastructure is too compromised for passivity. It requires engineering. What we call natural and what we call human are inseparable. We live one life.

We are forced to learn planet craft — in both senses of the word: craft as a skill and craft as cunning. The forces in play in the Earth system are astronomically massive and unimaginably complex. Our participation has to be subtle and tentative, and then cumulative in a stabilizing direction. If we make the right moves at the right time, all may yet be well.

“Find (a) simple solutions (b) to overlooked problems (c) that actually need to be solved, and (d) deliver them as informally as possible, (e) starting with a very crude version 1.0, then (f) iterating rapidly.” — Paul Graham

For sensitive ecosystem engineering at planet scale, what we need most is better knowledge of how the Earth system works. We are model-rich and data-poor. We need to monitor in detail and map in detail what’s really going on, and the measuring has to be sustained and consistent. Donella Meadows laid down the commandment: “Thou shalt not distort, delay, or sequester information.” You can drive a system crazy by muddying its information streams. You can make a system work better with surprising ease if you can give it more timely, accurate, and complete information. We must build a digital Gaia.

“A project is sustainable if it is cheap enough to be the first of a series continuing indefinitely into the future. A project is unsustainable if it is so expensive that it cannot be repeated without major political battles. A sustainable project marks the beginning of a new era. An unsustainable project marks the end of an old era.” — Freeman Dyson

Climate change

One important negative feedback may be operative. The world’s land areas are absorbing more carbon dioxide than they’re releasing lately. “Believe it or not, plant life is growing faster than it’s dying. This means land is a net sink for carbon dioxide, rather than a net source.” This might be due to simple CO2 fertilization–additional CO2 stimulates plant growth.

In Jim Lovelock’s worst-case climate scenario, Earth stabilizes at 9°F warmer; a fraction of the present human population survives. But the exact outcome in such a complex system is unpredictable. Threshold effects are sneaky. At some point, though, a threshold is reached. Then in an unstoppable cascade the rain forests melt like Arctic ice, leaving savannah, scrub, and desert in their place.

Humanity currently runs on about 16 terawatts of power. We have to cut our fossil fuel use to around 3 terawatts a year, and we have to do it in about 25 years.

On the old astronomical schedule, a new ice age should have begun a couple thousand years ago. “A glaciation is now overdue, and we are the reason.”

Our terraforming thus far has been unintentional. Now that we have the curse and blessing of knowing what’s going on, unintentional is no longer an option. We finesse climate, or climate finesses us.

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Book Notes: Why We Get Sick

Back in December I read the book “Why We Get Sick” (1992) by Randolph Nesse and George Williams. While some of the information was outdated due to its age, overall I loved the book as it took a more wholistic, evolutionary approach to explaining sickness.

Given the global pandemic of 2019-nCoV (novel coronavirus) underway and the timely nature of my read, here are my brief notes I took from the book.

Why We Get Sick

Two kinds of explanations for disease:

Proximate explanations — Answer “what” and “how” questions about structure and mechanism. Address how the body works and why some people get a disease and other’s don’t. A proximate explanation describes a trait — its anatomy, physiology, and biochemistry, as well as its development from the genetic instructions provided by DNA.
Evolutionary explanations — Answer “why” questions about origins and functions. Show why humans, in general, are susceptible to some diseases and not to others. (Or why some parts of the body are so prone to failure.) An evolutionary explanation is about why the DNA encodes for one kind of structure and not some other.

Defenses. Mechanisms our body and immune systems designed specifically to combat an issue. A protective response to a problem. Coughing is a defense. The distinction between defenses and defects is important — defects are not preprogrammed responses, they are results of a problem. Skin turning blue from lack of oxygen is a defect.

Causes of disease:

Infection. External agents such as bacteria and viruses.
Novel environments. Environments our evolved bodies aren’t used to handling. A mismatch between our design and our environment.
Genes. Some of our genes are perpetuated despite the fact the cause disease. In the environments we evolved in, they didn’t harm us enough not to be selected out. DNA can also be mutated and create new bad genes.
Design compromises. There are costs associated with every major structural change preserved by natural selection.
Evolutionary legacies. Evolution is incremental and can’t make major changes quickly. Many of the design choices are not optimal and carry on anyway.

