Edmond Chan

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Shoe Dog by Phil Knight – key takeaways

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Shoe Dog

I picked up Shoe Dog on a recent trip through Hong Kong airport. I’d first heard about it on Bill Gates’ excellent blog.

I read this in less than a week. It’s that good a page-turner.

It’s the story of how Phil Knight went from selling shoes in Oregon to building a $30bn empire.

What stands out about this book is its raw honesty. Knight never puts a nice spin on things.

In many ways, he’s a very difficult man. He doesn’t omit this. He’s uncommunicative to colleagues and can be a complete asshole. But he’s a man you respect and by the end of the book, I really liked him.

It reads more like a novel than a business book. One of the best memoirs I’ve ever read.

Key takeaways from Shoe Dog

Pursue something related to what you love

Knight wanted to be a professional athlete. He fell in love with Japanese running shoes and wanted to sell these instead. His obsession with bringing these shoes to a wider market was what allowed him to work long hours and never give up, even when faced with disaster.

Build lifelong partnerships

Knight is a master at building relationships with quality partners. It isn’t just his team (detailed below) but also Japanese holding company called Nissho, who gave Knight the funding and knowledge that he needed, and actually saved his company from bankruptcy once.

Build a seriously great team around you

He built a team of obsessives in the early days. People like Jeff Johnson who loved running and the Onitsukas that Knight was selling in the US. People who would give up everything for the company (like move from the West Coast to the East Coast just because they were asked. Above all, he recruited people with extreme loyalty, to Knight himself and to the Blue Ribbon company (the first incarnation of Nike).

Take risks

Knight went travelling round the world in the 1960s! Think about that. Today, backpacking round the world is an industry in itself and it’s pretty easy to do. But in the 1960s, it must have been another world in terms of comfort and almost no predetermined routes for intrepid travellers like Knight.

He also took out chunky loans and left a solid job at Price Waterhouse (as it was then) to focus 100% on his company.

Be a voracious reader

In the early pages, I was pleasantly surprised to see that Knight was a deep reader. More importantly, he was a reader of quality. He recounts how he went to Johnson’s house once and saw a fellow reader, one that read philosophy and ancient history. Knight regularly quotes what he’s reading at the time. At one point, he has a fascination with generals and biographies of his three main heroes: Churchill, Tolstoy and Kennedy. He quotes widely: Confucius, Alexander the Great, Rumi, The Upanishads, Dante, Voltaire, Rousseau, The Oresteia and much, much more.

Buy this book: Shoe Dog by Phil Knight

For a similar read, check out “Legacy – What the All Blacks can teach us about the business of life” by James Kerr and my summary here.

What you can learn from Amy Cuddy’s TED Talk – Your body language shapes who you are

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This TED Talk by Amy Cuddy on how deeply your body language affects you is one of the most viewed TED Talks of all time.

Summary

Professor Cuddy demonstrates just how closely linked the physical is with the psychological.

We heard of psychosomatic, where your mind can influence your body, eg when anxiety affects your bodily health.

Cuddy explains how our body language affects our mental states, i.e. the reverse is also true.

For example, if you’re hunched over, with your shoulders rolled forward, looking down at the ground, it’s likely that you’re in a nervous state of mind.

Now exaggerate the opposite posture. Sit back, lean backwards, open up your chest, breathe deeply and you’re likely now feeling more relaxed, less anxious and more at ease.

We can exaggerate this further.

There’s a universal pose for victory and feeling victorious. Studies show that even those unable to see make this pose.

usain-bolt-olympics-200m

Try this pose for 30 seconds. Really lean back and feel the victory.

How do you feel now? Pretty good I bet!

The causation flows both ways. Feeling powerful makes you more likely to exhibit powerful poses.

But interestingly, posing powerfully can make you feel more powerful!

What can we learn from Amy Cuddy’s TED Talk on Body Language?

Immediate applications

If you’re an anxious person or lacking in confidence, this has the potential to change your life.

You know now that your body can genuinely influence how you feel.

This gives you a framework and a toolkit to almost instantly change your mental state.

So before an interview, go to the bathroom and power pose. Do a few minutes of the victory pose.

In the interview itself, recognise that at the bare minimum, how you sit has consequences.

If you’re hunched over and making yourself feel small, that’s how you’re going to feel and this will translate to the interviewer.

Similarly, without going overboard, sit in a powerful way. Legs apart, head up, shoulders and back square.

If you get nervous on dates, do the same. Stop yourself fidgeting, looking at your hands, and guard against a slumping posture.

In general, try being mindful of your posture and how you hold your body.

I have quite bad posture.

When I’m sitting at my desk, I tend to hunch forward. I don’t hold my head up. I lean on my left elbow.

Whilst cooking today, I realised that my posture was poor. I corrected it immediately but it’s amazing how quickly I regressed to poor posture.

Catch yourself during the day.

How are you sitting or standing now? Could your posture be better? Improve it now!

Reinforces just how linked mind and body are

There are plenty of recent books that deepen our understanding of how the body and mind work together (or against each other).

