Book Review – The Devil in the White City

Devil in the White CityThe Devil in the White City, by Erik Larson (Amazon, Apple), is an historical account of two major events in late 19th century America. The first is the construction and execution of the 1893 World’s Fair in Chicago, and the second is of a serial killer, named Dr. H. H. Holmes, living in Chicago, who was able to use the transient nature of people visiting the World’s Fair to commit multiple murders.

This book is a bit older (published in 2004), but I decided to pick it up based upon several recommendations from friends, and that it looks like it is going to be made into a movie starring Leonardo DiCaprio.

I wasn’t sure what to expect from the book. While I am a fan of incredible construction projects and the detail that went into them (such as the building of the transcontinental railroad, or the federal highway system), my interest has never been piqued by any World’s Fair. And I’m certainly not much into reading about mysteries or serial killers. But I was intrigued that these events happened at the same time in the same place, and the idea of both stories being told concurrently, interwoven into each other, gave me the feeling that this would be told more like a novel than a dry history.

To that effect, it worked. The author set the stage well for both stories, and initially would jump, almost a chapter at a time, between the two. This definitely gave me something to look forward to if one particular chapter seemed a little dull.

And there was a lot to learn. Mr. Larson did a great job describing the angst that the architects of the World’s Fair had, as they desperately wanted to beat what Paris did with the Eiffel Tower. They wanted to “out Eiffel Eiffel”. I had no idea what they actually did, and for a time thought they must have done nothing. The way Larson revealed the secret was done very well.

But in general, not being as fan of architecture, the story of the design of the World’s Fair just began to tire me. I simply didn’t care when architects were fighting amongst themselves about the color palette, or whether building X should be taller or shorter than building Y, and what the grounds needed to look like. It’s not that these topics were described poorly – Larson does this story great justice. But overall, it just wasn’t my thing.

It also felt like Larson lost interest in the interweaving of the stories after a while, because the serial killer narrative disappeared for long stretches, and when it appeared, was only for one short chapter before delving right back into a fight about the gravel pathways of the fair. Then, when the fair ended, the book became a really interesting detective story.

Finally, and somewhat strangely to me, Larson also threw in a third story, about a mentally deranged man named Prendergast who thought he was going to get a government job based upon work he did in an election, and how that eventually led to an assassination.

These three stories never had a point of intersect. Prendergast never interacted with Holmes, and neither one of them interacted with any of the architects. And the serial killer story really started before the World’s Fair, and went on for two years after the fair, which in some ways made the whole dovetailing with the World’s Fair a mere coincidence.

My gut tells me that the movie that is made from this book is going to throw the story on its head. The Prendergast story line will probably be dropped, and the construction and execution of the fair itself will be merely a backdrop for the serial killer story, because otherwise I don’t see how there is a movie there.

However, I don’t want to come down on this as being a bad book. I learned quite a bit reading it – all the firsts that occurred (electricity, motion pictures, the Ferris Wheel, and many others), and just how close in time this American serial killer was to the infamous Jack the Ripper, which mentally I always assumed to be from a much earlier time. But Holmes, the American serial killer, was intimately aware of Jack the Ripper, and perhaps was even inspired by him. Chilling.

Book Review: The Quartet by Joseph J. Ellis

51TXZtZRl1L._SX342_BO1,204,203,200_The Quartet, by Joseph J. Ellis (Amazon, Apple), is a history of the events that led to the United States abandoning it original government (The Articles of Confederation) for our present government (enshrined in our Constitution and its amendments).

Before getting into the review, I have to say that as much as I am into non-fiction, and history in general, I’ve never been a fan of histories from about the Renaissance to, say, the beginning of the 20th century. I’m not sure why. I think it is because we happen to have a lot of data from these periods – letters, art, architecture, and accounts of the period. And as such, most histories of these eras just dive right in, asking you to just understand how people in that time behaved without giving you any context. So, they will throw in letters which use a lot of obtuse language we can’t understand in the modern era, and describe behaviors of people in that era assuming you understand details about the culture (high born vs. low born people, for example), and just how they those people thought about distance and travel.

As such, every time I’ve picked up a biography about one of the founders of our country, I inevitably get bored and put it down. I just can’t get into the heads of these characters or how they thought. A letter will be inserted, and I can’t understand what the heck he or she is really saying, so I’m left to try to interpret the “feeling”, like I’m interpreting Shakespeare.