Signs and symptoms of infectious diseases

Symptoms of colds and other sicknesses and diseases can be unpleasant. But most of them are useful. It is an adaptation shaped by natural selection specifically to fight infection.

Fever is an adaptation to raise body temperature enough to assist with fighting infection. Body temperature is carefully regulated even during fever; the thermostat is just set a bit higher. Children who take Acetaminophen take about a day longer to recover from chicken pox. There are costs of a fever, of course. Otherwise the body would just always stay at 103F at all times. It depletes nutrient reserves 20% faster and causes temporary male sterility. Still higher fevers can cause delirium and lasting tissue damage. And because regulatory precision is limited, fever will sometimes rise too much and at other times not enough.

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Polaroid, Apple’s spiritual successor

I just finished 2 books on the history of Polaroid 🌈¹. A remarkable tech company with enormous success in consumer and industrial applications for decades. It’s also remarkable just how much Apple was influenced by Polaroid.

A brief history

As a child Edwin Land found a copy of the 1911 edition of Physical Optics, a textbook by the physicist Robert W. Wood. He obsessed over its contents, lingering on one chapter in particular: the polarization of light.

In 1928, Ed Land was 19 when he invented the first thin-sheet polarizer. He cofounded Land-Wheelwright Labs with a friend in 1932 after dropping out of Harvard. Their first products were polarized versions of headlights, sunglasses, etc.

They grew slowly with mostly small industrial contracts for 6 years, then reincorporated as Polaroid Corporation. During the war sales grew an order of magnitude, 80% of which went to the military for products like polarized goggles.

In 1943 Land came up with the idea for a film camera that can process right away instead of in a lab. R&D started immediately, but it wasn’t until 1948 their first camera, the Model 95, was released. It went on to sell 900k units in 5 years.

The 95 was a classic disruptive innovation: worse quality than traditional film cams, dismissed as not “real” photography, but appealing to a new market of customers. And profitable: camera for $90, film packages with 60% gross margins.

With all the new cash flow, they could plow it back into R&D. To Land, they had “. . . created an environment where a man was expected to sit and think for two years.”

Polaroid’s growth lasted decades longer, peaking in the ’80s right when, ironically, they won an historic years-long lawsuit against Kodak for patent infringement.

Apple, the spiritual successor

Back to the Apple comparison. The similarities are clear: from values, to marketing, to org structure, to product launches and demos.

Just like Jobs, Land was at the top of every invisible organizational chart. An anonymous former colleague: “Don’t kid yourself, Polaroid is a one-man company.”

When faced with scientific illiteracy or lack of imagination, Land resorted to a restrained bit of showbiz. As it turned out, he was strikingly good at explaining his work to people, and powerfully persuasive.

Ed Land was one of Jobs’ childhood heroes. Jobs met with him later and connected when when Land said his products have always existed, they were just invisible: waiting to be discovered. Apple exemplified Land’s motto “Don’t do anything that someone else can do.“

Polaroid’s downfall started long before the digital apocalypse with their sidelining of Land in the ’80s. His final mistake was giving little thought to his own succession and the future of the company in the new generation. When they all but kicked Land out, Jobs met with and scolded management, saying Polaroid would turn into “a vanilla corporation”.

And it did. Jobs would take this lesson to heart many years later with his own succession plan.

Snapshot

Evan Spiegel is also heavily influenced by Land and Polaroid. But alas, Snap is not a camera company—they’re a communication company. And I think they’d do better in the future remembering that.

Inspiration, not imitation.

Polaroid Variable Day Glasses; Snap Glasses.

I’ll finish with a Land quote from 1970: “We are still a long way from the… camera that would be, oh, like the telephone: something that you use all day long … a camera that you would use as often as your pencil or your eyeglasses.”

