The Reading Unlock

Entrepreneurs influenced by a single read include Joe Coulombe, Elon Musk, Jeff Bezos, Morris Chang, Sarah Blakely, Chip Wilson and Phil Knight.

Trungphan2

Sep 23, 2023

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Today, we are discussing entrepreneurs who were inspired by reading a single article or blurb.

Also this week:

Eliud Kipchoge's sub-2 hour marathon
What’s up with Airbnb cleaning fees?
And them fire memes (including the Roman Empire)

AI image prompt: “Reading a fat stack of magazines” (Stable Diffusion)

One of my favorite genres of quotes is investors talking about how much they love reading.

The Investment Master Class website has a collection of them including these bangers:

Warren Buffett: “The advice I would give is to read everything in sight. And to start very young. It’s a huge advantage in almost any field to start young. If that’s where your interest lies, and you start young, and you read a lot, you’re going to do well."
Marc Andreessen: “I’ve really read all the time since I was a little kid, it's been a lifelong thing. It's basically trying to try to fill in all the puzzle pieces for the big discrepancies. A great term is ‘sense-making’. Essentially, ‘what the hell is happening and why?’ The world is an incredibly complex and erratic place and trying to figure that out ...is kind of a lifetime occupation.”
Charlie Munger: “In my whole life, I have known no wise people — over a broad subject matter area — who didn’t read all the time. None. Zero. You’d be amazed at how much Warren reads and how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.” (Author’s note: that is a funny image)
Howard Marks: "I think its helps to read broadly, what good does it do to know everything about one little thing if you don't know how it fits into the world, and how the world is going to effect it."
Seth Klarman: “Never stop reading. History doesn’t repeat but it does rhyme.”
Sam Zell: "I've said it before and I'll underscore it here: I am a voracious consumer of information. I have honed my ability to digest a lot of information, sift out what's potentially relevant, retain it, and then recall it when it's useful. I read at least five newspapers every day, and five business magazines a week. I remember all of it, or at least everything relevant. I also like to read escapist fiction — mystery novels, spy thrillers — and I go through about one book a week. I usually remember nothing about them. Unless all of a sudden something becomes relevant."

“Read a lot" is reasonable advice but it is too general.

Take another piece of generic advice: "get 30 minutes of exercise a day". This practice is certainly beneficial, but its effects are diminished if your diet is crap and — like me — you have an urge to buy a Spicy Chicken burger whenever you are within five square kilometers of a Wendy's.

The follow-up question to any advice about reading is "Are you in a position to do anything with the hard-earned insights you have gained from your reading efforts?"

Frederik Gieschen has a great piece called “The Reading Obsession” that looks critically at Buffett’s famous quip “I just sit in my office and read all day”. It may be true in his 80s and 90s but the Oracle of Omaha was doing a lot more than just reading in his early career. He was travelling, hobnobbing, networking and spending thousands of dollars on long-distance phone calls. Buffett got to the point where he could read all day — while scarfing down Coca-Cola and cheeseburgers (I prefer Spicy Chicken) — because he spent decades building an insane Rolodex.

It is easy to see the benefits of reading for investors. Good investors combine unique insights with capital to unlock profitable trades. And you don't need many unique insights to have an incredible investing career.

In 2017, Charlie Munger gave a talk at the Daily Journal Annual Meeting and talked about how he had read the finance magazine Barron's for 50 years and only ever got one investment idea from the publication.

Stemming from a single article, the investment idea earned him $500m:

“I talked about patience. I read Barron’s for 50 years. In 50 years, I found one investment opportunity in Barron’s. I made ~$80m with almost no risk. I took the ~$80m and gave it to [Himalaya Capital’s] Li Lu, who turned it into $400-500 million. So I have made $400-500 million from reading Barron’s for 50 years and following one idea.”

The pipeline from reading-to-investing is easy to visualize.

But what about other ventures? Can a single insight from an article or book blurb change the trajectory of a business?

Yes, it can.

Since reading about the Munger / Barron’s story a few years ago, I tuned my information-gathering antennae to find stories of entrepreneurs who read a single article (or blurb) that unlocked something for their businesses or careers.