Having said that, I’m incredibly fascinated by this one period of American history. We have a Declaration of Independence in 1776, yet a Constitution in 1787. Yes, I know a war was fought between that time, but it ended in 1783, and for all intents and purposes, it was really over in 1781. So, what happened in between? How did the government run? Why did it change? This period is also interesting because there is so much mythology around our founding fathers. People tend to speak of them as if they are gods, or guided by God, and it causes us to debate whether our Constitution is something written in stone and must be interpreted strictly based upon the world those men lived in (the modern conservative argument) or if it is living and must be interpreted more loosely, based upon intent (the modern liberal argument).

So, I figured I would try to get through one of these books. Hopefully, the author would do a good job of trying to put the modern person into that time properly, so we can understand why these men made the decisions they made.

Luckily, this book does a really good job. Yes, there are letters that are quoted that are very hard to interpret, but Ellis does a good job explaining what the letter says up front, and then explaining what it means after. And he emphasizes over and over again the trouble with distance. As small as America was back then, it was gigantic compared to European states. When America won its independence, it was essentially the largest single unified empire in the world, and European powers recognized that. To travel the full length of the colonies at that point in time would have taken months.

What this book showed was just how bare-knuckled the political fight for the Constitution was. Forming the US Constitution was not a matter of elegant, smart men discussing the philosophical differences between a strong federal government vs. a government centered on the states, which is how we sometimes talk about it in arguments to the Supreme Court.

Rather, it was a matter of vote counting, forming back-room alliances, and using language to frame the debate, all of which would be quite familiar to people who watched the debate unfold over, say, Obamacare. It was messy, there were set backs, and there were various points where compromises were made in order to not have, as the phrase goes, “the perfect being the enemy of good.”

The Quartet focuses on four main characters – James Madison, George Washington, Alexander Hamilton, and John Jay. Each of these characters saw how the Articles of Confederation were a failure, but from different perspectives. The government had no money, as it had no power to tax the states (all money given was voluntary). This probably kept the war going on longer than it needed to, as Washington and Hamilton (his aide in the war at the time) could never get money or arms for their soldiers. The government couldn’t conduct a unified foreign policy, because all votes had to be unanimous (each state had a single vote), something that John Jay and Madison bumped into all the time. It was violating the treaty that ended the war – namely, states weren’t paying debts owed to Britain, and some were seizing property of former British loyalists, which was strictly banned.

Additionally, one of the victories the new United States earned was western land (up to the Mississippi), but there was no agreement as to how to administer it. Virginia had old claims on some of this land as a colony, and it was already the biggest state in the new Union. Would the states that had western borders keep expanding westward? Would this land instead become new states? If Virginia could keep growing, what would that mean to a state like Rhode Island, whose borders were fixed by water and surrounding states? Also, without a unified foreign policy, what would happen when settlers reached that border – war with Spain or France? How can you avoid that if you can’t negotiate a treaty given that the Articles of Confederation required 100% agreement?

The thing most fascinating about this book was, how little many people at the time actually cared. And this gets into the distance argument. Without mass transportation, most people didn’t leave their town, let alone their state. Thinking “nationally” was just not something people could even begin to grasp. It was hard enough, in many cases, to think of a government at the state level. We weren’t “the American people”. We were “Virginians”, “New Yorkers”, and at best “New Englanders”.

Also, the idea of a national government smelled suspiciously to a lot of people like English Parliament, a remote body completely divorced from the culture of the local town, making rules for the local town. Didn’t we just fight a war over this?

I don’t want to give much more away. We know how the story ends (a Constitution and Bill of Rights). The story of how the Constitutional Convention came about is quite fascinating, and the battles that ensued over ratification of the states is something anybody who has done vote counting in the modern era would fully understand.

