Multi-Disciplinary Reading - Book Reviews

Red Roulette, Desmond Shum, 2021 - This is ghost-written account of Desmond Shum and his wife Whitney Duan in China that reads like a unputdownable political thriller. In the process we also learn how the CCP (Communist Party of China) works, including details about former Premier Wen Jiabao and family as well as Jiang Zemin. We all know about the tremendous economic progress China has made in the last couple of decades - this book gives an idea of the kleptocratic means through which it was achieved.

Some of the things I learnt from the book of how China works -

  • Unexplained disappearances happen regularly in China

  • The CCP were good at destroying a man’s prized possessions - his dignity and self-respect (Takeover a successful business and make the owner do a menial job in his own business or takeover his home and make him live in a small corner of it)

  • Unless you are beholden to somebody, nobody will be beholden to you and you will never build deeper relationships (works in most low-trust environments)

  • Children are often berated by parents, expectation are high and criticism constant as they believe children learn by failure, not through success (curse of nations with less “perceived” opportunities per capita?)

  • The CCP divided the world into enemies and allies (alliances are temporary and allies expendable) - to win support internationally, cultivated “foreign friends” among left-wing intellectuals, journos and politicians

  • On May 1976 when Mao died, the teachers in Shum’s school began crying, so the children started crying too - then the rule came down that playing and smiling wasn’t allowed

  • Mainland vs Hong Kong in the 80s - Mainland had sticky friendships, people barged into your life. If you looked fat, they will announce it. If you were in financial trouble, they would demand details. If you wanted a partner in crime, they will volunteer. People in HK gave each other room

  • All elementary schools in Shanghai repeated a grade the year after Mao died as most of the year was spent commemorating his life

  • Losing your home early teaches you to find a piece of it wherever you’d be (Easier to drift)

  • The CCP rose to power by stirring up protests and mass movements and then suppressing them ferociously once they had served its purpose

  • Following Tiananmen square protests in 1989 - between '89-'92, Li Peng rolled back lot of market-oriented reforms and poured money into State-owned sector. China’s economy slowed down dramatically

  • Rules were bendable if you had guanxi (connections). State changed rules often (Animal farm-ish :-))

  • Western business had a don’t ask-don’t tell business model (Pretend not to know the working conditions or type of labor for eg.)

  • Chinese were masters at shock-and-awe hospitality

  • China powered its way into the future by marrying entrepreneurial talent with political connections

  • Sons of daughters of premiers in CCP lived a life of aristocracy, intermarried, made fortunes selling access to their parents, inside information and regulatory approvals

  • Deng Xiaoping reforms from 1992 doubled economy by 1997 and it would double again by 2004 - private businesses boomed

  • Jack Ma, a former English teacher met Desmond Shum seeking $3m without a business plan on the premise that Goldman Sach’s was ready to offer him $5m just based on idea

  • China was the intellectual property rip-off of the world churning out pirated software and DVDs

  • If you want to jump, you must first learn to bow (Chinese proverb)

  • Meeting with officials were formal - you must be like a kid in a classroom, perched on the edge of you seat, and not speak unless spoken to

  • PLA (People’s Liberation Army) wasn’t the army of the state, it was the army of the party (wow)

  • CCP had spent years suppressing desires - material and sexual and that even the air in Beijing contained hormones (during the rapid growth phase in early 2000s)

  • Evangelical Christianity had found fertile soil in Chinese country-side for generations

  • PLA (CCP’s army) was into all sorts of businesses - food production, pharma, wineries and weapons

  • When cultivating someone powerful in China, the pursuer should never appear too eager

  • Singaporeans knew how the game was played in China and profited considerably (Front-running IPOs through firms in the mainland)

  • When a man attains premiership, even his pets ascend to heaven (Chinese proverb)

  • Like fish that cleans the teeth of crocodiles (feeding off corruption of CCP)

  • Cold-hearted calculation and manipulation but also genuine emotion (on how Wen Jiabao’s wife cultivated ties)

  • Jiang Zemin often dispatched emissaries to exert influence on behalf of his children and grand-children

  • Only Red aristocrats got access to monopoly business. They wouldn’t bet unless it was a sure bet (Deng Xiaoping’s relatives paid nothing for bottling water in Tibet)

  • Given the multitude of investment opportunities, everyone was leveraged to the hilt

  • When Chinese govt. passes laws, they are invariably retroactive - action from the past can become crimes now

  • Putting on airs was part of the game (Fake it before you make it)

  • License plates constituted a language of their own - party plates, military plates, black foreigner plates etc - with the right plates you could cruise down a bus-only lane, drive on sidewalks or make illegal U-turns. Money doesn’t buy these plates - only guanxi (connections)

  • Competing state-owned telephone companies ripped each others’ lines - even though they were all owned by the state (!)

  • Duopolies were common in China - one entity owned by state and another by red aristocrat

  • When one part of the bureaucracy makes a killing, other parts smell blood too

  • Rules were gray, fuzzy, constantly changing and always backdated

  • One child policy - people would go to another country and have second child or undergo sex-selective abortions

  • Some superstitious group of Chinese named their children Smelly Mutt or Dog’s Balls to avoid wrath of jealous ghosts

  • Wealthy people aren’t so much brilliant as lucky

  • Westerners thought they were helping China evolve into a pluralistic society with a freer market but the CCP was employing Western financial techniques to strengthen itself (On listing of State-owned telecom in NYSE with Goldman)

  • Biding one’s time is one of the key tenets of Sun Tzu’s ‘The art of war’

  • New capitalist class in China wanted a voice - for protection of property, investments and rights and a fair judiciary - but they had no say

  • By 2006, CCP wanted to weaken the moneyed class, uproot the civil society and reassert the party’s ideological and economic control (through corruption charges of course). Forced mergers followed by state-owned firms and private companies

  • In China, long-term business model wouldn’t work. The smart way to do business in China was to build something, sell it, take money off the table and go back in or you may lose it all (Explained succinctly by Shanghai composite index chart)

  • Jack Ma (Alibaba) and Pony Ma (Tencent) would be compelled to serve the party and spy for the state

  • China stimulates the economy through the state-owned sector than convincing entrepreneurs to invest

  • Anytime the CCP can swing towards repression, it will (Leninist system)

  • When Deng Xiaoping took over in 70s, the state was bankrupt and so free-market capitalism was ushered in as a necessity and not by belief (sort of our 90s reforms?)

  • Red aristocrats were given a prison sentence and commoners a bullet in the head for corruption

  • A Chinese business who hasn’t been to jail, hasn’t achieved anything

  • Retired senior leaders of the CCP cannot leave the country (wow)

  • Getting one’s fortune told was the rage among China’s elite. In its 70 years of power the CCP had destroyed religion and in its vacuum, superstition took hold

  • People were so scared of getting arrested that they did not want to make decisions (On arrests made in Xi’s first term)

  • By 2020, CCP had investigated 2.7 million officials for corruption and punished over 1.5 million

  • One country, two systems arrangement for Hong Kong allowed significant democracy and freedom of religion, speech and assembly. Xi broke these promises and took a nasty hard-line turn

  • Hong Kong - CCP wanted to vet candidates that could contest HK elections (what good is a democracy without democratic process?). By 2020, the CCP had imposed national security law nullifying freedom of speech

  • The CCP could fabricate evidence, force confessions, and level whatever charges it chooses, untethered from facts. People would believe the charges since the system was so opaque (like China’s economic growth rate). Impossible to separate fact from fiction

  • People and their careers could get airbrushed out of existence from photos and videoclips

  • Xi consolidated power using the infinite fungibility of Chinese laws

  • Xi grabbed so much power that Chinese began calling him “the chairman of everything”. In 2018 he rammed through an amendment that ended term limits on his presidency

  • So many people wanted to move their capital overseas that the party slapped capital controls (2016)

  • More than wealth and professional success, basic dignity and human rights are life’s most precious gifts.

The peel-all-of-the-layers-off approach was fantastic and I loved how so much information about a country that functions as a black box were delivered in a thoroughly enjoyable read. 10/10


I have been planning to read a few books from this list. Thanks for sharing your review.

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No Rules Rules, Reed Hastings & Erin Meyer, 2020 - Building great tech teams is extremely hard and Netflix has done an enviable job at it for over a decade and a half now. If you have never come across Netflix’s culture deck from 2009 and have no clue how this company functions, this book is a must read. Written in lucid style by Erin Meyer, it has interviews, several anecdotes that make for a engaging read.

My notes -

  • Blockbuster (owned by Viacom) was a 1000x Netflix when Reed asked for $50 million for Netflix in 2000. Blockbuster refused. By 2010 Blockbuster was bankrupt.

  • Pivoted from DVD by mail business to subscription driven streaming service to producer of content to global streaming giant

  • Netflix vs Blockbuster - Netflix had a culture that valued people over process, emphasized innovation over efficiency, and had very few controls

  • Slick corporate slogans are mostly empty words. Eg. “Integrity. Communication. Respect. Excellence” - Enron

  • Netflix culture deck from 2009 is one of the important docs ever from Silicon valley (Culture)

  • Netflix was No.1 rated place to work in 2018, beating Google, Tesla and Apple

  • Policies and control processes stifle mavericks who went to work elsewhere. Increase in efficiency meant decrease in creativity

  • More freedom to exercise own judgement under ambiguity without stifling processes mean more accountability

  • Blockbuster made most of its margin from late fees. If your business model depends on Customer feeling stupid, you won’t build loyalty

  • In 2001, when VC capital dried up and Netflix was still making losses, they laid off a third of the workforce only to find the 80 left were working way better than before - the reason - talent density (Small pool of talent but better talent per employee)

  • Higher performers thrive in environments with higher talent density

  • Team with one or two merely adequate performers brings down the performance of everyone in the team

  • When every member is excellent, performance spirals upward as employees motivate each other

  • Candor - giving and receiving transparent feedback with positive intent - not to attack or inquire but to get feelings, opinions, feedback onto the table where it could be dealt with (Get rid of the jerks before you enforce candor)

  • Openly voicing opinions reduces backstabbing and politics. Not voicing is tantamount to disloyalty

  • Higher you are in the org, the more likely you are to receive less feedback and to make an error that obvious to everyone but you. At Netflix, you are hired for your opinions irrespective of position

  • Creative work should not be measure by time (relic of the industrial age). Hard work is irrelevant to judge performance

  • Netflix has no vacation policy. Taking days off is left to employee’s discretion. (Vacations help in seeing problems in a different light and improves creativity)

  • Freedom is not the opposite of accountability, it is the path toward it - give freedom and get responsibility

  • Netflix has no travel or expense approvals. Only guidance - spend company money like it were your own (Has led to Reed flying economy while his content team was flying first class). Current policy - “Act in Netflix’s best interest”. Abuse the freedom and you are out

  • Processes provide management with a sense of control, but they slow everything way down. When you dummy proof your work environment - only dummies will want to work there (wow)

  • Employees make good decisions when they understand what’s happening with the business as well as those at the top

  • The best guy is 20x at coding, 25x at debugging and 10x at execution than the worst guy. So the best guy sometimes adds 100x the value (It also costs to manage mediocre guys). So Netflix pays top dollar for talent

  • Netflix doesn’t have a bonus system. Nor does it have a bonus tied to KPI system (Managers dont set annual goals or KPIs in general). Bonuses are based on the premise that you can reliably predict the future and that you can set an objective that can be relevant 6 months down the line.

  • If you dangle cash in front of your high-performing employees, they don’t try harder. Higher bonuses routinely led to poor performance. Scrap bonuses and offer higher base salaries

  • “Salary pools” and “Raise bands” are a equally bad idea. Offer what the employee is worth in the market and some

  • To retain your top employees, it best to give them raises before they get better offers (Applies to creative employees, not the operational ones)

  • Letting go of secrets and speaking transparently brings incredible advantages. (If I tell you a secret that will sabotage my success, your trust in me skyrockets)

  • Have meetings in open areas. Meet the person at their desk for eg. instead of your locked room. Locked area is symbolic of hidden things

  • Sunshining - putting big / small things whether good / bad out there so that others will do the same

  • Netflix puts its financial statements in the open for all employees to see. It will continue to do so, even if there are leaks - after dealing with the specific case (Do not punish the majority for the poor behavior of the few)

  • Treats employees like adults who can deal with difficult information. No spin - spin makes you look like a fraud sooner or later

  • When someone is let go, let your employees know the reason why so that there’s no gossip and there’s increased trust

  • Whisper wins and shout about mistakes

  • Pratfall effect - tendency of someone’s appeal to increase or decrease after making a mistake, depended on his/her perceived ability to perform well in general. (So build competency before shouting out your mistakes)

  • Dispersed decision making with high talent density (the best people pick other best people) and org transparency is how Netflix has grown quickly

  • Our biggest threat in the long run is not making a mistake but lacking innovation. Employees are empowered to make bets even when their bosses think they are dumb

  • The person signing a contract shouldn’t be a Head of a function or a VP but the person who is living and breathing the project (True ownership)

  • Complexity kills consumer engagement

  • When a bet fails, the manager must be careful to express intent in the takeaways without condemnation

  • Maintain talent density by firing good employees for great ones. High talent density environment is not like a family but like a sports team. Only the best get to play

  • Once you stop learning or stop excelling, its time for you to leave your spot for someone else

  • Keeper test - if a person on your team were to leave tomorrow, would you try to change their mind? If not, let them go today with a generous severance package and look for a star - someone you will fight to keep

  • Introduction, thesis, anti-thesis, synthesis - thats how French learn to analyze. Americans often learn to “get straight to the point and stick to the point” which is suboptimal

  • Most meetings at Netflix are just 30 mins long. They believe most topics, even the most important ones can be settled in half-hour time frame

  • Most management approaches we use today stem from Industrial revolution - high volume, low error, minimal variation manufacturing. Information age doesn’t need error prevention and replicability - it needs creativity, speed and agility

  • If you want to build a ship, don’t drum up the people to gather wood, divide and work, and give orders. Instead, teach them to yearn for the vast and endless sea (Antoine de Saint-Exupery)

While the book is somewhat media / tech focused, the lessons perhaps apply to any business that is in a creative field with rapid changes and innovation. It is not possible to course correct if your org is structured differently and has different values but for someone building an org from scratch, these are extremely important mental models. 9/10


The Lords of Easy Money

Few takeaways from the book:

  • Quantitative Easing (QE) is when the central bank purchases long-term government bonds from the open market, and pays the seller using freshly created money. Thus, a) the seller of bonds receives cash and b) bulk purchases of bonds push up bond prices, leading to a compression in bond yields. Overall, this creates an environment of low interest rates coupled with excess liquidity. QE is typically done during a crisis, to help the economy recover.
  • Hawks are those who focus on controlling inflation and are against excessive intervention. Doves are more willing to intervene and increase the money supply.
  • Excess liquidity can cause demand pull inflation, namely too much money chasing too few goods.
  • Excess liquidity and low interest rates pushed investors out of the safe haven of government bonds (since they no longer gave adequate returns), and into riskier assets like corporate bonds and stocks in the ‘search for yield’. Too much money chasing riskier asset classes would cause asset price inflation. This did not have the desired wealth effect since the distribution of assets (even in 2012) was highly skewed; as a result, the rich became richer leading to rising wealth gaps.
  • Further, asset price inflation encouraged aggressive lending, due to the inflation in collateral values.
  • The Fed responded to short-term problems (unemployment) using tools (QE) that would have long-term impacts, thus creating an asset-liability mismatch.
  • Thomas Hoenig (former president of the Kansas City Fed; someone who voted against QE in the early 2010s) has 3 major principles- a) the idea of ‘long and variable lags’, i.e., the actions of the Fed have long-term impacts; b) one should focus on both, consumer price inflation as well as asset price inflation; and c) the idea of ‘restraint’, i.e., due to the ‘long and variable lags’ between actions and impacts, one should not cut or hike rates too much too fast.
  • The ‘announcement effect’ is when markets adjust to ‘price in’ the Fed’s actions (e.g., another round of QE). In such a scenario, not acting would create a negative surprise (equivalent to an ‘earnings miss’).
  • The long and sustained period of excess liquidity made markets inherently fragile and vulnerable to any negative event, as was evident by the Taper Tantrum and the 2019 Repo Crisis.

The book is very well-written and simple to understand for anyone with a basic understanding of macroeconomics. A very useful guide for anyone wanting to understand the current times. Those who liked reading “More Money Than God” are likely to enjoy reading this one too.



Book: Competition Demystified by Bruce Greenwald

Porter’s Five Forces: Substitute, Suppliers, Entrants, Buyers and competitors
As per the author Entrants (barriers to entry) is more important than others.

Does the firm have competitive adv?
​If ​No​ then Efficiency is the key to watch
​If ​Yes​ then make more analysis; what kind of advantage?
Further to (If yes); Single dominant – Yes then continue working like an ant,
If duel or more dominant than difficult strategic decisions. ​
​Dominant companies like: Microsoft (Windows op) or IBM (Initial years) or Intel
Dual firm: Coke and Pepsi; Boeing and Airbus

Supply & Demand:
Cadillacs & Lincolns (Luxury car maker)
Even with competition, they were able to sell cars for premium prices. However, with a wide variety of available cars – Sales and market share began to decline. Meantime fix costs and other costs remain the same hence that impacted margins. In conclusion, they were differentiated but their profitability got shrunken.

