Acquired

I really enjoyed Andy Grove's books. They're all really good.

they're also including other books in that collection that are about doing a few things but very well like the book Essentialism which is from friend of the show Brad Gersner that is one of his favorite books

I want to say a huge thank you to Alex Morris who writes the investment substack "The Science of Hitting" he has two pieces that were just excellently written analyzing Costco's financials

the company has returned 80% of net income to share holders in the last decade rather than reinvesting it in growth and the key reason for this is that

the average Sam's club only generates about half the revenues of a Costco and that gap has widened over time given the unit economics of the business that's a tough hurdle to overcome which explains why Sam's club has a smaller unit base today than it did a decade ago crazy right over the same period Costco increased its US warehouse count by one third anyone who could have challenged them is just done

the average US store has 68,000 the first store in China opened in 2019 which popped to 400,000 members within two years the US at maturity is at 68,000 members China right I'm assuming our China tech episodes because I feel like every 10 minutes in those episodes we just be like China like things are of a different scale there

There is this incredible history of Porsche called Excellence Was Expected that was written by Carl Ludwigson.

This work is like, I mean, the photos, the archive work that are in this volume. It's incredible.

So there is this incredible history of Porsche called Excellence Was Expected that was written by Carl Ludwigson.

I believe could be wrong on this, but I believe 901 was the name of the engine project that Ferdinand Piach was working on.

I read a coffee table book that was like the complete illustrated history of the 9-11 because for this episode and this topic, you want a visual history.

I joined Microsoft in 1992 because I wanted to work for a company filled with people who believed they were on a mission to change the world. But after years of outdistancing all our competitors, something was changing and not for the better. Innovation was being replaced by bureaucracy.

Teamwork was being replaced by internal politics, and we were falling behind.

The Road Ahead

Information Superhighway

information at your fingertips

I always thought we could stop bundling new features for 10 years and it would be fine no one would notice

World War 3.0

So for nonfiction, The Creative Habit by Twyla Tharp, which was a book that I actually got a long time ago and had been meaning to read, had started, never finished. And I finally picked it back up again and finished it this year.

Every single person who listens to Acquired should read it

He's unbelievably pithy.

I suspect it's a really good one to read now Post 2020 and 2021 bubble when like everything was crazy. It would have been great to read it during 2020 But it includes I think I've I've made it a carve out before the morgan's essay how all this happened and every chapter of psychology of money is one of his essays And so if you liked if you read how all this happened, which is this amazing path of World war two through today through the american economy and a lot of politics and why different things happened and how everything led to the next thing The Psychology of Money is awesome because it incorporates all of that sort of like factual history with just really good perspectives and some Citations of research on what actually makes people happy and what investment strategies work when your goal is happiness

Morgan makes a very strong argument in the book to basically Put as much into s and p 500 index funds when you're as young as you Possibly can and just never sell anything.

Bill Simmons in his basketball book quotes David Halberstam in his basketball book and Simmons is like, I know you can't believe I'm quoting Halberstam here, but but I have to do it. That's this is Halberstam. He says, what ABC has to prove to a disbelieving national public, Arledge believed was that this was not simply a bunch of tall, awkward goons throwing a ball through a hoop, but a game of grace and power played at a fever of intensity.

One of my all-time favorite book is "The Systems Bible" by John Gall and one of my favorite lessons from that book is you can't just airdrop a complex system and have it work it's got to have evolved from a simple system and so there's incredible wisdom in Chatham's advice to go very slow in the early days with enterprise software specifically and and reach product maturity that's one example.

This book is like the top gun of historical autobiographies you read it and you were just fired up. It is Amazing what these people did it's top gun for engineers.

This book is like the top gun of historical autobiographies you read it and you were just fired up. It is Amazing what these people did it's top gun for engineers.

