The Personal MBA – Josh Kaufman (Finance)

April 3, 2012

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“Finance is the art and science of watching money flowing into and out of a business, then deciding how to allocate it and determining whether or not what you’re doing is producing the results you want. It’s really not any more complicated than that.” (151)

“The very best businesses create a virtuous cycle: they create huge amounts of value while keeping their expenses consistently low, so they make more than enough money to keep going without capturing too much value.” (152)

An under-appreciated benefit of profits is the fact that they can act as a “cushion” against an unexpected rise in expenses.

There are only four ways to increase your business’s revenue:

    1. Increase the number of customers you serve
    2. Increase the average size of each transaction by selling more
    3. Increase the frequency of transactions per customer
    4. Raise your prices

The purpose of a customer is not to get a sale. The purpose of a sale is to get a customer.
-Bill Glazer, advertising expert

 
“Lifetime value is the total value of a customer’s business over the lifetime of their relationship with the company.” (160)

“Allowable Acquisition Cost (AAC) is the marketing component of Lifetime Value. The higher the average customer’s Lifetime Value, the more you can spend to attract a new customer, making it possible to spread the word about your offer in new ways.” (161)

“Keeping a running tally of how much you spend and how much revenue you collect from the start of your business’s operations is the only way to figure out whether or not you’ve actually made money.” (166)

“Purchasing power is the sum total of all liquid assets a business has at its disposal. That includes your cash, credit, and any outside financing that’s available.” (168)

“Because debt keeps money in your account, it maintains your purchasing power.”

“Compounding is the accumulation of gains over time. Whenever you’re able to reinvest gains, your investment will build upon itself exponentially – a positive feedback loop.” (174)

“If you reinvest the revenue your business generates and your business is growing rapidly, you can multiply your original investment many times over. Compounding is the secret that explains how small companies that reinvest their profits become large companies in a few short years.”

Linchpin – Seth Godin (Chapter 6: The Resistance)

March 17, 2012

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In order to be an artist, you have to ship. The only point of starting something is to eventually finish it; as Godin puts it: “Shipping is the collision between your work and the outside world.” (103)

“Thrashing” – brainstorming and adjusting; amateurs do this near the end of a project, professionals do it early. Have the discipline to get your thrashing done early and then be stubborn near the end when it’s time to ship.

Our creativity, what the Greeks called the Daemon and the Romans called “the genius”, stems from the neocortex – the newest part of the brain.

The part of us that just wants to survive, even at the expense of our art, is our lizard brain.

The lizard brain is newer and stronger than our neocortex; when both are fully activated and pitted against each other, the lizard brain usually wins.

“The challenge, then, is to create an environment where the lizard snoozes. You can’t beat it, so you must seduce it. One part of your brain worries about survival and anger and lust. The rest of it creates civilization.” (109)

“If we go down the list of behaviors that are highly valued because of their scarcity, almost all of them are related to bringing a conscious and generous mind to the work, instead of indulging our lizard brain’s reflexes of fear, revenge, and conquest.” (112)

(After explaining how even just simple eye contact can cause gorillas to go crazy at the zoo) “Eye contact, all by itself, is enough to throw your lizard brain into a tizzy. Imagine how scary it must be to set out to do something that will get you noticed, or perhaps even criticized.”

The lizard brain loves school – he can postpone putting himself on the line in the real world, and he’s fine obeying authority figures as long as they help him survive.

“A well-defined backup plan is sabotage waiting to happen. Why push through the dip, why take the risk, why blow it all when there’s the comfortable alternative instead? The people who break through usually have nothing to lose, and they almost never have a backup plan.” (116)

In order to be creative and come up with good ideas, you need to be willing to have terrible, and even dangerously bad ideas.

Your lizard brain hates the prospect of coming up with an idea so bad that others will laugh at it. But realize that this is an inevitable part of the idea-generating process, and that this process is the only way that you can ever come up with brilliant ideas.