The barrier to entry is the main thing. ​For example “luxury car” ​market, ​if become attractive than new and existing firms try to enter that market. In such a case companies like Mercedes-Benz also suffer and are not able to earn more than normal returns. Hence barriers to entry, and no product differentiation, created strategic opportunities.

​​Toasters are highly differentiated, but there are no barriers to entry and no competitive advantage. Hence when products become like toasters, as most of them do over time, exceptional returns disapper.​

Habit: Habit succeeds in holding customers captive when purchases are frequent and automatics like Supermarkets vs automobiles. One goes to the same supermarket but changes car while buying new.

Switching cost is higher if the supplier has more information like Software, lawyers and doctors etc.
Search cost: Easy to search for refrigerator vs Doctor’s

Story of Walmart vs other retailers:
In 1970: 30 stores
In 1985: 859 stores
In 2000: 3000 in USA and 1000 in 8 foreign countries and sales 2x of sales of kmart, Sears, JCPenney and others combined.

Reason for that success: Inbound logistics, Advertising and executive supervision gave them operating adv of 4-5% of net sales (Walmart 8% vs others 4-5%).​
The margins are due to operation efficiencies, hence Walmart lowers prices which increases its sales.
Other similar example includes Apple Vs Compaq; Coke vs Pepsi: Philips vs Cisco​. ​

​Games firm plays when a new entrant comes to market​: ​
For example bank: If a new entrant offers a below-market-rate loan than an established bank, instead of matching lower rates for all his customers, be selective and offer a lower rate to borrowers with good credits and let go of borrowers with less credit.

An interesting case of Coke Vs Pepsi:
For many initial years, coke ignored Pepsi as a competitor. Even in their internal meeting, they don’t mention the name of Pepsi.
When the price war started in 1977, coke choose the worst​ field. They down price where they were the leader; 80% Coke vs 20% Pepsi. In that market, for every $ revenue Pepsi missed coke surrendered 4 $. That was more damaging to coke than Pepsi.

New entrant plays the game like:

  1. Avoid head-to-head competition
  2. Proceed quietly
  3. Moving into one niche market out of many established has
  4. Do little damage to the number of incumbents instead of singling out one

Interesting story of how small-scale airlines ​"​Kiwi​"​ entered the airline business and were able to scale it before got bankrupt. Story of how to avoid competition and equally important to lose on the competition when you scale up.

Kodak Story:
It’s about Kodak entering into instant photography (competing with Polaroid) and into photocopier (competing with Xerox).

Polaroid: Instant photography was an exclusive business for Polaroid. They have adv of customer captivity, proprietary tech & Economics of scale. The flight with giant Kodak by patent protection, R&D and hence superior products at price competitor offers. Kodak lost to patent case and have to pay $900 Million to Polaroid after 9 yrs flight. Kodak’s entry made the decently profitable business less rewarding for Polaroid but it’s loss-making for Kodak.

Story of Non-cooperation “Nintendo Story”:
Nintendo has a 95% Mkt share in Japan and 90% in the USA. However, it didn’t play the fair game; covered major profit for itself by ignoring game developers and retailers. Both supported other players later and Nintendo become an ordinary company from a dominant position.

Story of how cooperation (though some part was illegal as per the view of competition law) saves dying industries (Lead-based Gasoline additive business) for 20 years.

Merger & Acquisition:
Mainly are 2 types: 1. Financial & 2. Strategic
M&A is most difficult to achieve desirable outcomes. Like Coca-cola drinkers are loyal to coke only as coke is the habit-forming product. However, they don’t care if coke acquires an insurance company and offer insurance service to its captive customer of coke. Pepsi drinkers may not be more loyal to Frito-Lay than those who prefer coke. The financial company that acquires adjacent companies and becomes a “Financial supermarket” has led to recurrent failures.


Brands are not by themselves a type of competitive advantage. Mercedes has not been able to leverage its first-class brand image into exceptional investment returns. Brands are assets like other assets which produce income but it requires continuous spending to sustain their established status.

Certain brands like Coke, Marlboro, Gillette, Intel etc are able to provide a competitive advantage. However, there are many others like FedEx, Xerox, Honda, and McDonald’s that are not able to provide superior returns.

Coke is the world’s most valuable brand, however, it’s not able to fetch a premium. One won’t drink coke if they offer double the price of Pepsi. On another side one pays a premium to brands like Mercedes or Armani, they have higher brand value than coke but much lower economic value​ than coke. Coke’s value is due to habit-forming and the ​economy​ of ​scale.


Sustainable competitive advantages are good for companies but such companies are exceptional, not the norm. Most good companies focus on efficiency in all business operations.


Finite and Infinite Games, James P. Carse, 1986 - Books like these are rare. It is filled with big ideas, warped perspectives, incredible clarity of thought conveyed through a beautiful language. Carse distills Hegel, Locke and several philosophers and other thinkers and brings in his own clarity and depth to write one of the most profound books I have ever read. It can be a bit like abstract art and incoherent rambling in parts but I think its the product of a very, very fertile mind

My notes -

  • A finite game is played for the purpose of winning, an infinite game for the purpose of continuing play

  • Finite games end when one of the players has won. Players must agree decisively on who has won. There’s no finite game unless the players “choose” to play it. No one can be forced to play

  • Finite games aren’t played alone. There must be an opponent, in most cases teammates and spatial boundaries. (No one can be a doctor by their individual choice - potential colleagues, competitors and governing body must agree and confer the title)

  • Not all finite games have only winners, some can have rankings too

  • Infinite games dont have a visible end. Its not bound by time. Only purpose of the game is to prevent it from ending

  • No spacial or numerical boundaries exist in infinite games. There’s no eligibility criteria and anyone can play.

  • Finite games are externally defined while infinite games are internally defined

  • Finite games can be played within an infinite game, but an infinite game cannot be played within a finite game

  • Finite games establish rules of play - its the rules that define the game. Rules are not laws (considerable room for choice within restraints). By agreeing to the game’s rules, players validate them

  • Rules of a finite game (like rules of debate) doesn’t change during course of play while an infinite game’s rules (like rules of grammar) must change in course of play (its objective is continuation of game and bringing in as many players into the game).

  • Finite players play within boundaries while infinite players play with boundaries

  • Finite games prizes may look indispensable, that without them life is meaningless or even impossible

  • Finite games are voluntary and players have freedom to step off the field of play, but they seldom do

  • To be serious is to press for a specified conclusion. To be playful is to allow for possibility

  • Finite games are theatrical (scripted, performed for an audience), infinite games are dramatic. Its the difference between choosing the role of a mother vs being a mother

  • Surprise is a crucial element in most finite games. A finite player wins likely by surprising the opponent. Infinite players expect to be surprised. Surprise causes finite games to end and causes infinite games to continue

  • Finite players are deceptive (they hide their moves with the intention to surprise and win), infinite players are open and make themselves vulnerable

  • To be prepared against surprise is to be “trained”. To be prepared for surprise is to be “educated”. Training repeats a completed past in the future. Education continues an unfinished past into the future

  • Finite game wins yield a “title”. Titles are public. Effectiveness of a title depends on its visibility and noticeability to others (worn as badges, nailed in nameplates). Principle function of society is to validate titles and assure their recognition

  • Finite players assume the prize for winning is life. Life then, is not play, but the outcome of play. It is therefore bestowed, deserved, won. It is not lived. Finite play for life is serious, infinite play of life joyous.

  • Finite games are contradictory (players desire to bring play to end for themselves) as infinite ones are paradoxical (they play to continue playing).

  • Mode, content of address and manner of behavior towards titled persons are to indicate where they are no longer in competition (Captain, Mrs, Lord, Professor, Comrade, Father, Admiral, Attorney, Holy Mother etc.). The titles are powerful and others are expected to “yield” in the arena in which title was won

  • Power is always in relation to others. (How much resistance can I displace determines my power). One does not win by being powerful, one wins “to be” powerful

  • If we defer to titled winners, it is only because we regard ourselves as losers (And so take part in the theater of power)

  • The finite player plays to be powerful, the infinite player plays with strength. Power is concerned with what has already happened, strength with what is yet to happen. Power is limited to a few but anyone can be strong. (Infinite players seek strength, not power)

  • Only that which can change can continue (principle followed by infinite players)

  • Wars are lost when audience for it is lost (wow)

  • Large bureaucracies grow out of the need to verify entitlements of citizens of that society

  • A society has a wide variety of games intricately connected to produce a societal ranking. Families become competetive units. Power in a society is guaranteed by power of a society. Its in the interest of society to organize large number of finite games and establish prizes and winners. To defend their power, the winners will defend the society itself against competitors

  • To protect titles and preserve their property (again ‘titles’ to their property), men will unite into commonwealths and put themselves under government (Locke)

  • We display the success of what we have done by not having to do anything. The more powerful we consider persons to be, the less we expect them to do.

  • Titles are passed across time through passing of estates to future generations and erection of monuments and great buildings in their name

  • When soldiers find no audience for their prizes, they have no reason to fight for them

  • Society is defined by its boundaries, culture is defined by its horizon (culture is infinite, so is language, grammar, art as they undergo constant change and preserve themselves)

  • Patriots must create enemies before we can require protection from them. They can fluorish only where boundaries are well-defined, hostile and dangerous

  • One cannot be free by opposing another. My freedom does not depend on your loss of freedom. Since its freedom for society and not freedom from society, my freedom inherently affirms yours

  • If a state has no enemies, it has no boundaries. To keep its definitions clear, a state must stimulate danger to itself. War isn’t necessary for self-protection, its essential for self-identification

  • The more we are recognized as winners, the more we know ourselves to be losers for we must prove repeatedly and the script must be played over and over again

  • An infinite player does not fill a period of time with work but fills work with time

  • For a finite player freedom is a function of time. We must have time to be free. For an infinite player time is a function of freedom. A finite player puts play into time. An infinite player puts time into play

  • A prediction is an explanation in advance (Has something of a David Deutsch in it)

  • What we observe is not nature in itself but nature exposed to our method of questioning (Heisenberg)

  • A garden is where growth is found. It does not end with harvest. One does not bring change to a garden, but comes to a garden prepared for change and therefore prepared to change. Parenting thus must happen not in a preferred pattern with scripted stages but with parents growing and changing with their children (brilliant thought)

  • The only true voyage would be not to travel through hundred different lands with same pair of eyes, but to see the same land through a hundred different pair of eyes (Proust)

This is such a short book but was so packed with gems that I took forever to finish it. I realise one of the biggest, highly rewarding changes I have made to my life is stopping most finite games and switching to infinite games over time. However, this book is bound to shock and offend people in parts as it goes at the very structure of the way we live our lives. A good book must make us think and question and this one does it amply well. Highly recommended to anyone who likes abstract thought process, reasoning and philosophy. This is possibly the ‘tao te ching’ of our times. 11/10


Investing for Growth, Terry Smith, 2020 - Have heard a lot about Terry Smith and his fund Fundsmith’s strategy of investment. This books covers 10 years of the fund’s performance (2010-2020) through the Annual letters Mr.Smith has written during the period and other communication in-between. It deals with a variety of topics from buybacks, capital allocation, business quality, active vs passive, emerging markets and of course investing in quality companies for the long-term with low churn.

My notes -

  • Bond proxies - Stocks which produced profits and cash flows like bonds

  • A stock may have a low valuation and an even lower intrinsic value (On value investing being interprited as low P/E investing)

  • You could have paid 281x for L’Oreal, 126x for Colgate and 63x for Coca-cola in 1973 and still beaten the index return (MSCI World Index)

  • Growth should be a component of value (WB). Growing a business with inadequate returns is sending good money after bad

  • Cyclicals recover strongly from an economic downturn. High quality businesses have nothing to recover from and hence cyclicals do well in recoveries

  • Low multiple doesn’t mean cheap and high multiple doesn’t mean expensive

  • Most forecasters do so not to predict events but to influence them

  • A man hears what he wants to hear and disregards the rest - S&G’s ‘The Boxer’

  • Those who don’t know and those who don’t know that they don’t know - two classes of forecasters

  • All your knowledge is about the past and all your decisions about the future. No amount of sophistication can fix that. - Ian Wilson, GE

  • “Foreseeable future” - Is an oxymoron

  • Performance fees do not work. They extract too much of the return and encourage risky behaviour. Ensure your fund manager invests in the same fund and on same terms as you

  • The avg. fund manager in the UK turns over their fund 80% per annum

  • Small-ticket consumer non-durables which aren’t purchased on credit and where the Customer has no opportunity to bargain on price, or defer consumption by prolonging life of the product make for great investments (say Pet foods)

  • Churning portfolio is hard since finding an equivalent good investment for your cash is hard

  • Share buybacks only create value if the shares purchased are below their intrinsic value and there’s no better use for the cash that generates better returns

  • Buybacks should be viewed in the same way as if the company bought shares in another company. One should use RoE to analyse impact of buybacks rather than increase in EPS which is inevitable

  • When management does things they dont want examined, they use polite euphemisms to camouflage the reality of the situation

  • Murdoch’s News Corp paid $580m for MySpace which it then sold for $35m (on poor capital allocation)

  • Financial crisis of '08-'09 wasn’t solved but made into a soverign debt crisis. In '08 govt. saved the banks, in '11 we wonder who will save the govts.

  • When banks, investment banks and brokerage firms combine operations where they trade their own account and also acted as an agent for clients, the client always loses (conflict of interest)

  • Fundsmith uses the weighted average FCF yield as the primary valuation yardstick for portfolio (My take - May not be applicable for developing growth markets like India. One has to visualise OCF vs FCF - what is growth capex vs maintenance capex. What the business generates on incr. Capital invested etc.)

  • Least volatile decile of stocks generated higher annualised total returns than most volatile decile thereby questioning the belief that higher returns come at higher risk (Risk measured as volatility)

  • CROCI - Cash Return on Cash Invested. Higher CROCI = Better investment returns (Goldman study)

  • If you can’t understand what an investment does, it is because you are not meant to understand it

  • Giffen goods - Demand paradoxically rises as their price increases

  • Never invest just to avoid tax. These investments perform poorly (Like our LIC whole life plans). Its often cheaper just to pay the tax

  • Never invest in poor-quality companies. With a good company, time is on your side (Time is a friend of the wonderful business, enemy of the mediocre as WB puts it)

  • There’s a limit to the number of good businesses available. So the more stocks you own, the more likely you are to compromise on quality

  • Dont invest in orgs with “steering committees”. You don’t steer a boat or car through consensus arrived by a committee. They are unlikely to do good

  • Straight-talkers are rare - invest in them. Domino’s published harsh criticism like ‘Pizza was like cardboard’ in 2009. You only do that if you intend to change. Since then Dominos is up almost 50x

  • Fundsmith portfolio companies produce their earnings with significantly less capital (high RoCE than market) and deliver more of their earnings in cash (excellent cash conversion)

  • There are no new jokes. Only those who haven’t heard them before

  • EROEI - Energy return on energy invested. Used to be 100:1 in 1930s. For shale its 5:1 (Lot more energy needed to extract)

  • Asset life is critical to assess all investments

  • If you see a bandwagon, its too late - Jimmy Goldsmith

  • Revenue growth is a higher quality source of value creation than share buybacks or cost control (No limit to revenue growth but the other two are finite)

  • One of the clearest trends after WW-2 has been the rise of the middle class or consumers. While there are several definitions, $10/day of disposable income is a good indicator. (300m / 2.5b people in 1950 vs 2.4b / 6.4b in 2010)

  • Growth rate in consumption in emerging markets is more than 3x developed world

  • When RoCE drops, it may mean that new capital invested is generating inadequate or negative returns

  • “Hedge funds” dont stand for any particular methodology of investment. It now describes a fee structure that benefits the manager

  • Coca-cola holds stake in its bottlers to control distribution but the whole reason the bottler exists is because that business is capital-intensive

  • ROCE as used by Fundsmith = OCF/(Equity + Net Debt) (Note, no EBITDA and its net debt, ex. cash. I presume this is because of excellent cash conversion of these businesses and policies for div payouts where this will converge with traditional RoCE).

  • A company can be busy destroying shareholder value deploying incremental cash in subpar rates of return while still increasing EPS (what most see). Creating shareholder value != Making share price go up.

  • Three steps to heaven. 1. Invest in good companies 2. Don’t overpay 3. Do nothing

  • “Where’s the beef?” - Idiom / catchphrase to question substance of an idea, event or product. Without a business selling something the customer wants, no amount of financial wizardry will create lasting value.

