A year in books: my 10 best reads of 2018
2018 has been a highly prolific year in term of reading for me — both qualitatively and quantitatively.
Although my reading topics are eclectic, I have an appetite for intellectually challenging books. I guess it’s a way for me to get the most out of my spongy, want-to-learn-everything phase of life.
I’m a fervent believer in the positive compound effect of reading. Compound effect is this concept from which you reap huge rewards from small positives actions, choices, you take consistently over time. In other words, that can be associated with the power of good habits.
Small, Smart Choices + Consistency + Time = Radical Difference
— Darren Hardy, The Compound Effect
Although there is still a long list of good habits I need to work on, I believe that I can very welcome the fact that reading is already fully integrated into my daily routine.
I also like the Drift team approach toward reading in their recent article. They believe that we don’t need to reinvent the wheel for every business question we have, as they all have been answered in books.
I’ll finish this short introduction with this passage from Ray Dalio that can certainly be one of my mantras.
It seems to me that if you look back on yourself a year ago and aren’t shocked by how stupid you were, you haven’t learned much.
— Ray Dalio, Principles: Life and Work
Find below what I consider my top 10 reads of the year.
1. Principles: Life and Work — Ray Dalio
2. Thinking, Fast and Slow — Daniel Kahneman
3. First, Break All the Rules: What the World’s Greatest Managers Do Differently — Gallup
4. Powerful: Building a Culture of Freedom and Responsibility — Patty McCord
5. WTF?: What’s the Future and Why It’s Up to Us — Tim O’Reilly
6. Hedge: A Greater Safety Net for the Entrepreneurial Age — Nicolas Colin
7. Capitalism without Capital: The Rise of the Intangible Economy — Jonathan Haskel, Stian Westlake
8. Algorithms to Live By: The Computer Science of Human Decisions — Brian Christian, Tom Griffiths
10. Bad Blood: Secrets and Lies in a Silicon Valley Startup — John Carreyrou
1. Principles: Life and Work — Ray Dalio
Unquestionably, Principles: Life and Work from Ray Dalio is my favorite read of the year. It was also the first book I read in 2018.
Released late 2017, Ray Dalio shares in the book, his principles that led him to build Bridgewater Associates from the ground up to become the biggest hedge fund in the world.
It is hard to categorize this book in any specific area due to the many disciplines that it covers. But, I’d situate it somewhere at the crossroads of management, philosophy, and behavioral economics — three topics for which I have a profound interest.
If you want to have a sneak peek of some of the insightful passages of the book, feel free to check out my Twitter thread below.
As stipulated by the title, the book is divided into two major parts: the Life and the Work Principles.
Life Principles are here to help you grow as a human being and get the most out of your life. In this section, Ray Dalio provides us with advice on how to approach life. From the importance of being radically open-minded and radically transparent to the 5-step process to get what we want out of life.
- Have clear goals
- Identify and don’t tolerate the problems that stand in the way of you achieving those goals
- Accurately diagnose the problems to get at their root causes
- Design plans that will get you around them
- Do what’s necessary to push these designs through to results
Here is one of my favorite (among many others) extracts from this part:
Radical open-mindedness is motivated by the genuine worry that you might not be seeing your choices optimally. It is the ability to effectively explore different points of view and different possibilities without letting your ego or your blind spots get in your way. It requires you to replace your attachment to always being right with the joy of learning what’s true.
Work Principles, on the other hand, lays out the contours on how to build a working environment where people will thrive and unlock their full potential to the great benefits of the company.
Ray Dalio expresses in this part what is and will probably stay as his best invention: the concept of idea-meritocracy. Here is the definition as seen in the book:
Idea meritocracy: a system that brings together smart, independent thinkers and has them productively disagree to come up with the best possible collective thinking and resolve their disagreements in a believability-weighted way.
If you are curious about this system but doesn’t feel like reading this 500+ pages book, then I’d recommend you to watch Ray Dalio’s Ted Talk where he explains how he implemented it in his own company.
