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Wall Street Meat by Andy Kessler
accounting loophole / creative accounting, Andy Kessler, automated trading system, banking crisis, George Gilder, index fund, Jeff Bezos, market bubble, Menlo Park, pets.com, rolodex, Sand Hill Road, Silicon Valley, Small Order Execution System, Steve Jobs, technology bubble, Y2K
But little Rickie was a man, and stood up to him and put a Hold rating on it instead. This was a nice piece of revisionist history, in an attempt by Ruvkun to selfinstall a backbone. So I sent an email to Frank (in Eliot Spitzer’s archives now, no doubt): To: Frank Quattrone From: Andy Kessler It must have been Rick Ruvkun’s shadow (the one he is still afraid of) that put out that Hold. Hang in there . . . Andy I was trying to be nice. Hey, maybe I did give a rat’s ass. Later that evening, I got an email back from Frank: 222 Spitzer Fixer To: Andy Kessler From: Frank Quattrone How about writing an article about how you pressured Bill Brady into taking Mediavision public? Now that was a low blow, but a well deserved one on my part. I was itching to do a multimedia deal back at Morgan Stanley, to prove to Frank that my research wasn’t worthless.
West, 221 Valentine, Don, 169 Velocity Capital Management, 170–71, 180, 191–94 255 Index Venrock, 137 Vonderschmitt, Bernie, 94 Vortex, 214 Waddell and Read, 28 Wagner, Todd, 178 Wait, Jarett, 206–7 Wallach, Andrew, 11–12, 29, 162 Wall Street banking and, 91 casino metaphor, 147 how money is made on, 90–91 individual investors and, 237 IPOs and, 115 Wall Street Journal, 67, 112–13, 178, 222 Wasserman, Lew, 157 256 Weil, Ulrich, 25 Weill, Sandy, 216–17, 227 Wein, Byron, 111–12, 143, 153 Wellcome Trust, 143 White Weld, 14 Wilson, Fred, 203 Wilson, Pete, 62 Winnick, Gary, 213, 220 WorldCom, 1, 38, 219, 220, 226–27, 229 Xilinx, 94, 114–16 Yahoo, 169 Yamamoto, Takatoshi, 151 About the Author ANDY KESSLER worked on Wall Street for nearly twenty years as a research analyst, investment banker, venture capitalist, and hedge fund manager. He has written for the Wall Street Journal, Forbes, Thestreet.com, and the American Spectator, and appeared on CNBC, CNN, Nightline, and Dateline NBC. He lives in northern California with his wife and four sons. Visit www.AuthorTracker.com for exclusive information on your favorite HarperCollins author. Credits Designed by Amy Hill Copyright WALL STREET MEAT. Copyright © 2003, 2004 by Andy Kessler. All rights reserved under International and Pan-American Copyright Conventions. By payment of the required fees, you have been granted the non-exclusive, non-transferable right to access and read the text of this e-book on-screen.
My Narrow Escape from the Stock Market Grinder ANDY KESSLER For Nancy and the Boys Contents Foreword by Michael Lewis v Introduction 1 C HAPTER 1 Right 51% of the Time C HAPTER 2 Piranhas 19 C HAPTER 3 You’re in the Entertainment Business 41 C HAPTER 4 Bull Run 50 C HAPTER 5 Time to Get Serious 70 C HAPTER 6 Wheeling and Dealing at Morgan 88 C HAPTER 7 Up, then Tanked 114 C HAPTER 8 Kicking Off the ’90s 121 C HAPTER 9 Something about Mary 132 C HAPTER 10 Netscape IPO 165 C HAPTER 11 Quacking Ducks 172 C HAPTER 12 Price Targets as a Marketing Tool 181 C HAPTER 13 Synthetic Goldman Sachs 195 C HAPTER 14 The Ax Syndrome 209 C HAPTER 15 Spitzer Fixer 219 5 Afterword 233 Index 247 About the Author Credits Cover Copyright About the Publisher Foreword by Michael Lewis J ack Grubman, Frank Quattrone, Mary Meeker, and Henry Blodget, were Wall Street’s best-known promoters of the Internettelecom boom.
How to Kick Ass on Wall Street by Andy Kessler
Andy Kessler, Bernie Madoff, buttonwood tree, call centre, collateralized debt obligation, family office, fixed income, hiring and firing, invention of the wheel, invisible hand, London Whale, margin call, NetJets, Nick Leeson, pets.com, risk tolerance, Silicon Valley, sovereign wealth fund, time value of money, too big to fail, value at risk
How to Kick Ass On Wall Street Andy Kessler Author of Wall Street Meat, Running Money and Eat People Copyright © 2012 by Andy Kessler All rights reserved, including the right of reproduction in whole or in part in any form. Escape Velocity Press www.andykessler.com Introduction All right! You got a job on Wall Street. Way to go. Welcome aboard. If history is any guide, you’re wicked smart, a great athlete and know somebody. Or any combo of the above. Don’t matter. You got the job. Feels good, right? When you got the offer, you were probably as pumped as Will Ferrell in Semi-Pro, “Yes! Give me ten Norton! Everyone can eat shit! A big bag of shit! Ha ha ha! I'm the greatest man in the world! Whoo!” OK. Not so fast. All you got was a ticket to the dance.