  • 97% drugs in pre-clinical tests never made it, neither did 95% in phase-1 trials or 88% in phase-2. Only in phase-3 prospects improve to 46%. So probability of a molecule getting to market is (1-0.97) x (1-0.95) x (1-0.88) x (1 - 0.46) = 0.00001

  • Investors should be wary when a long-standing and highly successful chief executive leaves a business (Tesco’s Leahy years’ problems surfaced much later - Probably why market has been apprehensive on HDFC Bank after Aditya Puri’s exit)

  • Its better to be concentrated among high-quality investments than to be diversified among low-quality investments

  • People ask “if a stock is cheap” more often than they ask “if the business is good”

  • The best investments are often the most obvious. Eg. Dominos. High RoCE is very good, especially if the business operates through franchises where the revenues are generated on other people’s capital. Delivery business can operate from cheaper premises.

  • You should always run your winners (Despite extreme low churn and preaching this, Fundsmith made the mistake of selling Dominos twice, only to buy it back again)

  • Equity returns are enhanced when a company pays down debt and value is transfered from debt to equity

  • Emerging markets ETFs aren’t good investments (as compared to active EM funds) because EM ETFs are filled with large companies with sub-par RoCEs (Can’t doubt Mr.Smith here as many Adani stocks are in MSCI indices)

  • Retained earnings invested at good rates of return is what enhances shareholder equity. For this the business must have great growth opportunities. Dividends paid out should be re-invested in business until incremental cash invested in business is earning good rates of return

  • Long depression of 1873-96 was caused when a new industrial power (America) came onstream and produced goods cheaper than the Old World. It caused a collapse of the banking system. (China repeated the same in the 2000s)

  • Fundsmith prefers consumer staples, some consumer discretionary, healthcare and technology

  • Investors should not look for high dividend yield stocks which lack growth. They should look for growth even if the business pays no dividends. They should be ready to sell a bit of the stock for cashflow instead

  • Just 5 companies out of 25,967 companies account for 10% of total wealth creation in 90 years. Just over 4% of companies account for all wealth created

  • Bull markets do not broaden as they age - they narrow. Switching can be harmful in a late-stage bull market

  • Meeting managements is not a primary test of whether a business is sufficient quality to invest. Good businesses are identifiable by the numbers they produce. (Of course, depends on where you fish and what your appetite is)

  • Crisises including pandemics (Book came out in Oct '20 post Covid-19) exacerbate existing economic trends. Assembly line for Ford Model-T was conceived to deal with the reduced workforce during Spanish Flu

Mr.Smith’s fund has outperformed with a CAGR of 18.6% vs 12.9% of MSCI World Index from '10 to '21 (570% vs 287% overall return) investing with the simple strategy of buying good businesses and holding them with negligible churn. He has had no style drift from 2010 to 2022 and doesn’t look like he will change strategy as he seems prepared for underperformance if it ever comes.

The book covers the simplicity and elegance in the approach which heavily borrows from the late 70s onward Warren Buffett - something to which he gives credit enough and more times. As a book though, since these are just a collection of Annual letters, there’s way too much repetition. 8/10


Why we sleep, Matthew Walker, 2017 - This is pretty much the only book you need to read to understand sleep and such all encompassing books add great value in terms of time spent, especially when the benefits of getting it right are so great.

My notes -

  • 2/3rd of adults in developed nations fail to get 8 hrs of sleep

  • Insufficient sleep is a key indicator for Alzheimer’s. Less than 6 hours for long time has cancer risk

  • Even moderate sleep reductions for a week disrupts blood sugar levels

  • The shorter you sleep, the shorter your lifespan

  • Every species known to man sleeps - even the ones in harsh environments because the benefits of sleep far outweigh other hazards

  • Our bodies have a 24 hour clock that controls the circadian rhythm to be in sync with the day-night cycle. Even plants have their own internal time

  • Our internal clocks aren’t perfect and sometimes run for 26 or 28 hours. When exposed to daylight, our body resets these errors (other external cues like exercise, temperature fluctuations, regular social interactions also help reset the clock - that’s why blind people still can regulate their clocks)

  • Diurnal species - species active during the day vs noctural ones during the night

  • Our circadian rhythms helps drops the body temperature in an almost sinusoidal curve prior to sleep which troughs 2 hours post sleep

  • Not everyone’s rhythm is in sync. Morning types are wakeful early in the day at dawn and feel sleep pressure early in the night. They make up 40%. 30% are evening types that sleep late and wake up late and rest lie in-between (Driven mostly by genetics, so night owls can’t be morning types - night owls probably stayed up to protect species)

  • Owls suffer the most due to job schedules with higher rates of depression, anxiety, diabetes, cancer, heart attack and stroke

  • Melatonin communicates the signal of day vs night through the body. It maintains timing but doesn’t really help in sleep (Levels start rising from early evening and peaks at 4am and drops to lowest at 7am and stays so till 6pm)

  • Suprachiasmic nucleus (our clock that maintains the rhythm), can adjust by 1 hour a day when we are in a new timezone

  • Frequent timezone shifts destroys learning and short-term memory - based on stydies on airplane cabin crews

  • While melatonin doesn’t control sleep, it is adenosine that does. It starts building up in the brain for every waking hour from the morning. When adenosine concentrations peak, we feel sleepy (takes 12-16 hours)

  • Caffeine interferes with the way adenosine works by blocking receptors. Caffeine has a half-life of 5-7 hours (time it takes to cut concentration by half). So its not advisable to drink coffee post 4pm

  • Most people with insomnia just have a caffeine problem

  • When caffeine concentration falls, the adenosine that built up during the time hits suddenly causing a caffeine crash (sudden onset of sleepiness)

  • Circadian rhythm and Melatonin decrease signaling end of day and adenosine build up signaling time to sleep don’t work in perfect sync

  • 8 hrs of healthy sleep purges the adenosine built up. Inadequate sleep doesn’t purge fully and hence we feel sleepy the next day during mid-day

  • Melatonin follows a sinusoidal curve irrespective of whether you had sleep or not but adenosine can continue climbing when not had addequate sleep. We feel most sleepy when the diff between melatonin and adenosine is very high. So when we skip sleep for one night, when melatonin peaks next day, we may actually be able to overcome sleep or feel less sleepy than we would have felt earlier in the day when melatonin levels were low (Fascinating stuff that looks easy to understand from chart)

  • Are you getting enough sleep? If you are feeling sleepy by 11am, then NO (Not enough adenosine purged). If you need caffeine before noon to function normally, definitely NO (Blocking adenosine with caffeine).

  • Sleep obligations that aren’t paid off are carried over to the next day and the next and so on, eventually leading to chronic fatigue leading to mental and physical ailment, mostly in industrialized nations

  • Common sleep disorders - insomnia and sleep apnea (snoring and disordered breathing)

  • When we sleep, thalamus in the brain blocks the sensory gates.

  • We lose track of time consciously when we sleep but our body still maintains time precisely (hence we wake up at 5:58am for an alarm we set at 6am)

  • Time isn’t time within dreams as we experience time dilation

  • When we sleep, our brain replays the patterns we learnt during the day. This is how we actually learn - by getting adequate sleep

  • We have two distinct sleep cycles when we sleep. One called REM and another NREM (non-REM). REM = Rapid Eye Movement

  • REM and NREM alternate through-out the night in 90 min cycles. Early in the night we spent more time in NREM than REM but later in the morning, we spend more time in REM per 90 min cycle (hypnogram chart in book shows this nicely)

  • NREM sleep weeds out unnecessary neural connections while REM sleep strengthens them. By alternating, we manage the finite space in our brain.

  • When we wake ourselves up early after sleeping late, even if we lose 2 hours or 25% of sleep time, we lose bulk of the REM sleep in the last cycle (severely affect our ability to learn)

  • During NREM sleep, brain activity is synchronous, like the neurons are all singing together. This is where distillation of memories happens. Distant parts of the brain communicate and new insights may emerge.

  • In REM sleep, the brain completely paralyses the body (atonia), opens the sensory gate of the thalamus but instead of outside sensations, its our memories that get played back. If NREM state is “reflection”, REM sleep is “integration” - building an accurate model of how the world works. The brain paralyses the body so we can dream safely. It fuels creativity and we tend to wake up with solutions to intractable problems

  • Every species sleeps and has done so since at least 500 million years ago from the Cambrian explosion. Even unicellular organisms that last beyond 24 hrs have a active/passive phase based on light/dark cycle of the planet

  • Sleep was the first state of life on the planet. It was from sleep that wakefulness emerged

  • Although all animals sleep, their REM/NREM composition is different. REM sleep is present only in birds and mammals. So its newer in the evolution chain

  • In unfamiliar environments like a new hotel room, one half of the brain sleeps little less than the other to stay vigilant

  • Individuals who are deliberately fasting will sleep less as the brain is tricked into thinking food is scarce

  • Monophasic vs Biphasic sleep - one block of time vs two blocks. Most cultures sleep in the noon post meal (Greeks and mediterraneans with their siesta). Abandoning siestas increase risk from heart disease in these societies

  • Fire helped us sleep on the ground safely. This also perhaps led to REM sleep and consequently, our domination

  • REM sleep is like the high-speed ISP that connects different neighborhoods (synaptogenesis). Babies spend most of their sleep in REM state

  • Excess amounts of connectivity in some parts and deficiency in others occurs during early development in people with Autism. Autistic children also have weak melatonin cycles

  • Alcohol is one of the most powerful suppressors of REM sleep

  • REM/NREM composition varies through childhood. First year its mostly REM, then mid to late childhood is mostly NREM and reduces post puberty. Rationality is one of the last things to fluorish in teenagers until this pruning happens

  • REM sleep largely remains stable through adult life but NREM sleep reduces (poor memory in older age)

  • Hippocampus stores memories temporarily. When we sleep, it gets into the cortex for long-term storage

  • Sleep helps to forget what we need to forget. It also helps to reinforce skills without further practice. (People who play instruments will vouch for this)

  • You do not know how sleep-deprived you are when you are sleep-deprived

  • Emotional irrationality is a key problem without sleep as the amygdala’s emotional gas pedal isn’t countered by the pre-frontal cortex’s brake

  • Depression is not presence of excessive negative feelings. It is the inability to experience positive emotions (anhedonia) in food, socializing or sex

  • The best bridge between despair and hope is a good night’s sleep (Cossman)

  • Heart disease, obsesity, dementia, diabetes, cancer all have causal links with lack of sleep

  • Those sleeping 6 hours or less were 400-500% more likely to suffer one or more cardiac arrests than the one that sleep in excess

  • The less you sleep, the more you are likely to eat high-cal foods and develop type-2 diabetes. Also body depletes muscle instead of fat when you don’t get enough sleep

  • Leptin and Ghrelin regulate our appetite. More letin = blunted appetite. More ghrelin = strong hunger

  • Lack of sleep depresses immunity to the tune of increasing infection rate to 50% vs 18% in non-sleep deprived individuals for the same virus

  • Chronic inflammation causes a lot of health problems, including cancer

  • Its not time that heals wounds. Its time spent in dream sleep (Sedatives and alcohol may help us sleep but not heal as they interfere with REM sleep. Also sedation is not sleep)

  • What most people think as Insomnia isn’t inability to sleep - it is mostly people not giving themselves the opportunity to sleep. Clinical insomnia is inability to “generate” sleep

  • Constant LED light from screens (esp blue light suppresses melatonin, making you think its still day), regularized temperature, caffiene, alcohol and alarm clocks cause sleep troubles. One must get to bed only when sleepy and avoid spending non-sleep time in bed

  • Bath prior to sleep helps bring blood to the surface. Exposed hands, feet and face help radiating heat outwards reducing body temp and helps sleep

  • REM sleep is what stands between rationality and insanity

  • 50% of children with ADHD diagnosis actually have sleep disorders

  • Tips for good sleep - 1. stick to sleep schedule 2. exercise but not too late in the day 3.avoid caffeine and nicotine 4. no alcohol before bed 5. avoid large meals late at night 6. avoid medicines that disrupt sleep 7. no naps after 3 pm 8. relax before bed with a book or music 9. hot bath before bed 10. dark, cool, gadget-free bedroom without clocks 11. right sunlight exposure 12. avoid bed when not sleeping

Sleep is the easiest way to improve quality of life, reduce disease, be mentally agile, creative and yet its the one most of us focus the least on. Matthew Walker covers everything around sleep in great depth and the message is clear - get your 8 hours of sleep per day without fail no matter what. You won’t regret the time spent and if the book makes you sleepy, well it has achieved what it set out to do. 9/10


Brilliant book. Everything a good book should be: concise, clear, and actionable. This is the best book on habit formation I have read, and will no doubt be a resource to reread again. Author does an excellent job of providing all the required planning resources to go along with the book.
Recommend for everyone who is trying to change and build new habits (ie. pretty much everyone).

Chapter 1 - The Surprising Power of Atomic Habits
•1 percent better each day for one year, you’ll end up thirty-seven times better by the time you’re done
•Habits are the compound interest of self-improvement.
•You should be far more concerned with your current trajectory than with your current results.
•Breakthrough moments are often the result of many previous actions, which build up the potential required to unleash a major change.
One Key Takeaway – compounding happens in every aspects of life hence focus on process instead results
Chapter 2 - How Your Habits Shape Your Identity (and Vice Versa)
•True behavior change is identity change.
•The goal is not to read a book, the goal is to become a reader.
•Your identity emerges out of your habits.
•Each time you read a page, you are a reader.
•Every action is a vote for the type of person you wish to become.
Chapter 3 - How to Build Better Habits in 4 Simple Steps
•Habits do not restrict freedom. They create it.
•The process of building a habit can be divided into four simple steps: cue, craving, response, and reward.
•How to Create a Good Habit
• The 1st law (Cue): Make it obvious.
• The 2nd law (Craving): Make it attractive.
• The 3rd law (Response): Make it easy.
• The 4th law (Reward): Make it satisfying.
Chapter 4- The Man who didn’t look right
•Pointing-and-Calling is so effective because it raises the level of awareness from a nonconscious habit to a more conscious level.
•The first step to changing bad habits is to be on the lookout for them.
•Habits Scorecard are focused on getting you to recognize your habits
Chapter 5 - The Best Way to Start a New Habit
•Broadly speaking, the format for creating an implementation intention is:
•When situation X arises, I will perform response Y.
•The habit stacking formula is:
One Key Takeaway – Habit stacking and linking new habit to existing habit
Chapter 6 - Motivation is Overrated; Environment Often Matters More
•Design your environment to motivate you to accomplish the things you want to. Visual stimuli help.
•New environments can help eliminate old bad habits and establish new ones.
One Key Takeaway –Environment must be changed for new habit. Better Cue
Chapter 7 - The Secret to Self-Control
•Avoid temptations that trigger bad habits. This is the only way to break bad habits.
•The best way to improve qualities by creating a more disciplined environment.
One Key Takeaway –Environment must be changed for new habit. Better Cue
Chapter 8 - How to Make a Habit Irresistible
•The habit stacking + temptation bundling formula is:
•After [HABIT I NEED], I will [HABIT I WANT].
One Key Takeaway – Habit stacking with reward at the end
Chapter 9 - The Role of Family & Friends in Shaping Your Habits
•We tend to imitate the habits of three social groups: the close (family and friends), the many (the tribe), and the powerful (those with status and prestige).
•One of the most effective things you can do to build better habits is to join a culture where (1) your desired behaviour is the normal behaviour and (2) you already have something in common with the group.
One Key Takeaway – Be aware of your social groups and try to have positive groups
Chapter 10 - How to Find and Fix the Causes of Your Bad Habits
•Change the language and frame of habits to make them positive.
•Your habits are modern-day solutions to ancient desires.
•Habits are attractive when we associate them with positive feelings and unattractive when we associate them with negative feelings. Create a motivation ritual by doing something you enjoy immediately before a difficult habit.
One Key Takeaway – Associate Negative feeling to negative habits
Chapter 11 - Walk Slowly, but Never Backward (Generic)
•Habits form based on frequency, not time. Story of Quantity vs Quality
•The most effective form of learning is practice, not planning. Error and trial
•Aim for small actions (ex: working out) to achieve instead planning for something big
•The amount of time you have been performing a habit is not as important as the number of times you have performed it.
One Key Takeaway – Take small action daily as habit is formed on frequency not on time
Chapter 12 - The Law of Least Effort
•Energy is precious, and the brain is wired to conserve it whenever possible. It is human nature to follow the Law of Least Effort.
•Create an environment where doing the right thing is as easy as possible.
•Conversely, use environment design to make the wrong thing as difficult as possible.
•The greater the obstacle—that is, the more difficult the habit—the more friction there is between you and your desired end state.
One Key Takeaway – Create an environment friendly to your good habits and full of friction for bad habits
Chapter 13 - How to Stop Procrastinating by Using the Two-Minute Rule
•The idea is to make your habits as easy as possible to start.
•New habit should not feel like a challenge, The actions that follow can be challenging,
•When you start a new habit, it should take less than two minutes to do.
•Ex: “Read before bed each night” becomes “read one page."
•Master the art of showing up, then refine.
One Key Takeaway- New habit should take less than two minutes to start or show up.
Chapter 14 - How to Make Good Habits Inevitable and Bad Habits Impossible
•The best way to break a bad habit is to make it impractical to do. Increase the friction until you don’t even have the option to act.
•Automate as much of your life as possible.
•Use commitment devices - a choice you make in the present that locks in future behaviour - to guarantee future actions. Gym Payment in advance
Key Take away – Automate and think 1 big change that will automatically put you on good habit
Chapter 15 - The Cardinal Rule of Behaviour Change
•Problem is not awareness but consistency, hence make it satisfy
•What is rewarded is repeated. What is punished is avoided.
•Add a small, immediate reward to good behaviours.
Key Takeaway – End every habit on that day with some immediate reward.
Chapter 16 - How to Stick with Good Habits Every Day
•Most satisfying feelings is the feeling of making progress.
•Track your behaviour, ideally with something visual like a calendar.
•Automate this tracking when possible.
•The habit stacking + habit tracking formula is:
Chapter 17 - How an Accountability Partner Can Change Everything
•Create a habit contract with a painful penalty with one or two other people.
•Knowing that someone else is watching you can be a powerful motivator.
•An accountability partner can create an immediate cost to inaction. We care deeply about what others think of us, and we do not want others to have a lesser opinion of us.
• Key Take away – Accountability Partner and Habit contract
Conclusion: The Secret to Results That Last

Book Summary - You → Choice (decision) +Behaviour (Action) + Habit (repeated action) +Compounded (time) = Goals


The world for sale, Javier Blas & Jack Farchy, 2021 - This was a fascinating mix of history of commodities trading and geopolitics, as well as a glimpse of how the world economy has evolved since WW-2 - from the growth in Europe and Japan post-war, to Nixon years and the great inflation of the 70s, to the rise of Wall St. in commodities trading in the 80s, globalization and the crises across countries in the 90s, the fall of the Soviet Union and the rise of China.

