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Library

Below is the visual library for all the books I have summarized
To access the searchable library, click here

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51N7s0z8kXL._SY344_BO1,204,203,200_ 174713 Washington_A_Life_book_cover Power vs Force Softcover 510aKu0sPTL 41-eYMXLKqL._SX326_BO1,204,203,200_  41ZDNyKoHlL._SY344_BO1,204,203,200_ 9780805052534 16130 517oIyvrNDL 13533740 41rJVsU7tJL._SX331_BO1,204,203,200_ download md184556324162688773851a9rND+uPL._SY344_BO1,204,203,200_ 513dRdOldWL._SX329_BO1204203200_ 5143bEJRfqL._SX322_BO1,204,203,200_ 9780300216974 heroes-of-history-9780743235945_hr{488DB970-C6F6-4E88-AE18-11A93B255D66}Img400 41cmM6UedGL._SX331_BO1,204,203,200_ 41ElRO9ypBL._SX319_BO1,204,203,200_ 41jeohotvgL._SX258_BO1,204,203,200_ 41qKdrO4wnL._SY344_BO1,204,203,200_ 51zp+qPAe-L._SX258_BO1,204,203,200_ 511yBt6KhlL._SX351_BO1,204,203,200_ 812rexUR0rL The_Power_Broker_book_cover 41jFVZL72YL._SX336_BO1,204,203,200_ 41JvQj9sJAL._SX304_BO1,204,203,200_ 41VatwrWCeL._SX325_BO1,204,203,200_ 51dLDq5mkcL._SX320_BO1,204,203,200_ 51gN-yGw5oL._SY344_BO1,204,203,200_ 51Mt5H5lX2L._SX322_BO1,204,203,200_51YHqfdHJeL._SX331_BO1,204,203,200_ 81aGCwitXcL 516qbIR3suL._SX333_BO1,204,203,200_ 1305 LoyaltyEffectRevCover 516pEhuhDlL._SY344_BO1,204,203,200_  41m0N7IIcsL 41rfAKBZVuL._SY344_BO1,204,203,200_ 51WnDA3RrUL._SY344_BO1,204,203,200_ 51YE689GC7L._SX302_BO1,204,203,200_ 4144JvvbfkL._SY344_BO1,204,203,200_ 5486 cover225x225  the-silo-effect-9781451644739_hr  51DWYZY76QL._SX321_BO1,204,203,200_41+nfGp2AgL._SY344_BO1,204,203,200_ 41lz22fodhL._AC_UL320_SR212,320_ 41WrIQaCTBL 41Z3XNXTcHL._SY344_BO1,204,203,200_ 51-j173j-LL._SY344_BO1,204,203,200_ 51jWkjTVbBL._SX330_BO1,204,203,200_ 51l6k9k4HsL._SX331_BO1,204,203,200_ 51pBocD9LPL._SX322_BO1,204,203,200_  Beyond-Training-Cover  cb6ef9e8fa38798e99972aaef7cdcc4d  david-goliath  FinalCover2 TheGraveyardBook_Hardcover What_do_you_care_what_other_people_thinkGEB Lindbergh The Innovators Obstacle is the Way Body by Science Bridgewater Education of a Value Investor The Loser's Game The Prince remains-of-the-day   Stroke of Insight   This is WaterBirmingham Jail  Lolita   Letters from a Self Made Merchant Peter the Great  Antifragile  Think and Grow Rich 48 Laws of Power What the Most Successful To Kill a Mockingbird I and Thou Influence  Manuscripts found in Accra  Ben Franklin Measure Your Life  How to Read a Book   The Small Cap Advantage My Own Life  Buddha Standard Time Decoded Checklist Manifesto The Outsiders Seeking Wisdom Bold Buddha Brain 10 Happier Cyrus the Great Hedonistic Imperative The Winner's Game Diary of Soren Adultery  Where are the customers yachts Education of a Coach Zen in the Art of Archery Moral Sayings of Publius Art of Stillness 51lPZw1WaOL._SY344_BO1,204,203,200_ 51r0fm0Y82L._SY344_BO1,204,203,200_ Killing Kennedy 5 Rules Brave New World Common Sense Investing The Little Book That Builds Wealth Never Eat Alone  Warrior Within  Poor Charlie's Almanack Killing Lincoln Hitchhiker's Guide to the Galaxy A New Earth Tao Teh Ching Hurricane Startup of You Essentialism innoutAmerican Gods Do the Work Future of the Mind How to Love The Luck Factor Radical Acceptance   Nudge Eleven Rings The Hard Thing About Hard Things 33 strategies delivering happiness good to great monk and philosopher on china one click power of full story of philosophy thinking big way we're working zen and art 41z+F+i4C2L._SY344_BO1,204,203,200_ 51cvElYU7WL._SX311_BO1,204,203,200_ 51fN0mD37nL._SY344_BO1,204,203,200_ 51nPvo5Su3L._SX314_BO1,204,203,200_ 51OVTLXoJ+L._SY344_BO1,204,203,200_ 61zkSQ8mjbL 81fncUPB6cL 518PbRACTQL 17859574 a curious mind Brain-That-Changes-Itself George-True-North-Authentic  power thebrainswayofhealingCapture 41ckYWIZtNL._SY344_BO1,204,203,200_ 41HVo-Vf+zL._SY344_BO1,204,203,200_ 41xs4vbcTPL._SX327_BO1,204,203,200_ 51BWHwWGCoL 51jCcKixK1L 51NcUB2HTxL._SY344_BO1,204,203,200_ 51NL4ze5EkL._SX332_BO1,204,203,200_ 51o2zBoDItL._SY344_BO1,204,203,200_ 71tHnQXwJtL 514Y9hUYhRL._SY344_BO1,204,203,200_ 519MS8HD0CL._SY344_BO1,204,203,200_  1152-2 0399139435 41SNnGFamQL._SY344_BO1,204,203,200_   51EOw3BYhrL._SY344_BO1,204,203,200_ 51fIjlYbsVL._SX331_BO1,204,203,200_ 51g8CrvBr8L._SX384_BO1,204,203,200_ 51pmlYf63+L._SX324_BO1,204,203,200_ 51T7HIMnjvL._SY344_BO1,204,203,200_ 51y+hZEulnL._SY344_BO1,204,203,200_ Fooled_by_Randomness_Paperback  Steve_Jobs_by_Walter_Isaacson the-fountainhead  tumblr_mzf8b0ZtUv1tq3nx5o1_1280  WceGgDUNlCA8RPHOz66AbHHs4RI12Vqg+OoBRGBrKx2plCphEkAr3aizNSRpuGHkIoDZcS4gLRs3LNNbucM2tzHjr1b6gOv!JK2gG4iMspVQ5iDKyCBWtzAWMsmQ+7PK41cpg1ESArL._SY344_BO1,204,203,200_ 41OLNqCiM0L._SY344_BO1,204,203,200_ 41ujSlRdt3L._SY344_BO1,204,203,200_ 51dOQ2ytN-L._SX374_BO1,204,203,200_  51mF+0T9o5L._SY344_BO1,204,203,200_  51oHuRxOgIL._SX327_BO1,204,203,200_ 51q71sE7c5L._SX329_BO1,204,203,200_ 51xwPegEzlL._SX333_BO1,204,203,200_ 51Z6PrTDb4L._SX331_BO1,204,203,200_ 413fr2eoPPL._SY344_BO1,204,203,200_ 416qS30-lQL._SX355_BO1,204,203,200_ 830 23289992 Organized-Mind 9900241KHCQnx1EL._SX331_BO1,204,203,200_ 51aUygppA+L._SX331_BO1,204,203,200_ 51cx5AfHpZL._SX337_BO1,204,203,200_ 51ETE8NqvcL._SX330_BO1,204,203,200_ 51kbKLCazgL._SX327_BO1,204,203,200_ 51XkLHJz++L._SY344_BO1,204,203,200_ 71ahJkud8uL 71X3Y9yRtlL 81wBzBcSclL 857333 littlebets  prophet-cover_1_op_397x548 Screen-Shot-2015-09-14-at-2.22.25-PMreagan-151fc0+DDh9L._SY344_BO1,204,203,200_ 51iuMfmHHHL._SY344_BO1,204,203,200_ 51tkKRzS5YL._SX329_BO1,204,203,200_ 51xrAg9mceL._SX331_BO1,204,203,200_ FINDING-ULTRA-COVER-FINAL1  TheBoysintheBoat9780812993257 How_We_Decide_cover  OmnivoresDilemma_full  brothers k Happiness-Hypothesis unbroken-crjpg-ce0987f837463333  mans_search_for_meaning  simplicity  9781571745712 81B9+kACYLL BotanyofDesire_full 300x300 cn_image.size.swerve-book rise of superman  year-without-pants-752x1128  getting to yes 51V38NLW5zL._SY344_BO1,204,203,200_ TheIntelligentInvestor 51XcaFJirNL._SY344_BO1,204,203,200_ Jesus  BP Diet  Zorba_book Flowers for Algernon  1776 Auto of Black Hawk Genghis Khan Making Onward God Delusion Moonwalking_with_einstein Stroke of Insight Einstein Isaacson Siddhartha Titan fooling super brain Lila Meditations Fahrenheit 451  On the Road   Cooked On the Shortness of Life What every body is saying Aleph Animal Farm Sports Gene Love WinsBorn to Run  Emotional Intelligence Cool Tools Sun also rises Inutition Pumps  Moby Dick  Free to Choose  Power of Positive Thinking Experiments with Truth Vagabonding Slaughterhouse Five Aristotle in Outline the social animal_3.indd Cat's Cradle Thinking Fast and Slow  The Alchemist  Walden  Art of War  The Charisma Myth  Flatland  Mr. Feynman Money master the game 51qwpkjNP7L._SY344_BO1,204,203,200_  7126 41ry6MoUc3L._SX331_BO1,204,203,200_ 51JNMx5G3iL._SY344_BO1,204,203,200_Berkshire 51K28NKVF3L._SY344_BO1,204,203,200_ 1984-by-opallynn-d4lnuoh 6596 17184 cover2 cvr9781451695182_9781451695182_hr Mastery_Cover movieposter PicofDorianGray-728143 Rye_catcher subliminal_seduction  TheJungleSinclair  The-Richest-Man-In-Babylon-George-Clason