A sub-title Godin uses in Chapter 6: “You Don’t Need More Genius. You Need Less Resistance.”

Your resistance is always comfortable with low expectations.

The less freedom you have in a given field, the less resistance you face. This is why it’s feels so natural to do a job where all you have to do is follow instructions.

“Our economy has reached a logical conclusion. The race to make average stuff for average people in huge quantities is almost over. We’re hitting an asymptote, a natural ceiling for how cheaply and how fast we can deliver uninspired work.” (123)

As a society, we’ve tried to establish an entire economic system where one can go through the motions, give in to their resistance (by doing menial jobs), and still be supported – but it’s just not working anymore.

“Don’t listen to the cynics. They’re cynics for a reason. For them, the resistance won a long time ago.” (126)

The resistance/the lizard brain exists “to make you safe, which means invisible and unchanged.” (127)

Signs that the lizard brain is at work:
-Procrastination
-You excessively criticize the work of your peers, thus unrealistically raising the bar for your work
-You criticize anyone who is doing something differently. If they succeed, it means you’ll have to do something differently too.
-Having an emotional attachment to the status quo
-Inventing anxiety about the side effects of a new approach
-Believing that it’s about gifts and talents, not skill
-Announcing that you have neither
 

A great tactic to combat resistance is to announce it out loud: “I’m doing this because of the resistance.” The lizard brain will retreat in shame.

 
“The difference between a successful artist and a failed one happens after the idea is hatched. The difference is the race to completion. Did you finish?” (136)

Anxiety is just a pointless form of fear, it’s fear about fear. The resistance is really anxiety; real fear is a response to actual threats and it’s a perfectly healthy response.

Reality is the best antidote for anxiety.

“You can’t make a useful map when you’re busy exaggerating the downside of every option.” (139)
 

The best way to overcome your fear of creativity, brainstorming, intelligent risk-taking, or navigating a tricky situation might be to sprint. When we sprint, all the internal dialogue falls away and we focus on going as fast as we possibly can.

You can’t sprint forever. That’s what makes it sprinting. The brevity of the event is a key part of why it works. (143-144)

 
It’s easier to work downhill than uphill. So take the time to build a better platform for you to launch your ideas from – this seperates the hard work of preparation from the sometimes scary work of creativity.

Linchpin – Seth Godin (Chapter 5: Is It Possible to Do Hard Work in a Cubicle?)

March 16, 2012

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“An artist is someone who uses bravery, insight, creativity, and boldness to challenge the status quo.” (83)

Seth Godin hates the idea of “a day’s work for a day’s pay.” He thinks it cheapens us.
 

Are you really willing to sell yourself out so cheap? Do you mortgage an entire (irreplaceable) day of your life for a few bucks? The moment you are willing to sell your time for money is the moment you cease to be the artist you’re capable of being.

The alternative is to treasure what it means to do a day’s work. It’s our one and only chance to do something productive today, and it’s certainly not available to someone merely because he is the high bidder. A day’s work is your chance to do art, to create a gift, to do something that matters. As your work gets better and your art becomes more important, competition for your gifts will increase and you’ll discover that you can be choosier about whom you give them to. (87)

 

“It’s impossible to make art for everyone. There are too many conflicting goals and there’s far too much noise. Art for everyone is mediocre, bland, and ineffective.” (94)

“An artist’s job is to change us. When you have a boss, your job is to please the boss, not to change her.” (95)

“The job is not the work” – The job is what you do because you are told to do it. There will always be someone who can do your job more cost-efficiently than you. Your art can only be done when no one can tell you exactly how to do it. It is, as Godin puts it, “the act of taking personal responsibility, challenging the status quo, and changing people.” (97)

Ask yourself, are you indispensible with your family and friends? Now what about at work? Why are you so expendible in one setting and not the other?

Most people are afraid of expressing their art, which stems from their indoctrinated fear of standing out.

