What Buying Books and Venture Capital Have In Common

If this is your first time visiting my site, there’s something you should know: I love reading. As subscribers of my monthly reading recommendation newsletter know (if you’re not a subscriber, what are you waiting for?), I have an eclectic taste in books. My recommendations run the gamut from psychology and war history to novels and science or math books.

From the title of this post, you might be thinking that I have a utilitarian view of reading. For the record, that is not true. By no means should you be looking at reading purely from a return on investment (ROI) standpoint. Reading is first and foremost a pleasure. That being said, a useful book is one of the best investments you can make. In fact, reading is one of the very, very few areas of life which offer the potential for 100x or higher returns.

There is so much knowledge just sitting there in books, waiting for someone who can communicate the ideas effectively and take them into the real world. In fact, a large percentage of the people we consider highly intelligent may just be more well read than us. Many of the problems that companies, governments, and individuals face on a regular basis have been in existence for hundreds, if not thousands of years, and have been solved over and over.

The clever innovator or highly accomplished consultant who can solve all your problems may just be pulling their solutions from a better set of sources (books) than you are. And those better sources are the reason they’ve been able to differentiate themselves and get out of the commodity workforce. It’s clear – books can give you a competitive advantage that few other things can. But it requires an investment of both time and money.

There’s a quote I love by the Dutch Renaissance scholar Erasmus that really drives this home:

“When I get a little money, I buy books; and if any is left, I buy food and clothes”

I’m not recommending you starve yourself to read – we do have libraries after all. But if you want to buy your books (and I recommend you do), it isn’t too difficult to justify the investment. Because that’s what a book is – an investment.

Let’s assume that a book will cost you $15 (you can buy books for much, much less than that but I’ll save those tips for another post). If you buy three books per month, you’re spending $540 per year. If you choose your books wisely (which isn’t easy), you’ll get through 36 books over the course of the year – far more than the average person. Compound this advantage over a few years and you’ve pretty strongly differentiated yourself.

In fact, it wouldn’t be surprising if just one of the books you read leads to an insight which results in your next company, a consulting contract, or a promotion at work. I’ve experienced this firsthand – a $12 book plus a few cold emails once led directly to a $10,000 consulting gig. There aren’t too many investments that can beat that ROI.

And therein lies the similarity to venture capital. Since books have the potential to lead to such high returns, you can afford to be wrong about books many, many times in your search to get it right. In fact, if I never again see a dollar of return from reading, the one consulting gig I earned covers the cost of over 830 books.

This is similar to (but even better than) venture capital economics. VCs fully expect a large percentage of their investments to go to zero. Their entire job is to find the one or two companies which will drive the returns of the entire fund. This means finding the company that can deliver the 100x return. The same applies to buying books. In my case, the ROI of that one book was 833X. While I won’t be competing with Andreessen Horowitz in the venture game any time soon, knowing that reading books can lead to huge payoffs helps me justify the amount of time and money I spend on reading.

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Of course, not every book you read needs to get you a consulting contract or a new job. Some books, fiction or nonfiction, are just an absolute pleasure to read and have no (direct) impact on your earnings potential. If you’re fortunate enough to find one of these books, lucky you. They’re more difficult to find than the 100x return books.

 

 

 

 

Most Business Books Are Unnecessary

Most business books are unnecessary to read if you’re reading to learn something. When I say unnecessary, I don’t mean the information provided in them isn’t helpful. I mean that there’s nothing you can find in those books that couldn’t be learned from a couple of blog posts. I notice this more with newer books than older ones but that’s probably because the older books that have survived and are read today actually have some worthwhile ideas.

Most business books simply repeat ideas that have already been talked about 100 times elsewhere. Now that’s actually fine – IF the book expands on those ideas with longer anecdotes and examples OR it organizes the information in a way that makes it more accessible to the reader.