Here are a few that I have collected:

Joe Coulombe built the Trader Joe’s brand to appeal to educated shoppers who wanted international cuisines after reading two magazine articles. The first one was from Scientific American, which discussed the increasing percentage of the US population with a college degree. The second was an article from the Wall Street Journal that talked about the launch of Boeing 747s, which would reduce the cost of international travel.
Jeff Bezos decided to found Amazon after reading on a news website that the internet was growing at a rate of 2,300% per year.
Morris Chang laid the seeds for Taiwan Semiconductor Manufacturing Company (TSMC) after discovering an insight in a graduate-level textbook called Introduction to VLSI Systems. The textbook excerpt explained why it made economic sense for the design and manufacturing of microchips to take place at different companies, instead of being totally integrated in one organization (e.g. Intel).
Elon Musk’s first steps towards creating SpaceX began when he visited the NASA website and was surprised to find the agency had no schedule or plan to go to Mars.
Airbnb co-founders Brian Chesky and Joe Gebbia got the idea for their platform because they wanted to attend a design conference in San Francisco. When they checked the conference’s website, they found that all the recommended hotels were sold out. So, they figured they could rent out the extra space in their apartment and use the funds to buy tickets to the conference.
Sara Blakely gave her shape-wear company a perfect name (Spanx) after researching why Coca-Cola and Kodak were so well-known. She discovered that the Kodak founders liked the sound of the letter "K" and made it the first and last letters of the company name. Blakely then chose Spanks, but then changed it to Spanx (with an "x" instead of "ks") because she found that "made-up words work better for products than real words do, and they are also easier to trademark."
Chip Wilson was motivated to build Lululemon partly due to his reading about the demographic trend of women staying in their jobs for longer periods of time and delaying childbirth. As these women were going to the gym, running errands, and spending hours at the office, he believed there was an emerging need for female technical athletic gear that could be worn throughout the day.
Dietrich Mateschitz tried an energy drink in Thailand and realized that it was a huge business opportunity after reading that the country’s top corporate tax payer sold the drink. His idea: add carbonated water and sell the drink in Europe. We know it as Red Bull.
Bill Gates saw a Popular Mechanics magazine issue about the ALTAIR 8800 in 1975 that he said “stopped me in my tracks”. It convinced him and and Paul Allen to write a version of BASIC for the machine, which laid the foundation for the PC revolution.
Phil Knight found crucial financing for Nike — as well as a manufacturing partner — after reading an article about Japanese trading companies that “do just about everything — import, export, and extend easy credit to all kinds of companies.”

Wide and random reading on its own is beneficial. The practice nurtures the mind and is a good antidote for digital dopamine distractions. When you combine that with hard-earned expertise and skills, the results — as shown above — are next level.

Joe Coloumbe’s insight was so impactful because he used it to augment 10+ years of running retail stores.

Sara Blakely’s insight was so impactful because she used it to augment years of perfecting a textile product.

Morris Chang’s insight was so impactful because he used it to augment decades spent building a reputation at Texas Instruments and in the semiconductor field.

Chip Wilson’s insight was so impactful because he used it to augment 18 years of building a previous sportswear brand called Westbeach.

The insights for Elon and Bezos were so impactful because they combined them with capital and a decade of work (Zip2 and PayPal for Elon; the D.E. Shaw hedge fund for Bezos).

The ability to combine insights from reading with other skills reminds me of the "Talent Stack" framework popularized by cartoonist Scott Adams.

He created Dilbert, which became one of the most successful comic strips ever.

Did he do it by being the best — or a 99th percentile — artist? No. He was probably in the 70th percentile when it came to drawing. But he was also in the 70th percentile for humor and 70th percentile for business writing (based on his experience in the corporate world). In his specific Venn diagram of skills — drawing, humor, and business writing (aka “Talent Stack”) — Adams was in the 99th percentile.

Reading and comprehension are skills. In an increasingly digitally distracted world, fewer and fewer people are honing these skills. This presents a huge opportunity for those who want to build a niche 99th percentile talent stack by combining reading — and the insights gained from the experience — with a few other skills.

Nowadays, the bar is actually very low to be considered a top-percentile reader.