It is a living document that I’ll keep updating and adding to it. Send me an email at email@example.com with KAWS or Kick Ass on Wall Street in the subject line and I’ll put you on my mailing list. Feedback is welcome, good or bad. I have a thick skin. And tell me what you’re doing, how you’re doing and how this helped. You can find most of the other stuff I’ve written at www.andykessler.com. Good luck and kick some ass on Wall Street. Andy Kessler
Albert Einstein, Andy Kessler, automated trading system, bank run, Big bang: deregulation of the City of London, Bretton Woods, British Empire, buttonwood tree, Claude Shannon: information theory, Corn Laws, Edward Lloyd's coffeehouse, fiat currency, floating exchange rates, Fractional reserve banking, full employment, Grace Hopper, invention of the steam engine, invention of the telephone, invisible hand, Isaac Newton, Jacquard loom, Jacquard loom, James Hargreaves, James Watt: steam engine, John von Neumann, joint-stock company, joint-stock limited liability company, Joseph-Marie Jacquard, Maui Hawaii, Menlo Park, Metcalfe's law, packet switching, price mechanism, probability theory / Blaise Pascal / Pierre de Fermat, profit motive, railway mania, RAND corporation, Silicon Valley, Small Order Execution System, South Sea Bubble, spice trade, spinning jenny, Steve Jobs, supply-chain management, supply-chain management software, trade route, transatlantic slave trade, transatlantic slave trade, tulip mania, Turing machine, Turing test, William Shockley: the traitorous eight
HOW WE G O T H ER E A Slightly Irreverent History of Technology and Markets A Silicon Valley and Wall Street Primer To order a copy of this book, click: http://rcm.amazon.com/e/cm?t=andykessler20&o=1&p=8&l=as1&asins=0060840978&fc1=000000&=1&lc1=00 00ff&bc1=000000<1=_blank&IS2=1&f=ifr&bg1=ffffff&f=ifr ALSO BY ANDY KESSLER Wall Street Meat: Jack Grubman, Frank Quattrone, Mary Meeker, Henry Blodget and me Running Money: Hedge Fund Honchos, Monster Markets and My Hunt for the Big Score Coming in 2006: The End of Medicine: Tales of Naked Mice, 3D Guts and Rebooting Doctors How We Got Here A Silicon Valley and Wall Street Primer . A Slightly Irreverent History of Technology And Markets Andy Kessler Copyright © 2005 by Andy Kessler All rights reserved, including the right of reproduction in whole or in part in any form. www.andykessler.com email the author at: firstname.lastname@example.org with HWGH as the subject Library of Congress Control Number: Cataloging-in-Publication data is available.
Standage, Tom, 1998, The Victorian Internet – The Remarkable Story of the Telegraph and the Nineteenth Century On-Line Pioneers, Berkeley Sylla, Richard, 1998, The First Great IPO, Financial History Magazine Issue, 64 Thurston, Robert, 1878, A History of the Growth of the Steam-Engine Weightman, Gavin, 2003, Signor Marconi’s Magic Box – The Most Remarkable Invention of the 19th Century and the Amateur Inventor Whose Genius Sparked a Revolution, Da Capo Press About the Author Andy Kessler is a former electrical engineer turned Wall Street analyst turned investment banker turned venture capitalist turned hedge fund manager turned writer and author. His book Wall Street Meat: Jack Grubman, Frank Quattrone, Mary Meeker, Henry Blodget and me was published in March of 2003. The follow on, Running Money: Hedge Fund Honchos, Monster Markets and My Hunt for the Big Score, was published by HarperCollins in September of 2004. Andy is a frequent contributor to the Wall Street Journal op-ed page and has written for Forbes Magazine, Wired, the LA Times, and The American Spectator magazine as well as techcentralstation.com and thestreet.com websites. He has even written a piece of fiction for Slate - bet you can’t find it. Andy Kessler was co-founder and President of Velocity Capital Management, an investment firm based in Palo Alto, California, that provided funding for private and public technology and communications companies.
Running Money by Andy Kessler
Andy Kessler, Apple II, bioinformatics, British Empire, business intelligence, buy low sell high, call centre, Corn Laws, family office, full employment, George Gilder, happiness index / gross national happiness, interest rate swap, invisible hand, James Hargreaves, James Watt: steam engine, joint-stock company, joint-stock limited liability company, knowledge worker, Long Term Capital Management, mail merge, margin call, market bubble, Maui Hawaii, Menlo Park, Network effects, packet switching, pattern recognition, pets.com, railway mania, risk tolerance, Sand Hill Road, Silicon Valley, South China Sea, spinning jenny, Steve Jobs, Steve Wozniak, Toyota Production System
See Internet Western Digital, 128 Whitaker Investments, 176 Whitney, Eli, 67 wide area networks, 188, 199 Wilkinson, John, 51–52, 56–57, 78, 101, 268 William Morris Agency, 196 Windows, 197, 247, 259, 274, 276, 277 Winnick, Gary, 183, 187, 290 Winstar, 179 Wintel, 265, 277 wireless technology, 179, 296 worker training, 122 World Bank, 264 WorldCom, 225, 290 Worldtalk, 106 Wozniak, Steve, 128 Wynn, Steve, 50 Xanadu, 118 Xerox PARC (Palo Alto Research Center), 118, 189, 190–91 Xilinx, 130, 131 Yahoo, 92, 93, 136, 143, 223, 247 Yamaichi, 160 Yamamoto, Takatoshi, 154–61 yen-carry trade, 162–65, 168, 292 Z80 home computer, 127 Zilog, 127 Zona, Hank, 131 Zoran, 96 About the Author Andy Kessler is the author of the book that rippled through the financial world, Wall Street Meat: My Narrow Escape from the Stock Market Grinder. He has written for the Wall Street Journal, Forbes, TheStreet.com and the American Spectator, and appeared on CNBC, CNN, Nightline and Dateline NBC. He lives in northern California. Visit www.AuthorTracker.com for exclusive information on your favorite HarperCollins author. ALSO BY ANDY KESSLER Wall Street Meat Credits Designed by Nancy Singer Copyright RUNNING MONEY. Copyright © 2004 by Andy Kessler. All rights reserved under International and Pan-American Copyright Conventions. By payment of the required fees, you have been granted the non-exclusive, non-transferable right to access and read the text of this e-book on-screen.