My notes -

  • The book’s focus is not on commodity traders of wall st. but the ones that buy and sell physical commodities (Glencore, Trafigura, Cargill, Vitol, Mercuria, Gunvor etc.)

  • Glencore - world’s largest metals trader, top 3 oil trader and largest wheat trader. Trafigura - world 2nd largest metals and oil trader. Vitol - World’s largest oil trader. Cargill - Leading agri products trader

  • They buy natural resources from one place and sell in another bridging supply-demand mismatches and perform price arbitrage (Adam Smith’s invisible hand)

  • World’s trade in natural resources and manufactured goods rose from $60 billion post WW-2 to $17 trillion in 2017 (25% of it is commodities)

  • Key events - 1. Opening up of markets with the collapse of dominance the large oil companies (seven sisters) and the rise of the petrostates (middle-eastern and latin american oil-rich countries) 2. Collapse of the soviet-union in 1991 3. Spectacular economic growth of China 4. Financialization of the global economy drove business towards commodity traders

  • Turnover of 4 largest commodity companies in 2017 - $725 billion. In 2011, the combined profits of top 3 was bigger than Apple & Coca-cola combined

  • Most of these transactions are outside the jurisdiction of national regulators and trade through shell companies

  • Soviet Russia understood the potential of oil as a strategic weapon (Might be what it is pursuing now with the Ukraine war?)

  • Business is supreme. Political matters are not business (Philipp brothers’ basic rule)

  • Washington financed billions of dollars of exports to carry the American diet to the world. Between '55 and '65, Cargill quadrupled the volume

  • Soviet oil was produced and consumed within its borders in '55. Between '55 and '65 it increased exports from 116k bpd to 1 million bpd (Soviet Economic Offensive)

  • Commodity traders thrived on information edge. They had sophisticated system that was second only to DoD and CIA

  • During Suez crisis of 1956, Cargill’s traders bet the canal would be closed and shipping freight rates would rise as ships took long route around africa (sounds like Evergiven crisis from '20?)

  • Great grain robbery - Soviet Russia’s Belusov in '73 bought almost 30% of US wheat harvest by negotiating deals with several grain traders. The secrecy of the traders was leveraged by Russia to buy more quantities of grain than the US could afford to sell leading to severe losses for the traders

  • Between’48 and '72 (post war), oil consumption in US tripled. In Europe, it went up 15x and in Japan 100x.

  • Western corp oligopoly (seven sisters) set oil prices pre 1960. Soviet oil undermined their dominance by selling oil cheaper. When Standard Oil (Exxon) cut posted price for middle-east, the sheikhs were livid and Opec was born (in 1960)

  • When Israel attacked Egypt and Syria in 1967, Suez Canal was closed until 1975 (war had lasted just 6 days but its impact for 8 yrs)

  • Israel and Iran wanted to bypass the Suez and had been working on Eilat-Ashkelon pipeline to get oil from Persian Gulf to the mediterranean. Iran used a shell company in Liechtenstein and Israelis a Panamanian entity to hide their ownership of this pipeline

  • The 254 km pipeline saved 22k km circumnavigating Africa (when Suez was closed between '67 and '75) making Iranian oil most cost competitive in the mediterranean (200k bpd)

  • Nixon’s policies like dropping the gold standard and the fed’s loose monetary policies (at Nixon’s insistence), devalued the dollar and oil shot up and with it, causing the inflation of the 70s (sounds familiar?)

  • Arab Light crude was $1.90 in 1960s and a decade later was at $1.76 entering the 70s. By '71 it was $2.24, '72 - $2.48 and '73 it was $3.29 and shot up to $11.58 by '74 at the mercy of middle-eastern politics and ended the decade at $18 in '79 and $28 in '80 (A flat decade followed by a 15x). The global post WW-2 economic boom from '48 to '72 was over and stagflation took over

  • The commodity traders helped rebels, dictatorial and communist regimes - be it in Libya, or South Africa during Apartheid or countries shunned by IMF and Washington for communist connections, as long as the country was rich in resources

  • Producing a tonne of Aluminum requires as much electricity as a US household uses in a year. Hence Al was referred to in trader circles as “congealed electricity”

  • Tolling deals - Financially low risk deals for commodity traders - like supplying alumina and collecting aluminum from smelters in Jamaica (Asset-light business model of Marc Rich + Co. that allowed it to compete with Alcoa & Alcan)

  • Aluminum quadrupled between '85 and '88 (due to a corner executed by Marc Rich + Co at LME)

  • The spike in oil prices in the 70s, plunged several countries into chaos and millions into poverty. Moscow and Washington were waging proxy wars across the globe and trade embargoes proliferated

  • Where risks were numerous, rewards were enormous. Commodity traders expanded into merchant banking and private equity and engaged in capital arbitrage - raising funds in industrialized world and investing in EMs

  • Being able to produce documentation to show a commodity had come from a different part of the world than it actually had opened up opportunities for profit. They had customs forms and stamps from every country in the world

  • Countries that did not align with either Moscow or Washington joined together and could secure crude from OPEC at cheaper rates (They couldn’t afford financing in dollars at 20% interest). Commodity traders took advantage of this by setting up fronts in Burundi or Kenya with local govts. and buy cheap oil and resell at big markups

  • Circumventing embargoes was how traders thrived

  • Oil which entered '80s at $30, dropped to $20 and oil-rich nations in OPEC felt the pinch and started cheating on production quotas pushing prices further down

  • Collapse of the Soviet Union made it integrated with the world economy and suddenly Russian aluminum, copper, zinc, oil and coal flooded the global markets (like a closing-down sale for commodities)

  • PepsiCo took 17 Soviet submarines, cruiser, frigate and destroyer as payments for Pepsi :slight_smile:

  • In the newly independent Russia, inflation skyrocketed and rouble collapsed

  • Heavy crude looks like marmalade and produces more fuel oils and less diesel & petrol. Light crude looks like cooking oil and produces more petrol and petro products. Most refineries can handle 40-50 diff varieties of crude

  • 90s commodity prices were mostly low due to crises in Mexico in '94. South-east Asia in '97 and Russian sovereign default in '98 and Brazilian crisis in '99

  • When per capita income is below $4000, people spend most of the income on food, clothing and housing. Above $18-20k extra income is spent on services that require little commodities. Between these two as income rises above $4k, there’s a sweet spot for commodity demand (China crossed this in '01)

  • Consumer goods like fridges, washing machines, household appliances and cars took off. Rice gave way to pork and poultry. 1000s of kms of highways, power plants, airports were built, along with schools and shopping malls in China when per capita income went over $4k

  • Copper demand - China was same as Italy in '90. By '00 it was 3x Italy and by '17 China’s Cu demand is half of global demand. Oil - 1.5 mil bpd in '01. 3x by '09 to 10 mil bpd by '18 (equivalent of entire production of Saudi). This caused the commodity supercycle

  • Between '98 and '18, BRICS + Indonesia, Mexico & Turkey accounted for 92% of inc. in metals consumption - 67% in energy and 39% inc. in food consumption. Crude rose from $10 in '90 to $50 by '04. (Low prices in '90s had curtailed capacity expansion and when demand hit, prices went through the roof).

  • Mercuria and Gunvor helped Russia sell its Oil and enriched its coffers and gave confidence to the rise of Putin. Between '99 and '05, Russian exported surged by 50%. Putin realized that Oil meant money and power. Mercuria’s cumulative profits between '07 and '18 was $3.9 billion

  • Putin made a deal with the oligarchs that as long as they stayed out of politics, he would not seek to reverse privatization (Khodokovsky Russia’s richest oligarch was made an example of, for defying this, as he spent a decade in prison and Rosneft took over his oil property)

  • Russia’s oligarchs could enrich themselves only as long as it pleased Putin. Russia’s natural resources ultimately belonged to the state

  • Between '81 and '01, sub-Saharan Africa’s economy remained same in size. Between '01 and '11, it quadrupled

  • During hyperinflation in Zimbabwe, Cargill issued its own money with the logo of Cargill Cotton as the presses couldn’t print money fast enough :slight_smile:

  • During GFC, Oil which traded at $147.50 in early July tumbled to $36.30 by end of year

  • Rising food inflation of 2010 was one of the causes of Arab spring (Easiest way to create political problems is to have hungry people)

  • US sanctions were routinely violated by commodity trades. BNP Paribas paid $9 billion for violating sanctions in Cuba, Sudan and Iran

  • US uses the dollar to sanction countries and banks as no one can afford to be locked out of the US dollar (Weaponising the dollar)

  • Even as western commodity traders stepped back, China’s commodity traders took over to overstep sanctions buying oil from Iran. Iran one time supplied 1/6th of China’s demand

  • During Covid when oil prices plunged to zero and below, Glencore’s traders were buying and storing oil in the world’s largest tankers and selling futures, tripling their money in 3 months. Glencore made $1.3 billion trading energy in the first 6 months of '20

I can’t imagine the amount of effort it takes to write books like these in terms of research. I don’t think the summary does justice to the book as its written as a gripping read for what can be a dry subject. Please do read the book if you find the summary interesting. 10/10


The DAO of Capital: Austrian Investing in a Distorted World by Mark Spitznagel | Goodreads

This is a very unique book. The focus is to build the framework for Austrian Investing, which makes it a very dense read. Perhaps prior reading of the Austrian Economists is a must for reading this book.

Market is viewed as a process of price discovery which is essential to establish coordination among large number of workers. The main actor is the entrepreneur who tries to build better capital structure with the aim of earning profits. However a distinction is made between those who focus on short term profit versus those who forgo present profit so as to build competitive advantage for themselves and larger profits in the future. Humanity progresses due to the roundabout capital building leading to greater productivity by this Austrian hero. I can’t help but think of many of my investments, for example, Dmart which chose to buy large plot of land and slowly build their network of large format stores with the focus on low prices which becomes their competitive advantage and source of larger future profit.

The last two chapters suggests two complimentary trading strategies. The first is to exploit the distortion in market produced by money printing. The idea is to buy out of money put options when the Mises index (also known as Tobin’s Q ratio is significantly above equilibrium (at 1), say 1.7. Market return in such cases have been poor and in the event of market crash, the put becomes the source of capital for investing in low Mises index environment. The second strategy selects which stocks to invest in. The ideal stock to invest in has a high ROIC and low Faustmann ratio.
A sustainably high ROIC is an indicator of competitive advantage, therefore applying an ROIC threshold in stock selection removes those which do not have any competitive advantage. A low Faustmann ratio then ensures that we don’t overpay.

The edge of the first strategy comes from the market distortion caused by FED intervention. The edge of the second comes from the entrepreneur forgoing the present profits to build more efficient capital structure, competitive advantage, and higher future productivity.

1 Like

How to Make Money in Stocks by William O Neil

This Month in Book club read we had this one old classic that discuss technical and fundamental analysis of stock investment with some great US stock examples. It gives a straight-forward methodology that you can implement on your own to recognize multi-bagger stocks especially growth stocks. Book talks mostly on Positional trading using CAN-SLIM methodology for selection of stocks coined by Author.

Below notes may include Indian stock name as an example. I personally loved the book as for satellite portfolio this will add value and help us to identify some growth stock which can become core stocks too.

  1. Stock chart must be checked if stock if stock is in a proper base or it’s extended
  2. Chart patterns are best to get the winners
  3. Cup and Handle Pattern

  1. Key Characteristics
    -7- 65-week duration +
    -Must have clear uptrend at least 30%
    -Base should look more of U shape than V shape
    -Some leaders can correct for 40-50% in a bull market. More than 50% have high failure chances
    Handle characteristics
    -Duration 2-7 weeks. Less week, has high failure rate
    -Falling wedge. Rising or not falling wedge may fail as chances are weak hands hasn’t exited yet
    -Volume dries up and High relative strength
    -Forming above 10-week ema
    -With no handle, stock has high prob of failing
    -Handle should be in upper half of cup

  2. Finding Pivot Point
    -Top of the cup
    -Daily volume should start increasing
    -Buy point within the range of 5-10%

  3. Double Bottom

Key Characteristics
-Match With W
-Continuous pattern and hence Must have clear uptrend at least 30%
-2nd Bottom of W match the price level of first bottom or undercut to create shakeout for weaker hands else prone to fail
-Pivot point is top of the middle peak of the W

  1. Flat Base or Square Box
    -2nd stage base that occur after stock has advanced at least 20% or more from CPH, DB pattern
    -Flat base must be at least 5-6 weeks within the range 10-15% tight bound
    -If initial buy missed then, keep an eye here for entry point

  2. High Tight Flags
    -Starts with 100-120% move in few weeks – 3-8 weeks
    -And then sideways within range of 10-25% - 3-5 weeks
    -Each earlier pattern works for each later pattern

  3. Some Erratic Behavior
    -Handle shouldn’t cross more than 18% or below
    -Wedges forming up
    -If dept of the cup is too much
    -Beware of buying stocks in prolonged bear market
    -Keep an eye on volume dry up while handle is formed
    -Reliable base is anything above 6 weeks
    -Don’t buy if most of the weeks are in lower half of the base
    -Bad relative strength even if the stock is breaking out

  4. C= Current Q EPS growth and Sales Growth
    -Yearly QoQ EPS growth >25% or more, Greater than 50% is better
    -Never compare with Previous quarter in same year due to seasonality the result could be distorted
    -Strong Sales growth must also be there. 25%>
    Examples below - Rajratan, Tata Elxsi

  5. A -Annual Earnings growth
    -Higher EPS growth in last at least 3 years > 25% to 50%
    -ROE >17%, Higher the better
    -Best portfolio can be created during down market (Esp Core)
    -Many growths leader in one market don’t repeat on next market
    -PE ratio is end effect of accelerating earnings. PE is not the cause of super performance
    -Never sell just because PE is high and never buy because PE is just less

Eg: Bigbloc, Deepak Fertilizer, Rajratan, Apl Apollo etc

  1. N- Newer Companies, Highs, Products, Management
    -New Product or Services (Apl APollo)
    -New Management CG Power
    -New Industry Condition- Supply shortage, Price increase or new technology (Tata Elxsi, Shivalik bimetal or Rajratan)
    -New Highs 52 or 26 week high, coming out of proper base (Many)

  2. S- Supply and Demand

-Price determined by Law of supply and demand
-Less the float better the chances of stock to perform
-Look for stocks where Promoter holding is high
-Look out for Stock Dilution or splits, frequency of that. 2:1 is better than 5:1
-Buybacks are good along with CANSLIM. Higher %age better
-Look for less Debt-to-equity stocks. Leverage is bad. Look for company reducing the debt

ATGL, Honeywell Automation, Whirlpool, NGL finechem
Risk – operator Driven possibility but use chart/technical to tread this

  1. L- Leader or Laggard
    -Buy top 1,2 or 3 stocks in strong industry group
    -It’s not necessary the Largest but best
    -If in Portfolio, worst performers to be sold and winners keep adding
    -Can be used by applying Relative strength
    -Look for RS rating 80 and above
    -Sell the laggard with 7-8%
    Eg: De Nora, DHP, Rajratan, Elecon in May june 2022

  2. I - Institutional Sponsorship
    -Biggest source of demand are the institutions, MFs, MPS etc
    -If Institutions are increasing participation in the near past
    -Look for the quality of the funds along with increasing number of institutional ownerships
    -Recent new position is more important instead old existing one
    -Avoid over ownership too, as it can cause huge selling too
    Eg: ASAHIINDIA, Deepak Fertilizer