A Pew survey conducted in 2019 found that 1/4 of Americans hadn’t read a single book in the past year and the average amount of time spent on leisure reading was only 17 minutes a day. Comparatively, people spend over 2 hours a day on social media (granted, some of that time is spent reading but it is not the best medium for it and short-form video consumption obviously pales in comparison to deep reading).

Reading an hour a day for leisure probably puts you in the upper echelon of the skill.

It is obviously good to curate your reading diet but that step follows just reading more, period.

“It almost doesn’t matter what you read,” says investor Naval Ravikant. “Eventually, you will read enough things (and your interests will lead you there) that it will dramatically improve your life. Just like the best workout for you is one you’re excited enough to do every day, I would say for books, blogs, tweets, or whatever — anything with ideas and information and learning — the best ones to read are the ones you’re excited about reading all the time.”

The most impactful thing I’ve done for my reading habit in recent years is using two phones: a “cocaine phone” (with all apps) and a kale phone (with only reading and note-taking apps). Substituting a few glances at social media or check-ins on Slack can get you to an hour of reading a day.

Going back to Munger's story about Barron's magazine, the insight he found was for an auto-parts manufacturer called Tenneco. After making $80m — likely a 10x return — he gave the money to investor Li Lu. For the uninitiated, Lu was one of the leaders of the student protests during the Tiananmen Square crisis in 1989. He fled to America and then attended Columbia University (BA, MBA, JD) before launching his own hedge fund in 1997.

Lu was able to turn Munger’s $80m into $500m based on only a few bets, including a big one into Chinese electric-vehicle maker BYD.

During a lecture at the Columbia Business School in 2006, Lu shared thoughts on lifelong reading and learning that are relevant to this article (Lu was talking about his own portfolio, not anything specific to what he did with Munger):

You go through your life and you may not have more than five or ten insights which you develop over many, many years of study. Fifteen years ago I studied an American company and now I find the Asian counterpart and I find the valuation that I like. I can bet on it now but I studied that business for 15 years in between. I know everything about that industry and what really makes that business tick. An opportunity like that doesn’t come very often, so when it comes you have to seize it.
You need to have that kind of insight in order to really swing with conviction and if you cannot do that either psychologically or because you’re ill-prepared, you just will never really make any real amount of money [in investing].
How do you really build that insight? There is no other way than continuous curiosity, intense curiosity, continuous studying for your whole life.
The things about this approach is you progressively get better and better and better, to the point that you read a page and it only takes you a couple minutes to tell right away whether something jumps out. You can smell it when you see something.

The truth is that no one knows when the reading will pay off, but as the saying goes, "Luck is when preparation meets opportunity". And reading is a form of preparation that is available to anyone. All you really need is your attention (based on the fact I just spent the past 90 minutes watching Steve Nash basketball highlights on YouTube, this is easier said than done).

Let me end this article with some potential “ah-ha” insights for you. They are from a viral Twitter thread written by Steph Smith, my former colleague at The Hustle. The thread starts by citing the story of Bezos reading about how quickly the internet was growing and wonders what the current "generation-defining stats" are.

Here are a few for your reading pleasure:

The cost of mapping a genome has fallen ~100,000% over the last 15 years (“If that doesn't speak to you, we're talking about $100m down to <$1k — faster than Moore's law”).
College tuition has outpaced how much people earn by almost 10x.
In 1942, 8 hours of sleep was the norm. Today, people get an average of 6.8. New research and the $411B toll this costs the US each year has people finally "waking up" to its importance.
The percentage of men under 30 not having sex has tripled in the last ~decade.
The semi-conductor industry will be short 300k workers by 2025.

Hopefully, you just read something that will unlock a project you are working on.

If not, at least I got those banger memes at the bottom of the e-mail to give you a laugh.

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Links and Memes

Eliud Kipchoge’s sub-2 hour marathon: The Berlin Marathon will take place this Sunday. Kenyan running legend Eliud Kipchoge set the official record time of 2:01:09 last year (the Berlin course is ideal for record breaking and has produced the past 8 record-times since 2003).