But the key takeaway was that none of these men thought they had created a divinely inspired document. Most were unhappy (especially Madison) because he felt the issue of sovereignty (states vs. federal government) was left unanswered. But the one thing they did know is that the document was not set in stone. They consistently used the term “framework” to describe it, knowing that it would be modified over time, and in fact, the vagueness in things like sovereignty was a good thing, as it meant we could shift power from one to the other as time and circumstances dictated. (This means, more or less, that the conservative argument centered around ‘originalism’ is, to put it nicely, idiotic, Justice Scalia). Also, the 2nd amendment? No, it is not about anybody being able to own a gun for any reason, and it isn’t about citizens having a gun to stop government tyranny. It was written as a compromise, because as a nation we needed to ensure we can defend it when attacked, but many of the delegates (and people ratifying in the states) didn’t want a standing army. How do you accomplish defense then? Obviuosly, the only way to do that was to ensure that people could have a gun. That’s why the word “militia” was in there, people.

I will quote one letter from the book, written by Thomas Jefferson many years after ratification, that best describes how we should treat the Constitution. Jefferson understood fully how people could look to the document as something divine, and how that was a really bad idea:

Some men look at constitutions with sanctimonious reverence, and deem them like the ark of the covenant, too sacred to be touched. They ascribe to the preceding age a wisdom more than human, and suppose what they did to be beyond amendment. I knew that age well; I belonged to it and labored with it. It deserved well of its country…. But I know also, that laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths discovered…institutions must advance also, and keep pace with the times. We might as well require a man to wear still the coat which fitted him as a boy as civilized society to remain ever under the regime of their barbarous ancestors.

As John J. Ellis said of this letter: “It is richly ironic that one of the few original intentions they (the framers) all shared was opposition to any judicial doctrine of “original intent.”

 

 

Book Review: “How Music Got Free”

41uqX+wVxbL._SX329_BO1,204,203,200_How Music Got Free: The End of an Industry, The Turn of the Century, and The Patient Zero of Piracy (Amazon, iTunes), by Stephen Witt, is a non-fiction book that takes a look at the creation of the MP3, and how that eventually cratered the profits of the music industry.

I came across this book pretty much by accident – I wasn’t looking at a book on technology or the music industry. And in some ways, you can ask yourself what is really the point of a book like this – don’t we know the story already? Music companies are greedy, they missed out on technology, pirates were just a bunch of kids, and that was that.

But this book goes into much more detail, telling a story that I don’t think most of us know. I, for example, am pretty steeped in technology, but didn’t really know how the MP3 came to be (and almost didn’t). While I knew of Napster and The Pirate Bay, I figured music was just being ripped by college kids, when in fact there was a deeply conspiratorial enterprise involving people in CD manufacturing plants who were sneaking out CDs (and later DVDs) before they were released, and this is where most of the leaks came from. And while the executives at labels were indeed stupid and greedy, there were those who were just blindsided by technology, and figured something like the MP3 could be beaten simply by churning out hit music (in other words, people would just want to buy it, like they always had).

This book focuses on three main characters who never met each other, but whose stories were intricately intertwined:

  • Karlheinz Brandenburg: The German scientist and engineer who worked for the Fraunhofer Instittue, and created the MP3 standard
  • Doug Morris: A record executive who worked at one time for all the major labels, and became the CEO of the largest label (Universal Music) as the industry imploded.
  • Dell Glover: A factory worker at the Kings Mountain, North Carolina CD manufacturing plant, who is probably responsible for leaking more music and movies than anybody in the world.

This book spans the late 1980s through 2013. The early focus on the book is on the technology of MP3, and the amazing politics that went on behind the scenes that almost killed it, yet through Brandenburg’s tireless efforts, eventually came to dominate (Brandenburg and his team was horrified by music piracy, yet because of piracy, they became rich through licensing their technology to MP3 player device companies).

The sections dealing with Dick Morris were less interesting to me, yet it highlighted just how obscene music profits were, and how they were completely blindsided by MP3 technology. The most interesting aspect of this to me is that the executives thought MP3 was inferior, because they were listening to their sound mixing engineers in the studio, who insisted compression was bad. Unfortunately for the executive, these sound engineers weren’t really “engineers” – they didn’t understand acoustic technology nor how it worked on the brain, so they just assumed compression meant lost information that you absolutely needed.

The most fascinating piece of this, however, was the story of Dell Glover, and how the pirate community grew. These were not people interested in riches, but rather just the excitement of being “first” to leak. The cat and mouse games of getting music out of the plant (or radio stations, or from store warehouses) and onto the internet were pretty fascinating. While the RIAA was suing individual users who really didn’t know what they were doing, guys like Dell Glover were completely decimating the industry, and not getting anything for it.

