Eat People & Other Rules for Game-Changing Entrepreneurs

Andy Kessler “Eat People & Other Rules for Game-Changing Entrepreneurs” Penguin, 2011, 232 pp.

Author Andy Kessler has been an investment banker, venture capitalist, and hedge fund manager.  He shows how in good times or bad superstar entrepreneurs don’t’ just start profitable companies, they overturn entire industries.  They make the world more efficient.  From Wal-Mart to Intel, low-tech to high-tech, the classic formula of creative destruction (what the author calls “eating people) keeps playing out.

My Notes:

Pg. 11:  Definition of an economy: a system that increased the standard of living of its participants.  Period.  Everything else from credit to money supply to quarterly earnings releases to minimum wages is just a tool or else a meaningless characteristic of an economy.  Without increases in living standards we would still be living in caves.

Pg. 86:  Saul Alinsky had his Rules for gaining power.  And with power comes wealth, or at least the power to redistribute wealth.  But wheat is real wealth in the first place” How do you create it?  The simple answer is productivity.

Pg. 87:  According to one MIT study a modern worker needs to work just eleven hours today to produce as much as a worker putting in a forty-hour workweek in 1950.  That is almost a fourfold increase in wealth in sixty years. 

Pg. 102:  The world economy transitioned from loosely knit but mainly stand-alone industrialized countries through the 1970s to a tightly wound digital ecosystem today.  It’s not so obvious yet, but I’m convinced that digital technology has rendered imperialism and territorialism obsolete.  Despite all the protests, globalization instills peace.  Trade now represents 26 percent of world GDP_, up from 18 percent in 1990.

Pg. 113:  Across the economy, the real task is to figure out which jobs going forward need to be eaten.  That’s where you find the opportunity for upside and wealth.

Pg. 124:  America has become a patchwork quilt of laws serving special interests because courts refuse to protect economic liberty.  In 1950, only one in twenty trades required a license.  Now it is more than one in four…and the clamor by industry groups for more licensing grows unabated.  None of this would be possible if judges simply struck down licensing laws as an insult to the constitutional right to earn an honest living secured by the due process clause of the Fifth Amendment and the privileges or immunities clause of the Fourteenth Amendment.

Pg. 135:  We went from Stone Age to Iron Age to Industrial Age to Space Age and now are now firmly in the Idea Age.  Ideas rule.  We’ve transitioned before.  We transitioned from an agricultural to an industrial economy which mean automating farming—tractors, combines, better seeds—and it worked.  Now only 3 percent of the U.S. population feeds the rest, down from 80 percent during the colonial age.

Pg. 126:  Humans are costly.  Every job you can imagine is suspect—from marketing manager to chip designer to copy editor to assistant to the regional manager and on and on until we reach lawyers and doctors.  They will possible all be replaced by smart systems that can interact with the human race faster, cheaper, and better. 

Pg. 147:  The DJI was at 14,164 on October 9, 2007 (the peak) and bottomed out at 6,547 only seventeen months later. 

Pg. 228:  The battle going forward is not going to be the Haves versus the Have-nots, it will be the Makes versus the Takes.  Right now, the Haves are tapped.  In 2007, the top 1 percent of taxpayers paid 40 percent of all federal personal income taxes; the top 50 percent paid 97 percent.  A whopping 47 percent of Takes paid no federal income tax at all (they did pay SS and Medicare, at least those working).