Books!

This is a work in progress.

Books I’ve recently read

The Code
- Author: Margaret O’Mara
- Why I read: To better understand origins of VC and conditions necessary for innovation/good VC returns. Also, now that I live in San Francisco, I probably should know more of the local history?
- Thoughts:
  - A must read for any LP active in VC.
  - The book is comprised of many short bios on tech pioneers (founders and VC GPs), which makes the book dense. Nonetheless, O’Mara makes it entertaining. It’s a great resource and O’Mara writes about the most important, but oft forgotten, secular changes that enabled Silicon Valley to become so dominant. It was easier for me to remember these—the biggest:
    - Stanford and Berkeley’s relationships with/funding from the DoD and defense contractors like Lockheed helped get Silicon Valley going (chapters 1-5)
    - Johnson’s 1965 immigration reform led to a massive influx of talent, especially from Asia and Eastern Europe (p. 83)
    - Carterphone and Bunker Ramo lawsuits against telecom monopolies (AT&T primarily) enabled 3^rd parties to use telecom’s lines/build businesses that used lines; one new business that emerged was ARPANET, precursor to the internet (p. 62 – 64)
    - Innovation can be efficient—ARPANET was built on just $1mm out of the $24bn spent on the space race (p. 66)
    - Johnson’s 1958 Small Business Investment Act really got the VC industry going in both Boston and Silicon Valley (p. 73)
    - California civil code prohibited non-competes, which created more competition (p. 81)
    - Government paid little attention to how new tech companies potentially violated privacy; instead, the focus at the time, was limiting the federal government’s abuses, which were rampant in the 60s (p. 125)
    - 1974 passage of ERISA and increasing capital gains taxes killed VC funding; several VC GPs, including David Morgenthaler, Ned Heizer (Allstate), Pete Bancroft (Bessemer) formed the NVCA, a venture trade organization, and published “Emerging Innovative Companies: An Endangered Species” (I can’t find the pdf!); they made little progress convincing the Carter administration to lower taxes and re-interpret the “Prudent Man Rule,” but after collaborating with a broader business trade group, the AEA, they convinced populists/farmer congressmen (Senator Clifford Hansen and Representative Bill Steiger) to help in their lobbying effort; they succeeded in 1978, which led to a massive increase in funding to the VC sector (p. 158 – 172)
      - See The Money Flood: How Pension Funds Revolutionized Investing on the importance on reinterpreting the Prudent Man Rule to mean “it’s okay to be invested in higher risk investments as part of a diversified portfolio” instead of “don’t lose money on any single investment”
    - Cyberpunks and extremists (KKK people, for example) were early adopters of the internet; cryptography was also popular; so the debates we are having today aren’t new (p. 259)
    - HTTP, which was created by a CERN team, provided a common language for all the info that’s on the internet (p. 289)
      - Sun Microsystem’s Java would later enabled developers to build programs via the browser, not via a balkanized PC market (p. 307)
    - Al Gore, and Newt Gingrich to a lesser extent, kept the internet decentralized by passing the High Performance Computing Act; shortly thereafter businesses were allowed to conduct transactions online (p. 290 – 291)
      - Mitch Kapor also lobbied for this
      - Gingrich also reduced the FCC’s powers >1994
      - Pretty important for Ebay, Paypal, and Amazon…
    - Clinton’s moderation, support of SV, and choice of Al Gore as VP convinced many powerful Republicans in SV to instead back Democrats (p. 293 – 297)
    - Clinton pushed to regulate the internet via the Department of Commerce, not the heavy-handed FCC (p. 299 – 300)
    - The government did not force software and hardware companies to build encryption “Clipper Chip” software that only the federal government would have the keys to crack (p. 300 – 301)
    - In the early 90s a $2.5mm Commerce Department grant financed the development of CommerceNet software that protected credit card data and greatly boosted online business (p. 310)
    - Bezos started Amazon in Seattle, largely because Washington didn’t have a sales tax (p. 313)
    - The FASB allowed loss-making tech companies to not charge options against earnings, which made them look more profitable and likely led to more investment into the sector (p. 319)
    - Tech companies relying on referrals in recruiting perpetuated a White/Asian and male workforce (p. 321)
    - Gingrich opposed the “Communications Decency Act” despite being a Republican; instead, he proposed a bill that let the industry self-regulate content standards—Section 230 was in this bill; while a restrictive bill still passed, the courts struck much of it for violating the 1^st amendment, but Section 230, which limited liability for internet platforms, remained; incredibly important (p. 329 – 330)
    - The Republicans supported tech companies in limiting class-action suits brought on by plaintiffs and their lawyers, which have traditionally backed Democrats; also important (p. 332)
    - In response, Democrats in California tried to pass Proposition 211 that would have made company officers and board members personally responsible for damages owed to plaintiffs. Silicon Valley, including many powerful Democrats (Steve Jobs, for example), flipped out and financed a massive campaign to vote down the measure. John Doerr led the campaign and convinced Clinton to support him. Super, duper important (p. 333 – 336)
    - 1998 – 2000 Microsoft monopoly trial led to more competition and therefore innovation (p. 346)
    - So many foreigners are start-up founders: >50% if companies founded between 1995 – 2005 had at least one foreign-born co-founder; no other country had this massive advantage (p. 389)
    - The cloud, APIs, and the emergence of platforms such as iOS greatly reduced the cost of starting new companies in the mid 2000s; also very important (p. 390)