Platform Revolution by Geoffrey Parker, Marshall Van Alstyne and Sangeet Paul Choudary

Summary
  1. This book seeks to describe how and why platforms are coming to dominate the market today ranging from Google, AirBnb, Uber, Amazon, eBay, Facebook, YouTube, Wikipedia, Pinterest, Alibaba, Kayak, Instagram, PayPal and more
Key Takeaways
  1. The platform business model
    1. One which uses technology to connect people, organizations and resources in an interactive ecosystem in which incredible amounts of value can be created and exchanged.
    2. Network effects are the main source of value creation and competitive advantage in a platform business – It encourages an open, cooperative interaction which removes friction from matching suppliers and consumers, also removing barriers of time and space.
    3. Frictionless entry to the network is key.
    4. Because they create value with resources they don’t own or control, they can grow much more rapidly.
    5. Side switching, ability for consumers to easily become producers, is also important
  2. Traditional linear businesses, aka pipelines, cannot scale as efficiently as platforms since platforms eliminate gatekeepers which typically slow down flow of information from producers and consumers. Platforms can also “unbundle” services so consumers can get exactly what they want for less. Everyone wins except for the traditional players. Platforms bring new sources of supply online and pits high fixed cost companies against low fixed cost companies (Hyatt vs AirBnb)
  3. In platform markets, the nature of supply changes and harnesses feedback from consumers and the community which only used to consume. Platforms use database tools to create community feedback loops in which the users’ reputations are always at stake and to determine which projects are most promising
  4. Platforms often invert traditional business models by focusing more on functions outside of the business than internal to it
  5. Network effects – can be both positive and negative. Positive effects occur when additional value is created for each new member that joins a network. This is the principal competitive advantage of platforms
  6. Traditional businesses dominated through supply economies of scale – efficiencies in production from scale. New businesses tend to dominate from demand economies of scale – take advantage of efficiencies from technological advancements on the demand side such as efficiencies in social networks. This is one of the key reasons network effects are so powerful
  7. Two sided markets feed the network effects. At Uber, riders attract drivers and drivers attract riders in a powerful positive feedback loop
  8. Important to distinguish between network, price and brand effects. Network effects leads to a virtuous cycle that is more sustainable whereas price and brand can be fads or not as sustainable. Most platform failures rely mostly on price or brand effects
  9. Virality about attracting people to join network, network effects about delivering more value once on platform. Temporary vs. sustainable
  10. Skillful curation helps mitigate negative network effects (OK Cupid and how originally all men flocked to most beautiful women who then left, and then men left because there were no more attractive women)
  11. Data driven network effects – the more users and therefore the more data you have, the more effectively you can curate
  12. Same side network effects – the effects consumers have on other consumers and producers on producers
  13. Cross side network effects – effects consumers have on producers and vice versa
  14. 4 broad buckets for different companies – asset providers (Ford), service providers (United Healthcare), technology providers (Microsoft), network organizers (platform businesses and are the most efficient value creators)
  15. Every exchange between producers or consumers involves 3 things – information, goods or services and some sort of currency (money, attention / reputation / other forms of social currency)
    1. Value creation for platform directly depends on what kinds of currency are being exchanged and how much of it the platform can capture
  16. The why of platform design – core interactions.
    1. The core interaction is the most important form of activity of the platform and has 3 core areas – participants, the value unit (any info which helps users decide if they want to proceed – price and description of item on eBay) and the filter (search query or any other filter which effectively provides users only value units they’re interested in). These 3 must be designed very well to make the core interaction as frictionless and value accretive as possible
    2. Platforms don’t create value units so platforms are information factories where producers can provide value units
  17. The how of platform design – pull, facilitate, match.
    1. Platforms face a chicken and egg problem where consumers won’t come if there are no producers and vice versa. Most platforms fail because they don’t effectively pull consumers and or producers into the platform. Finding and leveraging feedback loops which drive engagement is vital (FB changed focus from getting new members to helping current members establish new connections)
  18. Modularity in a platform is important – structures which are designed independently but can all function together. Subsystems can interact in a way that yields complex adaptive behavior without any one subsystem being too complicated
  19. Inevitable that users will use platforms in ways the designers never anticipated. Sometimes the best design is anti-design – allowing space for the bizarre and unanticipated to grow and expand
  20. Software eating the world is evolving to platforms eating pipelines. Internet no longer just a distribution channel, a pipeline, but also acts as a creation infrastructure and coordination mechanism. Physical and digital are also rapidly merging. Platforms enjoy two main advantages – superior marginal economics of production and distribution and network effects allows platforms to scale much more quickly
  21. Platforms eliminate barriers to entry, bringing in more supply and therefore competition
  22. All platforms struggle early on with quality due to abundance but as the community grows and curation improves, quality typically improves
  23. Delinking assets from value allows B2B to move to more profitable B2C
  24. Re-intermediation is the process of adding new, nimble, automated, customer rated, value-add middlemen to transactions. Separating ownership from control
  25. Nike is one of the most successful pipeline companies turning themselves into a platform. Fuel band, apps, Apple Watch and more helps connect products with platform businesses – fueling growth and keeping customers engaged in a new ecosystem. Eventually allowing them to make better products. Under Armour attempting same thing with purchase of MapMyFitness  MyFitnessPal and Endomondo- all about platforms, data and users, not products.
  26. IoT allowing industrial companies like GE potentially create a viable platform
  27. Chicken and egg problem with platforms occurs when both sides of the market are equally valuable and PayPal overcame by reducing friction involved in online transactions, making very user friendly, gave new customers money for just signing up ($10-$20).
    1. Getting users to sign up is step one, then must realize value and become regular users – user commitment more important than user registration. Multiple positive feedback loops fed at this point and explosive number of customers fueled sellers to promote their acceptance of PayPal. Enabling service on eBay made it even more visible and reduced friction
  28. Platforms must rely on pulling in customers rather than push like most pipelines do. Marketing must be built into the platform
  29. Knowing value proposition of competitors, even if seemingly similar product or service, can help you structure your own
  30. Strategies for beating chicken and egg problem
    1. Follow the rabbit – build on top of already successful pipeline or platform, attracting both consumers and producers (Amazon Marketplace, Intel)
    2. Platform from scratch
      1. Staging value creation – attract initial users who attract more users and so on. Huffington Post started with very high quality content, attracting first consumers to engage more and therefore attracting more users
      2. Designing platform to attract one set of users – critical mass on one side will come to attract other side
      3. Simultaneous onboarding – value for those who first join but increasingly more valuable as more join (Facebook)
    3. Piggyback strategy – connect with a user base from an an existing platform and stage the creation of value units to recruit those users
    4. Seeding strategy – create value units for at least one set of users who will then attract other users because they want to interact. Platform owner can be first customer, leading way in showing how to take advantage of value units and what types of rules and interactions are recommended (Google and $5m prize for best apps when first launched Android; Quora at first would ask and answer their own questions, showing how it’s done)
    5. The Marquee Strategy – sometimes one side of the market can make or break the platform so targeting them is key (may purchase marquee producer like Microsoft did with Bungee which eventually became Halo)
    6. Single side strategy – develop platform for only one side and then entice other side to join
    7. Producer evangelism strategy – platform helps producers better serve consumers and cross-pollination can then ensue (Kickstarter, Udemy)
    8. Big Bang Adoption Strategy – use one or more push strategies (marketing, etc.) to attract a high volume of interest, creating a nearly fully formed network almost instantaneously. Less effective in today’s world with so many ads and distractions
    9. Micro market strategy – target a tiny market which is already engaging in interactions – enables platform to act as a market even in earliest stages of growth
    10. Viral growth (complements all strategies above) – encourages users to spread the word about the platform to other users, network thus becomes the driver of its own growth – positive feedback loop in action
  31. Key pillars
    1. Sender (love the platform and often get some benefit such as money or notoriety)
    2. Value Unit (spreadable value units key, can’t be secret or hard to spread)
    3. External Network (Instagram leveraging Facebook)
    4. Recipient (responds and spreads word if find enough value)
  32. Monetizing platforms – about capturing a portion of excess value created
    1. Determine value of platform is step 1 – only way to be sustainable is if it doesn’t hamper network effects and even better if it reduces possibility of negative network effects
      1. Consumers – access to value created on the platform
      2. Producers – access to a community or market
      3. Both – access to tools and services which improve interactions
      4. Curation mechanisms – connecting right to consumers with producers through curation is key