The book was very well written, not spending too much time on any one character, and finding natural places in the story to switch from one character to another. It got a little slow in the middle, and at times I felt it spent too much time on the recording industry, but it really picked up from just over halfway in the book, when the activities of Dell Glover and the other pirates took center stage.

It’s a pretty fascinating story – the rise of the MP3 seemed inevitable in hindsight, but the battles within the MPEG licensing industry almost killed it in the crib. And the laughable way that the recording industry behaved in response to piracy – how they completely missed who the real pirates were while they were busy yelling at Napster and single moms in Minnesota, was pretty amazing. And Dell Glover was a great character.

It is well worth the read.

Book Review: “Losing The Signal”

Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry (Amazon, Apple) is a business biography of the Canadian phone maker that rose to prominence on the power of corporate messaging and e-mail to be a powerhouse, only to spectacularly collapse within a few years of the introduction of the iPhone.

I think a lot of people know the basics of the story, and in some ways assume that the fall was pre-ordained. After all, Apple has come in and disrupted industries before, Steve Jobs was on top of his game in the mid 2000s, and the iPhone was simply revolutionary, so of course this meant somebody like BlackBerry would fade away.

But the book tells a more complex story. A well-written narrative by authors by Jacquie McNish and Sean Silcoff describes how BlackBerry managed to create a data messaging network at a time when data networks were terrible and expensive, and how BlackBerry managed growth through a two-headed CEO, one of them the technical genius (Mike Lazaridis), and the other a cut-throat businessman (Jim Balsillie). These are brilliant guys who created something amazing.

What is even more important than the rise of BlackBerry, however, is how it fell apart. Lazaridis and Balsillie were just as smart before the iPhone came out as after. But the things that allowed BlackBerry to exist and thrive – it’s stinginess on data usage, and its long battery life, simply became unimportant to people. Data networks improved while the cost dropped, and people didn’t mind having to plug their device in more often, especially if the device allowed them to play Angry Birds.

Missing this was a failure of Lazaridis, who was still insisting that 4G networks weren’t worth implementing, and who felt that customers would flat out reject a device that didn’t last multiple days on a single battery charge. However, to be fair to Lazaridis, he had gone through this experience before, telling carriers they didn’t need 3G as quick as they thought, and pushed them to a technology dubbed 2.5G, and Lazaridis was proven right. It was not out of the question for him to think he was right again on the 4G transition.

Similarly, on the business front, Balsillie rubbed many people the wrong way, and BlackBerry’s insistence on monthly network fees to use the encrypted data service was something that carriers were constantly trying to get out of. As soon as BlackBerry faltered (with the ill-conceived touch-screen Storm device after the iPhone came to market), the carriers began to flee to Android. Was BlackBerry a better, more robust, and encrypted service?  Yes. Did it matter?  No.

The book also highlights one of the things that is common with startup businesses that become successful. Many times the person or people who found the company are not the people who should be leading it after it makes its mark. BlackBerry never learned this. The co-CEOs appointed a compliant board that didn’t ask questions, and when market realities changed, there was nobody to question the founders when they continued to play by the same technical and business rules as before, when Apple and later Google changed those rules completely. Essentially, the game changed from baseball to football, but BlackBerry was trying to sell better pitchers mounds and more efficient means of putting the bases on baseball diamonds.

One issue I had with the book is that secondary characters – friends of Lazaridis or Balsillie who were also very important to BlackBerry’s success, sort of fade in and out of the narrative, only popping in to give the after-the-fact 20/20 hindsight account of how a decision Lazaridis or Balsillie made was wrong or could have been better. It became a bit difficult to remember all of these names, and since they weren’t considered essential characters, it is hard to understand whether the failures and successes were all on Lazaridis and Balsillie, or if the actions of these people also contributed to the rise and fall.

As an example, Lazaridis would give incredibly difficult, probably impossible, product deadlines for a new device. Up until the iPhone release, the engineering teams consistently pulled these off. Afterwards, it was consistent failure (starting with the Storm). It would have been nice to get more information as to why this was – were teams burnt out? Were they just lucky before and the law of averages kicked in? Did the scope of the impossible change to something that truly was impossible whereas before it was just hard?