For example, see Coates’ The Hour Between Dog and Wolf for how physical hormonal states such as testosterone and cortisol affect our mental states.

Cuddy’s findings on body language might just be the tip of the iceberg.

In the same way that power poses encourage powerful feelings, imagine what the associated body language is for feeling relaxed, or for feeling creative, or feeling joyful?

Learn more

Check out the TED page for this talk.

Here’s Amy Cuddy’s HBS profile.

What I learnt from Simon Sinek’s TED Talk – ‘How Great Leaders Inspire Action’

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This video by Simon Sinek will change how you see the world.

In this TED talk, Sinek says most of the time we fail to start with the Why.

Instead, he argues in general that, we start with the What, then the How, then the Why.

To resonate with people, however, we need to start with the Why. This is the part that appeals to the ‘feeling’ part of the brain. Not the rational, logical part, but the emotional part.

Sinek applies this to marketing, such as when explaining Apple appeals to consumers more than Dell. Both sell great computers (the What). Both sell the How. But only Apple truly sells the Why.

golden-circle

Sinek argues that Apple found their raison d’etre and started from there. They sold the counterculture, the rebellion, the attack on the status quo and that’s what consumers bought into. They bought why Apple existed before they were convinced about Apple’s products.

They bought the Why before anything else.

What’s the reason for this?

Sinek argues that the Why and the How relate to different parts of the brain than the What does.

The What resides in the neo-cortex whilst the How and the Why live in the limbic part of the brain.

The Limbic brain is where we feel things and is the emotional centre of our brains.

Apple then, in Sinek’s example, appeals to this deeper emotional core of our brains and perhaps this is why Apple have such loyal fans.

It’s beyond reasons such as product features, specifications etc.

People love Apple because of Why they do what they do.

What can we learn from Simon Sinek’s Start With Why?

There are lots of potential applications across a wide variety of areas.

Marketing

It has immediate applications in marketing.

Sinek’s example of why Apple resonates more than Dell with consumers is compelling.

If you’re marketing your company, product or service, what is your Why?

Why do you or your product exist?

If the answer to make people’s lives better, then that will be apparent in your product.

If it’s purely for profits at the expense of the customer, then this will shine through too.

A great example in the UK is a company called Green Energy.

Green Energy supplies energy in a sustainable way.

They want to change the world. That’s Why they do what they do.

It’s a compelling why and this shines through.

I was persuaded to use them because I wanted to be more green and it didn’t really cost me more than using other suppliers.

I also liked that they were different to other

I Will Teach You To Be Rich by Ramit Sethi – key takeaways

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I Will Teach You To Be Rich by Ramit Sethi

I read I Will Teach You To Be Rich by Ramit Sethi before I read The Richest Man in Babylon (see previous post). However, I Will Teach You To Be Rich (IWT) can be taken as building on many of the principles in The Richest Man in Babylon (RMB). IWT is RMB for the 21st century.

Summary of the book

IWT is split into 6 sections:

1. Get out of debt first

Don’t save or invest until you’ve got out of debt. Interest rates on credit card debts far outweigh any possible gains from high-interest savings accounts or investments in equities or bonds. Eg. a 26% interest rate on your credit card balance is going to be bigger than the interest of 2% you might get on your savings account or the 10% annual return you might get from your investments.

Sethi gives the reader exact scripts for negotiating lower credit card interest rates to help you pay off your debts faster.

2. Set up no-fee, high-interest bank accounts

This is much harder to do now in the post-2008 low-interest rate world. Still you can find no-fee accounts and accounts with more attractive rates. As of writing, check out the Santander 123 current account which pays 3% on balances up to £20,000.

(Update from May 2020, Marcus by Goldman Sachs probably has the best savings interest rate at the moment at a paltry 1.20%)

3. Open an investment account

Savings will only get you so far. You need a return above inflation to keep your money. In the UK, that’s about 2%.

Historically, over the long-term, equities return around 8% per year.

The enemies of good long-term investing are things that eat into your profits.

  • Fees,
  • Taxes and
  • Poor investments.

Pick a low-cost investment account (like Hargreaves Lansdown).

Pick a tax-free account like a Stocks and Shares ISA (again see Hargreaves Lansdown)

Most managers lose against the market. Instead, beat 85% of managers by just ‘buying the market’. This means investing in index tracker funds which have the advantage of being lower cost than active managers. Again, remember that fees eat into your returns.

4. Conscious spending

Track where your money is going. Stop spending money on things you don’t want. Spend money on things that you value.

5. Automate your financial system

We aren’t rational creatures. We have limited willpower. Take this fallibility out of the equation by setting up automatic mechanisms to move money through your system, from salary to investments.

6. Get your investments right

Invest your hard-earned savings wisely. Invest according to your age. When you’re young, lean more heavily to equities, and reduce your exposure when you’re older.

Follow successful asset allocation (i.e. the split between your asset type – equities, bonds, cash, property).