“Now, though, the economy is forcing us to confront this fear. The economy is ruthlessly punishing the fearful, and increasing the benefits to the few who are brave enough to create art” (100)

Linchpin – Seth Godin (Chapter 4: Becoming the Linchpin)

March 15, 2012

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Types of organizations that don’t need Linchpins: “Organizations that are centralized, monopolistic, static, safe, cost-sensitive” (55)

In fact, these companies should look for the cheapest drones possible. But they shouldn’t expect to grow or have much customer loyalty.

“Today, if all you have to offer is that you know a lot of reference book information, you lose, because the Internet knows more than you do.”

However, Godin emphasizes the following point: “Depth of knowledge combined with good judgment is worth a lot.”

“Expertise gives you enough insight to reinvent what everyone else assumes is the truth.” (56)

Degrees of freedom – you have very few choices on a bus (get on or get off), a few more when you’re driving (which road to take), and infinitely more when you’re walking.

“In the face of an infinite sea of choices, it’s natural to put blinders on, to ask for a map, to beg for instructions, or failing that, to do exactly what you did last time, even if it didn’t work. Linchpins are able to embrace the lack of structure and find a new path, one that works.” (58)

Our society values being error-free (“Get nothing wrong and you get an A, right?”). The flaw in this approach is that art is never defect-free.

The problem with bowling is that it’s an asymptotic sport – the best you can ever do is get 300.

“Organizations that earn dramatic success always do it in markets where asymptotes don’t exist, or where they can be shattered. If you could figure out how to bowl 320, that would be amazing. Until that happens, pick a different sport if you want to be a linchpin.” (69)

“The only way to prove (as opposed to assert) that you are an indispensable linchpin–someone worth recruiting, moving to the top of the pile, and hiring–is to show, not tell. Projects are the new resumes.” (73)

Even if you are a linchpin, you often won’t be able to convince the standard HR establishments to make an exception for you. That’s fine. Your goal should be to look for companies that understand the value of a linchpin – companies that hire people, not just resumes.

“If you need to conceal your true nature to get in the door, understand that you’ll probably have to conceal your true nature to keep that job.” (79)
 

Groucho Marx famously said, “I don’t care to belong to any club that would have me as a member.”

The linchpin says, “I don’t want a job that a non-linchpin could get.”

Linchpin – Seth Godin (Chapter 3: Indoctrination – How We Got Here)

March 14, 2012

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“We’ve been trained to believe that mediocre obedience is a genetic fact for most of the population, but it’s interesting to note that this trait doesn’t show up until after a few years of schooling.” (40)

“The launch of universal (public and free) education was a profound change in the way our society works, and it was a deliberate attempt to transform our culture. And it worked. We trained millions of factory workers.” (41)

Godin believes that our consumer culture is a by-product of the network effect that came from universal education.

If your local public school had a description underneath its sign, Godin thinks it would read:

WE TRAIN THE FACTORY WORKERS OF TOMORROW. OUR GRADUATES ARE VERY GOOD AT FOLLOWING INSTRUCTIONS. AND WE TEACH THE POWER OF CONSUMPTION AS AN AID FOR SOCIAL APPROVAL.

At least today, it’s much more difficult to imagine a sign that reads:

We teach people to take initiative and become remarkable artists, to question the status quo, and to interact with transparency. And our graduates understand that consumption is not the answer to social problems. (42)

 
“We teach people to stick within a tiny range. We don’t want the lows to be too low, so we limit the highs as well.” (44)

It’s been shown things we learn in frightening situations tend to stick with us, so schools create a culture of fear (of getting a failing grade, of not obeying arbitrary procedures, of not fitting in, etc.) in order to teach compliance.

Godin argues that while we need school and we need teachers, they need to teach us to believe and reward us for doing our best work, not just our most predictable work.

