October 2014

Book Summary: The Obstacle is the Way

The Obstacle is the Way is the third book published by Ryan Holiday, the 27-year old marketing guru who was famously the Director of Marketing for American Apparel. It's loosely based on Roman stoic philosophy, and features a lot of quotes and ideas from figures like Seneca, Epictetus, and Marcus Aurelius.

Perspective as Reality

One of the defining qualities of stoicism, which emerged in 3rd century BC, is that perspective defines reality. True sages, according to the stoics, are invulnerable to bad fortune because virtue is sufficient for happiness. Stoicism teaches that the key to overcoming destructive emotions is fortitude and self-control, leading to what's called "stoic calm".

The title of this book originates from a Marcus Aurelius quote which says:

"The impediment to action advances action. What stands in the way becomes the way."

Ryan Holiday talks about the process of facing seemingly insurmountable obstacles – a process which results from logic and self-discipline:

To be objective
To control emotions and keep an even keel
To choose to see the good in a situation
To steady our nerves
To ignore what disturbs or limits others
To place things in perspective
To revert to the present moment
To focus on what can be controlled

The Premortem

Stoic philosopher Epictetus, born a 1st century slave

One interesting exercise of perspective described in this book is the premortem. As defined by Holiday:

A CEO calls her staff into the conference room on the eve of the launch of a major new initiative. They file in and take their seats around the table. She calls the meeting to attention and begins: “I have bad news . The project has failed spectacularly. Tell me what went wrong?”

The CEO is creating an exercise in hindsight, except it's in advance. The technique of the premortem was designed by psychology Gary Klein, but the idea was founded by the stoics thousand of years ago. Today it's used by startups and Fortune 500 businesses.

Thinking about problems in unconventional methods such as this often quickly reveal oft-missed problems or challenges. This is just one described in the book.

Favorite Passages

"Marcus Aurelius truly saw each and every obstacles as an opportunity to practice some virtue: patience, courage, humility, resourcefulness, reason, justice, and creativity."

"Every obstacle is unique to each of us. But the responses they elicit are the same: Fear. Frustration. Confusion. Helplessness. Depression. Anger."

"An employee in your company makes a careless mistake that costs you business. This can be exactly what you spend so much time and effort trying to avoid. Or, with a shift in perception, it can be exactly what you were looking for— the chance to pierce through defenses and teach a lesson that can be learned only by experience. A mistake becomes training. Again, the event is the same: Someone messed up. But the evaluation and the outcome are different. With one approach you took advantage; with the other you succumbed to anger or fear."

"You always planned to do something. Write a screenplay. Travel. Start a business. Approach a possible mentor. Launch a movement. Well, now something has happened— some disruptive event like a failure or an accident or a tragedy. Use it. Perhaps you’re stuck in bed recovering . Well, now you have time to write . Perhaps your emotions are overwhelming and painful, turn it into material. You lost your job or a relationship? That’s awful, but now you can travel unencumbered. You’re having a problem? Now you know exactly what to approach that mentor about. Seize this moment to deploy the plan that has long sat dormant in your head. Every chemical reaction requires a catalyst. Let this be yours."

"A decade earlier, a century earlier, a millennium earlier, someone just like you stood right where you are and felt very similar things, struggling with the very same thoughts. They had no idea that you would exist, but you know that they did. And a century from now, someone will be in your exact same position, once more. Embrace this power, this sense of being part of a larger whole. It is an exhilarating thought. Let it envelop you. We’re all just humans, doing the best we can. We’re all just trying to survive, and in the process, inch the world forward a little bit. Help your fellow humans thrive and survive, contribute your little bit to the universe before it swallows you up, and be happy with that. Lend a hand to others. Be strong for them, and it will make you stronger."

Conclusion

This book is a very good introduction to stoic philosophy and how to re-contextualize the challenges that we are all constantly facing. The way in which we look at these challenges, and all things in life, defines their very nature, so the value and impact that learning to think of challenges in this way cannot be overstated.

Due to the writing style of this book, which reads like very many short but profound statements, it became slightly exhausting by the end. Most of the concepts are simple to understand, but difficult to develop into innate features of our psyche. But it's as much a worthy pursuit as anything.

Amazon link: The Obstacle is the Way

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Book Summary: Zero to One

Peter Thiel is the billionaire entrepreneur and hedge fund manager who became Facebook's first investor in 2004. In September of 2014, he published his first book, titled Zero to One: Notes on Startups, or How to Build the Future.