> > > Running Money > > > > Hedge Fund Honchos, Monster Markets and My Hunt for the Big Score > > > > > Andy Kessler For Nancy and our bookends, Kyle and Brett, and our books, Kur t and R yan > > > Contents Ssangyong Sweat 1 Part I Raising Funds 7 Part II Revolution 37 Part III Searching for Scale 87 Part IV Intellectual Property 115 Part V The Next Barrier 173 Part VI Burst 221 Part VII The Margin Surplus 231 Part VIII Epilogue 285 Acknowledgments 297 Index 299 About the Author Other Books by Andy Kessler Credits Cover Copyright About the Publisher > > > Ssangyong Sweat This market really sucks. It’s the fall of 1998, and things are banging around so much, my head hurts. Just like that, our gains from the last few years have vanished. Poof. You can’t ever forget how precarious and humbling running money really is.
23andMe, Andy Kessler, bank run, barriers to entry, Berlin Wall, British Empire, business process, California gold rush, carbon footprint, Cass Sunstein, cloud computing, collateralized debt obligation, collective bargaining, computer age, disintermediation, Eugene Fama: efficient market hypothesis, fiat currency, Firefox, Fractional reserve banking, George Gilder, Gordon Gekko, greed is good, income inequality, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, Joseph Schumpeter, knowledge economy, knowledge worker, libertarian paternalism, low skilled workers, Mark Zuckerberg, McMansion, Netflix Prize, packet switching, personalized medicine, pets.com, prediction markets, pre–internet, profit motive, race to the bottom, Richard Thaler, risk tolerance, risk-adjusted returns, Silicon Valley, six sigma, Skype, social graph, Steve Jobs, The Wealth of Nations by Adam Smith, transcontinental railway, transfer pricing, Yogi Berra
Stephen’s Green, Dublin 2, Ireland (a division of Penguin Books Ltd); Penguin Books Australia Ltd, 250 Camberwell Road, Camberwell, Victoria 3124, Australia (a division of Pearson Australia Group Pty Ltd); Penguin Books India Pvt Ltd, 11 Community Centre, Panchsheel Park, New Delhi – 110 017, India; Penguin Group (NZ), 67 Apollo Drive, Rosedale, North Shore 0632, New Zealand (a division of Pearson New Zealand Ltd); Penguin Books (South Africa) (Pty) Ltd, 24 Sturdee Avenue, Rosebank, Johannesburg 2196, South Africa Penguin Books Ltd, Registered Offices: 80 Strand, London WC2R ORL, England First published in 2011 by Portfolio / Penguin, a member of Penguin Group (USA) Inc. Copyright © Andy Kessler, 2011 All rights reserved LIBRARY OF CONGRESS CATALOGING IN PUBLICATION DATA Kessler, Andy. Eat people : unapologetic rules for entrepreneurial success / Andy Kessler. p. cm. Includes index. eISBN : 978-1-101-47562-1 1. Entrepreneurship. 2. Technological innovations—Economic aspects. 3. New products. 4. Value. 5. Economics. I. Title. HB615.K396 2011 658.4’09—dc22 2010039727 Set in Minion Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of both the copyright owner and the above publisher of this book.
The Glass Cage: Automation and Us by Nicholas Carr
Airbnb, Andy Kessler, Atul Gawande, autonomous vehicles, business process, call centre, Captain Sullenberger Hudson, Checklist Manifesto, cloud computing, David Brooks, deliberate practice, deskilling, Elon Musk, Erik Brynjolfsson, Flash crash, Frank Gehry, Frank Levy and Richard Murnane: The New Division of Labor, Frederick Winslow Taylor, future of work, global supply chain, Google Glasses, Google Hangouts, High speed trading, indoor plumbing, industrial robot, Internet of things, Jacquard loom, Jacquard loom, James Watt: steam engine, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, knowledge worker, Lyft, Mark Zuckerberg, means of production, natural language processing, new economy, Nicholas Carr, Norbert Wiener, Oculus Rift, pattern recognition, Peter Thiel, place-making, Plutocrats, plutocrats, profit motive, Ralph Waldo Emerson, RAND corporation, randomized controlled trial, Ray Kurzweil, recommendation engine, robot derives from the Czech word robota Czech, meaning slave, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley ideology, software is eating the world, Stephen Hawking, Steve Jobs, TaskRabbit, technoutopianism, The Wealth of Nations by Adam Smith, Watson beat the top human players on Jeopardy!
He pointed to aviation as an example: “A computerized brain known as the autopilot can fly a 787 jet unaided, but irrationally we place human pilots in the cockpit to babysit the autopilot ‘just in case.’ ”1 The news that a person was driving the Google car that crashed in 2011 prompted a writer at a prominent technology blog to exclaim, “More robo-drivers!”2 Commenting on the struggles of Chicago’s public schools, Wall Street Journal writer Andy Kessler remarked, only half-jokingly, “Why not forget the teachers and issue all 404,151 students an iPad or Android tablet?”3 In a 2012 essay, the respected Silicon Valley venture capitalist Vinod Khosla suggested that health care will be much improved when medical software—which he dubs “Doctor Algorithm”—goes from assisting primary-care physicians in making diagnoses to replacing the doctors entirely.