    - Low capital gains taxes in the 2000s and the carried interest deduction probably boosted VC funding (p. 393)
    - The US tax code doesn’t tax foreign earnings until they are repatriated, which benefits large US tech companies (p. 394)
    - VCs pattern matched and looked for “grade-A men” from the nation’s best engineering and CS programs or promising young companies; had validation from someone the VC knew; were driven like Bill Gates or Mark Zuckerberg; and were working on a slightly better version of something that already exists. This was effective, but perpetuated discrimination. (p 400)
      - However, newer GPs like Social Capital have sourced via company operating metrics, not the pattern matching above, which leads to less discrimination (p. 400 and 401)
  - I read in conjunction with Something Ventured movie (2011)
    - This summer I also watched Netflix’s High Score, which is a history of the gaming industry
  - Other good histories of VC:
    - Acquired overview (part 1) of Don Valentine/Sequoia origins
    - Acquired interview (part 2) with Sequoia’s Doug Leone
    - Jerry Neumann’s Heat Death: Venture Capital in the 1980s
    - Wikipedia page on Venture Capital
    - The NYT’s The Secret History of Women in Coding
      - “By the 1983-84 academic year, 37.1 percent of all students graduating with degrees in computer and information sciences were women. In only one decade, their participation rate more than doubled. But then things went into reverse. From 1984 onward, the percentage dropped; by the time 2010 rolled around, it had been cut in half. Only 17.6 percent of the students graduating from computer-science and information-science programs were women.”
      - Thesis: When people started buying computers for their homes, it was more “appropriate” for boys to geek out on them; so when both boys and girls went to college, boys had more experience with coding before starting CS 101; which is unfortunate because boys don’t inherently have more coding talent than girls
- One of the more interesting articles O’Mara referenced: Spacewar, which is about ARPA and the consumerization of computers.
  - Another: Gates 1976 Open Letter to Hobbyists
- Source: Fellow LP
How to Raise a Venture Capital Fund
- Author: Winter Mead
- Why I read: I’m a big fan of Oper8r
  - An overview of Opr8r
  - VC Roast podcast on Oper8r
- Thoughts:
  - Great book to share with aspiring VC GPs
  - Winter probably offers the same/very similar advice to many GPs, so efficient for him to just write a book
  - LPs active in VC should be familiar with most of the content
  - Book uses too many terms that a broader audience wouldn’t recognize (but that isn’t Winter’s targeted audience)
- Source: Twitter/Oper8r (a service for emerging VC GPs)
Prophet of Innovation
- Author: Tom McCraw (since deceased HBS professor who is from Alabama)
- Why I read: To understand innovation and endogenous growth theory better.
- Thoughts:
  - Amazing read, top 5 book
  - After reading Schumpeter, I’d put him next to Hamilton and Churchill. Dude did a lot, which is both depressing and inspiring. An insight of his I think is profound: entrepreneurs, many of whom are laborers, convince capital owners that they can be innovative and create profit; owners provide them capital; some entrepreneurs are creative, some aren’t; the ones that are, generate prosperity and a base for future innovation…and they become capital owners (despite what Marx said); cycle repeats. And process is random, which is why so many incumbent firms go bankrupt, and why it is so important to have a system that enables all sorts of people to be entrepreneurs (Schumpeter was an early user of the term “venture capital”) and allows stale firms to liquidate. Fascinating personal life, too—three marriages, many hardships, legit polyglot, ladies man, a teacher and not just a researcher, world traveler, Czech/Austrian/German living in America during WWII (one of his loves and several members from her family were murdered by Nazis).
  - Schumpeter, like many VC people today, was very much an optimist. I’ve also always thought some level of vol—in the economy and in an individual’s life—is important for promoting action, including idea generation, be it art or entrepreneurship. Both upside vol caused by excessive optimism (which leads to collective pursuit of far-fetched goals) and downside vol caused by tragedy (it kicks people in the ass/re-enforces importance of relationships).
- Source: No idea
Range: Why Generalists Triumph in a Specialized World
- Author: David Epstein
- “Specialists flourish in such “kind” learning environments, where patterns recur and feedback is quick and accurate. By contrast, generalists flourish in “wicked” learning environments, where patterns are harder to discern and feedback is delayed and/or inaccurate.” And the world today is a wicked learning environment.
- Why I read: I’ve tried to be a generalist (generalist LP, read widely, many friend groups and interests, attended a liberal arts college), so seeking validation?
- Thoughts:
  - Great read, one of my favorites
- Source: NYT (Jim Holt) review
Malcolm Gladwell books: David and Goliath, Talking to Strangers, Outliers
- Why I read: I like generalists like David Brooks and Malcolm Galdwell. Sure they aren’t experts in any single field, but they are creative. It’s also easy to read their writing—short words, big font, short books, and phenomenal writing.
- Source: Bunch of people
Writing My Wrongs
- Why I read: A different perspective—Shaka is black, grew up in Detroit, murdered, went to prison for 19 years and survived, and then redeemed himself. Phenomenal writer—super authentic biography. Also indictment of the judicial/prison system.
  - Check out Shaka’s interview with Oprah
  - And his relationship with Ben Horowitz (from a16z)
  - “How do you emerge in a society that’s so unforgiving?”
- Thoughts:
  - Great read, one of my favorites
- Source: Kwame Anku
Saudi America
- Author: Bethany McClean
- Why I read: have underwritten PE energy; Bethany thinks the entire sector won’t generate good investment returns. She’s been correct (from the FT):