Another issue I had was that this book didn’t contain any pictures of the people or products. Usually biographies have some photos in them, and their absence was strange.  The book would go to great detail to describe what the first BlackBerry looked like (the 900), describing how revolutionary and addicting it was due to its keyboard. Additionally, lots of time was spent describing the Storm and what was wrong with the technology, but no picture of the Storm itself. I found myself jumping out of the book to look these devices up, both to get an understanding of what was being described, and to take a trip down nostalgia lane as I remember many of these devices. Putting these in the book seems like a no-brainer.

Despite these shortcomings, it is a very well written book, and a quick read. It doesn’t get too deep technically, so you will not get lost trying to understand the technology, and the business stories, especially the one where Balsillie basically conned Blackberry’s way into Europe, are quite entertaining. There is also an interesting epilogue, showing what the two now-departed CEOs are doing with the riches they earned.

 

Review of Michael Lewis Book “Flash Boys”

UnknownThe book “Flash Boys” (Amazon, Apple) by Michael Lewis tells the story of how our current stock market works, how it is being manipulated, and what a group of guys who figured it out are trying to do about it. Like all good Michael Lewis books, it focuses on one central character to provide the narrative structure as he teaches you about what is going on. In this case, the character is Brad Katsuyama, a trader at the Royal Bank of Canada (RBC). By focusing on one character, Lewis’ books become page-turners, though it does tend to leave some of the technical details out in the interest of advancing the story. I find this perfectly acceptable, because it gives you enough of a window into how things work that you can then dive into the deeper, and let’s face it, drier, technical details of the subject if you are so interested. Lewis himself mentions these books in his notes, so you have get a good heads up on where to go for further reading.


While the book focuses on Brad and his colleagues, it gives a fascinating insight to how our modern stock market actually works, and really made me not want to be a part of it at all. As an example, I think we all have an idea that there are these limited quantity of hard, fixed pieces of real estate, called the NYSE or Nasdaq, and there are people running around on the floor shouting at each other as trades get made. If you wanted to trade Apple stock, you went to the NYSE (as that is where it was listed). If you wanted to trade Intel, you went to Nasdaq (because that is where it was listed). Yes, there are computers, and maybe some of this “people yelling at each other” is antiquated, but the NYSE is still a place where this stuff happened. If you turn on CNBC, you see the floor of the NYSE and you see people walking around.

However, this is not how things work anymore. That trading floor you see on CNBC, and the celebrities or CEOs doing an IPO that ring the opening bell? That’s just a set piece, nothing goes on there. And there aren’t 2 or 3 exchanges (Amex being another). There are 12 or 13… and you can trade any stock on any one of them… and those are just the public exchanges. Banks like Goldmann Sachs have their own, private exchanges, called “dark pools”, where their clients can trade. And these new public and private exchanges aren’t loaded with people, but rather are just large arrays of computer servers running algorithms. And you don’t just have trades like “buy” or “sell”, or even things as simple as “limit orders” (buy/sell if the stock hits such and such a price). You have dozens of order types that are complex and hard to describe, because the types are really meant as triggers for the computer algorithms running on the servers in these multiple exchanges.

OK, wait… what?

Exactly!

The world is a much different place, not only from the Wall Street immortalized in the Oliver Stone movie of the same name, but even from the market of the late 90s that you or a friend of yours participated in when they quit their job to be a “day trader”, and even from the market that existed when the financial crisis hit.

Why are things so different, and how come we didn’t know about it? That, basically, is the crux of the book. This change in the market was all transparent to you and me when we go onto our Fidelity web page to trade a stock, because these changes weren’t about you and me. They were about a group of people called “high frequency traders” or HFT. These changes were made to turn the stock market into a complex Rube Goldberg machine, because the more complex the machine is, the easier it is to find inefficiencies in it to exploit. Much like how the financial crisis occurred because people who traded in mortgage backed securities were trading in an opaque market of strange, hard to decipher rules, the new stock market is complex, opaque, and confusing, which allows the people who know how to spot a fissure in the rules to swoop in, unbeknownst to the rest of us, and take some money.

In the olden days, stock trades did happen based upon speed, but it was a regulated speed. You might have a really good stockbroker who has a stacked Rolodex or excellent memory, and when he (or she, but let’s face it, it is mostly he) trades a stock on your behalf, he can get you the best deal because of this. He can find the seller willing to sell for less than he really wanted (so as to get you the best buy price) or find the buyer willing to buy something for more than he wanted to buy (so as to get you the best price) or, perhaps, do great horse trading so that you split the difference.