“Instant: The Story of Polaroid” by Christopher Bonanos (2012). “Land’s Polaroid: A company and the man who invented it” by Peter Wensberg (1987) ↩︎

Books: 2017 Reading List

Competing Against Luck — finally a full writeup on “Jobs Theory”, and required reading for anyone involved in product strategy & UX design (i.e. all startups).

The Change Function — good, simple model to think about how valuable a new innovation is (all about UX, or if (perceived crisis > cost of adoption)).

Marketing High Technology — best book on distribution you can find, for technology or otherwise.

Shoe Dog — Great story; wish he would have spent more time in the later years of Nike’s growth.

Doing the Impossible — too dense overall, but I loved hearing the story of the moon mission from the inside, especially from such a talented project manager that made it happen.

Scale — not as good as hoped, but a good “skim” with lots of interesting ideas around a theme.

21 Irrefutable Laws of Leadership — great leadership advice + stories to go along with, Dale Carnegie style (but could have been much shorter).

Hard Drive — 3rd reading of the best bio of Bill Gates & Microsoft’s early years.

The Elements of Computing Systems — I never had formal CS education so this was a great practical explainer, from translating binary to assembly, to how an OS works.

A Mind at Play — always been a huge fan of Claude Shannon’s work, mind, and humility.

Turing’s Cathedral — a little long in places, but great overall history of computing & early people who shaped it.

Softwar — Reading now. Interesting insights about early Oracle, also gives me new appreciation for Ellison. [Update: I would not recommend this book. First part is good but last half rambles on, fawning over Ellison with random stories. “The Difference Between God and Larry Ellison” is much better.]

Book Notes: Benjamin Graham

As with my other book notes, some passages are direct quotes and others are my own paraphrasing/summaries. Any footnotes or [brackets] are my personal comments.

The Intelligent Investor (1973) + Security Analysis (1934), by Benjamin Graham

To invest intelligently in securities one should be forearmed with an adequate knowledge of how the various types of bonds and stocks have actually behaved under varying conditions—some of which, at least, one is likely to meet again in one’s own experience.

An investment operation is one which, upon thorough analysis promises safety of principle and an adequate return. Operations not meeting these requirements are speculative. An investment operation is one that can be justified on both qualitative and quantitative grounds.

We speak of an investment operation rather than an issue or a purchase, for several reasons. An investment might be justified in a group of issues, which would not be sufficiently safe if made in any one of them singly. In our view it is also proper to consider as investment operations certain types of arbitrage and hedging commitments which involve the sale of one security against the purchase of another. The safety sought in investment is not absolute or complete; the word means, rather, protection against loss under all normal or reasonably likely conditions or variations. A safe stock is one which holds every prospect of being worth the price paid except under quite unlikely contingencies.

Outright speculation is neither illegal, immoral, nor (for most people) fattening to the pocketbook. There is intelligent speculation as there is intelligent investing. But there are many ways in which speculation may be unintelligent. Of these the foremost are: (1) speculating when you think you are investing; (2) speculating seriously instead of as a pastime, when you lack proper knowledge and skill for it; and (3) risking more money in speculation than you can afford to lose.

The defensive (or passive) investor will place his chief emphasis on the avoidance of serious mistakes or losses. His second aim will be freedom from effort, annoyance, and the need for making frequent decisions. The determining trait of the enterprising (or active, aggressive) investor is his willingness to devote time and care to the selection of securities that are both sound and more attractive than average.

Obvious prospects for physical growth in a business do not translate into obvious profits for investors. The future of security prices is never predictable.

In his endeavor to select the most promising stocks wither for the near term or the longer future, the investor faces obstacles of two kinds—the first stemming from human fallibility and the second from the nature of his competition. He may be wrong in his estimate of the future; or even if he is right, the current market price may already fully reflect what he is anticipating. In the area of near-term selectivity, the current year’s results of the company are generally common property on Wall Street; the next year’s results, to the extent they are predictable, are already being carefully considered. Hence the investor who selects issues chiefly on the basis of this year’s superior results, or on what he is told he may expect for next year, is likely to find that others have done the same thing for the same reason. To enjoy a reasonable chance for continued better than average results, the investor must follow policies which are (1) inherently sound and promising, and (2) not popular on Wall Street. Continue reading “Book Notes: Benjamin Graham” →

Book Notes: Innovation and Entrepreneurship

As with my other book notes, some passages are direct quotes and others are my own paraphrasing/summaries. Any footnotes or [brackets] are my personal comments.