School are teaching children to do the following (some more successfully than others):
-Fit in
-Follow instructions
-Use #2 pencils
-Don’t challenge authority
-Do the minimum amount required so you’ll have time to work on another subject
-Have a good resume
-Don’t fail
-Don’t say anything that might embarrass you
-Be a generalist
-Try not to have the other kids talk about you
-Once you learn a topic, move on (45-46)

“The problem lies with the system that punishes artists and rewards bureaucrats instead.” (46)
 

The model is simple. Capitalists need compliant workers, workers who will be productive and willing to work for less than the value that their productivity creates. The gap between what they are paid and what the capitalist receives is profit.

The best way to increase profit was to increase both the productivity and the compliance of factory workers. And as (Andrew) Carnegie saw, the best way to do that was to build a huge educational-industrial complex designed to teach workers just enough to get them to cooperate.

It’s not an accident that school is like a job, not an accident that there are supervisors and rules and tests and quality control.

 
Godin ends the chapter by arguing that schools should only teach children how to do two things:
1. Solve interesting problems
2. Lead

“While schools provide outlets for natural-born leaders, they don’t teach it. And leadership is now worth far more than compliance is.” (48)

Linchpin – Seth Godin (Chapter 2: Thinking About Your Choice)

March 13, 2012

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“If you want a job where it’s okay to follow the rules, don’t be surprised if you get a job where following the rules is all you get to do.” (29)

“If you want a job where you get to do more than follow instructions, don’t be surprised if you get asked to do things they never taught you in school.” (30)

One of the main themes of the book is: unskilled laborers are not being rewarded in the same way that they used to, therefore, you must become indispensible so that people have no choice but to reward you.

The three words that can kill an entire organization: “Not my job.”

“In a factory, doing a job that’s not yours is dangerous. Now, if you’re a linchpin, doing a job that’s not getting done is essential.” (34)
 

Would your organization be more successful if your employees were more obeidient?

“Or, consider for a second: would you be more successful if your employees were more artistic, motivated, connected, aware, passionate, and genuine?

You can’t have both, of course.

 
“When you’re not a cog in a machine, an easily replaceable commodity, you’ll get paid what you’re worth. Which is more.” (35)

“When customers have the choice between faceless options, they pick the cheapest, fastest, more direct option.”

“In a world that relentlessly races to the bottom, you lose if you also race to the bottom. The only way to win is to race to the top.”

The E-Myth Revisited – Michael E. Gerber (Part 3 of 3)

February 29, 2012

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All organizations are hierarchical. At each level people serve under those above them. An organization is therefore a structured institution. If it is not structured, it is a mob. Mobs do not get things done, they destroy things.

-Theodore Levitt, Management for Business Growth

 

Draw up an Organization Chart that outlines all of the positions that will exist in your company once it has reached its full potential.

At the beginning, not only will you be working in each position, you will be working on each position; basically, you’ll be doing the work that the position requires but you should also be evaluating and improving the position itself.

If everybody is doing everything, no one is responsible for anything.

Once you’ve refined the procedure for fulfilling a position, document it in an Operations Manual – then your employee prospects theoretically don’t even need experience.

Job procedures that are documented in Operations Manuals should primarily be Technician jobs (fairly straightforward labour work).

Two keys to working with employees are to treat them seriously and with respect, and to take your business seriously. When you treat your employees respectfully, they’ll want to return the favour; by demonstrating how seriously you take your business, the only way for your employees to reciprocate your respect is to respect your business (and the jobs they currently hold in it!).

Gerber shares a story about an amazing hotel he visited that embodied every great characteristic a small business can hold. He asked to talk to the manager and some of the employees in order to understand why this business was so great:

“The first thing that surprised me when I came to work here,” the Manager said, “was that the owner took me seriously. I mean, think about it. Here I was, a kid, with absolutely no experience in this business. But he never treated me that way. He treated me as though I were a serious adult. Somebody worth talking to about what he obviously considered important.” (197-198)

“It was like the hotel was an expression of who he was, a symbol of what he believed in. So if I hadn’t taken the hotel seriously, it would have looked like I wasn’t taking him seriously, as a man whose values I respected.”