For example, say you want to buy a stock and make a bid at $10. And somebody else wants to sell the same stock and makes a sale offer for $10.02. A good broker might be able to get you that $10 price because of whom he knows and how fast he works, such that you don’t have to pay $10.02. Conversely, if you were the seller, your broker was so good he could get you the $10.02 price so you don’t have to sell at $10. Or, he works it out such that the stock trades for $10.01. The better the broker, the more you are likely to get your price.

Now, in this old-timey Bud Fox market of guys in rolled up white buttoned shirts and ties yelling on the phone, if your broker instead interjected himself, such that he bought the stock for $10 that you asked for, but turned around and sold it for $10.02 back to you, that would be illegal. He was using his knowledge to make the seller think the only offer for his $10.02 sales price was $10, and to make the buyer think the only stock available for his $10 ask was $10.02. He pocketed the difference. That’s a no-no and a quick ride to jail (well, fines… maybe… depending on how crappy the government feels like operating)

But in the new world order of computer based algorithmic trading, this is not illegal, as long as it is the computer doing it. A computer can make this trade, independently. And the way it works is like this. Your Bud Fox-type broker isn’t getting a phone call… what he is doing instead is taking a bunch of money from an HFT (through fees), which lets the HFT see what the incoming stock price bids/asks are ($10 and $10.02). The HFT sees this information, and has his computer sit closer physically (as in, with shorter wires) to these stock exchanges “matching engines” where the trades occur. Because he is closer, just by rules of physics, he gets to the matching engine before you, and can do the trade with you opposite of the way you hoped. To you, it looks like you didn’t get your price. But the thing is… neither the buyer nor the seller got their price. The seller thinks he had to sell for $10, and the buyer thinks he had to buy for $10.02. The HFT made a 2-cent profit (some of which he paid to the Bud Fox brokerage firm in fees).

Now, that sounds simple and all, and it is. Because, couldn’t the HFT equally “lose” as well as win here? He could, in theory, end up buying at the wrong price and selling at the wrong price, and lose just as easily as he could win. And this would be true, but that gets us back to all those complicated order types. You don’t just have “buy” and “sell” or “limit” orders. You have orders you can make that you can cancel unless certain, wild and crazy and difficult to explain in English conditions are met. And since these orders can be cancelled, they allow you as the maker of the order to tease out what the real buy and sell prices are, which you can use to then cancel the main order, and come in right after it with a “better” order that you do complete. You are thus, in essence, making free money.

Keep in mind, this is all legal. And this legality is not an accident. The people who have made it legal? They made it legal explicitly so they could do this. The “it’s illegal if it is a human but legal if it is a computer” thing is not a mistake – it is part of the plan.

The crux of the story, once you learn this, is what Brad and his colleagues did with the information – they created yet another exchange that can combat these HFT algorithms. Their exchange slows down the orders such that an HFT can’t sneak in. Their exchange has much simpler order types. And finally, they got clients to demand from their banks doing trades (such as Goldmann Sachs) to use Brad’s new exchange when they placed their orders. Like every other exchange, they make money when trades happen on their exchange. They might make less than other exchanges as they aren’t selling access to HFT, but the hope is that by being the “fair” exchange, they will get more volume over time and thus do just fine.

One other fun note… as with the mortgage based financial crisis, Brad didn’t just set out to create his exchange as soon as he figured it out. He went to the SEC to let them know what was going on, with the hopes that maybe this would stop on its own with some rule changes. He was a happy, and rather wealthy man, doing trades at RBC. He wasn’t an entrepreneur with dreams of starting his own exchange. But, just like with what happened in the financial crisis, he found deaf ears at the SEC. They didn’t seem interested in stopping what was going on. Brad’s team did some analysis of this, and as it turns out, the sheer number of SEC employees who later quit the SEC to go work for HFT firms was astounding. In other words, the SEC knows what is going on, but just didn’t care. I know… my head slammed on the desk reading that, too.