Idea Meritocracy = Radical Truth + Radical Transparency + Believability-Weighted Decision Making
As a conclusion, I’m pretty convinced that Principles: Life and Work is part of this rare breed of books that will live through the years without a wrinkle.
2. Thinking, Fast and Slow — Daniel Kahneman
When it comes to psychology and behavioral economics, Thinking, Fast and Slow is a must-read.
In his book, Daniel Kahneman brings us on a fascinating journey to better understand the operation of our mind and the many biases of intuition we are prone to.
To help us effortlessly apprehend the complexity of the mind, he introduces two fictitious characters: the intuitive System 1 and the effortful and slower System 2. The first is in charge of the fast thinking, and the latter does the slow thinking, monitors System 1, and maintains control as best as it can within its limited resources.
Systems 1 and 2 are both active whenever we are awake. System 1 runs automatically and System 2 is normally in a comfortable low-effort mode, in which only a fraction of its capacity is engaged. System 1 continuously generates suggestions for System 2: impressions, intuitions, intentions, and feelings. If endorsed by System 2, impressions and intuitions turn into beliefs, and impulses turn into voluntary actions. When all goes smoothly, which is most of the time, System 2 adopts the suggestions of System 1 with little or no modification. You generally believe your impressions and act on your desires, and that is fine — usually.
Once we grasped the difference and roles of the two Systems, the author starts an in-depth presentation of our numerous biases of intuition. Each one is brilliantly introduced through an illustration and/or experiment that he and his fellow psychologists’ colleagues ran over the last decades.
Also, at the end of each chapter, the author made a worthy effort — through his “Speaking of…” — in contextualizing the bias of intuition he brought out. It makes it easier to connect the bias with our everyday situations.
Here is one passage that I particularly enjoyed:
(…) declarations of high confidence mainly tell you that an individual has constructed a coherent story in his mind, not necessarily that the story is true.
Ultimately, what I found as an interesting insight is the fact that both Daniel Kahneman & Ray Dalio, respectively end their books with a similar conclusion on the importance of improving our decision-making and the role that technology can play for that in the future.
3. First, Break All the Rules: What the World’s Greatest Managers Do Differently — Gallup
Gallup, a performance-management consulting company, has run the largest study ever conducted to determine what are the key characteristics of great managers.
This book witnesses the massive work undertaken by the company and, unlike most management books, has been written in a highly actionable way.
Throughout the book, they provide us with some great tools to:
- measure the strength of a workplace (Q¹² items)
- define in-depth the four core activities of a manager (“Four Keys” of great managers)
- interview for talent (the Strengths Interview)
- discover your own talents (the Clifton StrengthsFinder assessment)
Moreover, First, Break All the Rules is a gold mine made of profound insights to understand better what great managers do differently. Similarly to my Twitter thread on Ray Dalio’s book above, I made one for this book. I hope this can help you quickly grasp some of its value.
Management is way too often seen as an innate discipline and overlooked by founders. But poor management is the number one causes of failure for companies and as Gallup reminds us, “People leave managers, not companies.”
If I had to extract one major insight from the book, it would certainly be the following one:
People don’t change that much. Don’t waste time trying to put in what was left out. Try to draw out what was left in. That is hard enough.
It reveals that — unlike what “personal growth gurus” want us to believe — not everyone has unlimited potential and managers shouldn’t focus on helping people fix their weaknesses. Instead, they should focus on people’s strengths and make sure to capitalize on each person’s uniqueness.
This book’s extract makes the point of it:
Focus on each person’s strengths, and manage around his weaknesses. Don’t try to fix the weaknesses. Don’t try to perfect each person. Instead, do everything you can to help each person cultivate his talents. Help each person become more of who he already is.
In short, I wish it could be the bedside book of any manager.
4. Powerful: Building a Culture of Freedom and Responsibility — Patty McCord
Powerful is a short, inspiring and thought-provoking book on how to build a high-performance company’s culture.