    2. Often a good strategy is not to charge either side early on but simply take a small transaction fee. Transaction will occur and feels like only a small tax on the service provided by the platform
    3. Another good tactic is to charge companies for postmortems to help them understand what they did well and where they can improve
    4. Charging for access or enhanced access. Alibaba charges no transaction fees but fueled network effects by paying members who recruited others
    5. Freemium – charge full price to a certain set of customers and give to free or at least subsidized to those who value it less
    6. Charging one side will often drastically reduce volume but drastically improve quality and engagement and discourage second rate participants. Deciding which side to charge and how much is one of the most crucial decisions
    7. Should try to keep as many monetization opportunities open as possible
  33. Openness – Determining what users can and cannot do is key
    1. No restrictions placed in participation of platform’s development, commercialization or use or any restrictions and applied uniformly to all participants
    2. Openness encourages innovation but obviously gives up much control
    3. Determining how open and which areas to leave open is important – can keep key pillars closed but leave other areas open for others to play with and innovate on. Facebook platform opened up massive innovation of apps
    4. As platforms by definition derive value from outside producers and consumers, key to find right level of openness. Defining exactly who should have access to the platform and how they can participate is absolutely vital with huge strategic repercussions and why openness at the top of every platform manager’s agenda
    5. 3 key decisions about degrees of openness – decisions regarding manager and sponsor participation, developer participation, user participation
      1. Proprietary (Apple), licensing (Google with Android), joint venture (Visa when first started), shared (Linux)
      2. As a platform manager, cannot let an outside developer drive too much of the value creation on the platform – buy the app or the company that created at this point (Apple bought Siri)
      3. Absolute openness is usually not chosen in attempt to provide highest quality but getting a lot of user participation often leads to very engaged and sticky customers – AirBnb customers can also be suppliers
    6. Platforms in similar arenas may choose to differentiate themselves through varying levels of openness
  34. Data aggregation can be very effective but it must be done appropriately to not feel intrusive or creepy
  35. Good governance – set of rules of who gets to participate in an ecosystem, how to divide the value created and how to solve conflicts
    1. Always create value for the consumers you serve, don’t use your power to change the rules in your favor, don’t take more than your fair share of the wealth (don’t make Keurig’s mistake of blocking out all competition from coffee making platform)
    2. The scale and scope of today’s largest platforms like Facebook and Alibaba often have direct or indirect consequences on tens of millions of people and hundreds of billions of dollars. They can learn much from cities and states – namely, how best to create wealth and distribute it fairly
      1. 1% drop in a state’s anti-corruption leads to ~1.7% rise in GDP! Multiplier effect of loyalty, trustworthiness! Singapore is the prime example and has grown GDP at 6.7% for over 50 years. Good governance matters
    3. Absolute openness doesn’t work in companies or states because it can’t always be relied upon to be fair and satisfactory for all
    4. Governance failures occur because of information asymmetries, externalities, monopoly power and risk
    5. Good governance increases trust and transparency thereby enabling good interactions to occur, allows people on different sides of the market to find each other more easily, minimizes congestion when too many people are involved or quality is too low and minimizes repugnant activity.
    6. 4 tools of good governance (as used by nation states but should be adopted by platforms) – laws, norms, architecture and markets
      1. Laws of platforms are its explicit rules which determine behavior by producers and consumers
      2. A dedicated community is one of the most powerful forces a platform can have
      3. Trigger – Action – Reward – Investment is the process platform managers use to entice behavior they want and improve engagement and stickiness
    7. Important to give outside stakeholders as much of a voice as inside stakeholders or else decisions will inevitably be made more for the platform’s benefit
    8. Act consistently – commitments to act or not act must be able to be counted upon
    9. Don’t surprise people and don’t play favorites with news
    10. Don’t promise not to change, simply promise early notice
    11. Must have skin in the game
    12. It is alright to provide differentiated access and value but must clarify what qualifies
    13. Promote welfare and health of partners, especially smaller partners
    14. Fairness creates wealth in two main ways – sharing of ideas, wise allocation of resources (less fear of being taken advantage of)
  36. Metrics – how to measure what really matters
    1. Cash flow, inventory turns, operating income, gross margin, overhead, ROI – the efficiency through which value flows through the pipeline
    2. Must be able to get close to solidly understanding positive network effects and what drives them
    3. Goal is to measure the rate of interaction success and the factors which contribute to it – most powerful metrics quantify the success of the platform in fostering sustainable repetition of desirable interactions
    4. Pipeline more concerned with flow of value through pipeline and platform manager about value creation for whole ecosystem, all users – both on and off platform
    5. Revenues, cash flow, profitability are key to pipelines but largely irrelevant for platforms during start up phase. Once critical mass is attained, conversion of active users to customers can take priority
    6. Crucial to measure extent to which both producers and consumers are interacting on the platform and increasing their participation over time
    7. Metrics during start up phase – core interaction and value it creates for both consumers and producers
      1. Liquidity – first and most important, minimum number of producers and consumer and percentage of successful interactions is high; interaction failure minimized and intent of users to interact is consistently satisfied within a reasonable period of time
        1. Most important metric early on is one that helps determine when liquidity is reached – tracking % of listings which lead to interactions within a given time period
        2. Must also track illiquid situations (such as when an Uber user opens app and sees no cars available)
        3. Most meaningful metrics are comparative ones – either between groups of users or over periods of time
        4. Don’t fall into the trap of over-measuring. What matters is having customers who love, rave and repeatedly use your service
      2. Matching quality – accuracy of search algorithm and the intuitiveness of search tools to connect with users to start value add interactions
        1. Achieved through product or service curation
        2. Sales conversion rate helpful – % of searches that lead to interactions
      3. Trust – degree to which users on a platform feel comfortable with the level of risk associated with interacting on a platform. Achieved through excellent curation of participants on both sides of the platform
      4. Actual metrics used to measure these 3 key areas must be relevant to the type of platform, the types of users and producers, forms of value being created and exchanged and so on
        1. Engagement per interaction, time between interaction, % of active users, number of interactions, interaction capture (for platforms taking a stake of every interaction), market access, producer participation
    8. Metrics during the growth phase – best metrics will change as company grows and it is important to determine when these inflection points occur
      1. A proxy for interaction success can be measured by the ratio of producers to consumers. The ratio of failed interactions and producer fraud are also important to monitor
      2. Using various metrics, producer and consumer lifetime values can be calculated and various strategies tested to see their effects on these important values
    9. Metrics during maturity phase – incremental innovation measured through key metrics must be closely monitored
      1. Studying extensions created by developers is important to keep on top of to see if any changes or adaptations are necessary
      2. Metrics must be actionable, auditable, accessible (comprehensible)
      3. Again, in the end, the most important metric is the number of happy customers on every side of the network who are repeatedly and increasingly involved in positive interactions
      4. Are people happy enough with the ecosystem to continue participating in it actively?
  37. Huge advantage of platforms is ability to incorporate products and services of outside partners into activities and capabilities of the platform
  38. Believes that sustainable advantages are illusory in today’s world with how fast technology is progressing. However, platform businesses tend to expand the pie rather than taking market share of a fixed market (like Amazon was able to do with Kindle and self-publishing) or goes sideways and creates new markets with new supply (like Airbnb did with supply of lodging). However, winner take all situations do lend to longer lasting moats as they encourage users to abandon other platforms – network effects, supply economies of scale, high switching costs and lack of niche specialization
  39. Platforms seek exclusive access to essential assets and create the platform to discourage multi-homing (same behavior on different platforms) as this facilitates switching. Apple and not making Flash compatible, Alibaba and not allowing Baidu’s bots to crawl their site so that they alone could sell ads to their customers
  40. Data is the new oil – fuels growth and aids ecosystem optimization
  41. The policy, regulation and tax regimes will need to adapt and evolve to take platforms into account since they provide so much value to both producers and consumers
  42. Future trends where platforms can disrupt – industries with non scalable gatekeepers (publishers), highly fragmented industries, important information close to the source (media and telecom , extreme information asymmetry
  43. Industries likely to fight off platforms – Industries with regulatory control (healthcare), high failure costs (banks), high resource industries (energy and mining)
  44. Education, finance, healthcare and renewable energy may be the most ripe for disruption by platforms
What I got out of it
  1. One of my favorite business and technology books of all time – shows the power of platforms and a roadmap to build or analyze them
Choudary’s website is worth checking out and has a good introductory page