So kelly and his handful of bright young designers that he selected took over some empty space in building 82 This is a building on the lockheed campus, which is right next to the burbank municipal Airport it's an unmarked building literally like this is a commercial airport that Average people are taking off of every single day So that it continues those guys brainstormed What if questions about the future needs of commercial and military aircraft and if one of their ideas resulted in a contract to build an Experimental prototype kelly would borrow the best people he could find in the main plant to get the job done That way the overhead was kept low and the financial risks to the company stayed small His small group were all young and high spirited who thought nothing of working out of a phone booth If necessary as long as they were designing and building airplanes All that mattered to kelly was our proximity to the production floor a stones throw was too far away He wanted us the engineers and designers only steps away from the shop workers to make quick structural or parts changes Yes, I love this. I think this is a huge learning Keeping your designers as close as possible to production So the game of telephone is as short as possible It is incredibly valuable and having the designers being able to glance up at their desk and see like literally the way things are being Manufactured so they can say oh that looked good in the diagram But in practice you have to bring this big thing around over here Maybe we can make that better the next time we design it. It's just such a great key insight The other thing on the small number of people this gets to the Skunk Works rules And kelly created this incredible document 14 rules that we'll link to in the show notes. Oh, yeah The third of which I mean they're all incredible the third of which really applies here and I quote The number of people having any connection with the project must be restricted in an almost vicious manner Use a small number of good people 10 to 25 Compared to these so-called normal systems These people should all be together all of them building relationships collaborating working together to produce the very best product and you see this in products in the future too the iphone the ipod I mean you read the stories about the early teams there are six eight ten people They're all full stack. So there's these unicorns that cross disciplines and they're 10x 100x engineers So you really only need a handful of really good people Okay listeners now is a great time to thank one of our big partners here at acquired service now

kelly once said that unless he had the hell scared out of him at least once a year in a cockpit He wouldn't have the proper perspective to design airplanes So great, okay

The full weight of government secrecy fell on me like a sack of cement that day Inside kelly johnson's guarded domain learning an absolutely momentous National security secret just took my breath away and I left work Bursting with both pride and energy to be on the inside of a project so special and closely held But also nervous about the burdens it would impose on my life This is exactly to your point, you know with great power comes great responsibility here Yep

We flew over it and within 30 seconds you knew that this was the place It was right by a dry lake man alive We looked at that lake and we all looked at each other. It was another edwards like upwards air force base So we wheeled around Landed on that lake taxied up to one end of it. It was a perfect natural landing field as smooth as a billiard table Without anything being done to it How insane is it that this is where we were testing nukes?

In the main plant they give raises on the basis of the more people supervised I give raises to the guy who supervises the least That means he's doing more and taking more responsibility But most executives don't think like that at all. They're empire builders This is so important. Yep, totally agree. And in fact, it's thinking like a capitalist too I mean, it's really like how can we achieve the most with the least? Not how can we achieve a fixed amount with a fixed margin?

The skunkworks manager must be delegated practically complete control of his program in all aspects Yeah, I mean this is like the auteur theory like you have to have a single person's vision And the buck stopping with a single person who has ultimate control and isn't a squeezed middle manager He's the program manager for any given program that they're working on any new aircraft And also he's the guy flying to washington to interface with the government It's not like he's dealing with the engineers and then calling the sales force and being like Hey, can you go to a steak dinner with our guy in washington? No, it's kelly and yet it's most productive Skunkworks I think was about maybe 50 designers and engineers and maybe 100 Machinists and shop people like this is not a large organization. It's crazy My last one is the last one of the rules Yes, this is one of mine too because only a few people will be used in engineering and most other areas Ways must be provided to reward good performance by pay Not based on number of personnel supervised. So kelly has a quote about this in the book

I also highly recommend a book called Beyond the Horizons Which is hard to find and most people don't know about by walter boine And that is an amazing history of lockheed during all these eras that we're going to talk about David that's so mean you're recommending an out-of-print book to people. We keep doing this

And I was very much inspired by a book that I think you know as well, right? The GENIUS OF THE SYSTEM by Thomas Schaff.

And that book is a remarkable book in my opinion because it really takes the business side of the film business back from the 20s to say the 50s and really elevates the business side of the business and shows how a lot of what we understood to be the creative part of the business really was a collaboration between creative people and business people.