And Patty McCord’s knows what she talks about when it comes to building a company culture. She’s been working at Netflix for 14 years — a company that despite being incredibly successful is very popular for its unmatched Culture — and had the key role in shaping it.
The highly popular Netflix’s Culture deck was initially crafted by her and Reed Hastings, the CEO. But not only she defined the Culture, she also did the toughest part for many years, ensuring it spread accordingly throughout the company.
The most important thing to understand about transforming a culture, whether that of a team or a whole company, is that it isn’t a matter of simply professing a set of values and operating principles. It’s a matter of identifying the behaviors that you would like to see become consistent practices and then installing the discipline of actually doing them.
What I enjoyed the most about this book is Patty McCord’s outspokenness and how she has always challenged the rules of conventional wisdom.
As I introduce the alternative management methods we developed at Netflix, I’m going to challenge all of the basic premises of management today: that it is about building loyalty and retention and career progression and implementing structures to ensure employee engagement and happiness. None of that is true. None of this is the job of management.
Here is my radical proposition: a business leader’s job is to create great teams that do amazing work on time. That’s it. That’s the job of management.
Here are two of my favorites quotes:
Building the muscle to hire great people is a huge competitive advantage.
Motivation is about talent density and appealing challenges.
Thus, Powerful should be seen as the recipe for building a high performing working environment.
5. WTF?: What’s the Future and Why It’s Up to Us — Tim O’Reilly
I have always had a fondness for the strategy discipline and this book from one of the Silicon Valley’s most iconic person and thought-leader helped me on my quest toward being a great strategic thinker.
Among the many capabilities that are required to excel in strategy, two are absolutely key: 1) the capacity to understand our world from a macro perspective and 2) to recognize the importance of history and relate to it when taking strategic decisions.
With regards to the first one, I think Jeff Bezos made the best illustration of what an understanding of macro perspective means (you will also appreciate his legendary skill in explaining in simple words a complex topic such as strategy):
I very frequently get the question: “What’s going to change in the next 10 years?” And that is a very interesting question; it’s a very common one. I almost never get the question: “What’s not going to change in the next 10 years?” And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time. … [I]n our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection.
It’s impossible to imagine a future 10 years from now where a customer comes up and says, “Jeff, I love Amazon; I just wish the prices were a little higher.” “I love Amazon; I just wish you’d deliver a little more slowly.” Impossible.
And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.
For the second one, Mark Twain famously said: “History doesn’t repeat itself, but it often rhymes.” Thus, as Tim O’Reilly advices us in his book, to improve our ability to think about the future we should “Study history and notice its patterns.” My interpretation from this passage is that great strategists are, above all, great pattern recognizers.
Now, let’s get back to the core message of this book. Tim O’Reilly’s objective, here, is to show us that we shouldn’t be subjected to this period of great economic transition and we cannot blame technology for it as “both the problems and the solutions are the result of human choices.”
This is our own responsibility though to build the best future possible. And each individual has to play its part in it. One question that he suggests everyone should ask to himself is:
How can a business create more value for society than it captures for itself ?
Answering this type of question is a clear path toward bringing us closer to create this sustainable world we all dream of. Tim O’Reilly mentions the crucial role of data scientists who are currently building the algorithms that will govern tomorrow’s world. (If you want to explore more on this topic, I’d highly recommend reading this article).
Eventually and more practically speaking, Tim O’Reilly provides us in his book with some great tools to think and build the future — as per below:
6. Hedge: A Greater Safety Net for the Entrepreneurial Age — Nicolas Colin
I have been following Nicolas Colin for some years already. Through his numerous writings, he helps me make up my mind and forge my opinions on the state and evolution of the world.
Nicolas Colin is our French reference when it comes to anything related to the digital economy. I was mentioning above that great strategists — among many other abilities — cultivate two crucial ones: 1) a clear understanding of how our world is evolving from a macro perspective and 2) a vast knowledge of history as “History doesn’t repeat itself, but it often rhymes.”
Nicolas Colin fulfills both, and his book testifies to that.