  3. M- Market Direction

-All the parameters are right but this one is wrong then you are gone
-Analyse Market in three ways – Bull vs Bear, Which Stage it is in , early or late or Intermediary and Strength of the market
-Identify Key General Market, NIFTY 50, BSE Small cap and SENSEX
-To be analyzed on Daily chart
-Bear market usually end while business still in a downtrend. Market is leading indicator as it discounts all the possible economic upturn
-Most of the stocks fall during bear market but not all of them recover
-When market does bad, at least have 25% cash raised
-Big Money is made in first 2 year of bull market
-Follow-through day concept to identify an important change in general market direction
-Check your ego- Never fight Market. Market is always right

  1. Sell- When to sell and cut loss
    -Strike rate of 4/10 is still good if cutting losses small
    -It takes courage and discipline
    -Lose small and win big is holy grail of investing
    -Always look for 3:1 ratio. 25%: 8% and in bear market 10%:3%
    -If you cut loss quick then, you will have enough cash for next bull market
    -Do not sell the stock because it has fallen from the top 7-8%

  2. When to sell and take your Profit
    -Objective in the market was not right but to make big money when you are right
    -Never Average down but average up
    -If year in corrective phase, look for 2-3 25% wins and you are sorted
    -Have a rule or strategy which will force you out
    -2 Key points for selling – but near to base and don’t get shaken out so go to weekly to buy that—STOP CHASING EXTENDED STOCKS
    -Some Sell signals recommended in the books
    -Stock being extended from the base or moving average or when biggest price action happened post extension from the base
    -Sell the stock if stock runs up 25% -50% for one or two weeks of stock split
    -If stock extended from 200 days – around 70-100%

  3. Money Management
    -Have concentrated satellite portfolio, may be not more than 5 stocks
    -If any new attractive idea occurred, then discipline should be selling the least attractive one
    -If You are confident on your strategy then, real wealth can be created via concentrated portfolio in bull market
    -In terms of adding tranches, don’t do aggressive if stock has given good move in initial weeks else your average cost will go up.
    -Day trade not recommended. If you are in hurry to make money, then you are in hurry to go bankrupt
    -Use of Margin – New Investors no. Experienced investor with proper strategy may be. Age factor important


Auth n Capture, Aditya Kulkarni, 2021 - One book to understand the Indian digital payments ecosystem, from UPI, CC/DC, BNPL, e-NACH, BBPS, Aggregators, Wrappers, International Payments to how payments works for different sectors. This is an excellent book that gives a bird’s eye view of the ecosystem from the perspective of merchants, bankers, consumers, the regulator and a fintech product manager. If our digital payments has evolved so fast into something so incredible, it is due to the nimbleness of everyone in the ecosystem and I can’t be more proud of what the payments ecosystem has done in the last 10 odd years. This book is a bible to understand the basics. I happened to read it for building a payments system ground-up. However, it is definitely not for everyone (It can get pretty technical for people with no interest in tech).

My notes -

NPCI’s payment products evolution - 1. IMPS - 24/7 inter-bank transfer 2. RuPay - India’s answer to MasterCard and Visa 3. UPI - built on IMPS rails 4. *99# - A somewhat failed USSD based payments system for feature phones 5. BBPS billing platform for bill payments 6. NACH - National Automated Clearing House where NPCI acts as clearing house 7. AePS - Aadhar enabled payments 8. Bharat QR - Unified QR for payments from UPI and cards

• Card Schemes or card networks facilitate card issuance, security (3DS), processing, settlement and card acceptance - Eg. Visa, MasterCard, Amex etc. They make money through BIN fees, certification fees and interchange fee (% of transaction value)

• Card schemes influence the ecosystem through capabilities (NFC), features (tokenisation) and commercials (interchange fee for diff merchants) and acceptance (What sectors are allowed)

• Payments have lot of exceptions from diff stakeholders. Eg. regulators - SEBI doesn’t allow wallet or credit products in investing and banks - SBI doesn’t allow wallet loading and HDFC doesn’t allow skill-based gaming etc.

• Banks and payment players share a unique relationship - they compete and collaborate at the same time

• Wallets (PayTM), BNPL (Simpl, Lazpay), EMI products (Zest) are some of the new payment fintech innovations

• Payment Instruments current available in India - CC/DC, Netbanking, UPI, Wallet, EMI & BNPL, Cheque/DD, Cash, Crypto

• Acquiring Banks are banks that process payments (CC/DC/UPI) on behalf of issuing banks

• Merchants would integrate with an acquiring banks like HDFC that can process Visa/Master through Payment Gateways like FSS, ISG, MIGS or CyberSource

Payment Aggregators were born to reduce integration hassles for merchants for building payment integrations with multiple parties to handle various settlements. PAs (BillDesk, PayU, CC Avenue, RazorPay) offer single settlement for all types of transactions

Payment Containers (PayPal, AmazonPay, PhonePe) are lite-payment aggregators. Here user has to create an account (unlike PAs) and login to it to access payment instrument (they save UPI, cards or have wallet linked to that account)

• TSP Wrapper - Technical Service Providers integrate with multiple PAs, PCs, Wallets and other payment processors and help route payments (They do not do settlements). Eg. JusPay, DreamPay

• All payment instruments are linked to a source - either a bank account, a credit source or a wallet

• Credit cards are differentiated based on credit limit, spending rules, credit period and variants (consumer vs corp, co-branded etc)

• Card network (Visa) gives the BIN (Bank-identification number), sets up networks to accept cards across channels and defines and enforces dispute management and arbitration

• Card Numbers are usually between 13-19 digits. Visa is 16 and Amex is 15. First digit is MII - Major Industry Identifier Amex is 3, Visa is 4 and Master is 5. 1-6 digits are BIN or IIN (Issuer id num) which identifies issuing bank. 7th to last but 1 digit is the actual card account number. Last digit is the checksum (uses Luhn’s or Mod10 to verify)

• EMV Chip (more secure) and Magnetic Stripe provide encoded card details along with the CVV1/CVC1. CVV2/CVC2 (Card verification code or card verification code) is used for online transactions (manually entered by user) where card is not present. 2FA earlier used to sign verification by merchant but is now mandatory PIN based

• Card Switch - the software that connects the issuing bank to the card network

• Prepaid cards and wallets need the PPI license (Pre-paid instruments) from RBI. Limit upto 10k with KYC and 2 lakh with Full KYC. PPIs can be reloadable (PayTM, Forex cards) or non-reloadable (Gift cards)

Closed Loop cards - accepted by a single merchant (Shoppers stop card), Semi-closed - large network of merchants (Sodexo) and Open loop (HDFC Bank Gift card)

• Card use restriction - say ATM withdrawal or reloadability or merchant based on MCC (merchant category code) for Sodexo

• NBFC/LendingTech companies issue PPIs and load them with credit just-in-time (This is restricted as of July '22 if am not mistaken but book came out in '21)

• Netbanking is unique to indian payments - it was popular because of lower penetration of cards (I still use it!)

• Netbanking is one of the biggest value propositions of PAs - as there are 45+ banks, it is impossible for merchants to integrate with them individually. PAs have direct integration with few large banks HDFC, SBI, ICICI etc and for rest they use other PAs (like Russian nesting dolls). UPI has reduced netbanking to a large extent. (Without Netbanking, will PAs be relevant?) For investments, NBFCs and Education sectors, Netbanking is still preferred option

BNPL - card-less credit (credit period 15 days). card and netbanking transactions go through multiple hops and need 2FA. BNPL is seamless. This is small-credit (utility bills, food, grocery) unlike big-credit used for big expenses (bike,car), aspirations (iPhone) or emergency. When user doesn’t pay, user is blocked (doesn’t affect credit score)

NTC - New to Credit. When there’s no credit history, credit scoring is done based on education and job history etc. A small credit limit is given and extended later

• BNPL makes money by penalty fees for late payment and also charge MDR to merchants. Pricing is done to cover credit risks, cost of funds, infra and customer acquisition cost

• NPCI’s IMPS replaced NEFT and RTGS with its real-time 24/7 settlements. You still have to enter account number and IFSC code - UPI built on top of IMPS solves this by being mobile-friendly and user-friendly

• UPI works through VPA (virtual payment addresses) which maps to a bank account/debit card. One VPA can be linked to multiple banks or multiple VPAs to single account. Issuer PSP (bank/psp that creates the VPA) and Acquirer PSP (one processing the transaction) interact through a UPI switch (managed by NPCI)

• UPI is protected by device-binding - so device fingerprint/PIN and UPI PIN (2FA as prescribed by RBI)

• Only banks can create VPAs with an NPCI switch. So fintechs like GPay (ICICI, HDFC, Axis, SBI) , PhonePe (Yes Bank) tie up with them

• UPI payments can be made via QR code (static & dynamic - with amount embedded to replace CoD). Virtual VPAs are useful to segregate branches of retailers. UPI also support one-time (IPO subscription) and recurring (Autopay) and also payouts (disbursements of game winnings)

Cash is the king and digital is divine (RBI). Even in online transactions, more than half are still paid as cash on delivery. Cash handling is hard - so companies try various things to avoid it - Mobile POS to swipe on the move, ePOS (SDK) that generate dynamic QR and via payment links

Cryptocurrencies are everything that you don’t understand about money combined with everything that you don’t understand about computers - John Oliver

• If enough people believe in the value of something, it can be come currency

• Card vaults are the only places cards can be stored. Merchants and PAs cannot store cards. Only issuing banks can vault cards. Tokenisation was to avoid vaulting - this can be done only by card networks

SI on cards - Standing instruction on cards is how recurring payments are processed on cards. First transaction must have 2FA. Max 5000 per debit. Pre-debit notification should be sent 24 hours prior and post-debit notification post debit.

• BillDesk is the official pioneer of payment aggregation in India and is still the market leader

• MDR - Merchant Discount Rate is the barometer of risk in the payments ecosystem. It varies by sector. E-commerce might be 1.80% and education 1%. (Its like insurance premium on a term policy). CP vs CNP (Card-present vs Card not-present) also affects transaction charges. MDR might be absorbed by merchant or passed to Customer

• Financial risk in digital transactions is controlled velocity checks (transaction limits, amount limits), risk engines (IP tracking, device fingerprints), tokenisation, encryption, PCI-DSS, 2FA and by onboarding “good merchants” (Unlike say, a gambling website)

• PAs underwrite merchants by understanding their business model, touchpoints, processes, policies etc. Banks are the ones that issue MID (Merchant IDs) but PAs take the financial risk to use the banking system

• A risky merchant can damage overall financials terribly since the PA’s take is very low and one bad transaction can wipe out all profits

• Sometimes PAs might use Master MIDs for the industry if the merchant is small and doesn’t have MID. Rates might be higher. PAs name will appear in the statement in this case.

• While MIDs are used to collect payments, Live IDs are used by PAs for settlements to merchants. One Live ID might be mapped to multiple acquiring banks (for performance-based routing). Card Vault is linked to Live ID.

• MDR is exempted for UPI and RuPay cards from 1st Jan '20. Issuer PSPs like Google Pay make nothing from UPI

• How PAs charge what’s owed to them - Upfront deduction (Deducted before settlement), Surcharge (borne by user) and Invoicing (Monthly). PAs avoid invoicing models as much as possible

• PA’s unit economics depends on what it charges its merchants vs what it costs with its banks and other payments issuers.

• PAs try to profit at merchant level, rather than on each payment instrument (it may lose on UPI but make money on cards and Netbanking for eg.)

• On-Us vs Off-Us rates and processing - PAs have diff rates if issuing bank and acquiring bank are same (On-us) or different (Off-us). They optimize a lot to lower rates here to maximize profit margins

• PAs that process a lot of transactions give free float to bank (PAs nodal account with the bank), so bank may provide little benefits to PAs in charges

• Chargebacks where PAs couldn’t recover money from merchants can wipe out their entire almost non-existent profits

• Best results will come from everyone in the group doing what’s best for himself and the group (John Nash). Price wars are thus harmful

PA integrations are done via non-seamless/redirection flow (simplest), via iFrame (cannot add multiple PAs) or seamless merchant hosted page (better control on look-and-feel and routing and for multiple PAs but most effort). If PCI-DSS compliant, merchant can capture card details (if not, card details shouldn’t hit merchant’s servers)

• Decision to save card is made based on frequency of purchase (say Swiggy), dominant channel (say mobile app) and lock-in with one PA (Card vault have to be migrated. But this goes away with tokenisation I think). Saved card is merchant’s property and not PAs, if vaulted with PA (With tokenisation this will be a relic. That’s how fast our payments ecosystem is evolving that a book written a year back is already outdated)

• It is possible to have multiple Live IDs for different lines of business but a combined card vault (Ola does this)

Behind a card transaction - Once user enters the card number, CVV and expiry and initiates payment,VISA/Mastercard directory will lookup the issuing bank and ACS (Access Control Server) of the issuing bank (OTP verification). Once this 2FA is completed, authorization ensues with the issuing bank checking available credit/balance and other risk checks and intimates the acquiring bank, PA, merchant and Customer and transaction is ‘Captured’ (For Pre-Auth, all above happens, except transaction is not captured)

• UPI has collect flow & intent flow. Collect flow is where you enter VPA in merchant app and your UPI app gets a notification to Pay. Intent flow is seamless app-to-app and works only on Android and iOS (Better success rate). GPay links the mobile number to VPA to make it seamless

• Transactions are routed real-time based on routic logic based on backup/failover, conversion or success rate, cost, fulfilling volume commitment (fine-tuned over long periods)

Payment success rate = Successful transactions / Transactions initated by merchant or Received by PA (varies). Also measured by channel (web, mobile), payment modes, card type (CC/DC), card network, issuing bank etc. Sometimes low success rate is just an inconvenience and other times its real loss of business (depends on user’s intent - say food vs travel, environment, demographic etc.)

Settlement - Issuing bank moves money to Acquirer bank which then moves it to PA, post which settlement to merchant is made. Some PAs borrow from NBFCs to settle early (otherwise it can be T+2). Risk is very low in this lending. PA’s add their margin on top of NBFC’s and make good with early settlement.

Recurring payments can be 1. Fixed amount & fixed cycle. (Monthly SIP) 2. Fixed amount & variable cycle (Top-ups) 3. Variable amount & fixed cycle (Utility bills) 4. Variable amount & variable cycle (cab rides). Common recurring payment solutions - SI on cards (SI Hub by BillDesk), e-NACH, UPI Autopay, BillDesk

Payout solutions - Periodicity, number of payouts, value and criticality, cost determines mode. Common usecases - refunds, vendor payouts, winnings in gaming, loan disbursements, agent incentives etc. RTGS, NEFT and IMPS, UPI are commonly used.

International Payments - Nostro account - Foreign currency account in a bank in a foreign country. Vostro - Home currency account of foreign bank in own country. Payments are usually done over SWIFT network and a FIRC is issued to merchant (used to claim export incentives). Acquiring banks consider International PGs as big risk

BillDesk’s EBPP platform brought billers (utilities, insurance, card companies etc.) and agents (third party apps, bankers) together so agents could extend bill payments to their customers (HDFC Bank’s Bill Pay)

• BillDesk’s EBPP works well but its become a monopoly so NPCI launched BBPS (Bharat Bill Payment Systems). Anybody can add utilities and those can be accessible to agents across the system.

TSP - Technical Service Providers - specialized in payment aggregation (JusPay, DreamPay), BBPS (, Banking APIs (Decentro) and Credit Card issuance ( GPay is a TSP for UPI

• TSPs can become single-point failures but can also help implement routing logic across PAs (RazrPay or PayU routed through JusPay is common) and PGs based on optimization required (success rates, performance, commericials). TSPs are like Russian nesting dolls.

Offline payments are done via POS (issued by Banks, Pine Labs, PayTM etc.), soft POS (can send payment link or generate dynamic QR) or through UPI QR code. BharatQR has acceptance for Visa, MasterCard

This is a book you must read if you have any interest in the Indian payments/fintech space. Nothing else I have come across is as comprehensive in its coverage. I have no doubt that this book will be outdated though in another 5 years time, with the fabulous pace in which our payments ecosystem is evolving to become the best in the world. 10/10


Putin’s People, Catherine Belton, 2020 - All of us probably understand Russia at some level but am certain we all live with lot of gaps in that understanding. This book covers those, especially what happened just before and after the fall of the Soviet Union, the Yeltsin era, Putin’s rise and everything after.

The fall of the Soviet Union was chaotic, with Yeltsin taking the reigns from the Communist Party after banning it, amidst food shortages and hyperinflation. Yeltsin was a liberal and wanted to privatize property and be democratic and more liberally integrated with the global economy. Putin ran illegals in East Germany before the fall of the wall and was a KGB agent who liaised with the Stasi. He even had a Stasi id. KGB men were trained in subterfuge to serve the party’s interests.

Yeltsin’s govt. gave control to large amounts of resources to their family and friends in the name of privatization and lot of them became overnight billionaires and Oligarchs as the Soviet Union was falling. KGB in the meantime, siphoned as much cash as it could to foreign shores. Putin, (then 39 was deputy to the mayor) and his KGB men took control of St. Petersburg port along with the mafia (Tambov group) and its oil and gas terminals and ran it like their own fiefdom.