Shoe Dog: A Memoir of the Creator of Nike by Phil Knight

Summary
  1. Phil Knight recounts the formation, history, culture and vision of one of the most widely recognized brands in the world
Key Takeaways
  1. Knight ran track at Oregon and says that runners truly run because what happens when they stop scares them. Knight decided early on that he would never stop, no matter what
  2. Nike started off with running shoes and the thesis originally came to Knight while he was st Stanford business school. Japanese cameras had undercut German ones and he argued that the same may happen with American running shoes. Wanted to travel the world before chasing this business dream and had to convince his dad. His father valued being respected more than anything and thought this was the case because of his inner chaos, which came through via alcohol. Phil hated to sell and was worried about trying to convince his dad but eventually he succeeded. Knight spent months planning his world travels and invited his best friend, Carter. The plan went off the rails quickly as they decided to stay in Hawaii for several months. Carter found a girlfriend and Knight decided to later move onto his world travel plans. He headed to Japan and was heavily influenced by Zen Buddhism and focused on forgetting the self, non-linear thinking, simplicity, minimalism and being fully present
  3. Knight met with a Japanese shoe manufacturer and won their business, representing them in the Western US. He described the tension between himself and the Japanese due to remnants from WWII
  4. Our work is the holiest part of us
  5. Greece was the highlight of the trip and the image of The Temple of Nike, the goddess of victory always stood out to Knight
  6. The track coach at Oregon, Coach Bowerman, was a huge inspiration for Knight and was obsessed with shoes and continuously tried modifying, iterating and innovating them. His father and his coach were extremely stingy with praise and Knight sought their approval more than anything. Bowerman and Knight became partners in Knight’s new venture which he named Blue Ribbon. Phil got success rather quickly and though he was terrible at selling, he didn’t feel he was selling the shoes because he truly believed in them and in the good running can have on people
  7. His mother was very athletic, a trackophile, quiet but very tough and very supportive of Phil. How he describes the quiet support from his mother is beautiful and inspiring
  8. The art of competing is the art of forgetting, forgetting the pain, the competitor, the strategy, the self
  9. Bowerman was an innovator. He focused as much on rest as training, he experimented with nutrition and electrolytes (predecessor to Gatorade), tore apart shoes, tried new materials (early polyurethane) and believed everyone with a body is an athlete
  10. Was fascinated by shoguns, samurai, tycoons. Churchill, Kennedy and Tolstoy specifically
  11. Knight took a job at PwC in case Blue Ribbon didn’t work out. “My life was totally out of balance but I didn’t care. I loved it. I wanted more imbalance. Or at least a different kind. I wanted to spend every minute working at Blue Ribbon…I wanted work to be play and I wanted what everyone wants, to be me full time.”
  12. His first employee, Jeff Johnson, was selling prodigious amounts of shoes and created an office which aimed to be a runners paradise with books, comfortable seating, and inspiring images
  13. The key to negotiations is to know what you want, what you need to leave feeling whole
  14. Hired a lot of ex-runners, fanatics, whom were paid on commission. They worked like crazy because they believed in the vision
  15. Phil spends a lot of time lost in his thoughts, going down mental wormholes, trying to figure out problems, was messy, spacey, competitive, laissez fair management to the point he was unresponsive
  16. Once the business took off, Knight’s father was no longer so skeptical and in fact used him as a sounding board to hash through problems
  17. Woodell’s parents loaned $8,000, their life’s savings, to Phil when the company had liquidity problems
  18. The Japanese shoe manufacturer, Onitsuka, attempted a hostile takeover in 1971. Phil started looking for alternative manufacturers and found one in Mexico called Canada. The first shoes out of this factory were soccer cleats disguised as football cleats and was worn by Notre Dame’s QB
  19. A shoe dog is somebody who is wholly devoted to the designing, buying, making, selling of shoes
  20. Knight describes Bowerman as the Edison for shoes and athletics. There had been no true innovation in outer souls since the Great Depression but Bowerman soon came upon a rubberized and waffle-like sole which changed the industry forever
  21. Blue Ribbon had always dealt honestly with their customers and salesman to the point that when they introduced the first Nike shoe, although the quality was suspect, the salesman believed Blue Ribbon when they said it was worth trying and that they’d improve over time. They got great sales right away and shows the power of dealing honestly with stakeholders
  22. No matter the sport, no matter the endeavor, all out effort toils at people’s hearts. Was referring to Prefontaine in the American championships. The energy for ovation, passion and so forth from the crowd in this race exemplified exactly what Knight stood for and wanted his company to become. “Sports allow others to take part in and feel like they have lived at least a little in the life of others. Sports at its best allow the spirit of the fan to merge with the spirit of the athlete and this is the oneness that all great mystics discuss.”
  23. It became apparent early on that to beat our competitors it was necessary to have the best athletes wearing the Nike swoosh. They got several Blazer basketball players early on as well as college and Olympic athletes. This soon evolved and they got world famous athletes such as Steve Prefontaine and Ilie Nastase and others. It is obvious how much pride Knight takes in his products to the point that he feels like he is living vicariously through his athletes and everyone of their victories is a little bit of a Nike victory as well
  24. Nike was highly levered and had supplier issues for a long time and they soon decided that the best way to solve this issue was to work with the retailers and get a six-month commitment. This would help improve lead time and funding for operations, lowering their liquidity issues
  25. Fear of failure would never be the reason the company went under. They had every expectation to fail but this would not hamper them from acting, deciding, telling the truth or doing whatever was necessary to make Nike as successful as possible
  26. Blue Ribbon really took off once the waffle trainer was made. Another step change came when they introduced new colors and people  began seeing it as not only an exercise shoe but as an everyday shoe as well. Soon after, Blue Ribbon re-incorporated under the Nike name
  27. Everyone on the management team was a reject, a disappointment in some way and they were all trying to solve for it
  28. Rob Strasser was one of the best negotiators because he didn’t care what he said or how he said it, he was totally honest. His negotiation skills were well used when dealing with the professors who came up with the shoe air injection process
  29. They ran into issues with some of their shoe designs but customers forgave them because nobody else was trying anything new and Nike always apologized and did the right thing. Nike soon became a statement more than just a brand
  30. For a long time Knight didn’t believe in advertising as he thought a great product would speak for itself
  31. Knight and the exec team were very reluctant to go public but it soon became inevitable in order to fix their cash flow and leverage issues
  32. When all you see is problems, you’re not seeing clearly
  33. Adidas had the edge for a long time because their size allowed them to offer better deals to their professional athletes. Today, however, the tables have completely turned
  34. Amazing to hear that more than a decade after Nike was started they were one of the most successful and fastest growing sports companies but were close to bankruptcy and had a burnt out and depressed management team
  35. Nike became the first American company to do business with China in the early 1980s and ended up sponsoring the Chinese Olympic team
  36. Phil spends a lot of time talking about his family, Penny and their two sons Matthew and Travis. Matthew died young in a scuba diving accident and Phil recounts his regret of not being a better and more present father
  37. The sweat shop scandal was unjust but Nike used it as impetus to improve their factories and processes. They removed 97% of carcinogens by adapting a water based binding agent and gave it away to their competitors, eventually becoming the gold standard for factories. They also established The Girl Effect to help young women get out of poverty
What I got out of it
  1. Prime example of how a business should be thought about – it was Knight’s calling. He wanted to be a source of good, help third world countries modernize and make athletes even greater. One of the better business books and biographies I’ve read in some time