Hedge: A Greater Safety Net for the Entrepreneurial Age aims to map out the scope and context of the world’s current techno-economic transition and propose a model for great powers — the Great Safety Net 2.0 — to thrive in this Entrepreneurial Age.
The central question of this book is this: where do prosperity and economic security come from? I believe they don’t come from a single magic-bullet mechanism like wage subsidies, a robot tax, tougher antitrust measures, a higher minimum wage, or universal basic income. Rather they can only emerge from a complex macro mechanism that goes way beyond the narrow definition of the safety net.
From this reading, we understand why building a new safety net should be set as a top priority for the Western great powers — it is the only way to prosper in tomorrow’s world. If this scenario doesn’t happen, then China will probably pave the way and create their own version of a new Great Safety Net. The end result of this scenario could be 1) the death blow of the Western society hegemony and 2) China taking the lead with “a very different global socio-institutional framework in terms of liberal democratic values.”
But, building the Great Safety Net 2.0 is a complex matter that cannot be built in a short period and free of pain. It is worth it though, as it is the unique way to provide economic security for the many.
Providing economic security for the many generates prosperity for all.
It all starts with having a good perception of the ins and outs of the Entrepreneurial Age. While in the Age of the automobile and mass production, the society was shaped around the Corporation at its core; in this new Age, it is the Multitude (also called The Networked Individual) that lies at its heart.
In the past, corporations saw customers as a mass of passive agents eager to consume standardized products without demanding a better experience. In the Entrepreneurial Age, the masses have turned into networks of connected users that consume while also being the essential resource that makes technology companies thrive. This is why the corporate contract has radically changed. The main balance of power is no longer between the shareholders and the employees, with the executive as an arbiter and the buyers as passive spectators. The multitude has now become the strongest and most active party in the economy.
And the major issue today is that while this shift to the Entrepreneurial Age has already happened for both:
- The consumer
Today’s consumer expects to be served at the highest level of quality and personalization - The worker
“Today’s workers alternate overlapping periods of training, wage-earning, starting a business, looking for a job, working as a freelancer.”
Our institutions, conversely, are still running on the age of the automobile and mass production which creates a substantial distortion.
Employees of small and medium businesses, self-employed workers, students, job seekers, and startups founders are all out of reach for most institutions that used to be part of the Great Safety Net 1.0. The vast majority of workers are outsiders in a world where risks are covered only for those employed by large domestic corporations.
Last but not least, the fact that our institutions are not suited for the Entrepreneurial Age 1) doesn’t prepare our western society to cope with this new unstable world and 2) reinforces the tech backlash that is currently happening where “tech companies are perceived as destroying good jobs and weakening liberal democratic values.”
Nicolas Colin brilliantly mapped out the differences between The Great Safety Net 1.0 — that helped the Western society to thrive in the Age of the automobile and mass production — and The Great Safety Net 2.0 that could help us succeed in the Entrepreneurial Age.
This book is not his first attempt, and for my French fellows, I’d highly recommend another one from him: “L’Age de la Multitude”.
7. Capitalism without Capital: The Rise of the Intangible Economy — Jonathan Haskel, Stian Westlake
Capitalism without Capital outlines for our society as a whole, what has been, and continues to be, a massive long-term shift from tangible to intangible investment.
Our central argument in this book is that there is something fundamentally different about intangible investment, and that understanding the steady move to intangible investment helps us understand some of the key issues facing us today: innovation and growth, inequality, the role of management, and financial and policy reform.
The authors spend time first, defining the four economic qualities of intangible assets:
- Scalability: Once a business has created or acquired an intangible asset, it can usually make use of it again and again at a relatively little cost, compared to most physical assets.
- Sunkenness: If a business makes an intangible investment and later on decides it wants to back out, it’s often hard to reverse the decision and try to get back the investment’s cost by selling the created asset — there’s the risk that the asset will be worth more or less nothing.
- Spillovers: The tendency for others to benefit from what were meant to be private investments.