When the profligacy ended with Russia’s default in 1998, Putin moved to Moscow from St. Petersberg and rose through the ranks very quickly. Yeltsin govt. and family had been caught in a lot of scam and scandal and needed a safe way out and thought Putin could be the one who could be their puppet and installed him as president. Putin was reluctant to take over the position and thought he would be an interim president. KGB planned apartment bombings in Russia and killed their own citizens and planted the blame on Chechen rebels. This helped Putin’s ratings and his rise in his first term.

Putin though struggled to rule as he was not good at handling sensitive situations. KGB men slowly took over key positions and went after the Yeltsin era oligarchs, leaving just Yeltsin and family alone. Slowly all of Russia’s key wealth was transferred to KGB men and Putin and billions were siphoned out of Russia through offshore accounts in tax havens. The state’s money became KGB’s slush fund with which they could do whatever they chose.

Khodorkovsky was one of the oligarchs who stood up to Putin and Putin did not like being challenged and used the law and media (Which were forcefully taken over by KGB men from the oligarchs) to put him behind bars and take over his extensive wealth. With the courts and media in his control, Putin could literally do anything and control public opinion. As long as people had their TV, cars and refrigerator and were left alone, he could do as he pleased and had public support.

He finished his two terms and had to step down. There was an interim puppet president but Putin still ruled behind the scenes and came back for his third term, this time with imperial ambitions. He was tired of the game the west was playing in Europe, taking over ex Soviet countries into NATO’s fold. He also did not like the disinformation campaigns run by Western media on Russia - so he decided to do just the same with the KGB slush funds influencing elections in a lot of countries (The Orthodox church was a cover for his imperial aims), including Czech, Ukraine, France, Germany and even the US, with Trump who connections with Russia are detailed in depth in the last chapter.

Putin always felt Ukraine was a part of Russia and annexed Crimea and influenced the govt. in power. When a pro-West govt. was elected, he had often threated to cut down on oil and gas supplies and play with pricing. None of what is happening now is new and has all happened in some sense or the other pre-2020.

That in a gist, is what the book is. The author thinks the KGB never came out of its Cold war mindset, but to me it sounds like the author, the CIA and the west haven’t either and that is the crux of the problem with the world today. This is a great book to view the West’s viewpoint of Russia. Very highly recommended if interested in geopolitics. 10/10


The Genesis Machine: Our Quest to Rewrite Life in the Age of Synthetic Biology
By Amy Webb, Andrew Hessel | 2021


This book is a wonderful primer on Synthetic Biology. Amy Webb has a gift for storytelling which makes this a compelling read.


In 2010, Craig Venter (the eccentric genious who pretty much single-handedley decoded the Human Genome) successfully synthesized “life” – a self-replicating bacteria to be precise – in the lab. He called this bacteria JCVI-syn1.0 or Synthia (scientific name: Mycoplasma laboratorium).

Venter had hypothesized (and he eventually proved it) that a minimally viable genome might act as a basic chassis, the scaffolding upon which other genes could be added for new functionality.

In 2017, Venter’s company Synthetic Genomics demonstrated a sort of biological printer, which he called a digital-to-biological converter, or a DBC. It consisted of a robotic DNA/RNA synthesizer-assembler system about the size of a sofa. Researchers can send various genetic programs to the DBC and print out DNA for manufacturing a protein, an RNA vaccine, and even a bacteriophage (a virus designed to infect bacterial cells).

This development has enormous implications for our species – it has the unparalleled potential to do both great good and existential harm.

So what is Synthetic Biology?

Researchers working in the synthetic biology struggle to define its contours, but it is an umbrella for chemistry, biology, computer science, engineering, and design united for a single goal: to gain access to the cellular factory and to life’s operating system in order to write new—and possibly better—biological code.

Synthetic biology digitizes the DNA manipulation process. DNA sequences are loaded into software tools—imagine a text editor for DNA code—making edits as simple as using a word processor. After the DNA is written or edited to the researcher’s satisfaction, a new DNA molecule is printed from scratch using something akin to a 3D printer. The technology for DNA synthesis (transforming digital genetic code to molecular DNA) has been improving exponentially. Today’s technologies routinely print out DNA chains several thousand base pairs long that can be assembled to create new metabolic pathways for a cell, or even a cell’s complete genome. We can now program biological systems like we program computers.

It’s expected that Synthetic biology will transform three key areas of life: medicine, the global supply of food, and the environment.

Why should you care as an investor?

Synthetic biology’s value network is just starting to form. So far there are just a few players in each segment. But that’s changing quickly. Investors poured $8 billion into synthetic biology startups in 2020.

The rate of investment growth in synthetic biology has doubled every year since 2018. BlackRock launched an ETF for synthetic biology in October 2020, following ARK Capital Management and Franklin Templeton, whose ETFs were performing better than expected. ARK’s made a 44 percent return on investment in 2019, and a staggering 210 percent return in 2020. The median size of synthetic biology IPO deals is rising, too: in 2020, the average IPO was valued twice as much as it was in 2019.

Notes from the book

  • Genentech to developed the world’s first biotechnology product: Humulin (biosynthetic human insulin) which won US FDA approval in 1982. It is synthesized in a lab where a genetically altered E coli bacteria with recombinant DNA produces biosynthetic human insulin.

  • Although there are more than five hundred known amino acids, just twenty routinely show up in biological systems

  • Insulin, which an estimated 10 percent of Americans require every day, is only made by three companies—Sanofi, Novo Nordisk, and Eli Lilly—and its price has skyrocketed. Between 2012 and 2016, the cost per month doubled, from $234 to $450.34 Today, one vial of insulin can cost $250.

  • Biological equivalent of the “start” button is a three-letter sequence (in the DNA) called a codon.

  • AlphaFold was used to predict the structure of more than 350,000 proteins from humans and 20 model organisms. The dataset is expected to surpass 130 million structures by 2022. This will allow scientists to develop drugs to treat diseases far more quickly than the trial-and-error methods.

  • The language of DNA uses A-C-T-G, and DNA’s version of a byte is a codon, which uses three, rather than eight, positions. For example, ATG corresponds to the amino acid methionine. When the cell sees that very first ATG, it knows to begin producing protein there. ATG is biology’s “hello world.”

  • A protein is a chain of amino acids connected together. You can think of this like a beaded necklace. The beads (amino acids) are connected together by a string (bond), which forms a long chain (protein).

  • SBOL (Synthetic Biology Open Language) makes the biological data machine readable and easily integrated into different software tools.

  • Artemisinin (for treatment of malaria) is hailed as synthetic biology’s first successful product, even though the business created to manufacture and sell it was a failure (developed by Amyris biotech)

  • Harvard’s George Church and his team genetically reprogrammed microbes so they would eat sugar and excrete polyhydroxybutyrate, a strong and biodegradable material that could hold liquids for a short period of time. In 2009, they made “plastic made 100% from plants.”

  • A keystone species is a species which has a disproportionately large effect on its natural environment relative to its abundance, a concept introduced in 1969 by the zoologist Robert T. Paine.

  • Our planet’s biodiversity has plummeted. The total biomass of the human race accounts for less than 0.01 percent of all life on Earth but we’ve wiped out 83 percent of the animal species.

  • GenBank is essentially a biological version of Wikipedia. There, researchers submit genetic sequences they’ve decoded along with notes about them. Community moderators review the sequences, and if they’re approved, publish them.

  • Moderna gets its name from combination of words “modified” and “RNA”—referring to the idea that messenger RNA could be re-engineered using synthetic biology techniques to develop personalized cancer treatments.

  • Using synthetic RNA would be far more effective and adaptable than long-standing vaccine protocols, like making use of weakened viruses. In effect, Moderna was crafting genetic instructions that could be written like software and packaged into the equivalents of nanoscopic USB drives. Once these biological USB drives were inserted into the cells, those cells would dutifully download the mRNA instructions and follow them. Such vaccines would also be safer and easier to control.

  • Decoding the first human genome took thirteen years, and the total cost of the Human Genome Project—which also included nontrivial expenses unrelated to genome sequencing—cost $3.2 billion.

  • Roswell Biotechnologies, headquartered in San Diego, is developing molecular electronic sequencing technologies that fuse DNA enzymes directly to semiconductor chips. Such chips will be able to record what individual enzymes are doing electronically; by doing so, they effectively wiretap their activities. The hope is that in the next year or two, a portable device will be able to sequence an entire genome in under an hour for less than $100.

  • UK-based Oxford Nanopore Technologies makes a sequencing machine that’s both the price of an iPhone and half its size.

  • The first DNA synthesizer was introduced in 1980, when Vega Biotechnologies brought to market a machine the size of a microwave oven that could automate DNA production. It cost $50,000—around $160,000 in today’s dollars—and could make one DNA fragment (called an oligonucleotide, or oligo) per day, so long as it was only fifteen bases long. Since then, the cost of making oligos has come down dramatically, to pennies per base or less. Millions can now be synthesized at once.

  • In 2019, Microsoft launched a platform called Station B, with the idea of creating end-to-end interconnected applications and services for synthetic biology. It’s partnering with startups to develop the open-source programming language used for biological experiments, and other startups that automate the work of lab machines made by different manufacturers. For example, the platform is used to replace first-generation synthetic biology instructions, like “shake a test tube vigorously,” with precise digital commands for lab robots.

  • DNA is already nature’s hard drive. In 2019 Twist Bioscience and Microsoft researchers prototyped the first fully automated read-write DNA storage system, using it to first write and then read the word “Hello” in just five bytes of data. All of the world’s digital information could potentially be stored in DNA molecules suspended in about nine liters of solution!

  • Advances in DNA synthesis have eliminated what used to be one of the highest barriers in genetic engineering: translating digital DNA code into code that a cell can run. But most synthesized DNA today is just a few thousand bases long, which is only about enough for a single protein. Building anything more complex, such as writing the complete genome of a microbe, requires tedious rounds of assembling fragments and precision sequencing before the biological design can be booted up, tested, and debugged. Biofoundries will simplify or automate this drudge work.

  • In 2019, sixteen organizations banded together to form the Global Biofoundry Alliance to cooperate on these issues and address common challenges, such as locating the best prices for DNA synthesis, sourcing talent, and finding sustainable business models.

  • There is a Moore’s Law analog in synthetic biology, and it’s named for a physicist Rob Carlson. He made the case that as technology improved, the cost of sequencing and synthesis would sharply decline. So far, his calculations—which have come to be known as the Carlson Curves—are holding true. The cost to sequence a high-quality draft of a human genome in 2006 was $14 million, and a finished sequence cost between $20 million and $25 million. By mid-2015, the cost for a finished sequence had dropped to $4,000. Today, BGI, a Chinese company, can sequence a genome for $100.

  • In the next two decades, synthetic biology technologies will be harnessed to eradicate life-threatening disease and to develop personalized medicines for individual people and their specific genetic circumstances. Researchers will genetically engineer viruses to treat cancer, and they will grow human tissue in a lab for organ transplantation and to test new therapeutic treatments. New technologies will monitor us continuously, eliminating traditional doctor’s exams. Most importantly, we will engineer healthier people: predicting and eliminating genetic disorders, and potentially making enhancements, to babies before they are born.

  • In 2021, geneticists at the Imperial College of London used CRISPR to modify the sexual development and other traits of female mosquitoes. Females born with the edited genes had different mouths, so they can’t bite, and they also can’t lay eggs, which means they can’t spread the malaria parasite.

  • New mosquitoes with different genetic modifications are being developed and tested at scale in a high-security facility in Terni, Italy. In 2021, millions of other genetically engineered mosquitoes were scheduled for release in the Florida Keys to curb the spread of Zika.

  • Long before they were making COVID-19 vaccines, both Moderna and BioNTech were researching immunotherapies for cancer. After analyzing a tissue sample from a cancerous tumor, the companies ran genetic analyses to develop custom mRNA vaccines, which encode protein-containing mutations unique to the patient’s tumor. The immune system uses those instructions to search and destroy similar cells all throughout the body, which is similar to how the companies’ COVID-19 vaccines work.

  • BioNTech is currently in clinical trials for personalized vaccines for many cancers, including ovarian cancer, breast cancer, and melanoma. Moderna is developing similar cancer vaccines. Both companies understand that the world’s most powerful drug manufacturing factory on Earth may already be inside you. We just need to figure out all the ways we can harness it.

  • Synthetic biology is being used to engineer and grow organoids—tiny blobs of tissue grown from human stem cells. Lab-grown lung and brain tissues are being used to research the lasting effects of SARS-CoV-2. Miniature guts and livers are also being grown, and infected with the virus, in high-security labs. With it, researchers can poison a mock respiratory system with new viruses, lethal chemicals, or other toxins to see how the body would react, and then test potential treatments on living human tissue without harming humans or other animals.

  • Toto’s “Wellness Toilet” was announced at the Consumer Electronics Show (CES) in 2021. This is a real device intended for everyday use: the high-tech toilet uses a similar array of sensors to analyze “key outputs” and provide users with insights on hydration and their diets.

  • At-home test startup has developed a urinary tract infection test kit that uses a mobile app to connect patients who have positive results with an online doctor and sends a prescription to a nearby pharmacy if needed. also partnered with the National Kidney Foundation to offer an annual kidney test kit to detect early signs of disease.

  • Researchers at MIT have developed an ingestible-based bacterial-electronic system to monitor gut health. Other ingestibles can detect bleeding or tissue abnormalities, or even check to make sure a patient is taking prescribed medication.

  • IVG (in vitro gametogenesis) is an emerging tech that will soon allow same-sex couples to create a baby using their own genetic material without requiring donor eggs or sperm. A Japanese scientist, Shinya Yamanaka, won the Nobel Prize in 2012 for his remarkable discovery: a method to turn any cell in the human body into induced pluripotent stem cells (iPSCs for short), which can be reprogrammed with the functions of any other cell.

  • Roughly one-third of the food produced every year for human consumption—1.3 billion tons—is wasted or lost. In the United States, there is more food waste in landfills than any other material. In total, more than 40 percent of food waste happens at the retail and consumer levels in the industrialized world.

  • Around 14 percent of all cotton grown worldwide is genetically modified, and nearly half of all soybeans are modified, too.

  • Scientists in China are developing “super-pigs,” which not only resist the virus but are stronger and mature more quickly than other pigs. They are also fortified with a gene that regulates body heat, which enables them to stay outdoors during northern China’s extreme winters.

  • The startup KnipBio engineers fish feed from a microbe found on leaves, editing its genome to increase carotenoids important to fish health and using fermentation to stimulate its growth. The microbes are then pasteurized, dried, and milled.

  • Other agricultural projects underway include synthetic organisms that can produce vast quantities of vegetable oil, and nut trees that can grow indoors using a fraction of the water these thirsty trees normally require, while also producing twice as many nuts.

  • CRISPR has increased the level of omega-3s in plants and aided the creation of non-browning apples, drought-resistant rice, and mushrooms that can withstand jostling during transportation. (In a nod to some consumers’ sentiments, in most countries product labels identify such products as genetically modified.)

  • Vertical farming projects are now scattered across the globe, mostly in urban centers such as Berlin and Chicago. But Japan leads the world when it comes to indoor farming. The Kansai Science City Microfarm, near Kyoto, uses artificial intelligence and collaborative robots to raise seedlings, replant, water, adjust lighting, and harvest fresh produce.

  • Microsoft operates FarmBeats, a sort of Internet of Things for farms, on its Azure Marketplace. The company is testing the technology on two US farms as part of a multiyear plan to modernize agriculture with data analytics. The system uses unlicensed, long-range TV frequencies to connect with and capture data from solar-powered sensors, while drones gather aerial footage of crops. Machine learning algorithms mine and refine the data before sending analyses back to farmers with recommendations on which variables to tweak.

  • By 2030, you could be shopping at a grocery store full of fresh, nutritious, CRISPR-edited foods.

  • In 2013 the first lab-grown hamburger made its debut. It was grown from bovine stem cells in the lab of Dutch stem cell researcher Mark Post at Maastricht University. The price to produce a single patty was $375,000. But by 2015, the cost to produce a lab-grown hamburger had plummeted to $11.43

  • Late in 2020, Singapore approved a local competitor to the slaughterhouse: a bioreactor, a high-tech vat for growing organisms, run by US-based Eat Just, which produces cultured chicken nuggets. In Eat Just’s bioreactors, cells taken from live chickens are mixed with a plant-based serum and grown into an edible product. Chicken nuggets produced this way are already being sold in Singapore, a highly regulated country.

  • An Israel-based company, Supermeat, has developed what it calls a “crispy cultured chicken,” while Finless Foods, based in California, is developing cultured bluefin tuna meat, from the sought-after species now threatened by long-standing overfishing.

  • Mosa Meat (in the Netherlands), Upside Foods (in California, formerly known as Memphis Meats), and Aleph Farms (in Israel), are developing textured meats, such as steaks, that are cultivated in factory-scale labs.

  • Two other California companies are also offering innovative products: Clara Foods serves creamy, lab-grown eggs, fish that never swam in water, and cow’s milk brewed from yeast.