In 2019, Kipchoge broke the 2-hour marathon mark in a staged event in Vienna. However, the time isn’t official because Kipchoge had pacemakers and the entire course was optimized for him. The marathon time of 1:59:40 — to cover 26 miles (42.2km) — is really insane when you break down the splits (via Wired):

4:35 per mile pace (the record for one mile is 3:43 and he kept the pace 26x)
OR 2:50 per KM pace (he did it 42x and each kilometre was within 2:48 to 2:52)
The average men’s marathon time for 5km is ~30 mins (Kipchoge’s 5km pace was 14:13 mins, which he did ~8x)
The world record 10km run is 26:11 (Kipchoge’s 5km pace was 28:26 which he did ~4x)
His 100m pace was 17 seconds, which he did 422x

His 21km per hour pace (or 13 miles per hour) is faster than I can bike and isn’t even available on some treadmills. I just pulled a hamstring reading about it.

🚨Podcast guest alert: One of my go-to newsletters is Liberty’s Highlights, which has a great round-up of tech, finance and media news stories. I recently went on Liberty’s podcast to discuss the future of Twitter / X and lessons learned from Rick Rubin and Christopher Nolan. 🚨

Airbnb’s CEO explains the cleaning fees: A running joke in recent years is the fact that the price of an Airbnb stay basically doubles from the original listing when you factor in fees (eg. cleaning, service, occupancy taxes).

The >$80B tech firm — which was recently added to the S&P 500 index — addressed the issue by putting a toggle on the site to make the listing an “all-in” price as the default. The Big Technology podcast interviewed Brian Chesky (Airbnb CEO and co-founder), and he explains all the reasons why it was difficult to set the most transparent pricing:

hotels are more homogenous and centralized, meaning they can more easily bake the cleaning fees into the list price (Airbnb has 4.5m hosts and it is hard to standardize a fee but Chesky acknowledges that the platform has to build better tools for hosts to deal with the cleaning fee issue)
there are different price listing rules in different countries;
if Airbnb enforced a single cleaning fee — which doesn’t take into account different cleaning prices around the world — it could mean owners list fewer rooms on the platform (which gives fewer options for travellers).

Other interesting details on the podcast include Airbnb’s design process and a comparison between Amazon and Apple’s organizational structures (like Apple, Airbnb is a functional organization).

***

Here some other baller links:

Airbnb parties: Speaking of Airbnb, the company rolled out an AI detection tool to ban parties. The system looks at 100s of variables including “is it a rental for only one night” or “is it close to someone’s birthday”. (CNBC)
How Hollywood insures its films: Insurance for a film typically costs 1% of the budget and underwriters are called risk engineers. Some of the craziest stunts — like Tom Cruise’s high-wire acts — won’t get insured but since he is such a megastar, the film still gets greenlit without that coverage. (The Hustle)
What happens at Fox? Rupert Murdoch stepped down at Chairman for Fox and News Corp. His eldest son Lachlan — who is already the CEO and Exec Chairman of Fox — is the new Chairman at News Corp. The Town podcast breaks down the succession play: Lachlan and three other Murdoch siblings have equal voting rights, which means that Fox News and other assets will likely be sold off because Lachlan is the only real conservative adherent amongst the four.
Roman Empire: In 2023, memes come and go in the blink of an eye. The latest one is a trend on TikTok where husbands and boyfriends were asked “how often do you think of the Roman Empire?” The rambling answers are decently funny, including this gem. The trend burnt hot for 48 hours and got wide mainstream media coverage, then just kind of disappeared. On a related note, here is a great write up from Adam Singer about marketing lessons we can learn from the Roman Empire.

…and here them wild tweets / X posts:

Finally, the biggest social media L this week probably belongs to New York Times Opinion columnist David Brooks. On Wednesday, Brooks posted this on X/Twitter:

My gut reaction was to agree with him because I also hate airport food prices ($20 chicken salad sandwiches, dafuq?). But then I read the replies to the post and realized that his photo includes two Whiskey drinks. Everyone knows airport alcohol is insane, which makes the original post insane.

So, Brooks started getting roasted by the internet then the restaurant chimed in and it turns out that 80% of Brook’s $78 bill was actually for booze. In sum: Brooks was complaining that “this is why the US economy is terrible” because of an $18 hamburger.

Or maybe he was joking, whatever. Either way, the restaurant capped off the saga with one of the greatest shitpost ads in recent memory: a “D Brooks Super Delicious Burger” combo for ~~$78~~ $18.