Hillbilly Elegy
- Author: JD Vance
- Why I read: I’m from northeast Alabama, so I can relate to an extent. Also read in conjunction with Writing My Wrongs—two different, but similar environments for a kid to grow up in.
- Source: A European sitting next to me on a cross Atlantic flight presumably trying to learn about American culture (iconic that this person had no interest in talking to the American sitting next to them for 8 hours).
Why We Sleep
- Author: Matthew Walker
- Why I read: Sleep is important, no?
- Thoughts:
  - Sleeping is important. When deprived, you can’t catch up by sleeping a lot in one day. Don’t drink alcohol—it sedates, which is different than sleep.
  - There’s an evolutionary reason why some people are morning-people (not me), and others are night owls (me). Convenient excuse for why I hate doing early morning things.
  - It’s ridiculous that kids are forced to wake up early to go to school. Sleep deprivation creates many issues, one of which is slowing emotional development (dreaming helps young people develop emotionally).
  - Later discovered that some of the stats Walker used are BS: https://statmodeling.stat.columbia.edu/2019/11/18/is-matthew-walkers-why-we-sleep-riddled-with-scientific-and-factual-errors/
- Source: Boston friend
The Happiness Advantage
- Author: Shawn Achor
- Why I read: To understand what makes people happy. Important question, right?
- Thoughts:
  - Good read
- Source: GP (Trive Capital, not Kushner’s Thrive)
Big Potential
- Author: Shawn Achor
- Why I read: In conjunction with the Happiness Advantage
- Source: GP (Trive Capital)
Cherry: A Novel
- Author: Nico Walker
- Why I read: Nihilist, to keep an optimistic me grounded.
- Thoughts: Nihilist. Author is authentic, but until writing his book, a loser and whiner.
- Source: College friend

Books I’m reading

The Technologized Investor
- Author: Ashby Monk and Dane Rook
- Why I’m reading: to better understand how LPs use data
- Thoughts:
  - A slog, seems to be written for Chief Information Officers at SWF and pensions; much theory with few examples
- Source: LP friend
The Man Who Solved The Market: How Jim Simons Launched The Quant Revolution
- Author: Gregory Zuckerman
- Why I’m reading: to better understand quant investing, especially how it has evolved
  - To complement More Money Than God, which I read in college and made me realize that generating alpha “back in the day” is easier than today (ie, frontrunning pensions)
- Thoughts:
  - ____
- Source: Capital Allocators podcast
Why Liberalism Failed
- Author: Patrick Deneen
- Why I’m reading: After reading David Brooks’ criticism of liberalism/neoconservatism/the nuclear family
- Thoughts:
  - ____
- Source: College friend (after sharing the Brooks essay with him)
The Company: A Short History of a Revolutionary Idea
- Author: John Micklethwait & Adrian Wooldridge
- Why I’m reading: To better understand the importance of limited liability and the role that corporations play in innovation. Relevant today because some, including politicians, are lobbying to eliminate limited liability.
- Thoughts:
  - ____
- Source: Jason Crawford review
A History of the Global Stock Market
- Author: Mark Smith
- Why I’m reading: Why I’m Reading: To better understand the importantance of capital markets and the role they play in innovation.
- Thoughts:
  - ____
- Source: Jason Crawford review
Knowledge & the Wealth of Nations
- Author: David Warsh
- Why I’m reading: Why I’m Reading: To better understand how economics models innovations—Paul Romer’s endogenous growth theory, for example.
- I generally think a lot of theory can’t be proven by evidence because there’s no hard data behind it (consumer surplus, for example):
  - From Wiki criticism section: “Paul Krugman criticized endogenous growth theory as nearly impossible to check by empirical evidence; “too much of it involved making assumptions about how unmeasurable things affected other unmeasurable things.”
- Thoughts:
  - Good to read in conjunction with The Worldly Philosophers and Prophet of Innovation. All three should be required reading for undergrad econ students, especially at liberal arts colleges.
- Source: Tyler Cowen podcast?

Investment books that I’m reading and re-reading as I build my asset allocation framework (see Presentations for my framework that I’m struggling to build)