People do not simply want to work for exciting people. They want to work for people who have created a clearly defined structure for acting in the world, where they can test themselves and be tested – a “game”.

Hiring experienced managers can be a downside because they will manage by the standards they learned at someone else’s business, not your standards.

 

You need people who want to play your game, not people who believe they have a better one.

-Michael E. Gerber

 

People that attribute their problems externally seek to fix the world so that they can remain the same.

 

When you hear something, you will forget it.
When you see something, you will remember it.
When you do something, you will understand it.

-Chinese proverb

SPIN Selling – Neil Rackham (Guest poster: Sebastian Cass)

February 27, 2012

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Sebastian Cass has been a good friend of mine for many years.

Recently, we’ve been enjoying the work of best-selling author and Forbes columnist Michael Ellsberg. In one of Ellsberg’s most famous public appearances, a speech he gave at the Google headquarters, he recommended the book SPIN Selling by Neil Rackham. Since this was the second time it had been endorsed by someone I respected (the other person being Josh Kaufman, author of the The Personal MBA: Master the Art of Business), I decided that I should check it out for myself sometime in the near future.

Sebastian, on the other hand, was eager to read it right away since he has already worked in several sales jobs and possesses an utterly absurd amount of knowledge on the subject. Less than two days later, he had finished it.

So I’ve invited Sebastian to guest post about SPIN Selling and he’s agreed to share his notes and thoughts about the book with you guys today. In this post, you’ll learn about some of the most uncommon, unconventional wisdom behind sales and why the phrase, “high-integrity sales” is not a contradiction in terms. (D.S.)

 
SPIN Selling contains by far the best advice I’ve ever come across when it comes to selling. This short explanation is only meant to show you the specific things I took from it and why I think it’s a great tool for sales/marketing professionals looking to improve their results exponentially.

This book is based on a massive amount of research conducted by the Huthwaite group and by Rackham himself. The advice of the book is aimed at “large” ticketed items, items that will sometimes take longer than a single sales call to sell. The term “SPIN” is an acronym for the 4 kinds of questions that make the model, they break down as follows:

-Situation questions: A question in which the seller finds facts about the current state, short and long term plans, and overall condition of the buyer’s company
(Note: Research shows that they are not very critical in making a sale successful, and one should keep them short as a customer might become impatient.)

-Problem questions: These are the types of questions that most people should consider improving, they’re designed to find any dissatisfactions or hassles that the customer is having at the moment (these should be aimed at the kinds of problems the customer would no longer have if he owned your product).

-Implication questions: This is where conventional selling techniques verge off, most training would direct people to give solutions that their product could offer to solve the customers “needs” as explained by the customer in the previous phase, however, this model takes it a step further. Implication questions are meant to show the customer/buyer the implications and future hassles his current problems will lead him to (ie: fast turnover on workforce, training costs of new employees, time that could be spent more wisely). In short it makes his problems become EXPLICIT NEEDS; he is now aware that the problem is more severe and he is now looking for a solution.

-Need-payoff questions: This is the final step in which the seller posses a different set of questions. These are aimed to get the customer/buyer talking about how if he had a solution to his now-explicit needs (from the implication stage) and the other ways in which having such solution (seller’s product) could help him (customer/buyer) and his business.

 

The SPIN model however is only one part of the bigger 4 part breakdown of a sales call. The whole model looks like this:

Opening –> Investigating (SPIN model for questioning comes in here) –> Demonstrating Capability –> Obtaining Commitment.

Opening: the research shows that staying on point is key, conventional wisdom on opening may not work so well for bigger sales, specially “starting off with chit-chat” or “open by demonstrating advantages”; a good rule of thumb to follow will be to establish:
-who you are
-why you’re there (but not by giving away product details)
-your right to ask questions.