.: Oxford University Press, 2005), 247. 58.Andy Clark, Natural-Born Cyborgs: Minds, Technologies, and the Future of Human Intelligence (New York: Oxford University Press, 2003), 4. 59.Quoted in Fallows, “Places You’ll Go.” Chapter Seven: AUTOMATION FOR THE PEOPLE 1.Kevin Kelly, “Better than Human: Why Robots Will—and Must—Take Our Jobs,” Wired, January 2013. 2.Jay Yarow, “Human Driver Crashes Google’s Self Driving Car,” Business Insider, August 5, 2011, businessinsider.com/googles-self-driving-cars-get-in-their-first-accident-2011-8. 3.Andy Kessler, “Professors Are About to Get an Online Education,” Wall Street Journal, June 3, 2013. 4.Vinod Khosla, “Do We Need Doctors or Algorithms?,” TechCrunch, January 10, 2012, techcrunch.com/2012/01/10/doctors-or-algorithms. 5.Gerald Traufetter, “The Computer vs. the Captain: Will Increasing Automation Make Jets Less Safe?,” Spiegel Online, July 31, 2009, spiegel.de/international/world/the-computer-vs-the-captain-will-increasing-automation-make-jets-less-safe-a-639298.html. 6.See Adam Fisher, “Inside Google’s Quest to Popularize Self-Driving Cars,” Popular Science, October 2013. 7.Tosha B.
Endless Money: The Moral Hazards of Socialism by William Baker, Addison Wiggin
Andy Kessler, asset allocation, backtesting, bank run, banking crisis, Berlin Wall, Bernie Madoff, Black Swan, Branko Milanovic, Bretton Woods, BRICs, business climate, capital asset pricing model, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, crony capitalism, cuban missile crisis, currency manipulation / currency intervention, debt deflation, Elliott wave, en.wikipedia.org, Fall of the Berlin Wall, feminist movement, fiat currency, fixed income, floating exchange rates, Fractional reserve banking, full employment, German hyperinflation, housing crisis, income inequality, index fund, inflation targeting, Joseph Schumpeter, laissez-faire capitalism, land reform, liquidity trap, Long Term Capital Management, McMansion, moral hazard, mortgage tax deduction, naked short selling, offshore financial centre, Ponzi scheme, price stability, pushing on a string, quantitative easing, RAND corporation, rent control, reserve currency, riskless arbitrage, Ronald Reagan, school vouchers, seigniorage, short selling, Silicon Valley, six sigma, statistical arbitrage, statistical model, Steve Jobs, The Great Moderation, the scientific method, time value of money, too big to fail, upwardly mobile, War on Poverty, Yogi Berra, young professional
Treasury and the Fed are set to give everybody a mulligan. The top 19 commercial banks are now explicitly backstopped from failure. Many if not most may still be nationalized should the crisis worsen beyond the assumptions of the not-so-stressful “stress test” regulators conducted in early 2009. Here is where Limbaugh veers away from conservatism: He quotes former hedge fund manager and Morgan Stanley semiconductor analyst Andy Kessler, who projects that the U.S. government will profit by as much as $2.2 trillion from its ownership of mortgages and derivatives obtained through the GSEs and the TARP bailout facility. Kessler may indeed be correct, and he hints that this would happen because “. . . the Treasury and the Federal Reserve get to cheat . . . with lots of levers (they) can and will pump capital into the U.S. economy to get it moving again.
“The Out of Control Tax Code,” Don’t Mess With Taxes weblog, April 17, 2008. Information sourced from the CCH Standard Federal Tax Reporter, a Notes 12. 13. 14. 15. 16. 17. 391 Walters Kluwer business. http://dontmesswithtaxes.typepad.com/dont_mess_ with_taxes/2008/04/the-out-of-cont.html. Limbaugh, Rush, Who Do You Trust?, Opening Monologue: September 25, 2008, http://www.rushlimbaugh.com/home/daily/site_092508/content/ 01125108.guest.html. Ibid. Andy Kessler, “The Paulson Plan Will Make Money for Taxpayers,” Wall Street Journal, September 25, 2008, http://online.wsj.com/article/ SB122230704116773989.html?mod=googlenews_wsj. Rush, Limbaugh, Who Do You Trust?, Opening Monologue: September 25, 2008, http://www.rushlimbaugh.com/home/daily/site_092508/content/ 01125108.guest.html. Rush Limbaugh Show, Hour Two, December 17, 2008. Donald Lambro, “GOP Aims For New Economic Agenda,” The Washington Times, November 23, 2008.
The Start-Up of You by Reid Hoffman
Airbnb, Andy Kessler, Black Swan, business intelligence, Cal Newport, Clayton Christensen, David Brooks, Donald Trump, en.wikipedia.org, fear of failure, follow your passion, future of work, game design, Jeff Bezos, job automation, late fees, Mark Zuckerberg, Menlo Park, out of africa, Paul Graham, Peter Thiel, recommendation engine, Richard Bolles, risk tolerance, rolodex, shareholder value, side project, Silicon Valley, Silicon Valley startup, social web, Steve Jobs, Steve Wozniak, Tony Hsieh, transaction costs
(More-draconian analysts predict a young person today will get nothing.) Consider the Social Security tax that comes out of your paycheck like you would a loan to a second cousin who has a drug problem—you might get paid back, but don’t count on it. 5. “Cost-Cutting Strategies in the Downturn: A Delicate Balancing Act,” May 2009, http://www.towerswatson.com/assets/pdf/610/CostCutting-RB_12–29–09.pdf 6. Andy Kessler, “Is Your Job an Endangered Species?” Wall Street Journal, February 17, 2011, http://online.wsj.com/article/SB10001424052748703439504576116340050218236.html 7. See the links in Will Wilkinson’s discussion, “Are ATMs Stealing Jobs?” The Economist, June 15, 2011, http://www.economist.com/blogs/democracyinamerica/2011/06/technology-and-unemployment 8. Alex Taylor III, Sixty to Zero (New Haven: Yale University Press, 2011), 14. 9.