- Synergies: Intangible investments are more valuable together, at least in the right combinations.
These four properties are the pillars of an intangible economy and do not apply in a tangible one.
But, this shift to an intangible-intensive economy has consequences on the approach toward making business, competing and how companies are valued today.
In a world where intangible investment is very important, we would expect to see the “best” firms — that is, those firms that (a) own valuable scalable intangibles and (b) are good at exacting the spillovers from other businesses — being highly productive and profitable, and their competitors losing out.
In sum, leading companies that are 1) exploiting the best the specificities of intangible assets and 2) enhanced by network effects, will benefit from high productivity and will make the competition almost impossible for others. A phenomenon of “industry concentration” or “winner-takes-all scenarios” that are already becoming more and more the norm today (i.e., Amazon with the retail industry, Airbnb with the travel housing industry…).
Also, Haskel and Westlake don’t only focus their analysis of this “quiet revolution” on the approach toward making business but goes beyond this scope. They explain why the four characteristics of an intangible-led economy are also responsible, in no small extent, for 1) the secular stagnation of our economy, 2) both income and wealth inequalities, 3) challenging the financial system, and more.
I must admit that this reading has probably been the one that challenged me the most (intellectually speaking) this year, but I appreciate the exhaustive work achieved by the authors to reveal the impact of this economic shift on our society.
In conclusion, I recently found out that Capitalism without Capital was among Bill Gates’ list of recommended books and encourage you to read his notes.
8. Algorithms to Live By: The Computer Science of Human Decisions — Brian Christian, Tom Griffiths
If I were asked about one topic from which I was a neophyte at the beginning of the year and from which, one year later, I feel much more knowledgeable about, that would certainly be on the how-to of humans’ decision-making.
Thinking, Fast and Slow and Predictably Irrational have helped me better understand behavioral economics and our cognitive biases. Principles was also a valuable read on this topic. But, overall, what struck me the most after these reads was to realize 1) the importance of improving human decision-making and 2) the countless opportunities for improving it.
Making decisions is the very essence of humans, and yet, we are still prone to our irrationalities when making them. Technology has an important role to play in order to help humans make better decisions — mostly because technology is made of algorithms that are by-definition logical and not subject to irrationalities. And that is precisely what Algorithms to Live By: The Computer Science of Human Decisions outlines.
I came across this book after looking for the must-reads on the decision-making topic, and I was curious about exploring how the authors would tackle their promise of transforming “the wisdom of computer science into strategies for human living.”
I enjoyed how Christian and Griffiths present some of the most popular algorithms and how they can be applied to real-life problems that humans are facing on a daily basis. For instance:
- The 37% Rule, if you want the best odds of getting the best apartment.
- The Least Recently Used criterion, for tidying your wardrobe.
- The Upper Confidence Bound, if you want to guarantee the minimum regret when you pick a restaurant for dinner.
Here is my favorite passage of the book, when the authors explain how humans should approach the exploitation/exploration dilemma:
“More generally, our intuitions about rationality are too often informed by exploitation rather than exploration. When we talk about decision-making, we usually focus just on the immediate payoff of a single decision — and if you treat every decision as if it were your last, then indeed only exploitation makes sense. But over a lifetime, you’re going to make a lot of decisions. And it’s actually rational to emphasize exploration — the new rather than the best, the exciting rather than the safe, the random rather than the considered — for many of those choices, particularly earlier in life.”
I see this book as a great extension of Daniel Kahneman’s book, Thinking, Fast and Slow. The latter presents our cognitive biases that are mostly responsible for the bad decisions we make, while this book provides practical solutions that could help us make better decisions.
9. Game Thinking: Innovate smarter & drive deep engagement with design techniques from hit games — Amy Jo Kim
So far, most of the books presented in my top 10 are mainly reflection-oriented as opposed to action-oriented. However, I also like reading actionable and practical books. Game Thinking is part of this breed of books with a step-by-step approach to achieve a clear objective.