Investigating: I’ve explained above in the SPIN model.

Demonstrating capabilities: The main thing to learn from this is the difference between features, advantages (usually referred in sales training as benefits), and “true” benefits.

Features – have low impact over the long and short term, they don’t really relate to the customer. Over-featuring a product will always lead to price objections, which might either be a service or disservice to the product depending on whether the price is low or high respectively.

Advantages – these are the ways that a customer/buyer could benefit from using the product, but since it does not tie in to their Explicit Needs, they’re very easy to forget.

(True) Benefits – They tie in strongly to the customer/buyer’s explicit needs and are the answer to their Need-Payoff statements. Customers/buyers will remember them because they relate to their deepest needs.

Obtaining commitment: the main point here is to understand the four kinds of outcomes that can come from a sale.

  • No Sale
  • Continuation
  • Advance
  • Sale

Since immediate No Sale/Sale situations only make up 10% of sales calls for high price items, one should pay attention to Continuation and Advances instead.

Continuation is usually made up of flattery of the product: “that was a great presentation”, “we look forward to hearing more”, but no actual commitment to follow the relationship in any meaningful way. This is why they are considered unsuccessful.

Advances on the other hand offer a “next step” kind of mentality. The sale won’t be done right there, but both parties are taking steps forward and it is considered a success since it’s more likely to lead to an actual sale.

The book also covers how research suggests that the areas in which most sales training focus most of their energy (closing techniques, open-closed questions, objection handling) are far less effective for large sales. Instead there’s obtaining commitment, SPIN model for questioning, and objection prevention.

……

These are the main points I drew from this book; I’d recommend you read the book if you saw any information here you’d like to improve and/or learn more about. I’ve decided that I’m going to work in a position in sales that pays solely on commission for the next little while. The items I’m aiming to sell will be high-ticketed items (cars sales, real estate, corporate tech solutions).

I’m not doing this for the financial remuneration but rather to apply the skills and mindsets that this book has taught me. As with anything you read, I also recommend that once you finish SPIN Selling (either the actual book or just my notes) you should take action in the near future to practice the ideas that Rackham presents.

Entelechy – the becoming actual of what was potential.

This word is used towards the end of the book to emphasize the importance of actually integrating any skill one learns in order to make it truly ingrained. I included here as well to reiterate its importance.

Until the next time guys.

-Sebastian Cass

The E-Myth Revisited – Michael E. Gerber (Part 2 of 3)

February 18, 2012

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“Pretend the business you own – or want to own – is the prototype for 5,000 more just like it.” (98)

If you create a solid foundational system for your business that employees can follow, it will make your business more system-oriented and less dependent on the whims and quirks of your employees. The better your system, the less that the quality of your employees matters.

One of the main benefits of having a written Operations Manual and a structure behind your business is that it helps the customer get a uniformly predictable, reliable service. This means that if the customer likes the service, he knows the next time he purchases it, it will be just as good.

The basic expectation of customers is that they will get a consistent experience. Do not regularly violate this expectation.

Basically, think of your business itself as a product.

 

“Creativity thinks up new things. Innovation does new things.” -Theodore Levitt, Harvard professor

Anytime you improve anything about your business, you will make more money than you would have otherwise.

“Innovation continually poses the question: ‘What is standing in the way of my customer getting what he wants from my business?’” (121)

Quantification – numerically measuring the impact of an innovation.

The only way to know the exact impact of an innovation is through rigorous quantification (ex: counting how many people came through the door at the time of a promotion).

Orchestration – ensuring that a good innovation is implemented every single time by eliminating employee discretion.

Without orchestration, you can’t have a franchise.

 

If you don’t know what your Primary Aim is, you can’t know if you’re moving toward it.