An Optimist's Tour of the Future by Mark Stevenson
23andMe, Albert Einstein, Andy Kessler, augmented reality, bank run, carbon footprint, carbon-based life, clean water, computer age, decarbonisation, double helix, Douglas Hofstadter, Elon Musk, flex fuel, Gödel, Escher, Bach, Hans Rosling, Internet of things, invention of agriculture, Isaac Newton, Jeff Bezos, Kevin Kelly, Law of Accelerating Returns, life extension, Louis Pasteur, mutually assured destruction, Naomi Klein, packet switching, peak oil, pre–internet, Ray Kurzweil, Richard Feynman, Richard Feynman, Rodney Brooks, self-driving car, Silicon Valley, smart cities, stem cell, Stephen Hawking, Steven Pinker, Stewart Brand, strong AI, the scientific method, Wall-E, X Prize
More seriously, what’s the web of interactions between our genome and our day-to-day lives that triggers disease? Why is it that your sister always gets colds but you rarely do? Did Uncle Bob get heart disease due to one burger too many? Was it always written in his code? Or is he the victim of some yet unfound link between eating mustard sandwiches and working in a laundry? Why do some of us develop an allergy to latex? Why can a bee sting send skateboarding legend Andy Kessler into fatal cardiac arrest, but not me – and why is it the more times you’re stung, the more likely you are to develop a potentially fatal allergy? Or to put it another way, how does Keith Richards stay alive? At one end of the scale there are some conditions that are ‘in the genes.’ This is genetic determinism that’s as unforgiving as Richard Dawkins in a bible class. Huntington’s disease (which famously killed folk legend Woody Guthrie in 1967) is a good example.
Only Humans Need Apply: Winners and Losers in the Age of Smart Machines by Thomas H. Davenport, Julia Kirby
AI winter, Andy Kessler, artificial general intelligence, asset allocation, Automated Insights, autonomous vehicles, Baxter: Rethink Robotics, business intelligence, business process, call centre, carbon-based life, Clayton Christensen, clockwork universe, conceptual framework, dark matter, David Brooks, deliberate practice, deskilling, Edward Lloyd's coffeehouse, Elon Musk, Erik Brynjolfsson, estate planning, follow your passion, Frank Levy and Richard Murnane: The New Division of Labor, Freestyle chess, game design, general-purpose programming language, Google Glasses, Hans Lippershey, haute cuisine, income inequality, index fund, industrial robot, information retrieval, intermodal, Internet of things, inventory management, Isaac Newton, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Khan Academy, knowledge worker, labor-force participation, loss aversion, Mark Zuckerberg, Narrative Science, natural language processing, Norbert Wiener, nuclear winter, pattern recognition, performance metric, Peter Thiel, precariat, quantitative trading / quantitative ﬁnance, Ray Kurzweil, Richard Feynman, Richard Feynman, risk tolerance, Robert Shiller, Robert Shiller, Rodney Brooks, Second Machine Age, self-driving car, Silicon Valley, six sigma, Skype, speech recognition, spinning jenny, statistical model, Stephen Hawking, Steve Jobs, Steve Wozniak, strong AI, superintelligent machines, supply-chain management, transaction costs, Tyler Cowen: Great Stagnation, Watson beat the top human players on Jeopardy!, Works Progress Administration, Zipcar
Two More Fields, Same Five Steps Now that you’ve got a clear understanding of the difference in the five ways of stepping, let’s think about how they translate to a couple of other realms of knowledge work: teaching and financial advising. As we’ve already noted, teachers are threatened in their roles as personalized curriculum designers and transmitters of content; technology can do both of these functions quite well. While some rabble-rousers (notably Andy Kessler, a former hedge fund manager) argue that teachers will (and should) disappear with the rise of these technologies, it’s more likely that teachers’ roles will simply adapt. We’re inclined to believe Thomas Arnett, a researcher on innovation in education, who predicts technology will “automate tasks such as taking attendance, handing back assignments, and checking multiple choice or fill-in-the-blank answers on tests and quizzes”—and even that it will “take care of some basic instruction and give [teachers] real-time data for tailoring lessons to student needs”—but that many aspects of teaching will remain too vital and essentially human to be replaced.14 Teachers who step up in a technology-rich environment will, for example, do the big-picture planning of curriculum units, and the overall questions of what must be taught.