As with all Michael Lewis books I have read, this book was very good. Lewis doesn’t feel it is his role to provide answers about how to make Wall Street change, any more than he felt it was his role to make Wall Street change when he wrote “The Big Short”, about the mortgage backed securities fiasco. Lewis instead writes a book that is entertaining as well as educational. It has heroes you root for, and villians you cannot believe exist outside of fiction. As with The Big Short, he succeeds.

 

 

Book Review: “The Loudest Voice in the Room”

The news is like a ship. If you take hands off the wheel, it pulls hard to the left.” – Roger Ailes

loudest_voice

Viewers don’t want to be informed; they want to feel informed” – Chet Collier, Roger Ailes mentor and boss at the Mike Douglas Show, commenting on his job as the first programming director at Fox News.

Those two quotes are pretty much all you need to know if you want to understand why Fox News is both successful, ridiculously partisan, and yet still believes it can call itself “Fair and Balanced”.

The book “The Loudest Voice in the Room” by Gabriel Sherman (Amazon, iTunes), is a biography both of Roger Ailes and Fox News.  It follows Roger through his childhood, to his first real experience doing TV with the Mike Douglas Show, his activities in Republican Politics, his time on Broadway (!) and finally, as the man who created Fox News and turned it into a ratings behemoth (in the cable news arena, anyway).

It is a well written narrative that gets right to the core of who Roger is, which is basically a guy driven to win, and a man who is incredibly paranoid.  Several examples of both of these traits are shown throughout the book, and they are pretty jaw dropping.  One example of his paranoia is that he wanted bomb proof glass installed in his office windows when Fox started, because “homosexual activists are going to be down there every day protesting.… And who knows what the hell they’ll do.”

The book is replete with stories of Ailes holding grudges, such that after he won a battle over some perceived slight, he would then send out Fox News employees to destroy the character of the person he just defeated.

Many aspects of the book were not new to me, as I knew many of these tales of Ailes over the years.  However, even these were pretty amazing, because the pettiness of Roger is on full display.  One example of this I think helps explain Fox’s popularity.  Early on, Roger and Chet Collier recognized when working at the Mike Douglas show, that you have to work very hard to keep people watching.  If you start to lose them in a segment, they might flip the channel during the commercial and not come back.  For the Mike Douglas show, they developed the idea of a each segment ending with a “payoff”.  Thus, when producing a show, it wasn’t enough to say you were going to talk about some topic for the next 7 minutes.  That topic had to have a beginning, middle, and end, and the end had to be something that was so entertaining that the person would stay through the commercial, because they wouldn’t want to miss anything in the next segment.  This kind of thing was just not done with TV news prior to Fox News.  The idea of a payoff just makes no sense in the construct of “news”.  That, right there, was the game changer Ailes brought when he built Fox, and helps explain why they have such ratings success.

The very last section of the book threw me for a loop.  In it, Gabriel describes how Roger bought a home in a small community in New York, and then proceeded to buy its local newspaper and turn it into a partisan, conservative rag.  He fired or scared off all the people who worked there, hired conservative ideologues to run it, and began going hard after his “enemies”, namely a local man who became the zoning commissioner.  The stories of how far he would go, using “news”, to destroy a small-town zoning commissioner were astounding.  And it was for no other reason than he just didn’t like the guy.

If you love Roger Ailes, you won’t like this book.  If you hate Roger Ailes, the stories may make you madder than you ever thought possible, like the story of the 2000 election and Florida debacle.  If you are just curious how a network could start from nothing while going up against CNN and then beat it, sort of a business angle story, you will learn a lot.

But I keep coming back to that quote from Roger about the news pulling “hard to the left.”  I think this sums up Roger and his paranoia pretty well.  You hear conservatives all the time talking about “liberal” bias in the media.  Such statements imply a conscious bias by reporters in the “mainstream” media, and thus one needs to actively combat that to be “fair and balanced”.  However, this quote by Roger belies that fact.  He basically admits that the media isn’t “biased” – it’s the news itself that is biased.  And the only way to deal with that bias is to keep paying attention and keeping a firm grip on ensuring that a conservative bias is applied as a counter-weight.  To me, that’s stunning.  When a bomb goes off during the Boston Marathon, that’s just a bomb going off.  It isn’t a “liberal” bomb.  It isn’t a “conservative” bomb.  You just report on it as a “bomb”.  Yes, you editorialize on talk shows about what the bombing means, and you can apply liberal or conservative spin on what you think it means, but a bomb is a bomb.  The idea that the event itself is “liberal biased”, is simply bizarre.