  • Perfect Day makes lab-grown “dairy” products—yogurt, cheese, and ice cream.

  • Investors in cultured meat and dairy products include the likes of Bill Gates and Richard Branson, as well as Cargill and Tyson, two of the world’s largest conventional meat producers.

  • Lab-grown meat remains expensive today, but the costs are expected to continue to drop as the technology matures. Until they do, some companies are creating hybrid animal-plant proteins. Startups in the United Kingdom are developing blended pork products, including bacon created from 70 percent cultured pork cells mixed with plant proteins. Even Kentucky Fried Chicken is exploring the feasibility of selling hybrid chicken nuggets, which would consist of 20 percent cultured chicken cells and 80 percent plants.

  • Shifting away from traditional farming would deliver an enormous positive environmental impact. Scientists at the University of Oxford and the University of Amsterdam estimated that cultured meat would require between 35 and 60 percent less energy, occupy 98 percent less land, and produce 80 to 95 percent fewer greenhouse gases than conventional animals farmed for consumption.

  • A synthetic-biology-centered agriculture also promises to shrink the distance between essential operators in the supply chain. In the future, large bioreactors will be situated just outside major cities, where they will produce the cultured meat required by institutions such as schools, government buildings and hospitals, and perhaps even local restaurants and grocery stores.

  • In the mid-2010s, there was a rash of fake extra virgin olive oil on the market. As a solution, the Functional Materials Laboratory at ETH Zurich developed DNA barcodes that revealed the producer and other key data about the oil.

  • Transforming cotton into fibers and textiles contributes 10 percent of global carbon emissions. Producing clothing requires a tremendous amount of water, and washing clothes made from polyester releases 500,000 tons of microfibers into the oceans each year. That’s the equivalent of 50 billion plastic bottles. Roughly 85 percent of textiles ends up in landfills every year.

  • Bolt Threads developed a synthetic “microsilk” fabric, engineered from spider DNA. A Japanese startup, Spiber, synthesized enough fibers to manufacture a limited-edition parka.

  • Synthetic biology processes can transform mycelium—the fuzzy, fibrous structures that help fungi grow—into rugged material resembling leather. Hermès, famous for its highly coveted leather handbags, partnered with startup MycoWorks in 2021 to develop sustainable textiles made out of mycelium.

  • Nylon is cheap to produce and durable, so it shows up everywhere. Its production generates more than 60 million tons of greenhouse gases annually. But it’s now possible to produce nylon using engineered microorganisms. Two startups, Aquafil and Genomatica, are doing that.

  • Several companies are developing bio-based, ultra-durable hard biofilms and coatings so that chipped nails, scratched paint, and cracked screens become yesterday’s problem. Zymergen developed a transparent biofilm that is thin, flexible, and durable enough to be used to transmit touch on a variety of surfaces, including smartphones, TV screens, and skin. Other possible applications include nearly invisible printed electronics that flex and move as needed.

  • Synthetic biology also points to a future in which our packaging and shipping materials could be far more sustainable than they are today. The insides of soda cans could be coated with a fully biodegradable film rather than plastic, as they are now. New bio-packaging could be designed to withstand heat or cold, revolutionizing the logistically complex, energy-intensive, environmentally damaging cold chain we use today to transport perishables.

  • Scientists at Columbia University are developing plastic trees that passively soak up carbon dioxide from the air and store it on a honeycomb-shaped “leaf” made of sodium carbonate—baking soda. So far, these fake trees are proving to be a thousand times more efficient at soaking up CO2 than real trees.

  • Chemists at George Washington University are experimenting with what they call “diamonds from the sky.” They bathe carbon dioxide in molten carbonates at 750°C (1,380°F), then introduce atmospheric air and an electrical current on nickel and steel electrodes. The carbon dioxide dissolves, and carbon nanofibers—the diamonds—form on the steel electrode. Carbon nanofibers that can be used for consumer and industrial products, including wind turbine blades or airplanes.

  • The startup Blue Planet developed a way to convert CO2 into a synthetic limestone that can be used as an industrial coating or mixed in with concrete. The company’s bicarbonate rocks were included in the reconstruction of San Francisco International Airport.

  • White button mushrooms commonly used in omelets, pizzas, and spaghetti sauce start turning brown just after they’re cut. That happens because of the oxidation that occurs when the mushroom is exposed to air, and specifically, because of a gene that codes for an enzyme called polyphenol oxidase. In 2015, Yinong Yang used CRISPR to edit six mushroom genes, which reduced that enzyme’s activity by 30 percent. The result: mushrooms that stayed white longer in the package, didn’t brown as easily when sliced, and could withstand being handled by automated harvesting robots.

  • In 2011 Ron Fouchier, a virologist at the Erasmus Medical Center in Rotterdam, successfully augmented the H5N1 bird flu virus so that it could be transmitted from birds to humans, and then between people, as a new strain of deadly flu. H5N1 had a high mortality rate: 59 percent of those who’d been infected died. Fouchier had taken one of the most dangerous naturally occurring flu viruses we had ever encountered and made it even more lethal. He told fellow scientists that he’d “mutated the hell” out of H5N1 to make it airborne, and therefore significantly more contagious.

  • In December 2019, a mysterious and anonymous organization called the Earnest Project announced that it had surreptitiously collected DNA from used breakfast forks, wine glasses, and paper coffee cups used at the World Economic Forum’s annual meeting in Davos. The Earnest Project launched a website and auction catalog and announced plans to sell the genetic data of many world leaders and celebrities.

  • As of April 2021, there were more than five thousand general patents for CRISPR and more than one thousand for CRISPR-Cas9 in the United States alone. There were thirty-one thousand CRISPR patents and applications listed in the World Intellectual Property Organization’s database. Hundreds of new CRISPR patents are being filed every month. Now here’s the rub: CRISPR is certainly the most famous technology within synthetic biology, but it’s hardly the only one. CRISPR represents just a tiny fraction of R&D activity within the broader synthetic biology ecosystem.

  • Genomic Prediction (company) offers a polygenic score, measuring DNA at several hundred thousand positions in order to predict the likelihood of a future person having, say, low intelligence, or being among the shortest 2 percent of the population. It uses genetic profiles of NFL quarterbacks to determine how closely the embryo matches those profiles for athletic ability.

  • Within the decade CRISPR and other genetic tools will be developed to manage viruses, repair tissue, combat mutations, and lengthen our lifespans.

  • China’s BGI Group, one of the world’s largest sequencing companies, already says that it can boost the IQ of children by up to twenty points through genetic selection. BGI Group is actually making a measured bet: as it sequences more people, the data will reveal patterns among those who are smartest. Then, it’s just a matter of identifying genetic markers and selecting for them before implantation.

  • Over the past decade, China has quietly created a scaled, national DNA drive to collect, sequence, and store its citizens’ genetic data. DNA repositories are part of a wider panopticon, aided by the Chinese Communist Party’s ambitions for artificial intelligence, to allow the government to continually surveil its constituents.

  • More than half the world’s population relies on rice as a primary daily staple. But the most popular variety, white, is stripped of its whole grain, which contains fiber, minerals, vitamins, and antioxidants. So rice, for much of the world, is filling, but not very nutritious.

  • All grains today have been modified through cisgenic breeding, in which genes from the same or a closely related species are inserted to improve yield, confer greater tolerance to drought and heat, and increase nutritional value.

  • The rice plant species most commonly consumed is Oryza sativa, which only has 12 chromosomes and a total of 430 megabases, which is a nucleotide length of 1 million base pairs. This makes it an excellent candidate for plant genomics.


Value Migration, Adrian Slywotzky, 1996 - Power-packed book with lot of case studies in value migration. This is probably one of the earliest books that made people look at businesses and their ecosystems and stakeholders as a whole and treat them as living/breathing things that grow, mature, age and die.

My notes -

• When the mechanism that matches the business design to the Customer priorities breaks down, value migration occurs

• Business design is how a business selects its customers, defines & differentiates product offerings, decides what tasks it will perform vs outsource, managing its resources and going to market - creating utility and capturing profit

• Value migration can occur to other business designs within the industry to migrate out of it altogether

• Value outflow may start slow and accelerate as the model becomes obsolete

• Value migrated from Ford’s single car stable to price-laddered GM in 1920s. From grocery stores to super-markets in 1930s

• In '94 when IBM had revenue of $64b and Microsoft has $5b, IBM was worth $43b and latter $36b in market cap (company’s value declines fast when market senses value migration)

• Where will I be allowed to make profit? where will the value of the industry be? what new core competencies do I need? What moves do I need to make to capture value in next cycle? (Some of the questions you must ask as manager/owner)

• Institutional memory - powerful norms, values and behavior built into the mind-set and culture of an org. It’s the biggest hurdle to combating recognition and stoppage of value outflow

• Technology alone is no longer a driver in value growth. Innovation is slowing - Eg. In Chemical industry there were 40 innovations between '30-'49. 20 between '50-'69 and only 3 between '70-'89. (Similar for dyestuff, steel, textiles)

• Information and capital flow through globalization has kept any technology from being profitable for long. As followers rapidly imitate, gross margins crash sooner

• Even when companies’ product/service offerings are comparable, differences in business design can produce different value growth (Southwest Air vs United, Intel vs AMD, Nucor vs Bethlehem in Steel). Technology alone without good business design will not generate value growth

Toyota tried to overcome cyclicality in Auto industry but doubling selling efforts when demand was low and cutting back when it was high. Its selling was as flexible as its manufacturing. In innovation as well, instead of innovating and selling, it sought what its customers wanted and invented that

McDonald’s Kroc realized that for a franchising business to be successful, he had two customers - the end Customer and the franchisee. There must be loyalty and growth in both (Innovated in both with menu of only 10 items offered at low prices with decent quality, manufactured the cheap McDonald’s way, for franchisee profitability)

• Value can be flowing in, be stable or flowing out - in any business. Important to identify where a business is. Initial period might have losses, then a steep improvement in profits (J-curve) and a period of stability and then profit plummets in value outflow phase. End of business cycle is the worst as obsolete designs tend to be subsidized and kept alive longer thereby destroying value

• Market cap/Sales is a good metric to identify value migration. High mcap/sales indicates high future expected earnings momentum (cart before the horse?)

• Value migration happens out of societal, economic and technological shifts

• Customers vote on business designs every day. Customer behavior is the strongest indicator of a superior business design. Following the customer will show you where the value is

Value inflow - How long? How to accelerate? Are we maximizing value? Who else is benefitting? What will signal this phase is ending? (changing priorities/new product from competitor)

Stability phase - Business is in comfort zone for Customers as well as management. If you are in stability phase, you are probably already under attack from a competitor.

Value outflow - Cut back or continue to invest in sub-par RoCE? It is hard to turn around once outflow starts - but once past denial - evaluate the threat, see what investments can create value and stop outflow or see how fast you can wind up or you will end up with empty, profitless revenues

• Innovation, regulation, trade restrictions, aggressive pricing, hyperinflation, even war can cause value to migrate into or out of a business design. (Video cassette pushed hollywood studios in stable phase back to value inflow. Oil embargo boosted compact car sales)

• It is new competition, rather than incumbents that trigger value migration

Industry-think - Past patterns of success and norms that defined the competitive field. Tunnel-vision leads to focus on relevant but incomplete set of competition. Typically outsiders do a better job identifying non-traditional players.

• Post-war retail was dominated by Macy’s Marshall Fields, May’s in high-end and Sears, Montgomery Ward and JC Penney in mid-market brands. In 80s, people’s income stagnated or declines in real terms, time was becoming increasingly precious and people became individualistic. Businesses like ‘The Gap’ and ‘The Limited’ focused on the individualism. Super Stores like The Home Depot, Toys R Us and Circuit City offered cost-conscious, price-sensitive customers great value. Wal-mart captured previous under-served rural C and D counties with large 100,000 sft stores.

• Premium pricing, reinforced 'The Economist’s highbrow image among business mags.

• External shocks can rapidly widen the competitive field (Demonetization & digital payments?). In Financial markets in the US, in '79 inflation was rampant at 13% while bank savings was 5.25% (sounds familiar). Public realized how much they were losing and moved to money market funds. '79 $10b to '82 total was $250b (25x in 3 yrs) as savers became investors

• When VCR technology became mainstream, value migrated from network television to video rentals. Network execs looked at programming, broadcasting and selling advertising while ignoring Customer’s utility of “video entertainment” (Same thing happened with Blockbuster and Netflix much after the book. Same mistakes keep happening)

Multi-directional migration - Value migrated from Steel industry to plastics (in auto due to light-weight and rise in fuel-efficient cars and durables) and from steel to aluminum (beer cans) and from fully-integrated mills to foreign mills and mini-mills (Bethlehem vs Nucor)

• There’s no rule that says there must be profit in an industry. An entire industry can turn and remain profitless

Southwest Air - low fares, no frills on short-flights. Planes were turned around in 20 mins vs 1 hr, they had higher load factor & frequent flights (instead of wider seats and free drinks)

• There’s no economies of scale in airlines business. Instead a small airline can be profitable with a lower cost proposition. Southwest Air would add one city at a time, become profitable in it and then add another (City pairs instead of hub-spoke)

• Chronic overcapacity kept the load factors (% of occupied seats) around 55-65% range in the airlines business in the 80s. Margins fell from 6.1% in '78 to -2.5% in '90. Price war meant 93% of tickets were sold at discount fare with avg. discount of 63%. No one could pull of such a low-price strategy profitably

• Pharma was mostly serendipitous science pre '75 but from '75-'90 it was more focused towards creation of blockbuster products.

• Expensive products with questionable efficacy in the '50s (thalidomide) forced FDA to tighten regulation for testing new products with rigorous statistical evidence.

• '60s and early ''70s, R&D spend of pharma industry grew from 4% to 7% of sales. Avg. length of discovery of product rose from 2 yrs to 7 yrs

• In the '70s the FDA also reduced the patent-protected economic life of product - so longer, expensive product development ($1m in '62 to $12m in '72 to $50m in '75) coupled with reduced revenue stream - success rate of products diminished

Merck’s business design overcame headwinds by making FDA and the physician as customers and focusing on narrow portfolio of blockbuster products and managing them aggressively and getting to market 40% faster. Merck also bought Medco to influence prescribing behavior and also to learn about how its products were used. Merck refused to let institutional memory affect its value growth and always pre-empted the market

Waxman-Hatch regulation changed pharma landscape by allowing approval based on bio-equivalence and removing the cost of clinical testing for safety and efficacy opening the door for generics

• When competitors all employ same business design, Customers are left with no option but to decide solely on price

• Premium products test the upper end of consumer quality spectrum - Haagen Dazs, TCBY in frozen yoghurt and Perrier in bottled water - gourmet foods at Gourmet prices for the growing population of discerning customers. Starbucks took the same model in Coffee by using premium Arabica beans which were aromatic, more flavorful but expensive

• When people bought a latte from Starbucks, they were drinking the same coffee as movie stars. They could not afford an expensive car as them but could reward themselves a bag of great coffee - coffee was an affordable luxury (Affordable luxury is a powerful concept. Jockey might be a premium brand for most Indians but its an affordable one)

• Starbucks leveraged its IPO to generate name awareness without advertising

Coke vs Pepsi - draw in retail channel but 2:1 in restaurants, 3:1 in vending machines and 4:1 in international sales. It accept lower margins in retail channel in order to build a brand that earns higher in other channels (As of '22 PepsiCo and Coca-Cola have similar market cap of ~$230b)

• Unlike McDonald’s Starbucks chose not to franchise and that led to imitators capturing a lot of market share at its expense as it was limited in its growth without franchising

• IBM first PC rolled off assembly line in '81 and by '84 annual PC sales was $12 billion (IBM had 37% market share)

IBM developed the PC but it outsourced the processor chip to Intel and its operating system to Microsoft (without exclusivity) and the rest is history. They had put out a quality product on the market quickly but at the loss of strategic control (be careful what you outsource and how)

Microsoft was to release OS/2 (under contract to IBM) as successor to DOS but Gates launched Windows 3.0 ignoring OS/2. Developers couldn’t get their apps onto Windows quick enough while Gates launched Excel usurping Lotus 1-2-3, Word eroding WordPerfect and acquired Foxpro developing Access decimating Ashton-Tate’s DBase

Low cost distribution has displaced traditional sales channels in retail, grocery, financial services, personal computing and basic supplies (Look out for decline or advances in purchasing power). It is a powerful engine in value creation when Customers grow more sophisticated and products and services lose differentiation in the marketplace. Price becomes the dominant criterion for choosing.