3D printing, Airbnb, Amazon Web Services, Andy Kessler, banking crisis, barriers to entry, bitcoin, blockchain, Burning Man, business climate, call centre, car-free, cloud computing, collaborative consumption, collaborative economy, collective bargaining, congestion charging, crowdsourcing, cryptocurrency, decarbonisation, don't be evil, Elon Musk, en.wikipedia.org, ethereum blockchain, Ferguson, Missouri, Firefox, frictionless, Gini coefficient, hive mind, income inequality, index fund, informal economy, Internet of things, Jane Jacobs, Jeff Bezos, jimmy wales, job satisfaction, Kickstarter, Lean Startup, Lyft, means of production, megacity, Minecraft, minimum viable product, Network effects, new economy, Oculus Rift, openstreetmap, optical character recognition, pattern recognition, peer-to-peer lending, Richard Stallman, ride hailing / ride sharing, Ronald Coase, Ronald Reagan, Satoshi Nakamoto, Search for Extraterrestrial Intelligence, self-driving car, shareholder value, sharing economy, Silicon Valley, six sigma, Skype, smart cities, smart grid, Snapchat, sovereign wealth fund, Steve Crocker, Steve Jobs, Steven Levy, TaskRabbit, The Death and Life of Great American Cities, The Nature of the Firm, transaction costs, Turing test, Uber and Lyft, Zipcar
Megan McArdle, “Why You Can’t Get a Taxi,” The Atlantic, May 2012. 12. “Taxicab,” Wikipedia, http://en.wikipedia.org/wiki/Taxicab. 13. “Taxicabs of the United Kingdom,” Wikipedia, http://en.wikipedia.org/wiki/Taxicabs_of_the_United_Kingdom#cite_note-The_Knowledge-3. 14. Jeff Bercovici, “Uber’s Ratings Terrorize Drivers and Trick Riders. Why Not Fix Them?” Forbes.com, August 14, 2014. 15. Andy Kessler, “Brian Chesky: The ‘Sharing Economy’ and Its Enemies,” Wall Street Journal, January 17, 2014. 16. “Freelancing in America: A National Survey of the New Workforce,” 2014, independent study commissioned by the Freelancers Union and ElanceoDesk, http://chaoscc.ro/wp-content/uploads/2014/09/freelancinginamerica_report-1.pdf. 17. Søren Mark Peterson, “Loser-Generated Content: From Participation to Exploitation,” First Monday 13, no. 3 (2008), http://firstmonday.org/article/view/2141/1948.
The New New Thing: A Silicon Valley Story by Michael Lewis
Albert Einstein, Andy Kessler, business climate, Chance favours the prepared mind, data acquisition, family office, high net worth, invention of the steam engine, invisible hand, Jeff Bezos, Menlo Park, pre–internet, risk tolerance, Sand Hill Road, Silicon Valley, Silicon Valley startup, Thorstein Veblen, Y2K
He'd spent the last five years, and upended the U.S. economy, to get his hands on the one we'd just sailed across the Atlantic Ocean. "Hyperion is a beautiful boat," he said, and I knew when he said it what the next word would be. "But..." His finger traced the lines of his new boat, which was still no more than a figment of his imagination. Pure possibility. A smile lengthened across his face. Hyperion was nice, but this... this was the perfect boat. Page 269 Acknowledgments Andy Kessler and Fred Kittler introduced me to the Valley, and helped make this book what it is. Jim and Nancy Rutter Clark put up with a writer in ways that no one should have to. Clark has made a career of taking risks others avoid. He took another when he let me talk my way into his life, and I'll always be grateful for that. I'd also like to thank Pham Nguyen for checking my facts and Chris Wiman for checking my sentiment.
That Used to Be Us by Thomas L. Friedman, Michael Mandelbaum
3D printing, Affordable Care Act / Obamacare, Albert Einstein, Amazon Web Services, American Society of Civil Engineers: Report Card, Andy Kessler, Ayatollah Khomeini, bank run, barriers to entry, Berlin Wall, blue-collar work, Bretton Woods, business process, call centre, carbon footprint, Carmen Reinhart, Cass Sunstein, centre right, Climatic Research Unit, cloud computing, collective bargaining, corporate social responsibility, Credit Default Swap, crowdsourcing, delayed gratification, energy security, Fall of the Berlin Wall, fear of failure, full employment, Google Earth, illegal immigration, immigration reform, income inequality, job automation, Kenneth Rogoff, knowledge economy, Lean Startup, low skilled workers, Mark Zuckerberg, market design, more computing power than Apollo, Network effects, obamacare, oil shock, pension reform, Report Card for America’s Infrastructure, rising living standards, Ronald Reagan, Rosa Parks, Saturday Night Live, shareholder value, Silicon Valley, Silicon Valley startup, Skype, Steve Jobs, the scientific method, Thomas L Friedman, too big to fail, University of East Anglia, WikiLeaks
Nonroutine low-skilled work can pay decently, depending on the local economy and how well that worker performs. But white- and blue-collar routine work shrinks, gets squeezed on pay, or just vanishes. The net result of the “rising demand for highly educated workers performing abstract tasks and for less-educated workers performing ‘manual’ or service tasks is the partial hollowing out or polarization of employment opportunities,” conclude Katz and Autor. Andy Kessler, a former hedge fund manager and the author of Eat People: And Other Unapologetic Rules for Game-Changing Entrepreneurs, published a piece in The Wall Street Journal (February 17, 2011) proposing an even simpler and more evocative typology of the new labor market: Forget blue-collar and white-collar. There are two types of workers in our economy: creators and servers. Creators are the ones driving productivity—writing code, designing chips, creating drugs, running search engines.