Ask yourself the following questions:

  • What do I wish my life to look like?
  • How do I wish my life to be like on a day-to-day basis?
  • How much money will I need to do the things I wish to do? By when?

Strategic Objective – a clear statement of what your business must do to reach its Primary Aim.

The first standard of your strategic objective is money: how much money do you expect your business to make? Unexpected circumstances always happen, but some estimate is better than no estimate.

Focus on core values when defining your business. Commodities are just the things that your customer walks out with, your product is what your customer feels after dealing with your business.

Fooled by Randomness – Nassim Nicholas Taleb

January 4, 2012

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At least in terms of Expected Value it is far better to be a dentist than a rock star, because dentists earn consistently large salaries while the majority of rock stars earn very little, and even those that do become successful and make millions don’t swing the profession’s average salary to the level of dentists.

And if lack of variance is valuable to you, than being a dentist becomes even more attractive!

Statistical example of the lack of variance in the long-term relative to the short-term: “A 15% return with 10% volatility (or certainty) per annum translates into a 93% probability of success in any given year. But seen at a narrow time scale, this translates into a mere 50.02% probability of success over any given second” (65)

“(T)here are Monte Carlo generators designed to structure such texts and write entire papers. Fed with ‘postmodernist’ texts, they can randomize phrases under a method called recursive grammar, and produce grammatically sound but entirely meaningless sentences that sound like Jacques Derrida, Camille Paglia, and such a crown.” (73)

If you let an infinite amount of monkeys type on typewriters, it is 100% certain that one will type a word-for-word copy of The Iliad.

“The following inductive statement illustrates the problem of interpreting past data literally, without methodology or logic:” (120)

I have just completed a thorough statistical examination of the life of President Bush. For fifty-eight years, close to 21,000 observations, he did not die once. I can hence pronounce him as immortal, with a high degree of statistical significance.

It’s easier to remember a logically linked story than an assortment of unrelated facts. Causality is easier to commit to memory, so sometimes we create it where it doesn’t exist.

“If you meet someone randomly, there is a one in 362.25 chance of your sharing their birthday…Now let us look at a situation where there are 23 people in a room. What is the chance of there being 2 people with the same birthday? About 50%. For we are not specifying which two people need to share a birthday; any pair works.” (159 – The Birthday Paradox)

“When the statistician looks at the data to test a given relationship…odds are that the results can be taken seriously. But when one throws the computer at data, looking for just about any relationship, it is certain that a spurious connection will emerge, such as the fate of the stock market being linked to the length of women’s skirts. And just like the birthday coincidences, it will amaze people.” (160)

“Data that is perfectly patternless would be extremely suspicious and appear to be man-made. A single random run is bound to exhibit some pattern – if one looks hard enough.” (169)

“Our brain is not cut out for nonlinearities…Our emotional apparatus is designed for linear causality.” (179)

Studies have shown that people are almost incapable of making the simplest decisions without emotions (Tested by surgical ablation on a piece of the brain to suspend the ability to register emotion, isolating logic. Subjects couldn’t get out of bed in the morning and wasted entire days weighing various decisions.) This is why psychologists call emotions “lubricants of reason.”

“No matter how sophisticated our choices, how good we are at dominating the odds, randomness will have the last word. We are left only with dignity as a solution – dignity defined as the execution of a protocol of behavior that does not depend on the immediate circumstance.” (246)

“There developed a social model for a stoic person, like the gentlemen in Victorian England. Its tenets can be summarized as follows: The stoic is a person who combines the qualities of wisdom, upright dealing, and courage. The stoic will thus be immune from life’s gyrations as he will be superior to the wounds from some of life’s dirty tricks.” (248)

“(E)conomics is a narrative discipline, and explanations are easy to fit retrospectively.” (257)

“It took me an entire lifetime to find out what my (core framework) is. It is: We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract. Everything good (aesthetics, ethics) and wrong with us (Fooled by Randomness) with us seems to flow from it.” (262)

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