Although Thiel is more famous for being a venture capitalist, this book is about how to think creatively, create value, and build a viable business. The book got started when a graduate student of Thiel's named Blake Masters took detailed notes on the class and published them online, which you can read here: CS 183: Startup.

The Paypal Mafia & Expectations

Peter Thiel co-founded Paypal in 1998, which was sold to eBay in 2002 for $1.5 billion. The group of co-founders that he founded the company with became known as the Paypal Mafia, who after the Paypal sale went on to create seven companies valued over $1 billion (including Tesla, LinkedIn, and Youtube).

The first book published by someone with a list of achievements like this quickly becomes a big deal. Last month, when Zero to One was released, I started noticing a lot of my favorite podcasts, like Tim Ferriss and James Altucher, invite Thiel on as a guest.

I had very high expectations for this book. Fortunately, it is extremely practical, smart, and engaging. It's one of the best books I've read this year.

Leaders & Followers

To find big success, you cannot follow. You must undertake the simple but difficult task of innovating. In the technology community, it's popular to think in terms of the luminaries who've grown to become the face of the industry. Peter Thiel addresses this immediately and simultaneously explains the title in the first lines of the book:

"Every moment in in business happens only once. The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won’t make a search engine. And the next Mark Zuckerberg won’t create a social network. If you are copying these guys, you aren’t learning from them. Of course, it’s easier to copy a model than to make something new. Doing what we already know how to do takes the world from 1 to n, adding more of something familiar. But every time we create something new, we go from 0 to 1."

I don't have much interest in reading about investment or capital management, but this book is about so much more. In this way, it's very similar to Creativity, Inc. which is one of the best books that I read this year. It's a grounded, practical guide to creating value and distinguishing yourself amidst a landscape of followers.

In the first chapter, Peter Thiel introduces the concepts of intensive versus extensive progress. Intensive progress, or vertical progress, is when a company does something new, like build a word processor when the market is building typewriters.

If you start with one typewriter and build 100, you've made extensive (or horizontal) progress. The best example for horizontal progress (in Thiel's words) is China, which has been straight-forwardly copying everything that has worked in the developed world.

To the right is an image from the book which explains how this concept works.

Zero to One is about escaping this trap and embracing the principle of innovation to give your business a chance to grow large enough to change the world. But creating value alone isn't enough – you also need to capture some of the value you create.

It's simple but powerful ideas like this which fill this book.

Favorite Passages

"Tolstoy opens Anna Karenina by observing : “All happy families are alike; each unhappy family is unhappy in its own way.” Business is the opposite. All happy companies are different: each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition."

"For Hamlet, greatness means willingness to fight for reasons as thin as an eggshell: anyone would fight for things that matter; true heroes take their personal honor so seriously they will fight for things that don’t matter. This twisted logic is part of human nature, but it’s disastrous in business. If you can recognize competition as a destructive force instead of a sign of value, you’re already more sane than most."

"Higher education is the place where people who had big plans in high school get stuck in fierce rivalries with equally smart peers over conventional careers like management consulting and investment banking. For the privilege of being turned into conformists, students (or their families) pay hundreds of thousands of dollars in skyrocketing tuition that continues to outpace inflation. Why are we doing this to ourselves?"

"For a company to be valuable it must grow and endure, but many entrepreneurs focus only on short-term growth. They have an excuse: growth is easy to measure, but durability isn’t. Those who succumb to measurement mania obsess about weekly active user statistics, monthly revenue targets, and quarterly earnings reports. However, you can hit those numbers and still overlook deeper, harder-to-measure problems that threaten the durability of your business. For example, rapid short-term growth at both Zynga and Groupon distracted managers and investors from long-term challenges. Zynga scored early wins with games like Farmville and claimed to have a “psychometric engine” to rigorously gauge the appeal of new releases. But they ended up with the same problem as every Hollywood studio: how can you reliably produce a constant stream of popular entertainment for a fickle audience? (Nobody knows.) Groupon posted fast growth as hundreds of thousands of local businesses tried their product. But persuading those businesses to become repeat customers was harder than they thought. If you focus on near-term growth above all else, you miss the most important question you should be asking: will this business still be around a decade from now?"

"In philosophy, politics, and business, too, arguing over process has become a way to endlessly defer making concrete plans for a better future."

Conclusion

I loved every moment of this book and finished it in two sittings. It's not just that it's practical and insightful: it's makes its point with remarkable clarity. I would consider this a must-read for anyone working in the tech industry especially, but is a fantastic read for anyone who wants to develop a better understanding of what makes some companies explode while others get crushed by the competition.

Amazon link: Zero to One

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