The Facebook Effect by David Kirkpatrick
Andy Kessler, Burning Man, delayed gratification, demand response, don't be evil, global village, happiness index / gross national happiness, Howard Rheingold, Jeff Bezos, Mark Zuckerberg, Marshall McLuhan, Menlo Park, Network effects, Peter Thiel, rolodex, Sand Hill Road, sharing economy, Silicon Valley, Silicon Valley startup, Skype, social graph, social software, social web, Startup school, Steve Ballmer, Steve Jobs, Stewart Brand, the payments system, The Wealth of Nations by Adam Smith, Whole Earth Review, winner-take-all economy, Y Combinator
The CEO Page 166 “I want to stress the importance of being young”: Mark Coker, “Start-Up Advice For Entrepreneurs, From Y Combinator Startup School,” Venturebeat, March 26, 2007, http://venturebeat.com/2007/03/26/start-up-advice-for-entrepreneurs-from-y-combinator-start-up-school/ (accessed November 28, 2009). 169 But at the end of March, BusinessWeek’s online edition: Steve Rosenbush, “Facebook’s on the Block,” BusinessWeek, March 28, 2006, http://www.businessweek.com/technology/content/mar2006/tc20060327_215976.htm (accessed November 15, 2009). 170 But to Zuckerberg, what was more significant: Ibid. 171 Another imitator, which launched around the same time in China: Baloun, Inside Facebook, 95. 173 He also quoted a sociologist who speculated: Cassidy, “Me Media.” 174 who he had met while: Lacy, 162. 174 After some negotiation, Zuckerberg: Lacy, 162. 176 A week after the program launched: Rob Walker, “A For-Credit Course,” New York Times, September 30, 2007, http://www.nytimes.com/2007/09/30/magazine/30wwInconsumed-t.html (accessed December 27, 2009). 177 As part of the deal the ad giant: email from Brandee Barker, Facebook public relations, December 11, 2009. 9. 2006 Page 184 Peter Thiel, older but very sympathetic: Lacy, 165. 186 Some nights, unable to sleep: David Kushner, “The Baby Billionaires of Silicon Valley,” Rolling Stone, November 16, 2006, http://rollingstone.com/news/story/12286036/the_baby_billionaires_of_silicon_valley (accessed November 28, 2009). 186 “I hope he doesn’t sell it”: Kevin Colleran, interview with the author. 190 Within about three hours the group’s membership: Tracy Samantha Schmidt, “Inside the Backlash Against Facebook,” Time, September 6, 2006, www.time.com/time/nation/article/0,8599,1532225,00.html (accessed December 11, 2009). 190 And there were about five hundred other protest groups: Brandon Moore, “Student users say new Facebook feed borders on stalking,” Arizona Daily Wildcat, September 8, 2006, http://wildcat.arizona.edu/2.2257/student-users-say-new-facebook-feed-borders-on-stalking-1.177273 (accessed December 11, 2009). 190 “Chuck Norris come save us”: Layla Aslani, “Users Rebel Against Facebook Feature,” Michigan Daily, September 7, 2006, http://www.michigandaily.com/content/users-rebel-against-facebook-feature (accessed December 11, 2009). 190 “You shouldn’t be forced to have a Web log”: Moore, “Student Users.” 190 “I’m really creeped out”: Aslani, “Users Rebel.” 191 But Zuckerberg, in New York on a promotional trip: Andrew Kessler, “Weekend Interview with Facebook’s Mark Zuckerberg,” Wall Street Journal, March 24, 2007, http://www.andykessler.com/andy_kessler/2007/03/wsj_weekend_int.html (accessed December 11, 2009). 10. Privacy Page 200 As one expert in privacy law recently asked: James Grimmelmann, “Saving Facebook,” Iowa Law Review (2009), http://www.law.uiowa.edu/journals/ilr/Issue%20PDFs/ILR_94–4_Grimmelmann.pdf (accessed December 11, 2009). 201 “At every turn, it seems Facebook makes it more difficult”: Marc Rotenberg, “Online Friends At What Price?
The Future of the Internet: And How to Stop It by Jonathan Zittrain
A Declaration of the Independence of Cyberspace, Amazon Mechanical Turk, Andy Kessler, barriers to entry, book scanning, Brewster Kahle, Burning Man, c2.com, call centre, Cass Sunstein, citizen journalism, Clayton Christensen, clean water, corporate governance, Daniel Kahneman / Amos Tversky, distributed generation, en.wikipedia.org, Firefox, game design, Hacker Ethic, Howard Rheingold, Hush-A-Phone, illegal immigration, index card, informal economy, Internet Archive, jimmy wales, license plate recognition, loose coupling, mail merge, national security letter, packet switching, Post-materialism, post-materialism, pre–internet, price discrimination, profit maximization, Ralph Nader, RFC: Request For Comment, RFID, Richard Stallman, Richard Thaler, risk tolerance, Robert X Cringely, SETI@home, Silicon Valley, Skype, slashdot, software patent, Steve Ballmer, Steve Jobs, Ted Nelson, Telecommunications Act of 1996, The Nature of the Firm, The Wisdom of Crowds, web application, wikimedia commons
Netanel argues that the sorts of principle-based checks in most democracies, such as antidiscrimination principles and equality in the basic rights of citizenship, are not sustainable in an unregulated cyberspace environment. As applied in this case, Netanel’s argument might cast doubt on the net worth of “tricks” or technologies that seem to simultaneously promote democracy and undermine state sovereignty. See id. at 412—27 (discussing cyberpopulism); cf Andy Kessler, Network Solutions, WALL ST. J., Mar. 24, 2007, at A11 (describing the communities enabled by Facebook, in which user-specified preferences and privacy are carefully maintained in order to facilitate user openness). 90. LAWRENCE LESSIG, CODE: VERSION 2.0, 309 (2006). 91. In this case, the distinction is not between conduct rules and decision rules, but between conduct rules and enforcement.