Sethi recommends David Swenson’s asset allocation split. Swenson is the legendary Chief Investment Officer of Yale’s Endowment Fund.

What can we learn from I Will Teach You To Be Rich?

I Will Teach You To Be Rich is filled with practical and genuinely helpful, detailed advice.

I took two main insights from IWT.

First off, the overarching framework for getting rich.

(1) Get out of debt.

(2) Save as much as you can.

(3) Invest these savings according to a proven asset allocation like David Swenson’s.

(4) Rebalance the asset allocation periodically.

Secondly, and more importantly, how Sethi recognises the reality of how we as humans are irrational and often our own worst enemy in working towards our goals.

So the overarching framework makes sense. We know it makes sense. So why isn’t everyone rich? Because it’s hard and requires discipline. We’d rather spend the money. Sethi’s advice doesn’t rely on willpower and self-discipline. He advocates automating and systematising.

Set up your bank accounts to automatically transfer money to a savings account and your investment account. This way, it’s not relying on you to remember to transfer the funds across.

I’ve automated my savings and investments. Every month, I get paid into my current account. The next day, I’ve set an automatic rule for the next day to sweep £500 to my investment ISA, which then has automatic instructions to invest in equity funds and bonds. (Read about how I’ve set up my automatic investing through Hargreaves Lansdown here.). I follow the David Swenson asset allocation that Sethi recommends.

His argument for following a great like David Swenson is persuasive. In essence, why would I think I was more qualified to allocate assets than an investing great?

I definitely recommend this book. My biggest problem was having a ‘head in the sand’ approach to my personal finances. This book gave me the framework to take control of my money and peace of mind was worth way more than the cost of a paperback. I’ve actually bought more copies to give to friends and family.

What I learned from The Richest Man in Babylon by George S. Clason

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The Richest Man in Babylon

I first heard of The Richest Man in Babylon from Fighting Mediocrity who made a fantastic animated video review of it. (Check it out here.)

I bought it on Kindle for next to nothing: £1.99!

It’s a short book and reads like an allegory similar in style to The Alchemist.

Synopsis

In ancient Babylon, an ordinary family man is struck one day that he is not rich and in all likelihood never will be rich.

He and his friends decide to ask the richest man in Babylon for his secrets to becoming rich.

Takeaways and analysis

The overall objective recommended is the image of ‘fattening up your purse’. It’s a great image to have in your mind when you’re reading this book. Imagine your wallet slowly getting fuller and fuller.

Rule 1

Pay yourself first. Save 10% of your income and spend the rest.

Clason makes the point that most people don’t pay themselves first. They spend what they earn or worse, spend more than they earn.

Keep one out of every 10 pounds.

Pay yourself first.

Interestingly, MJ DeMarco in The Millionaire Fastlane makes the point that most people do not pay themselves first even when they think they do. If you are employed, then the Government takes most of your gross pay first anyway.

DeMarco says truly paying yourself first would be by getting paid into a company structure, attributing expenses to the company, then finally paying tax on the profits. So the Government eats last.

Rule 2

Control your expenditure

This sounds obvious but it’s not. Or at least, most people don’t act like it’s obvious. Clason alludes to Parkinson’s Law whereby your expenditure fills to meet your income. So as your income rises, so does your expenditure.

Most of what we think are necessary expenditures are nothing of the sort.

We don’t need to go on holiday. We don’t need Netflix. We don’t need to go out to dinner twice a week.

Those are wants and desires.

Clason has a great line regarding this: Confuse not the necessary expenditures with thy desires.

Rule 3

Make your 10% you saved work for you. Create income streams.

Whether that’s investing in loans generating interest or ventures to generate earnings and capital appreciation.

Rule 4

Guard your treasures from loss 

Don’t put your hard-saved money into high-risk ventures.

Rule 5

Make of thy dwelling a profitable investment.

Rule 6

Ensure a future income.

Make sure to look after yourself when you can’t work.

Rule 7

Increase thy ability to earn.

Good luck tends to go to honest, hard work and industry and not to speculators and gamblers.

Clason makes the point that fortunes were never truly made at the gambling tables. The only people to get rich in gambling is the house.

What can we learn from The Richest Man in Babylon?

If you earn £48,000 a year, your monthly gross salary is £4,000.

Of this, taxes in the UK will leave you around £2,500 in your pocket (take home pay).

Clason says that we should save £250 of this. The rest is for us to spend as we wish.

We might say that it’s difficult to live without that £250. Wouldn’t life be boring without little treats and expenses here and there?

Pay yourself first.

Think about fattening up that purse.

Next, make that 10% saved every month work for you.

I put mine into an equity fund called Aurora.

You might simply put the 10% into a savings account and earn interest on it.

Don’t touch this treasure. Let it grow and grow.

In 10 years, instead of nothing, you’d have £25,000 minimum in your wallet.

In all likelihood, you’d have much more because of the extra earnings of your 10% treasure and the power of compounding.

The Richest Man in Babylon is an absolute classic of personal finance. It’s as applicable today as it was in the 1920s.

I highly recommend it.