For example, Traction does a great job of organizing information in an accessible format. Everything contained in Traction can be found online from various sources. The real value of the book and having it available as a reference is that it pieces together information in a coherent format that saves you time and energy. Last time I checked on Amazon, Traction cost $10.64 for the hardcover edition. Would I pay $10.64 to have this set of resources on my desk any time I want? Hell yea – and it’s sitting on my desk right now.

Another example of a business book worth reading is Ben Horowitz’s The Hard Thing About Hard Things. Ben’s been in the trenches with a few companies and has some amazing stories to share – I can’t recommend this book enough if you’re a founder or have any thoughts of becoming a startup employee or founder someday. The book is about 300 pages long but when I finished, I found myself wishing it was longer because the examples and stories were so good.

Benedict Evans and Chris Dixon have some pretty entertaining tweets about business books and I think they’re spot on, Benedict’s quote in particular. Business books make “business people” (whatever that means) feel productive and good about their reading time. Kind of like most self-help books, they’re written in a way that makes sense and has you nodding your head until you actually think about the application and you realize that you just read a bunch of fluff.

Last week, I read Seth Godin’s Permission Marketing, which was written way back in 1999. It’s a smart book and was definitely revolutionary when it came out but probably 75% of it was unnecessary. The entire 200+ page book is about the concept of getting permission from consumers to market to them with the prime example being email newsletter signups. Solid concept but not nearly enough detailed examples to warrant 200 pages. I saw the same thing while reading The Lean Startup by Eric Ries. Another great concept but again, too much fluff.

While you shouldn’t categorically reject business books, be careful which ones you invest your time in. Often, you’re better off spending your time reading books about history, philosophy, psychology, or biographies if you’re reading to learn something. You’ll find that those are usually more relevant to solving your problems than business books are.

 

The 10 Most Influential Books I Read in 2014

In 2014, I made it a goal to re-dedicate myself to reading. I read a ton growing up but for the past 6-8 years, I probably read less than 10 books per year outside of class. The books I recommend below were all personally transformative for me in one way or another. As with any book, the influence the books below had on me was based on a combination of things including what was going on in my own personal and professional life as well as what was happening in the world at the time.

This is not a ranking list so the books are presented in no particular order.

Zen and The Art of Motorcycle Maintenance by Robert Pirsig

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I really, really wish I had read this book before starting my undergrad degree in engineering. Throughout college, I felt frustrated about the theoretical focus of engineering education. I fall more on the visual learner side of the spectrum so learning about chemical engineering was particularly difficult (it’s hard to picture molecular interactions). The times I felt most comfortable were when a previously discussed concept was physically shown in a lab class. As my friends from college are very much aware of, I was pretty outspoken about my frustration with the curriculum and the way engineering was being taught.

This book dives right into the engineering education issue and so much more. It’s told in a narrative format about a father-son, cross-country motorcycle journey that’s filled with flashbacks and self-discovery, but most importantly, goes into the philosophy of the relationship between art, science, and practical application. I have to credit this book for finally “connecting the dots” for me between the classroom engineering concepts I learned at CMU and the real world around me.

The War of Art by Steven Pressfield

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This was a quick but very influential read. Anyone who has tried to build, write, or create anything will appreciate Pressfield’s book, which basically boils down to how to recognize and conquer The Resistance, something we’ve all felt when doing something necessary but difficult.

Creative Confidence: Unleashing the Creative Potential Within Us All by Tom and David Kelley

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There aren’t many people more creative than the Kelley brothers, who helped found and lead IDEO, the world’s leading design consultancy. The biggest takeaway for me was that creativity is something we all possess. Some of us just lose confidence in our creativity while growing up. Perhaps we were told we can’t draw or that we were analytical or that we were athletes and so stopped exploring our “creative side”. I read this in tandem with Zen and the Art of Motorcycle Maintenance and found the two to be very much related. This book is the reason I decided to take my first acting class and then helped me find the confidence to think I could be decent at it.