Game thinking: an approach to designing engaging products that synthesizes game design, lean/agile methods, design thinking, and systems thinking into a design system.
Amy Jo Kim had a lifelong experience designing social games such as Rock Band, and The Sims. She also pioneered the idea of applying game design to digital services, and this book is the how-to for achieving it.
Her process is made of 12 steps divided into 5 sections, as per see below.
If you wonder what’s the added value of Game Thinking as compared to other product development approaches such as Lean Startup and Design Thinking, here is what the author would tell you:
Game thinking is a framework for building products that make your customers more powerful, knowledgeable, and connected. Like lean startup, game thinking is grounded in testing assumptions. And like design thinking, we start out in a problem space (an unmet need) and end in a solution space (how your product fills that need).
The best products don’t just fill a need. They help people get better at something they care about.
In short, this book is a goldmine full of tips, tools, and great use cases to shape attractive products.
10. Bad Blood: Secrets and Lies in a Silicon Valley Startup — John Carreyrou
Bad Blood relates the notorious story of Theranos — a Silicon Valley’s healthtech company — which has been proven to be a massive fraud. Put simply, Theranos is for the tech world what Enron is for the corporate world.
The company has been built on the promise of having invented a revolutionary device that allows inexpensive and accessible finger-prick blood tests.
Founded by Elizabeth Holmes, a 19 years old Stanford dropout female — often compared as the new Steve Jobs or Mark Zuckerberg — Theranos was at its peak valued at almost $10 billion and backed by some of the smartest people in the world (Channing Robertson, Rupert Murdoch, George P. Shultz…).
This book could fulfill all the criteria for a good sci-fi book but it is painful to realize that it is nothing but a true story. This kind of story gives credit to the anti-tech aficionados when they pinpoint the absurdity of the fake-it-until-you-make-it tech culture.
By positioning Theranos as a tech company in the heart of the Valley, Holmes channeled this fake-it-until-you-make-it culture, and she went to extreme lengths to hide the fakery.
However, Theranos is not the first and will not be the last tech company pushing this mentality at its extreme, and I’d say it is not the root of Theranos problem. The major one is that “Theranos wasn’t a tech company in the traditional sense. It was first and foremost a health-care company. Its product wasn’t software but a medical device that analyzed people’s blood.” In short, while a fake software doesn’t directly damage people lives, Theranos’ medical device did.
But there is more to that story, this book reveals the atrocious management style adopted by the company’s executives led by Holmes (the CEO) and Balwani (the COO and Holme’s partner). Both were often described as ruthless dictators tracking every employees’ moves and not hesitating to intimate them if they felt threatened.
While I was reading this book, there was a question that kept going round in my head: How come a company with such a disastrous management style and an almost entirely fake product could last for so long — nearly 15 years — , raised almost a billion dollar and valued nearly $10 billion?
This challenges all the laws of rationality and gives a lot of credit to behavioral economics books such as Thinking, Fast and Slow and Predictably Irrational.
Based on my analysis, I see three main factors that can explain Theranos’ story:
- Despite the divergent opinions on Elizabeth Holmes’ personality, everyone agreed that she was a charismatic person with this rare ability to create reality distortion field (a unique personality trait among great leaders).
- Theranos had on its board some of the most respected VCs, businessmen, and politicians in the United States. These famous persons and their influence considerably helped give credit to Theranos and Holmes. And yet, no one had real expertise and knowledge of the health industry.
- Holme’s ability to play with the FOMO effect. All along Theranos’ journey, Elizabeth mastered the FOMO effect when dealing with big health companies. When Theranos’ customers started being dubious about the real capacity of the medical device, she let them know that they’d miss a massive market opportunity and would deeply regret it.
These three factors created an infinite loop that kept reinforcing each other over time.
In conclusion, as much as I described Powerful as “the recipe for building high performing working environment”, I could describe Bad Blood as “the recipe for building a destructive working environment made of lies.”
Oh, and if you don’t feel like reading the book, I have good news for you, a movie will be released next year on Theranos’ story.