One final point, near the end of the book it becomes clear that the higher ups at NewsCorp (Fox News’ parent), don’t really like Roger Ailes that much.  They may be conservatives in nature, but Murdoch has shown that he will back liberals if it makes sense for his business.  I truly believe that once Roger Ailes goes, the thing that is “Fox News” will go with him.  The station will change once he departs.

And that would be a very good thing for us all…

Book Review: “The Wheelmen: Lance Armstrong, The Tour de France, and the Greatest Sports Conspiracy Ever”

This book (Amazon, iTunes) details the rise and fall of Lance Armstrong – from teenage runner / triathlete, to bike racer, through cancer, his TDF victories, and eventual admission of doping.9-small

The book was relatively well written and easy to follow.  And while I think it is a fascinating book, I think it is fascinating for reasons totally unrelated to Lance Armstrong.  And, in fact, the data pieces they use of Lance are poorly written and a bit contradictory.  At times, Lance really comes across as a gigantic asshole, but the author’s don’t spend much time on that, so it reads more like rumor and innuendo than  “facts”.

I can forgive the book for this, because what this book does an amazing job explaining is just how easy it was for Armstrong to pull off such a doping ring.  I for one defended Lance until the end, because I just couldn’t see how he could keep passing test after test after test yet somehow still be guilty of doping.

And thus, this is what made the book fascinating.

Like most Americans who don’t know much about cycling, your exposure to cycling was probably through watching the Tour de France because we were wondering if Lance was going to win again.  Although I do remember watching coverage on NBC when Greg LeMond won his third TDF, that was more because of how it was done – an amazing final stage time trial for the comeback win.

If all you watched is the Tour de France, you probably came away like I did, thinking that international bike racing worked kind of like, say, Formula 1.  You have this big spectacle with a lot of fans, you have teams with big corporate sponsors, you have rules about what was allowed and not allowed for your equipment, etc.  And, of course with cycling, you had drug testing.

But what this book exposes is that, well, cycling during Lance’s ascent was actually a rickety organization held together with duct tape, with ample opportunities for obfuscation and outright corruption.  Until Americans started becoming good cyclists, in fact, the money involved in cycling was pretty awful.  And thus, the American rise in cycling, by introducing so much money, made the things Lance and the USPS team did almost inevitable – it was just too easy.

The UCI (International Cycling Union) which ran the sport and ran testing was, well, sort of compromised.  Here you are as an organization that benefits from donations.  And if, for example, you have a rider who is an international star, and his winning brings all kinds of new excitement to the sport and donations, what happens if that rider maybe had an elevated level of testosterone?  (Which Lance actually did in 1999).  Are you going to disqualify him?  Or are you going to accept his team’s answer that this was due to a cream applied to deal with saddle sores, and oh, by the way, here is a $400K donation to UCI?

Given how rickety the organization was, well, you are going to really be tempted, and yes, the UCI let his failed test slide).

USA Cycling was no better.  This was an organization that didn’t really exist at all until some wealthy Americans who were gaga about cycling and wanted Americans to win created it.  They clearly aren’t going to be motivated to expose American cheaters, because they want the glory of American victories.

And thus, this was how the doping program the USPS created was allowed to avoid detection.  The American cycling body didn’t really care, and the UCI was compromised.

It didn’t really fall apart until the WADA (World Anti-Doping Agency) and USADA (the US arm), got involved.  These organizations are quasi-government funded, and they are not cycling organizations – they went after doping in the Olympics and other sports.  It was their involvement that eventually broke the conspiracy.

I won’t go into the details on how that happened – read the book LOL.

Back to the character of Lance Armstrong.  I do think the book wanted to show that Lance is not such a great guy.  But as I indicated, I don’t think the authors did a terribly good job in documenting this, and frankly, I’m not sure Lance is worse than any other hyper-competitive person.  This kind of personality type is pretty singularly drive – to win – and that is going to affect their interpersonal relationships.  He might be a jerk, but I don’t think he is any bigger of a jerk than, say, Michael Jordan.  Jordan punched a teammate (Steve Kerr) in practice, for example.

So, don’t go into this book expecting to learn much about Lance that would help you form a more positive or negative opinion of him.  Read this book to learn about cycling.