The Alchemist by Paulo Coelho

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Can’t believe I didn’t read this book until this year. If you’ve had moments of doubt about your life’s direction (whether personal or professional), this book will literally feel as if it’s written for you. Read it.

Side note about Paulo Coelho: some people get put off by the religious (Christian) nature of his writing. Whether you consider yourself religious or not (I’m personally not religious at all), his writing is still inspirational and provides guidance with the existential questions of life.

What’s Mine Is Yours by Rachel Bostrom

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I’ve gotten really interested in the sharing economy this year (also known as the 1099 economy or the Uber economy) and this was the best book I found about the young industry. The book was written in 2010 (before the whole Uber craze really took off) so it’s amazing that so many of the predictions in here are spot on. Bostrom’s analysis and thinking around the whole space are great in terms of giving you a complete picture into the trends and forces causing “on-demand” and “sharing” services to explode in popularity today. The coolest takeaway from her analysis of the sharing economy: it’s really a move away from the unnatural “largeness” of 20th century corporations and a return to the more local economies of the past (and hopefully future).

If you’re interested in the sharing economy, you HAVE to read this book.

If On A Winter’s Night A Traveler by Italo Calvino

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Hands down the most creative book I read all year and possibly in my entire life. The book has 10 “first chapters” of stories intertwined with a love story involving…you! It sounds bizarre but it’s so engaging and I wasn’t able to put it down once I started.

The book was originally written in Italian (Italo Calvino was Italian, in case you couldn’t guess that from his name) and reading this really made me wonder what, if anything, was lost in translation. The English version is so great, I can’t even imagine how good the original was.

Zero To One by Peter Thiel

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Whether or not you’ve read the Blake Masters class notes from Thiel’s Stanford class, this is an interesting and important read. Regardless of if you agree with his politics, there are few people out there like Thiel and his contrarian thinking definitely gets you thinking outside the box. I personally don’t agree with 100% of his views but his thinking is presented in a readable, accessible manner that had (and still has) me looking at the world with a renewed desire to solve big, meaningful problems

Incerto Series by Nassim Nicholas Taleb

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Taleb is a genius, plain and simple. I wrote about his work earlier this year and his writing has been hugely influential in crystallizing my thoughts on risk. Just as importantly, his work is hilariously written and somehow manages to make 3 books about a “boring” topic like risk impossible to put down.

While I chose to feature The Black Swan, the other 2 books in the series are Fooled by Randomness and Antifragile. They can be read in any order but I would recommend starting with The Black Swan, then moving to Antifragile (my favorite in the series) and then finishing with Fooled by Randomness if you’re still interested.

Warning about Taleb: He’s EXTREMELY opinionated, which leads to some amazing and entertaining writing but can also piss some people off. If you read his books and end up falling into the pissed off group…can’t say I didn’t warn you.

World War Z by Max Brooks

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Directly related to Taleb’s work is World War Z. The zombie infection outbreak is a great, thankfully fictional, example of a Black Swan event. I also happened to read this around the time of the ebola breakout so that probably played a part in making this so memorable for me.

I was a huge fan of the movie too but the book is very different. The movie was told from one person’s point of view while the book is basically a series of recollections from various points in time during the outbreak and war, with no central character.

The Meditations by Marcus Aurelius and Letters from a Stoic by Seneca

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This year I got interested in learning more about Stoic philosophy. I’ve never been one to “sweat the small stuff” so Stoicism made intuitive sense from the beginning. The coolest thing to me was reading Meditations and literally seeing a Roman emperor struggle with the same things I do on a daily basis – namely, knowing that the world isn’t perfect and adapting my attitude to make sense of and operate in that world. Learning about Stoicism also played a big part in helping me come up with my morning routine.

 

So those were the top recommendations from my 2014 reading. If any of these books look interesting to you, definitely make the time to read them. Also, if you have a Goodreads account, let’s connect there.

I’m always on the lookout for more to read so definitely send your recommendations my way!