The Path Between the Seas: The Creation of the Panama Canal by David McCullough

Summary
  1. McCullough’s master story-telling skills are evident through this epic tale of the construction of the Panama Canal
Key Takeaways
  1. Apart from Great Wars, the building of the Panama Canal was the largest, costliest effort attempted anywhere on Earth
  2. A vision of cutting through Central America to connect the Atlantic and Pacific had been around since the 1500s but it wasn’t until the late 1800s that it became feasible. This would not only be a boon to global commerce but help America assert itself as the Western Hemisphere’s superpower
  3. The success of the Panama Railroad in the 1850s showed glimpses for how much demand there was (mostly from the California gold rush and other trade) and paved the way for the canal some 30 years later. A gap found in the mountains and the proof that the sea levels were not too different made the project more realistic. The construction was brutal due to disease, poisonous animals and an impossibly thick jungle and there are estimate that that 6-12,000 died throughout its construction. Nicaragua was a competing pass between the oceans and was originally funded by Cornelius Vanderbilt. Selfridge was the first American to explore Central America for plausible routes and although he failed, determined it must be Panama
  4. The two oceans came closer together at The Gulf of San Blas that at any other point in Central America
  5. The French were the first to take a crack at building the canal and it was Ferdinand de Lesseps who led the effort. De Lesseps had gravitas due to his ability to get the Suez Canal built due to his friendship with the new Viceroy of Egypt. He had no rank, no office, didn’t represent any group, defied financiers and people with technical ability but spurred enthusiasm and belief in the project – an original entrepreneur with no desire for money but wanted to improve the world
  6. Although there were many geographic and technical reasons not to build the canal in panama, de Lesseps had such standing and influence due to success at Suez that he was able to overcome great opposition and get the project passed. The project was estimated to cost $240m and take 12 years to build. The stock issue was a great disaster but didn’t dissuade de Lesseps one bit and was able to raise most of the money from French investors alone. His trip to Panama and healthy return brought massive enthusiasm for the project from the French population. The stock issue for La Compagnie Universelle ended up being the largest in history as the undertaking was to be the most expensive and audacious attempted thus far in human history. It ended up becoming a matter of national pride for France and Panama became synonymous with a fantastic investment in France. De Lesseps success at Suez gave him great influence over the crowd and his building it up blinded people to the immense difficulties that lay ahead
  7. The project turned out to be way more expensive and take way longer than was originally planned so a bond issue had to be made in France. De Lesseps built the hype and got hundreds of thousands of Frenchmen to sell what few possessions they had in order to buy more stock and bond. However, unfortunately, the minimum amount needed to keep the company afloat was not raised and they had to declare bankruptcy. This was one of the world’s largest and most painful financial failures, bringing ruin to hundreds of thousands of common citizens and later brought bankruptcy to France as a whole and toppled the government. Ferdinand’s son, engineer Eiffel, Hertz and many other highly esteemed men behind the Panama Canal were brought to trial and many were financially ruined. The French effort went bankrupt after spending about $285m and losing an estimated 20k lives due to diseases and accidents, financially ruining over 800k French investors. De Lesseps, his son, Eiffel and others were prosecuted and found guilty of misappropriating funds
  8. Teddy Roosevelt became president after William McKinley was assassinated. He truly brought in the 20th century and had mass, nationwide appeal. Teddy had a vision for the US as a global, commanding power and the canal which breached the Atlantic and Pacific was the surest way to get there
  9. Nicaragua seemed like the US’ choice for where to build the canal but Teddy Roosevelt changed it to Panama last minute. Bunau Varilla was a French soldier and engineer who greatly influenced Teddy’s decision to build in Panama instead. The decision was passed in the Senate in 1903 and was heavily influenced by the engineer’s insistence on Panama rather than Nicaragua. America was going to buy the land from Colombia but thought they were trying to screw the US so they instead planted revolutionaries in Panama and let them know that they’d have the backing of the US if they were to overthrow the Colombians who were currently in charge of Panama. Panama soon declared independence and the US recognized them as a nation and gained the rights to build and indefinitely administer the Panama Canal Zone and its defenses
  10. Teddy Roosevelt changed the treaty with Panama so that the US would act as the sovereign and would hold the zone in perpetuity rather than leasing it for 100 years. Bunau Varilla signed the treaty in 1903 along with Hay without truly understanding the changes he had agreed to. He thought the US would cease protecting Panama if they did not immediately ratify but Teddy was so set on Panama that this was unlikely
  11. Malaria and yellow fever killed so many people that they made a concerted effort to figure out how to stop or at least stem the diseases. They made slow but considerable progress and determined that mosquitoes were the culprits and went through great lengths to limit the amount of mosquitoes and their access to sick patients. Gorgas was head of sanitation and was vital in this effort and after two years nearly eliminated the mosquito-spread tropical diseases
  12. The Americans eventually came to understand better than the French that the construction of the canal was essentially a railroad problem (to transport the dirt away from the site). They hired and promoted men with a lot of railroad experience. John Frank Stevens was a self taught engineer who had built the Great Northern Railroad with James J. Hill. He took over from Wallace and bypassed much of the stifling bureaucracy by going directly to Teddy with requests, drastically speeding up the process
  13. Roosevelt visited Panama in 1906 to see the progress and became the first president to leave America while in office
  14. George Washington Goethals was named chief engineer by Teddy in 1907 in order to oversee the administration and supervision of the construction after Stevens stepped down. McCullough argues that Goethals should receive the majority of the credit for the successful construction of the Panama Canal – ahead of schedule, below budget and with no bribery or kickbacks
  15. The canal was an engineering feat for the ages. The locks were the largest by far, taller than all but a handful of buildings in modern day New York. The scale of materials used, especially steel and concrete is pretty much unsurpassed even today. The scale of everything is hard to even imagine. They utilized the flow of water to power generators, allowing the locks to power themselves. Though the steel and cement manufacturing was vital, General Electric played the most important role in building and installing all the electrical equipment and power generators
  16. The Panama Canal was the embodiment of the power of the United States at this time and showed how far the industrial revolution had taken it
  17. The only issue with the canal have been consistent landslides but given the scale and grandeur, this is a minimal problem. It worked almost perfectly from day 1
What I got out of it
  1. I didn’t appreciate the scale and effort that went into building the Panama Canal. The war on mosquitoes and tropical diseases was also interesting to learn about. Geopolitical relations and events in Central America and how this effort affected them, how expertly the canal was built so that even today it works pretty much flawlessly, how big of an impact the initial failure had on the French economy and how much Teddy Roosevelt championed this effort

What Technology Wants by Kevin Kelly

Summary
  1. Kelly takes the unusual view of describing technology as a natural system, much like biology. Technology, like living organisms, has “wants” and can transform and evolve in ways to help it achieve its goals.
Key Takeaways
  1. Kevin Kelly has long lived a very minimal and simplistic lifestyle, choosing to have very few possessions and as little technology as possible but has become known as one of the biggest proponents of certain technology. He has no cell phone, laptop and mostly bikes rather than drives. He is the founder of Wired magazine and has spent a lot of time living with the Amish
  2. As technology advances, it begins mimicking organism systems and goes through a process of disembodiment and these two are only speeding up as technology is getting more advanced. This leads Kelly to believe that technology is an extension of life and perhaps even culture. However, culture may even be limiting as the inventions of tools spurs new tools, creating a self perpetuating system.
  3. Kelly has invented a new word which is not as limiting – the technium. Technium includes art, social institutions, culture and intellectual creations of all types as well as the self perpetuating and advancing nature of technology. Kelly believes that after thousands of years, technology may be getting to the point of becoming like an autonomous organism that we don’t fully control. Like any deeply interconnected and complex system, it will self organize and self perpetuate, following many of the same rules our minds do
  4. Argues that human evolution was sped up by tools. The better the tools, the more food we could get which made us stronger, healthier, live longer and better self perpetuate. Our genes co-evolve with our inventions and in many ways we have domesticated ourselves. Shelter and technology should be thought of as extensions of the organism. We shape our environment and then our environment shapes us
  5. Technology differs from biology in that it rarely if ever truly goes extinct. Innovations and breakthroughs tend to live on and evolve into new technology. Technology can be thought of as the 7th kingdom of life
  6. Coined “exatropy” to be negative entropy or an increase in order. It resembles information and self organization. Information is a signal which makes a difference to how we think, act or behave
  7. Science and progress require a certain minimal threshold of leisure and a growing population. As more people buy the new technology it provides the funds to push even further
  8. Convergence causes technological innovations to happen simultaneously or at least nearly so. The same is found in biology with animals who have evolved similar functions but have done so independently (echolocation, bipedalism, eyes)
  9. The technium faces many of the same constraints as biological evolution, such as limited matter and energy
  10. Argues against the traditionally believed random path of evolution and for the convergent, directional nature of evolution. The universe seems to be geared towards life and complicated constructs like our minds are “improbable inevitabilities.” Homo sapiens is a tendency, not an entity. Humanity is a process, always was and always will be. Similarly, the technium is a tendency, not an entity and in continuous flux and evolution. Much like biology, the technium converges towards certain innovations and over time becomes self-organizing and gains a certain level of autonomy and even some wants
  11. Technological inevitability is seen in the seemingly endless parallel timing of inventions
  12. Entire new economy is built on technologies which require little energy and scale down well – photons, bits, frequencies. As the technology keeps getting smaller, they get increasingly closer to immaterial. Like Moore’s Law, many of these improve at around 50% per year
  13. The technium is shaped by what technology wants, by historical inventions and by people’s choices and free will
  14. When we reject technology, we reject a part of ourselves. We trust nature but hope in technology. By following what technology wants, we can better anticipate and capture its full potential
  15. Technological choices which begin as optional can slowly over time become mandatory as our reliance on the technology increases
  16. The Amish tend to be about 50 years behind technologically. They don’t want to stop progress, simply slow it down and do so by being very selective when deciding what to adopt. This time lag gives them the ability to carefully weigh the pros and cons of the new tech
  17. Selective poverty, minimalism and as little electricity as possible is an experiment everyone should undertake at least once in their life. It simplifies so much and leaves more time for leisure, building relationships and pursuing endeavors you enjoy
  18. Very few great technologies start out great or have a clear path to greatness. Technology does not know what it wants to be once it has “grown up”
  19. All technology wants to be ubiquitous but total saturation is not healthy or wanted as it leads to excessive traffic, too much pollution, etc
  20. The power of the technium lies in creating new objects which give us new choices and ultimately more freedom
  21. Some estimate that nearly 50% of the world’s organisms are parasitic and Kelly argues that this type of mutualistic relationship is increasingly the case between humans and technology. However, technology doesn’t want to simply be utilitarian, it wants to be beautiful, to become art
  22. Technology’s job is to create billions of “minds” to compute anything and everything we might need from it. Information is the fastest growing portion of the technium
  23. The technium will continue being selfish in its desire for self perpetuation but it also desires to help people understand, compute and compile information to make life easier. There are some games you play to win and some where you play to keep on playing, an infinite game. The best tactic here is to make choices which open up more choices in the future
  24. Technium’s wants are that of life and it helps amplify the thoughts of union and connection and to see reality- an infinite game worth playing. That is what technology wants
What I got out of it
  1. Better understanding what Kelly means by “technium” and how technology is coming to resemble biological, natural systems. The parallel timing of inventions across history and geographies was fascinating to learn more about – perhaps indicating the inevitability of certain technological innovations

Matchmakers: The New Economies of Multi-Sided Platforms by David Evans and Richard Schmalensee