• Low Cost Distribution - Aldi (German grocery retail) - limited selection, passable quality but rock-bottom prices. Even wealthy customers shop at Aldi because “Poor people must save and rich people like to save”. Avg. store size 8000 sft. 600 SKUs, mostly non-perishable, high-turn staples - sell product even before payment is due to suppliers. Minimal customer service - 3.5% of sales vs 6% for supermarkets

• Low Cost Distribution - In '80s discount brokers handled tiny fraction of retail trades, by mid 90s their share rose to 14% (today almost 85% in US and 55% in India)

• Low Cost Distribution - Grainger did to industrial purchasing of MRO (Maintenance, Repair and Operation) supplies what Wal-Mart did to retailing. It grouped 1100 suppliers and 73k products in a single catalog and became one-stop shop for MRO supplies - cutting purchasing and paperwork (consolidated billing)

• Low Cost Distribution - Dell cut down ASP and invented mail order distribution for computers coupled with telemarketing - IBM’s sales force was $150k/person producing sales of $2m vs Dell’s $40k telemarketer selling $4m

• When needs are emerging, the customer looks for performance, when needs are mature, the customer looks for lower cost. Investment in improved performance for mature needs provide no returns. A dollar invested gets little in return (Will be interesting to study what Apple spent on iPhone R&D last 5 yrs)

• In '70 market cap of world’s companies was $929b and 66% in US. By '93, it was $12.6 trillion with only 36% in the US. (In '20 its $90 trillion with 44% in US)

• Andy Grove’s Intel moved from DRAM chips that stored data to processor chips that did the thinking made them shed their institutional memory to embark on something new

3M has systems for defeating institutional memory that made it transition from abrasives to adhesives to chemicals to video tape to computer disks and other product areas. 3M makes it employees believe they work in smaller, more flexible orgs (startups within mature org) with 15% of time dedicated to individual projects. Each year they try to achieve 25% of revenue from new products that did not exist 5 yrs ago. 3M has 60k products (They still have same 60k products and available at 15x earnings and 5.4% Div yield!)

• Much of future is actually knowable to a high degree of certainty, given a rigorous examination of facts (in the context of businesses).

• A poorly examined fact is more dangerous than wrong reasoning (French proverb)

• Consumer packaged goods have extremely long lifecycles measured in decades (Coke is 130 yrs old, Tide is 70+) Only sustained neglect can erode and undermine them.

• Increasing price without increasing utility also kills brands. In the inflationary 80s, brands kept increasing price - where brands where 20% more expensive than generic alternatives in early '80s to being 2x more than generics by early '90s. This drove customers towards alternatives

Global mercantilism - hostile trading blocs and economic instability. Much harder to implement policies for greater good due to prisoner’s dilemma Eg. Environmental issues are ignored and no agreements on emission reductions (All currently underway as ESG has been swallowed by Energy crisis)

If you enjoy thinking about business models or business designs as this book calls it, you will find lot of insights here. Only issue is the outdated nature of the book in terms of some of the numbers and what transpired later (some heroes here suffered later and must be kept in mind) - but that’s to be expected - as IBM which was the hero in 50s and 60s made a come back in the 80s after suffering in the 70s, only to lose it all post '90s in the computing business even in this book. There can be no permanent winners and the lessons here are timeless. 11/10


Loved the summary …but loved your conclusion even more . The west wants politically correct dictatorship which is motivated by big business and superficially humaitarian but have got issues with anybody if they have divergent agenda. Its fine if …
1.Azerbaijan bites of some part of Armenia because not much business is to be done there or if
2.Saudis bomb the Yemenis since west needs saudi oil or if
3.Saudis flog people or cut off heads in public square but has big issues if Iran does so .
My problem is in believing whether anything that is stated in these books as fact are indeed so or just another piece of propaganda.


Breath, James Nestor, 2020 - This is a sort of a holistic and conscious look at the unconscious act of inhaling and exhaling from perspectives of evolution, medical history, bio-chemistry, athletic endurance etc. I like books that don’t stop at the boundaries of one area of science and explore the hazy borders and this definitely one such. Some of these books (like ‘Why we sleep’ as well for eg.) require a bit of an open, unbiased, inquisitive and curious mind to mull over the claims and probably try them for yourself.

My Notes -

  • Each inhaled breath provides new energy while each exhale releases stale energy

  • Freediving - ancient practice of diving 100s of ft. below water’s surface with a single breath (they can hold breath for 12 mins at a time)

  • Breathing wasn’t an unconscious act (For freedivers) - it was a force, a medicine with which they could get superhuman power

  • There are as many ways to breathe as there are foods to eat and each way affects our bodies in different ways (some nourish our brains while some kill neurons and so on)

  • Human beings, almost 90% of them have been breathing incorrectly since the Industrial age causing chronic problems like asthma, allergies, anxiety, snoring, ADHD, psoriasis etc. (these can be reversed simply by changing the way we inhale and exhale)

  • Removal of wisdom tooth can reduce size of mouth and increase chances of nocturnal choking or sleep apnea (obstructive form of it is snoring)

  • Nose is more or less an ancillary organ of little use is the prevailing belief in western medicine (can use mouth if not nose)

  • 40% suffer from chronic nasal obstruction and 50% of us are habitual mouthbreathers - causes - dry air, stress, pollution, medicines and reduced space to the front of the skull

  • When nasal cavity is congested, airflow decreases and bacteria flourish - leads to infections, colds and more congestions - congestion begets congestion leading to mouthbreathing

  • Skulls 200 to thousands of years old show well-proportioned mouths relative to face and the nose to the palate with straight teeth (no flossing, brushing or visits to dentists then)

  • Last 100 years, chins have recessed behind foreheads, jaws slumped back, sinuses shrunken with crooked teeth of various degrees. Ours is the only species to suffer from misaligned jaws, overbites, underbites and snaggled teeth (malocclusion)

  • 1.7 million years ago when we came down from the trees (homo habilis), we bashed food tenderizing it - 800k years ago, with fire this processing became even better and we saved a lot of energy otherwise spent processing food which helped us grow 50% bigger brains - this reduced space in the skull and weakened jawbones and loosened facial muscles and we ended up with vertically positioned, protruding nose (less efficient in filtering air, exposed to pathogens) and with the larger brains, tighter our airways became

  • Nose helps in warming the air before it enters the lungs (mouth can’t) - as homo sapiens evolved in diff climes - the colder clime people developed long and narrow noses while the warmer ones wider and flatter noses

  • Inflammation in the throat and polyps contribute to sleep apnea. 100% mouthbreathing increases snoring a lot - unfiltered, unmoistened and unheated air dries the tongue, irritates throat and irks the lungs

  • Forced mouthbreathing (author subjects himself and keeps track of vitals) - increased BP by 13 pts (incr heart attack risk in long run), heart rate variability decreased (suggesting stress), pulse increased and body temp. dipped and body looses 40% more water (also makes you want to urinate and drink more water due to inadequate sleep and less vasopressin)

  • Athletic endurance - mouthbreathing can make you pant with exhaustion at 47 breaths a minute while nasal breathing can keep it down to just 14 a minute under extreme exertion

  • Our muscles are capable of both aerobic and anaerobic processes - when we exert them without sufficient oxygen (say pushing hard without warmup) it does anaerobic which leads to lactic acid buildup (backup system, like turbo boost) but its toxic, and causes nausea. We should rely on the anaerobic muscle fibers less or they will break down (warm up and get sufficient oxygen in for aerobic process)

  • Thumb rule for best heart rate for exercise - 180 minus age. Long bouts of training can only happen under this rate - else body will switch to anaerobic for long causing damage

  • Nostrils have their own cycle and open and close like flowers (Shiva swarodaya from 1300 years ago describes it)

  • When nose becomes infected, nasal cycles get affected and they switched back and forth too quickly

  • The right and left nasal cavities function like a HVAC system regulating our BP and temp, feeding brain with chemicals that alter our moods, emotions and sleep states

  • The right nostril is a gas pedal, speeding up circulation, warming up body, elevating cortisol levels and BP - activates the sympathetic nervous system’s flight-or-fight response. Also feeds more blood to prefrontal cortex (logical decisions, language and computing)

  • The left nostril is a brake to the right nostril’s accelerator - it lowers BP, cools the body, reduces anxiety - increases creative thought and mental abstractions and negative emotions

  • Nadi shodhana - (channel purification, literally). Yoga dedicated to manipulating bodily function through alternate nostril breathing

  • Surya bheda pranayama - one breath through right nostril and exhaling through left for several rounds

  • All the cavities and passage ways in the interior of an adult nose add up to a of space equivalent of a billiard ball (6 cubic inches)

  • Mucus is body’s first line of defence

  • Air that enters the lungs through nose is as different from that which enters through mouth as distilled water is different from water in a frog-pond (Catlin, around 1860)

  • Mouthbreathing contributed to periodontal disease and bad breath and was #1 cause of cavities, more damaging than sugar consumption, bad diet or poor hygiene

  • Sinuses release Nitric oxide which helps in circulating and delivering oxygen into cells. Immune function, weight, mood and sexual function are all influenced by Nitric oxide in blood. (Viagra works by releasing Nitric oxide into bloodstream). Nasal breathing boosts Nitric oxide 6x and helps cells absorb 18% more oxygen

  • Mouth tape (3M Nexcare Durapore tape) can help forcing nasal breathing during sleep. It helps in reducing snoring and sleep apnea, reducing the need to pee

  • The path to everlasting life involves a lot of stretching: back bends, neck bends and twirling (Five Tibetan Rites). Greatest indicator for life span was lung capacity. Moderate exercise like cycling or walking can boost it by 15%

  • Orthopedic breathing - helps straighten a sideways curved spine (scoliosis)

  • Vocal coaching focuses on increasing the power of exhalation - any and all vocalization happens only during exhalation

  • Blood coursing through our arteries and veins complete a full circuit once a minute

  • Breathing influences blood circulation acting as a thoracic pump - pressure builds up in the lungs when we inhale, driving blood to the heart and circulates through the body as we exhale. Diaphragm powers this pump 50k times a day. Most of us don’t use even 10% of range of diaphragm, overburdening the heart and this increases BP. Using 50-70% of the diaphragm’s range reduces BP. It is sometimes referred to as the second heart for this reason

  • Breathing co-ordination - when respiratory and circulatory systems enter a state of equilibrium, air that enters is equal to air that leaves and bodily functions happen with least exertion

  • Sprinters usually took short and violent breaths which made them vulnerable to asthma and other respiratory ailments

  • Air travels through trachea splits into right/left lung, enters smaller tubes called bronchioles and through the 500 million little tubes in the dead-end (alveoli). Oxygen slips through membrane of alveoli and takes a seat inside haemoglobin inside RBC (red-blood cells). 25 trillion RBCs have 27 million haemoglobin, each of which can carry 4 molecules of oxygen - so about a billion molecules of oxygen course through us every min.

  • Oxygen disembarks to fuel the hungry cells and the cellular waste (CO2) is carried by RBC (blood is darker in color when its carrying CO2) back to the lungs to be returned back to environment in exhalation

  • Since we are carbohydrates, we primarily lose weight through CO2 that leaves our body (Every 10 pounds of weight we lose, 8.5 pounds leave through the lungs). Lungs are the weight-regulating mechanism of the body

  • CO2 helps separate O2 from RBC into cells and also helps dilate RBCs which make carrying O2 easier in the lungs. So breathing less actually helps blood carry more Oxygen effectively. Rapid panicked breaths purge CO2 and actually makes it difficult for blood and our cells to absorb O2 (You can try this by taking frantic fast deep exhalations - you will feel light-headed for certain)

  • When O2 is fed to a fire instead of air, it burns with more intensity but same is not true for us. 100% O2 doesn’t make us absorb more of it either in RBC or in our cells than when air with 21% O2 is breathed. We exhale almost 75% of O2 in air normally, so taking longer breaths is better than frequent breaths - like rowing a boat - fewer longer strokes are better

  • Most ancient cultures with their chants of Om, or Om Mani Padme Hum or through mudras and yoga advocate less than 6 breaths a minute.

  • Breathing slowly is not the same as breathing less - so 5.5 breaths a minute but with much lesser volume of air is the equivalent of fasting in breathing. It gets the body comfortable with higher levels of CO2 - this way we get comfortable during resting period to breathe less but more efficiently.

  • Mammals with the lowest resting heart-rate live the longest - these also breathe the slowest. A Yogi’s life is not measured by the number of his days but by the number of his breaths (B.K.S. Iyengar)

  • Optimum breathing - 5.5 liters of air per minute via 5.5 breaths per minute - each breath lasting 5.5 seconds

  • Processed food (even cutting a fruit is processing btw) has reduced our need to bite or chew and this in turn has reduced size and structure of our mouth in the last 100 yrs due to stunting of facial bones (nurture and not nature through evolution) - this has lead to a clogging of our airways and more mouthbreathing

  • Three-quarters of modern humans have deviated septums - bone and cartilage systems separating the right and left airways are off-center. Surgery though must be done carefully. If too much nasal tissue is removed, the nose can’t humidify, filter, clean or even sense inhaled air.

  • Bone mass decreases after age of 30. Women lose a third of their bone mass by 60 and by 80 they will have only as much as they had when they were 15.

  • Maxilla - the membrane bone that makes up center of our face can be grown at any age. The back molars release stem cells that help in its growth by the simple act of chewing. More we gnaw, more the bone density and growth and younger we we’ll look and better we’ll breathe

  • Breathing is a power switch for autonomous nervous systems - parasympathetic and sympathetic. Parasympathetic helps us relax, pumps feel good hormones oxytocin and serotonin, makes tears flow when emotional, salivate before a meal, loosens bowels. These parasympathetic activators are present in lower lobes in our lungs (that’s why deeper breath is more relaxing).

  • Sympathetic nervous system does the opposite and gets us ready for action, stimulates our organs and keeps us alert. These activators are on the top of the lungs and shorter, hasty breaths help activate. When someone cuts us off, threatens etc. heart rate increases, body redirects blood flow from stomach to muscles and brain. This state is good in short-bursts but taking short and too many breaths keeps us in this state for long and messes up with digestion and makes us feel anxious

  • Inner-fire meditation - Tummo practiced by Tibetan monks in the hills activates the sympathetic nervous system through short fast breaths and can even cause snow to melt (due to the body temp they are capable of achieving through this). Surfers, Navy SEALs and martial arts fighters use it to increase their alertness before competitions

  • Vagus nerve is the lever that turns organs on and off in response to stress. When stress levels are high, it slows heart rate, circulation and organ function (That’s how resptilian and mammalian ancestors played dead - we call it fainting). Not allowing ourselves to relax can keep this half-stimulated and half-anxious.

  • Stanislav Grof’s Holotropic Breathwork (referred in Pollan’s ‘How to change your mind’ as well) is Tummo cranked up to 11 and can make the subject have an out of body experience - rapid breathing to rewire the mind

  • Bhagvad Gita refers to Pranayama as ‘trance induced by stopping all breathing’. When we stop breathing, the chemoreceptors get activated to get the lungs going asap. That’s the sense of panic we feel when we know we may not take another breath (while drowning for eg.). Trained athletes condition themselves against extreme fluctuations of CO2 without panic

  • Meditation can change the structure and function of critical areas of the brain, help relieve anxieties, and boost focus and compassion

  • All ancient cultures have had a name for life force - prana, chi, ki, pneuma, ruah, orenda etc.

  • Swami Rama in ‘70s, allowed himself to be measured by EKG and EEG while meditating at Menninger clinic - the machines read him to be in deep sleep (yoga nidra) with long, low delta brain waves and yet when he woke up, he could give a detailed account of the conversation in the room. His mind was active while his brain slept clinically.

  • He could slow down him heart rate from 74 bpm to 52 in less than 60 secs or incr it from 60 to 82 within 8 secs. He could even take his heart rate to zero and keep it there for 8 secs - upon closer inspection, the EKG showed heart rate of 300 bpm (atrial flutter). He could create a temp diff of 11 degrees between his little finger and thumb

  • The Indus Valley was the birthplace of Yoga ~2000 BCE. This was codified in Sanskrit in two texts - Brihadaranyaka and Chandogya Upanishads. It spread through India, China and beyond and by 500 BCE, the techniques were filtered and synthesized into Yoga Sutras of Patanjali. Earliest Yoga was a science of holding still and building prana through breathing

  • Yoga poses were done once and held for an excruciatingly long time, allowing students to focus entirely on breathing

  • Sudarshan Kriya of Sri Sri’s The Art of Living and Tummo originate from the same kriyas practiced around 400 BCE - 40 mins of intense breathing - from 100 bpm to several minutes of slow breathing and then hardly breathing at all

  • Some breathing exercises the author has experimented with - Pranayama, Buteyko, Coherent Breathing, Hypoventilation, Breathing Co-ordination, Holotropic Breathwork, Adhama, Madhyama, Uttama, Kevala, Embryonic Breath, Harmonizing Breath, Tummo, Sudarshan Kriya

  • Modern medicine is amazingly efficient at cutting and stitching up parts of the body in emergencies but sadly deficient in treating milder, chronic, systemic maladies like asthma, headaches, stress, autoimmune diseases etc.

  • Diseases of civilization - Humanity created ones like diabetes, heart disease and stroke caused by food we eat, water we drink, houses we live in and the offices we work in

I like books that open up new modes of thought, new ways of living, inform me of things I didn’t know about and question my pre-existing beliefs and biases. This one certainly did all of those and I think deserves to be read by everyone interested in working on their mind and body. 11/10


Fantastic exhaustive & informative notes …Thanks for sharing !