Innovation & Entrepreneurship (1985), by Peter Drucker

Innovation and Entrepreneurship “The entrepreneur,” said the French economist J. B. Say around 1800, “shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.”

All new small businesses have many factors in common. But to be entrepreneurial, an enterprise has to have special characteristics over and above being new and small. Indeed, entrepreneurs are a minority among new businesses. They create something new, something different; they change or transmute values. An enterprise also does not need to be small and new to be an entrepreneur. Indeed, entrepreneurship is being practiced by large and often old enterprises.

The entrepreneur upsets and disorganizes. As Joseph Schumpeter formulated it, his task is “creative destruction.” They see change as the norm and as healthy. Usually, they do not bring about the change themselves. But—and this defines entrepreneurship—the entrepreneur always searches for change, responds to it, and exploits it as an opportunity.

When shifting resources to a more productive area, there is a risk the entrepreneur may not succeed. But if they are even moderately successful, the returns should be more than adequate to offset whatever risk there might be. One should thus expect entrepreneurship to be considerably less risky than optimization. Indeed, nothing could be as risky as optimizing resources in areas where the proper and profitable course is innovation, that is, where the opportunities for innovation already exist. Theoretically, entrepreneurship should be the least risky rather than the most risky course. [There are “hidden” risks of not being an entrepreneur.]

“Innovation,” then, is an economic or social rather than a technical term. It can be defined the way Say defined it, as changing the yield of resources. Or, as modern economists would tend to do, it can be defined in demand terms rather than in supply terms: changing the value and satisfaction obtained from resources by the consumer. Continue reading “Book Notes: Innovation and Entrepreneurship” →

How to separate luck and skill

These are some of my notes from the book “The Success Equation” by Michael Mauboussin. This book was spotted on Warren Buffett’s desk in this tour of his office. There’s lots more interesting stuff in the book, but these notes in particular answer the question “How do you separate luck and skill?” We’ll start off with some definitions:

Luck is a chance occurrence that affects a person or a group (e.g., a sports team or a company). Luck can be good or bad. Furthermore, if it is reasonable to assume that another outcome was possible, then a certain amount of luck is involved. In this sense, luck is out of one’s control and unpredictable. Randomness and luck are related, but there is a useful distinction between the two. You can think of randomness as operating at the level of a system and luck operating at the level of the individual. Luck is a residual: it’s what is left over after you’ve subtracted skill from an outcome.

The definition of skill depends on how much luck there is in the activity. In activities allowing little luck, you acquire skill through practice of physical or cognitive tasks. In activities incorporating a large dose of luck, skill is best defined as a process of making decisions. Here, a good process will have a good outcome but only over time. Patience, persistence, and resilience are all elements of skill.

Separating luck and skill

Luck-Skill Continuum
At the heart of making this distinction lays the issue of feedback. On the skill side, feedback is clear and accurate, because there is a close relationship between cause and effect. Feedback on the luck side is often misleading because cause and effect are poorly correlated in the short run.

In most cases, characterizing what’s going on at the extremes is not too hard. As an example, you can’t predict the outcome of a specific fair coin toss or payoff from a slot machine. They are entirely dependent on chance. On the other hand, the fastest swimmer will almost always win the race. The outcome is determined by skill, with luck playing only a vanishingly small role.

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Book Notes: The Visible Hand

The Visible Hand: The Managerial Revolution in American Business was written by Alfred Chandler and released in 1977. It’s a great history and study on business and why it exists the way it does today. For some books I read, I transcribe and summarize my highlights/notes in order to better learn the material and for future reference. Below you’ll find my (very long) summary of The Visible Hand. Some passages are direct quotes and others are my own paraphrasing/summaries. So if you’re interested in this sort of topic, send this baby to Instapaper, plop down on the couch, and enjoy.