Summary
  1. Matchmakers create and release value by connecting different groups and reducing transactional and other friction costs. Matchmakers are also known as multi-sided platforms and are becoming increasingly popular and profitable due to advances in technology
Key Takeaways
  1. Matchmakers operate under a different set of economic rules as their raw materials aren’t commodities but the different groups they bring together and the access they give to other groups
  2. OpenTable pursued a faulty strategy early on by getting a handful of restaurants in many cities. They soon shifted to a more critical mass strategy by focusing on getting as many restaurants as possible in four cities. This soon fueled the flywheel for both restaurants and customers. Charge restaurants a monthly fee, a cut of each reservation, make it free for diners and even incentivize with small rewards. This free usage for diners is strange according to traditional rules of economics but works because this solves the chicken and the egg problem – restaurants will be compelled to join if there are enough diners on the platform. The new business model takes into account that demand from producers and consumers are interdependent.
  3. The economic key lies in attracting at least two or more different types of customers and facilitating valuable interactions. This business model has existed for centuries but was only recently noticed – night clubs facilitate interactions between men and women via a physical space, music and lighting; shopping malls connect shoppers and retailers. A tell tale sign is if something seems too good to be true for one side of the market is when a great service is free – the business is monetizing your attention, data or something else so you can access their content or other customers/producers
  4. The great network effects mistake was that it assumed multi sided platforms followed the same rules as one sided network effect companies where there was only one type of customer when in fact there are many. Multi sided platforms have indirect network effects where an additional diner benefits restaurants rather than other diners. Build share first and fast doesn’t apply as much to multi sided platforms and in fact most of the times the first movers die
  5. The same person can play different roles at different times like when someone uploads a video to YouTube and then watches videos
  6. Important to recognize that indirect network effects also work negatively and therefore dominance can dissolve relatively quickly. Important to not only have a lot of customers on both sides but also the right customers whom the other side wants to interact with (a lot of restaurants and also the right restaurants)
  7. Multi sided platforms also can charge below cost where traditional businesses can’t because must balance interests of all sides and demand for each group depends on the demand from the other side. It may or not make sense to subsidize one side like OpenTable does with diners. It often does if the platform removes so much friction that one side is willing to pay more to get the other side on board
  8. Matchmakers have taken off recently because the cost of connecting customers has decreased significantly and the reach is larger than ever. This trend will only continue meaning matchmakers will likely play an increasingly important role
  9. YouTube gained critical mass by encouraging uploads which encouraged views which encouraged further uploads. It took them only a little over a year to have more than 100m videos and people spent more time on their site than any other. They made it free for both publishers and viewers with the hope that if they did reach critical mass, they could begin charging advertisers
  10. Platforms have to take into account the relative pricing on all sides of the platform, how much to charge and how much to earn on each side relative to the other side. One side tends to be subsidized and figuring out the price structure is crucial. They can often make more overall profit by actually losing money on one side. Price sensitivity, whether to charge access or usage fees or both are important to consider. Charge those who are least price sensitive
  11. Key questions
    1. What’s the friction, how big is it and who benefits from solving it?
    2. Does the platform reduce this friction, balance the interests of all sides and do it better than other entrants?
    3. How hard is the admission problem and does the entrepreneur have a good plan for achieving critical mass?
    4. Are the prices for admission and growth high enough for the platform to make money?
    5. How is the matchmaker going to work with others in the broader ecosystem, does it face related risks and has it dealt with it?
    6. Is the entrepreneur ready to shift the design and admission quickly to respond to market reactions?
    7. Who’s participating in the platform and how does the platform create value for the users
    8. How is the platform designed to promote interactions among participants?
    9. How does the platform use prices to encourage participation? Does it have rules and standards? Is anyone subsidized? How do these affect the ability of the platform to create value?
    10. How did or will it solve the chicken and egg problem?
  12. New, turbo charged matchmakers
    1. Matchmakers have been around for hundreds if not thousands of years
    2. A lot of what the new market darlings do is old but use technology to improve in things matchmakers have done in prior years
    3. What is pioneering is that modern technologies have turbocharged the multi sided platform model
    4. History of matchmakers suggests that today’s sharing economy matchmakers will get disrupted at some point
    5. Turbocharged matchmakers will transform industries. Will change it over decades but in dense, clustered periods of time
What I got out of it
  1. The rationale behind who to subsidize and who to charge and how that can help unlock and create even more supply and demand. Turning linear pipelines into platforms means that people who used to be only consumers can now be consumers and producers (people can stay in an Airbnb and also rent out their own apartment – consumer and producer)

Zillow Talk: The New Rules of Real Estate by Spencer Rascoff and Stan Humphries

Summary
  1. Spencer Rascoff, CEO of Zillow, and Stan Humphries, Chief Economist, detail their findings based on the immense amount of data they have been able to aggregate and analyze through Zillow’s platform. Zillow is aiming to improve and promote transparency to help consumers make choices based on information, not superstitions or hunches
Key Takeaways
  1. Unlike what most people think, when a home is for sale is not black and white. Many people are willing to sell their home even if it is not on the market if the price is right
  2. Spencer Rascoff started off wanting to disintermediate the travel industry and built his first company, Hotwire to do so. After Hotwire was acquired by IAC InterActiveCorp, his next dream was to bring transparency to the real estate market. Today, Zillow is the largest real estate site on the Web and on mobile, with 90m unique users visiting every month, has 110m homes, including Zestimates and hundreds of thousands of real estate agent reviews. Besides massive amounts of data and users, Zillow adds value by analyzing this data and making it available to all people at all times to be able to make more informed decisions. Zillow can estimate a home’s value instantaneously, using tools more familiar in genomics image compression and biochemistry – moving from a 13.6% margin of error to a less than 7% margin, while increasing Zestimate coverage from 43m homes to more than 100m. Uses simple models, hyper-local information, continuous iteration and refinement to keep improving the Zestimates
  3. The American real estate market is one of the largest in the world at over $25.7T and for the most part of our history, they argue that real estate has been a great long-term investment with less volatility than stocks
  4. The concept of the Breakeven Horizon is important to know – how long you must live in your current home to make buying worth it
  5. Real estate mantra of location, location, location should be changed to future location, future location, future location
    1. Easiest way to find a hot spot is to look at a neighborhood that has already taken off and trying to spot patterns and similarities
    2. Adjacent areas to city center grow quickly in value due to what they term a halo effect
    3. Better real estate strategy is to buy home outside of the premier neighborhoods
    4. Gentrification (new wealth kicking out current, less wealthy residents) is more powerful than the halo effect. Neighborhoods that are likely to gentrify if they have older homes, low home ownership rates and some access to more popular neighborhoods
    5. Starbucks is a great leading indicator of rising home appreciation
  6. The greatest indicator for a neighborhood that would one day strongly appreciate in value was the age of its housing stock. The older the average home is, the more likely a given neighborhood will see strong appreciation
  7. The conventional wisdom of “buying the worst house in the best neighborhood” is actually bad advice. Instead, buy the worst house in the hottest neighborhood
    1. Buy a house not in the bottom 10% of the nicest neighborhood you can afford
  8. Great school districts boost property values and high property values boosts school quality – creating a virtuous circle
  9. Do your homework to see if Fixed Rate Mortgage or Adjustable Risk Mortgage is best for you – steady or falling interest rates makes ARM more likely the better choice
  10. Foreclosure discount is tricky because it doesn’t take worse condition of these homes into account and they are often smaller too. True discount, when comparing apples to apples, is really only about 7.7%
  11. Inspectors – reviews are a major differentiator, try before you buy (ask to see old homes they’ve bought or sold), first impressions matter and attend the inspection in person
  12. Renovating bathroom, mid-range windows adds the most value to homes where kitchen and basement renovations tend to lose money
  13. Adjectives in listing is very important – potential, quaint and unique detract a lot of value but words like granite, landscaped, remodel, stainless add value
    1. Be honest, flaunt the house’s attributes and add enough color and descriptions to the listing
  14. Homes listed during the last 2 weeks of March tend to sell faster and for more money. However, always list after the first major influx of new listings of the year (bringing your listing to the top when people start searching more in early summer)
  15. Listing at too high a premium actually lowers the eventual sale price, on average
    1. If overprice, better to quickly revert price down to market value
  16. Pricing using the “magical number 9” can lead to a higher sale price. $149,000 or $149,900 for example tend to sell for more than homes listed at $150,000
  17. Infrequent, emotional expensive decisions tend to make people nervous and therefore rely on experts. This is especially true for home decisions which is why real estate agents are likely to thrive even though service providers in different sectors are disappearing
  18. Right agent – experienced (10+ years), women tend to be slightly better, rely on their Zillow rating
  19. Street maxims – a street with a name sells for more on average than numbered streets, Lake St. is better than Main St. (less common), suffixes matter (Dr. vs. Pl. vs. Ct.)
  20. The “sand states” (California, Arizona, Utah and Florida) tend to be more volatile because of the highly flexible work force found in those states
  21. More walkable areas offer higher returns on average and are more resilient to economic downturns – see Walk Score ratings
  22. Richer neighborhoods have 60% higher returns on average than poorer ones
  23. Mortgage Interest Deduction is essentially a $100b subsidy which mainly benefits the wealthy
  24. Government housing subsidies tend to hurt low-income tenants in the long-run more than help them
  25. Coastal areas always command a premium and appreciate faster although they can be devastated by hurricanes and the like. The risk tends not to be accounted for in the price because the government has shown that it will bail people out after disasters
  26. More than half of America’s homes (50m) have been updated on Zillow but what makes Zillow’s database unique however is more the frequency with which it’s accessed and updated than its sheer size. The differentiating factor is that Zillow has a database not just of all homes, but of all home values – going back for decades. By adding the dimension of time, Zillow can analyze the data for developments that have powerful implications about how the housing market is performing today and how it is likely to perform in the future.
What I got out of it
  1. The age of organizing data to bring transparency of pricing, trends and decision making has come to real estate and it’ll be fascinating to see how their platform and forecasts perform moving forward