The Future of Ideas: The Fate of the Commons in a Connected World by Lawrence Lessig
AltaVista, Andy Kessler, barriers to entry, business process, Cass Sunstein, computer age, dark matter, disintermediation, Erik Brynjolfsson, George Gilder, Hacker Ethic, Hedy Lamarr / George Antheil, Howard Rheingold, Hush-A-Phone, HyperCard, hypertext link, Innovator's Dilemma, invention of hypertext, inventory management, invisible hand, Jean Tirole, Jeff Bezos, Joseph Schumpeter, linked data, Menlo Park, Network effects, new economy, packet switching, price mechanism, profit maximization, RAND corporation, rent control, rent-seeking, RFC: Request For Comment, Richard Stallman, Richard Thaler, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, Silicon Valley, smart grid, software patent, spectrum auction, Steve Crocker, Steven Levy, Stewart Brand, Ted Nelson, Telecommunications Act of 1996, The Chicago School, transaction costs
Yochai Benkler, “The Commons as a Neglected Factor of Information Policy,” (paper presented at the Telecommunications Policy Research Conference (October 5, 1998): 70. Thus, “the availability of a commons creates incentives that make possible decentralization of content-production.” Benkler, “The Commons,” 68. 8 “These units are so small as to make the transaction costs involved in negotiating allocation of exclusive property rights to them prohibitive.” Benkler, “Overcoming Agoraphobia,” 174. 9 See, e.g., Andy Kessler, velcap.com, “Steal This Bandwidth!,” e-mail on file with author, June 19, 2001 (“The FCC should set aside some not-for-profit spectrum specifically for wireless access, probably at the same time they auction 3G licenses, and keep encouraging the grassroots to run with new technology.”). 10 Telephone interview with Alex Lightman, January 31, 2001. 11 Ibid. 12 Telephone interview with Dave Hughes, November 13, 2000. 13 Federal Communications Commission, “Creation of Low Power Radio Service,” January 27, 2000, at http://www.fcc.gov/Bureaus/Mass_Media/Orders/2000/fcc00019.doc. 14 Harry First, “Property, Commons, and the First Amendment: Towards a Core Common Infrastructure” (White Paper of the First Amendment Program at the Brennan Center for Justice at New York University School of Law, 2001), 42-44. 15 Departments of Commerce, Justice, and State, the Judiciary and Related Agencies Appropriations Act, 2001, H.R. 4942, enacting into law H.R. 5548, 106th Congress, Title VI §632 (2000) (enacted). 16 See Bob Brewin, “Airports Ground Use of Wireless: Safety, Loss of Income from Pay Phones Cited,” Computerworld (February 19, 2001): 1, http://computerworld.com/ cwi/story/0,1199,NAV47_STO57817_NLTpm,00.html. 17 The real aim of the airports, organized under “wirelessairport.org,” appears to be to develop a proprietary, exclusive architecture for wireless technologies within airports, to permit them to extract rents from the technology's use. 18 See, e.g., Hazlett, “The Wireless Craze,” 42 (“The burden of proof is on the potential entrant.
Extreme Money: Masters of the Universe and the Cult of Risk by Satyajit Das
affirmative action, Albert Einstein, algorithmic trading, Andy Kessler, Asian financial crisis, asset allocation, asset-backed security, bank run, banking crisis, banks create money, Basel III, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, bonus culture, Bretton Woods, BRICs, British Empire, capital asset pricing model, Carmen Reinhart, carried interest, Celtic Tiger, clean water, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, debt deflation, Deng Xiaoping, deskilling, discrete time, diversification, diversified portfolio, Doomsday Clock, Emanuel Derman, en.wikipedia.org, Eugene Fama: efficient market hypothesis, eurozone crisis, Fall of the Berlin Wall, financial independence, financial innovation, fixed income, full employment, global reserve currency, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, happiness index / gross national happiness, haute cuisine, high net worth, Hyman Minsky, index fund, interest rate swap, invention of the wheel, invisible hand, Isaac Newton, job automation, Johann Wolfgang von Goethe, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Kevin Kelly, labour market flexibility, laissez-faire capitalism, load shedding, locking in a profit, Long Term Capital Management, Louis Bachelier, margin call, market bubble, market fundamentalism, Marshall McLuhan, Martin Wolf, merger arbitrage, Mikhail Gorbachev, Milgram experiment, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, Naomi Klein, Network effects, new economy, Nick Leeson, Nixon shock, Northern Rock, nuclear winter, oil shock, Own Your Own Home, pets.com, Plutocrats, plutocrats, Ponzi scheme, price anchoring, price stability, profit maximization, quantitative easing, quantitative trading / quantitative ﬁnance, Ralph Nader, RAND corporation, random walk, Ray Kurzweil, regulatory arbitrage, rent control, rent-seeking, reserve currency, Richard Feynman, Richard Feynman, Richard Thaler, risk-adjusted returns, risk/return, road to serfdom, Robert Shiller, Robert Shiller, Rod Stewart played at Stephen Schwarzman birthday party, rolodex, Ronald Reagan, Ronald Reagan: Tear down this wall, savings glut, shareholder value, Sharpe ratio, short selling, Silicon Valley, six sigma, Slavoj Žižek, South Sea Bubble, special economic zone, statistical model, Stephen Hawking, Steve Jobs, The Chicago School, The Great Moderation, the market place, the medium is the message, The Myth of the Rational Market, The Nature of the Firm, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trickle-down economics, Turing test, Upton Sinclair, value at risk, Yogi Berra, zero-coupon bond
The top five executives at Bear Stearns and Lehman pocketed cash bonuses exceeding $300 million and $150 million respectively (in 2009 U.S. dollars). Although the earnings on which the remuneration was based were reversed in 2008, the executives did not return the payments received.36 Salli Krawcheck, a former CFO at Citi, observed: “it’s better to be an investment bank employee than shareholder.”37 Andy Kessler, a former Wall Street research analyst, noted: “Wall Street is just a compensation scheme.... They literally exist to pay out half their revenue as compensation. And that’s what gets them into trouble every so often—it’s just a game of generating revenue, because the players know they will get half of it back.”38 There were crumbs from the bankers’ feast for all. Regulators were seduced with invitations to all-expense-paid lavish conferences and speaking engagements.