The Visible Hand

Modern business enterprise is easily defined, having two specific characteristics: (1) it contains many distinct operating units and (2) it is managed by a hierarchy of salaried executives. Each unit has its own administrative office, set of books and accounts. Each could theoretically operate as an independent business enterprise. Such enterprises did not exist in the U.S. in 1840. By World War I this type of firm had become the dominant business institution. It was the institutional response to the rapid pace of technological innovation and increasing consumer demand.

This study is a history, moving chronologically. Before entering the historical experience, here is a list of general propositions to make more precise the primary concerns of the study:

The initial appearance of modern business enterprise:

Modern multiunit business enterprise replaced small traditional enterprise when administrative coordination permitted greater productivity, lower costs, and higher profits than coordination by marker mechanisms. [This was due to both corporate efficiency and economies of scale.]
The advantages of internalizing the activities of many business units within a single enterprise could not be realized until a managerial hierarchy had been created. An enterprise without such managers remains little more than a federation of autonomous offices.
Modern business enterprise appeared for the first time in history when the volume of economic activities reached a level that made administrative coordination more efficient and more profitable than market coordination. It came with new technology and expanding markets.

Growth of the modern business enterprise:

The hierarchy itself became a source of permanence, power, and continued growth.
The careers of the salaried managers who directed these hierarchies became increasingly technical and professional. Training became longer and more formalized.
The management of the enterprise became separated from its ownership. Stockholders didn’t have the influence, knowledge, experience, or commitment to take part in the high command.
Career managers preferred policies that favored the long-term stability and growth of their enterprises to those that maximized current profits. For salaried managers the continuing existence of their enterprises was essential to their lifetime careers.
As the large enterprises grew and dominated major sectors of the economy, they altered the basic structure of these sectors and of the economy as a whole.

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My favorite books on business, management, investing and design

Out of the many books I’ve read in different subjects, below is a list of some of my favorites with some brief commentary for some of them. There are a few other “Mental Model” categories (psychology, history, economics, ecology, etc.) that I left out — hopefull they’ll be the subject of another post.

Business theory

The Origin and Evolution of New Businesses, Amar Bhide — extensive study of startups of all kinds, how they grow, what makes them successful (this is not a “help” book it is mainly observational)
Innovation & Entrepreneurship, Peter Drucker — how companies should systematically innovate — lots of good startup/innovation strategies (it’s not random)
The Innovator’s Dilemma, Clayton Christensen — every businessperson or investor needs to read this (and the one below) — every industry’s value chain is disrupted at some point
The Innovator’s Solution, Clayton Christensen — expands on “Dilemma” with better explanations and examples — I think the “jobs to be done” concept is one of the most important in business
Competition Demystified, Greenwald + Kahn — how businesses capture value by building a moat, and what strategies to use if you have or don’t have one
The Halo Effect, Phil Rosonzweig — the anti-business-book — but still has great insights on how businesses work and how best to run them
Built to Last, Jim Collins — read this with The Halo Effect in mind — lots of good advice & stories (I like this much better than “Good to Great”)
The Strategy Paradox, Michael Raynor — dense at times but a great theory on why strategy is so hard
Hidden Champions, Hermann Simon

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The McDonald’s Success Story

I am currently in the process of researching and writing a long article on the restaurant industry, or more specifically Steak n Shake, McDonald’s, and In-N-Out Burger. I should have it finished in a few weeks or so. In the mean time, please enjoy the following excerpt of the article on McDonald’s:

As Ray Kroc sat in his car, he watched a miracle unfold. The parking lot was full, the lines were long, and customers were leaving with an arm-full of food and a smile on their face. Kroc stopped a few to see what was going on: “You’ll get the best hamburger you ever ate for fifteen cents. And you don’t have to wait and mess around tipping waitresses.” He had travelled the country selling milkshake machines, visiting countless restaurants of all types. But he had never seen a merchandising operation like this. It was 1954; fourteen years after the McDonald brothers opened their small burger drive-in in the town of San Bernardino, California.

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