The JD.com Story by Li Zhigang

Summary
  1. The story of Richard Liu and his founding of one of the world’s largest ecommerce sites, JD.com
Key Takeaways
  1. Richard Liu Qiangdong is a “philosopher CEO” and has instilled many of his values and beliefs into the core of JD. He has been extremely transparent and high-integrity in all business dealings from day one, is super ambitious, always operates in good faith, seeks to be a mentor. Low profits with high turnover and focus on scale with a steady and ever-growing stream of customers. JD’s concept has always been simple – provide better services to customers at lower prices and they’ll return. Over the years, one of JD’s biggest contributions has been to build confidence and trust in ecommerce. His tracking of every sale in order to ensure quality and authenticity also means he has been paying his fair share of taxes too, which was quite unusual in China at the time
    1. Easier to know others than to know oneself
    2. Liu was always obsessive about two things – user experience and integrity. The core value of JD is putting the customer first
      1. His fight against corruption and for integrity borders on paranoid
    3. “If the founder of a company is always right and never wrong, then the company is doomed. I am not God. It’s impossible for me to be right all the time  on everything. I have to subject myself to the collective intelligence.”
    4. Ultimate goal for JD is to offer a wider selection than anyone, at cheaper prices, delivering it faster, with transparent pricing and authentic, quality goods (no fakes!). Looking to become Amazon + UPS
    5. Liu worries about smooth running of systems, rigorous organization, great customer service
    6. Liu is energized and focused by the vision he has for JD – bringing transparent prices to every part of China and later, the world. Many people in rural cities currently have no means of knowing they are getting ripped off but JD’s ever-expanding reach and selection will change this. JD has helped move China to high-efficiency retailing and improve information and price transparency. Rural farmers across China have been getting screwed for some time because they had no access to see the price asymmetries and on top of that often got fake or low quality seeds, fertilizer and other goods
    7. Liu has the rare ability to make difficult decisions he believes in even if his investors and employees doubt him – carrying a full catalog of goods, moving into books, building out the logistics system. The logistics system was a $1b in 2007 which, if it hadn’t worked out, would have bankrupted the company but Liu believed it was necessary in order to solve the problem of slow, late, damaged shipment of goods and to win over customers for the long-term
      1. Logistics is the life-blood of retail. This and the most efficient supply chain are JD’s core advantage – nationwide reach and inter city delivery made online to offline (O2O) another growth path for the company. JD’s advantage is in the back end – its organization of the supply of goods, supply chain management, logistics and delivery
    8. Liu decided to cater to his deliverymen by paying higher than average wages and treating them very well. These deliverymen are blue collar workers who are often mistreated but Liu realized they were the largest source of face to face interactions with customers and could make or break the business depending on how they interacted with customers. Liu spends one day per year doing deliveries to get a first hand feel for the process, to get the deliverymen’s feedback and show he’s willing to get his hands dirty
    9. Has the rare ability of being very visionary, stubborn, focused and hard on people but also willing to change his mind if wrong and reward people for their hard work. The fact that he shares wins and responsibility engenders amazing trust and loyalty amongst his employees
    10. Liu sees next steps to be made in Brazil, India and then developed markets. International expansion by 2023
    11. All about the team – the team always comes first. Culture (goal, vision, values), capacity and integrity above all
    12. Only 2 KPIs that really matter  -cost and efficiency – not pursuit of profits but of lower costs and increased operating efficiency
      1. Product (availability/quality), price, service (pre-sale, sale and post-sale)
    13. Team spirit – willing to sacrifice self to adapt to others
    14. Can’t reduce waste by treating employees poorly
    15. True core competitiveness is simultaneous speed and price
    16. Liu believes the next 10 years will be the golden age of retail and consumption in China
    17. Dream to create the national enterprise of China
  2. 3 major decisions in JD’s history so far – transition to ecommerce from a physical store front, deciding to start carrying a full category catalog rather than just 3C, building out its own logistics system
  3. “Liu realized that “all innovation modes of the last ten or 20 years are related to transaction cost reduction and efficiency improvement. Only by lowering transaction costs or by making transactions more efficient can the new mode survive and develop. If the innovation mode fails to do so, then the innovation is meaningless.”
  4. The crux of an efficient retail business comes down to understanding what the consumer needs and reducing inventory costs by making good predictions of future sales.
  5. Focus and desire is to take JD.com out of just China and go global – they are already expanding into Russia and Indonesia
  6. The outbreak of SARS in China forced JD to go from offline to online and the trust and reputation Liu had built up in his business gave customers the confidence to shop from him online without seeing the physical goods before buying
  7. JD is an outcome of Liu’s philosophy: First, business was made up of chains. One could not rely on intuition but had to use sophisticated analyses to make business judgments. Every chain was linked with another. Second, the most basic tenet of doing business was quite simple: create value and gain profits. Profit was the curve, but value was the baseline, and it was constant. JD’s logistics expansion was based on value. Providing shopping platforms, improving logistics to ensure better consumer experiences, reducing costs, and improving turnover rates all created value.”
  8. Early on in JD’s life, there was a big drinking culture which Liu facilitated. It was a typical work hard, play hard mentality. “You had to have guts to drink like a fish with the others even if a glass of beer was enough to knock you out. Second, it was about speaking up.”
  9. Liu didn’t care how things got done. he focused on imparting the details, and genuinely wanted to cultivate saplings into big trees
  10. Richly rewarded those who performed but satisfaction and meaning must come from a deeper motivation
  11. Early on Liu was blown away by multi-generation European businesses and this helped drive home the long-term horizon and mindset he has today. In this quest to be a century old enterprise, one can’t simply look to maximize profits but must provide value by lowering costs and improving efficiencies.
  12. JD’s first outside capital was from Today Capital (Xu Xin). They invested $10m and gave Liu the space to pursue scale over profits
  13. Advertising is simply about earning tomorrow’s money
  14. Looking to solve ecommerce’s 3 problems – price, convenience, guaranteed quality
  15. It is unsustainable to acquire sales – aim to win customer’s over with greater value proposition
  16. Lei Zhang of Hillhouse Capital said he would only invest if the founders maintained control
  17. Liu always believed in operating with the highest transparency so early on, before he ever had to, he hired PwC to conduct an audit on his business
  18. JD’s slogan during the early days was “Fighting! Fighting!”
  19. Don’t skimp on training! 70% of promotions are internal due in large part to great internal training through JD University
  20. Corporate culture is the root of every company – the result of cultivation and not regulation. Endeavor, values, desire, integrity, gratitude and persistence are some cornerstone values of JD
  21. Liu always built his ideas into the system and passed down ideas through it. Less reliance on management and more on aligning incentives
  22. “Three Knives” – cut prices, cut costs, cut ideas that wouldn’t improve customer experience
  23. Likes being in competition and trying to overthrow the leader – “the team would wither without a fight”
  24. Lei Zhang said Liu has the magical ability to absorb knowledge, ideas and talents
  25. In a fast growing company, the ability to learn quickly is far more valuable than experience
  26. Liu decided to go to Columbia business school and step away from the business for a little bit in order to see how his “machine” would work without his complete focus. This gave others the chance to grow, learn and prove themselves and forced Liu to delegate and see if any cracks would appear
    1. Managing JD by relying on the system rather than micromanaging.
    2. “Deal with problems from a systemic, generalized point of view. Don’t tell me about the solution to an individual incident. What I want is the broad, systemic solution.”
  27. Began incorporating collaboration and big picture thinking into people’s bonuses in order to incentivize that kind of behavior and thinking
  28. Learned to wait to express his opinion until all others had spoken. This was difficult for a man who is so ambitious and has so many ideas but he knew that he would smother many great ideas if he didn’t learn to do this
  29. The dangers of large organizations – “What threatens a company’s ability to grow is not necessarily the competition, but the organization itself. Could the factors that contributed to past success be carried forward? Could tens of thousands of people continue to identify with the original organizing principles? If a company failed, it was most often because of internal factors rather than external ones.”
  30. Alibaba’s philosophy is to make business easier whereas JD’s is to make life easier
  31. An organization’s value is reflected in the things it can do that others can’t
  32. 4 pearls of the Internet – search engine, social network, combination of hardware and software, enterprise B2C retail platform which directly connected production and consumption
  33. The essence of a market economy lies not in control but in making the rules (systems thinking!)
  34. Bought Tencent’s ecommerce platform in 2014 for 15% of JD. This gives JD some of the most precious online real estate in the world within Tencent’s WeChat and QQ platforms. “This is a rare win-win in the history of the Internet in China.” – deal facilitated by Lei Zhang of Hillhouse
    1. Massive audience, mobile, targeted ads, new users
  35. 3 priority areas in 2014 – fresh food, cross border ecommerce and O2O
  36. JD Finance launched in 2013 to provide loans to suppliers and later was a platform for crowd-funding
What I got out of it
  1. Richard’s story is inspiring as his honesty and desire to do good for the poor by extending the availability of basic goods to rural areas

Alibaba: The House That Jack Ma Built by Duncan Clark

Summary
  1. Duncan Clark describes the history of Jack Ma, his personality, how and why he founded Alibaba (after a couple failed start-up attempts), his vision for the future and more
Key Takeaways
  1. Jack founded Aibaba in Hangzhou in 1999
  2. Alibaba looks to exploit the inefficiencies created by a government who exerts as much control as China does without pissing them off
  3. Alibaba’s strengths lie in ecommerce, logistics and finance
  4. Consumer discretionary spending is only about one third of GDP versus close to two thirds of GDP in the US. Latent spending power and high savings rates and lack of things to spend money on are the main causes for this discrepancy
  5. Alibaba is even China’s largest retailer
  6. Taobao is like a bazaar with 9m merchants and alibaba has no inventory and TMall is like a glitzy shopping mall. Major brands like Amazon Costco apple Zara and Moore are all on T-Mall
  7. About 10% of retail spending in China is done online compared to 7% in the US. China has been able to leap frog the brick-and-mortar retail business model which is much less efficient and expensive than e-commerce
  8. Nature abhors a vacuum and in China the Internet is filling in for eight created by an official state owned enterprises and government regulations
  9. Alibaba accounts for 40% of grocery sales in China and even does next day delivery of refrigerated items. It stands at only 10% in the US
  10. The rate of e-commerce packages is growing like crazy and has years of high-growth ahead with less than one package per customer per month being delivered on average today
  11.  JD.com it’s taking a different approach than Alibaba in that it is investing directly in logistics and becoming acid heavy versus acid light. JD wants to control the process from order to delivery end to end and I think a good analogy is Apple and other closed and companies that want to control quality throughout
  12. Alibaba‘s finance edge comes from Ali pay which is Alibaba is equivalent of PayPal  Ali pay handles more than $750 billion every year. Always pay is no longer own by Alibaba but is controlled by jack and has become the defect of method of transactions for an increasingly digital China. Alibaba can also serve as a savings account and often gives better rates than the banks. Because Alibaba had so much data on its customers it can better underwrite the credit risk of people who invest and pay through their platforms
  13. Jack is it your typical corporate titan and is quite humble and talks his intellect and ability down often. He said that the most influential role model in his life was Forrest Gump
  14. Jack’s presentation and oratorical skills are superb mainly because he focuses on messages he is deeply fluid in and suddenly changes his emphasis or message depending on the crowd and their expectations. Jack is quite funny and empathetic and the nature of his speeches tend to reach a broader audience due to his fluent English and Mandarin
  15. Jack’s mantra his customers first employee second and shareholders third. Another popular “often heard from Jack is 102 years with the point of trying to survive through out three different centuries
  16. Corruption and counterfeit goods are some of Alibaba’s major obstacles but they are taking certain precautions to begin limiting the amount
  17. When Jack was a boy he would relish the opportunity to practice his English often waking up before dawn riding his bike for 40 minutes to the nearest big hotel just to talk to English speaking tourists. Jack for friended on Australian family who he visited one day and on this visit he saw that what he had been taught that China was the richest country on earth was in fact falls and this taught him that he had to think for himself make his own decisions and use his brain to truly determine what was true and what he believed in
  18. Jack twice failed the college entrance exam and eventually on his third time got a good enough score to go to a fourth grade university in his hometown. Today he speaks of these failures as a badge of honor
  19. After university Jack became an English teacher but soon started his first company called hope which helped local companies find foreign customers. Jack has the uncanny ability to sell his vision and get people excited and to buy in completely
  20. Wong Joe were Alibaba is headquartered has been a prime an important trading hub for over 1000 years connecting the northern and southern China
  21. Jack was first exposed to computers and the Internet in the mid 90s when he travel to the US. From this exposure he started china pages which was the Chinese equivalent of yellow pages. China pages failed after a couple years and from the adventure Jack went on to work for the government for sometime before founding Alibaba
  22. Alibaba was chosen as the name of his company because it is a universal name that everyone can pronounce and most people know the story behind Ali Baba and the 40 thieves. This has saved a lot of money on marketing and advertising as the image of open Sesame and everything else that comes with the name is tied in to most people’s memories already
  23. Jack decided to distance himself from other Chinese portals such as Sina so who and that is by focusing on shrimp or small businesses
  24. Alibaba got first major investment from Goldman Sachs – $5m for 50%. A few weeks later soft bank invested $20m for 30%
  25. Jack decided to start hiring people who were a notch below the top of the class because he found they were better at handling adversity than the people at the very top of the class
  26. Today is brutal. Tomorrow is more brutal. But the day after that is beautiful. However, most people die tomorrow night
  27. The bursting of the Internet bubble was actually good for alibaba as this meant their competitors would not be receiving money and they had a lot in the bank from soft bank
  28. Author makes an interesting connection between the 2002 SARS outbreak and a massive ramp up in broadband usage, texting and increased investor appetite in china tech
  29. Taobao was alibaba’s response to eBay and was able to fend off the global powerhouse by better understanding the local market – free registration, busier home pages, free listings, ability to negotiate, online payment with Alipay, complacency and arrogance
  30. If you simply use money to solve problems, there’d be no need for businessmen. Businessmen are able to solve problems with few resources and leverage them to great benefit. eBay simply tried throwing money at china to regain their dominance and at this point Jack knew he had them. They first didn’t treat them like a rival at all and then took them too seriously. They showed their hand and didn’t change strategies at all
  31. There is a lot of controversy over the transfer of and financial to Jack’s personal account where he had total control of the company. Defenders say that without doing this day would never have gained financial approval from the Chinese government but other say this is not the case
  32. Shortly after the IPO Alibaba I got into some controversy what the government over baked goods which still is lingering over the company today
  33. Alibaba is beginning to expand into cloud computing, healthcare, entertainment and other markets where retail is inefficient and ecommerce under-penetrated
What I got out of it
  1. Does an excellent job providing some history of Jack and the company as well as some of the cultural differences between Chinese and American entrepreneurs and their relationship with their respective governments. Jack’s vision, persistence and charm were all really interesting and inspiring to read about

On Bruce Lee

I spent a couple months reading deliberately on Bruce Lee and have attempted to make a distilled “teacher’s reference guide” or cheat sheet which (hopefully) describes the man, his philosophy and contributions to acting and the martial arts in a clear, effective and concise manner. His commitment to honest self-expression, continuous improvement and deep, independent and multi-disciplinary thinking is amazing to me and I hope this comes across!

On Bruce Lee

*This is clearly my amateur attempt which I’m sure has many points that experts would refute or disapprove of.  I will continue to iterate, add to and improve this document over time but hope the main message is well received.

Tao of Jeet Kune Do by Bruce Lee

Summary
  1. “An organic collection of writings that are meant to convey the essence of Bruce Lee’s art of jeet kune do…To understand JKD, one ought to throw away all ideals, patterns, styles; in fact, he should throw away even the concepts of what is or isn’t ideal in JKD.”
Key Takeaways
  1. Personal evolution is the ultimate message of the Tao. The Tao represents an individual’s pursuit of martial arts for self-realization. There is nothing more powerful than that for human development and martial arts excellence
  2. The consciousness of self is the greatest hindrance to the proper execution of all physical movement
  3. Art reaches its greatest peak when devoid of self-consciousness. Freedom discovers man the moment he loses concern over what impression he is making or about to make
  4. The perfect way is only difficult for those who pick and choose. Do not like, do not dislike; all will then be clear. Make a hairbreadth difference and heaven and earth are set apart; if you want the truth to stand clear before you, never be for or against. The struggle between “for” and “against” is the mind’s worst disease
  5. How can one respond to the totality with a partial, fragmentary pattern?
  6. To fit in with an opponent one needs direct perception. There is no direct perception where there is a resistance, a “this is the only way” attitude
  7. The Path to Truth – seeking after truth, awareness of truth (and its existence), perception of truth (its substance and direction), understanding of truth, experiencing of truth, mastering of truth, forgetting truth, forgetting the carrier of truth, return to the primal source where truth has its roots, repose in the nothing
  8. When there is freedom from mechanical conditioning, there is simplicity. Life is a relationship to the whole.
  9. Relationship is understanding. It is a process of self-revelation. Relationship is the mirror in which you discover yourself – to be is to be related
  10. This does not mean to do nothing at all, but only to have no deliberate mind in whatever one does. Do not have a mind that selects or rejects. To be without deliberate mind is to hang no thoughts
  11. Acceptance, denial and conviction prevent understanding. Let your mind move together with another’s in understanding with sensitivity. Then, there is a possibility of real communication. To understand one another, there must be a state of choiceless awareness where there is no sense of comparison or condemnation, no waiting for a further development of discussion in order to agree or disagree. Above all, don’t start from a conclusion.
  12. The physically bound go for puffing and straining and miss the delicate way; the intellectually bound go for idealism and lack efficiency and actually seeing into realities
  13. Better to discover causes of ignorance than seek knowledge
  14. Transcend dualistic comprehension of a situation
  15. The knowledge and skill you have achieved are meant to be “forgotten” so you can float comfortably in emptiness, without obstruction. Learning is important but do not become its slave. Above all, do not harbor anything external and superfluous – the mind is primary. Any technique, however worthy and desirable, becomes a disease when the mind is obsessed with it
  16. Fear comes from uncertainty. When we are absolutely certain, whether of our worth or our worthlessness, we are almost impervious to fear. Thus, a feeling of utter unworthiness can be a source of courage. Everything seems possible when we are absolutely helpless or absolutely powerful – and both states stimulate our gullibility.
  17. Pride is a sense of worth derived from something that is not organically part of us, while self-esteem is derived from the potentialities and achievements of self. We are proud when we identify ourselves with an imaginary self, a leader, a holy cause, a collective body or possessions. There is fear and intolerance in pride; it is sensitive and uncompromising. The less promise and potentiality in the self, the more imperative is the need for pride. The core of pride is self-rejection. It is true, however, that when pride releases energies and serves as a spur to achievement, it can lead to a reconciliation with the self and the attainment of genuine self-esteem.
  18. We are told that talent creates its own opportunities. Yet, it sometimes seems that intense desire creates not only its own opportunities, but its own talents as well.
What I got out of it
  1. A great, in depth view of Bruce Lee’s philosophy of JKD. The majority of the book is a detailed look on the techniques, routines, training regimens and more that Bruce followed and taught. That part wasn’t too useful to me but you can see how Bruce applied his principles of JKD to all he did