Private Empire (review)

Private Empire
Long-time readers will recall that I loved The Bin Ladens, a previous book by Steve Coll. So, I was really glad to get a copy of Private Empire in the mail a few weeks ago1.

This one doesn’t have the same narrative drive as The Bin Ladens (it’s not as biography-based, for one), but it’s dang good. It covers the modern history of ExxonMobil from the 1970s, 80s, and beyond, just touching on the old Standard Oil days briefly here and there. The bookends are disasters: Exxon Valdez and Deepwater Horizon. It’s an ominous way to open and close the book, but those parts—like the middle sections on ExxonMobil’s involvement in Indonesia, Nigeria, Equatorial Guinea, Saudi Arabia, Qatar, Russia and elsewhere—are really fair and thoughtful. I’d wager that public opinion weighs pretty heavily against ExxonMobil, so a lot of this is good corrective or at least perspective. Think of it as a healthy re-complication of the simpler stories you might hear or assume, whatever your stance.

My favorite parts of this book weren’t the environmental concerns or the human rights horrors or the tangled geopolitical wrangling so well documented here, but the perspective on the business side. It woke me up to the sheer nerve (impudence?), courage (recklessness?), and (evil?) genius it takes to run a business like this. It’s incredible. Things I hadn’t thought much about before:

  • The planning has to take into account huge time scales. If you’re building new wells, new pipelines, new plants, and new shipping routes… for billions of gallons of reserves… in a war-torn country… you’ve got your hands full. And on top of that, assessing environmental risk, political stability, and managing investments over 30, 40, 50 years and behond in those environments, and managing to turn a profit? I can’t help but admire it.
  • ExxonMobil much prefers to own the whole process, upstream to downstream, from ground to well to refinery to processing to gas stations and other end products. Reminds me of Apple. Owning the whole value chain makes it easier call your own shots.
  • ExxonMobil isn’t a place for cowboys. Of all the big players in the industry, it has the reputation for being the most anal, rigid, calculating, precise, conservative, family-oriented, engineering-minded culture. And the most cocky. But it’s earned.
  • I kind of cynically assume a little bit of chicanery for any really big company, but I was surprised by how much ExxonMobil seemed to prefer to stay away from the government. A request here and there, but the firm seemed staunch in its stance: it’s not the Red Cross, and it operates worldwide. Global responsibility to employees and shareholders means that ExxonMobil’s interests may or may not always align those of the U.S. government. Best to keep your distance and keep the favors to a minimum.
  • With these volumes of money that ExxonMobil makes, tax becomes a huge concern in negotiations and business operations worldwide (not just the IRS). Even small variations can swing earnings.
  • There’s a great section on the we-started-the-Iraq-War-for-oil fallacy and our dysfunctional understanding of “energy security” in general, a corrective I wish we’d heard more 10 years ago. But, alas, it’s so hard to keep a holistic perspective in stressful times.

If anything, Coll errs on the side of detail. There were times I wondered why I was reading about so-and-so’s time in college or career trajectory, when I knew I wasn’t going to remember it and they wouldn’t be mentioned after the next 7 pages. But it’s that careful, steady, inclusive approach, carried out over hundreds of pages, that makes it easier to trust Coll’s sense for the nuances in really sensitive topics. Think “oil industry” or “global corporation” and try not to have a strong gut reaction. I’d thank this book for tempering my knee-jerk response on a lot of topics. Life is messy. I’m really glad I read this one.


1. Disclosure: I got it for free on the condition that I write about it. I would have gotten it for free from the library anyway because I like Coll’s writing. But just so you know.

Online monoculture and the end of the niche. In summary: online recommendation systems tend to offer a more diverse selection, but tends to reward fewer products more greatly than others:

In Internet World the customers see further, but they are all looking out from the same tall hilltop. In Offline World individual customers are standing on different, lower, hilltops. They may not see as far individually, but more of the ground is visible to someone. In Internet World, a lot of the ground cannot be seen by anyone because they are all standing on the same big hilltop.

I wish I followed the math better. Interesting stuff in the comments, too.

It’s just so damn easy to look upon someone else and jealously think, “Wow, he sure got lucky.” Real people did not have great opportunities fall in their lap. Mostly, crappy opportunities come along, and in the meantime, you make the best of them.

Po Bronson [via powazek]

Liar’s Poker: Rising Through the Wreckage on Wall Street (review: 4/5)

Liar's Poker by Michael Lewis
This makes the third Michael Lewis book I’ve read (see also my take on Moneyball and The Blind Side from last fall). It’s another good one. Liar’s Poker is Lewis’ first book. He writes about his years on Wall Street working with the Salomon Brothers investment firm during the heady 1980s. It’s a biography of the company’s internal breakdown and the revolutions that swept through the investment banking industry (like mortgage-backed securities and junk bonds) that made some people piles and piles of money.

Lewis’ writing is good and often funny:

The greatest of absurdity of the college investment banking interview was the people the investment banks sent to conduct them. Many of them hadn’t worked on Wall Street for more than a year, but they had acquired Wall Street personas. One of their favorites words was professional. Sitting stiffly, shaking firmly, speaking crisply, and sipping a glass of ice water are professional. Laughing and scratching your armpits are not…

I did not learn much from my stack of Wall Street rejection letters except that investment bankers were not in the market for either honesty or my services (not that the two were otherwise related). Set questions were posed to which set answers were expected. A successful undergraduate investment banking interview sounded like a monastic chant.

Lewis manages to get in to Salomon Brothers through some lucky connections, makes it through the months of lectures and hazing of the training program, and finally gets to the trading floor that’s dominated by a law-of-the-jungle ethos. Some of the best parts are these antics among the workers. People throwing phones at trainees, office pranks, verbal abuse, gluttony (“We’d order four hundred dollars of Mexican food,” says a former trader. “You can’t buy four hundred dollars of Mexican food. But we’d try—guacamole in five-gallon drums, for a start.”). It’s wonderfully disturbing.

If you are a self-possessed man with a healthy sense of detachment from your bank account and someone writes you a check for tens of millions of dollars, you probably behave as if you have won a sweepstakes, kicking your feet in the air and laughing yourself to sleep at night at the miracle of your good fortune. But if your sense of self-worth is morbidly wrapped up in your financial success, you probably believe you deserve everything you get. You take it as a reflection of something grand inside you. You acquire gravitas and project it like a cologne.

Lewis nails both the bizarre sociology inside the firm and the broader industry shifts. A lot of the stuff about mortgage bonds and junk bonds gives a good background on what’s happening on the market right now. Definitely worth reading.

When I heard that milk jugs are being redesigned for better efficiency, I felt a sort of witless glee. Part of that is my usual response to efficiency. And also because most of my high school employment was in the local Kroger, stores #444 and #432 (I still remember that…?). I mostly did night stock, but also spent one summer in the Dairy section. Although throwing crates around in the heat of the shelving moment is really fun,1 dealing with crates is a chore, every single day. Some days I would have killed for a nice waist-level pallet of jugs, rather than a 7-foot tower of crates. There’s also a good audio slideshow about the square milk jugs and some of the problems the customers are having. [via austin kleon]

1. Plenty of reasons I really liked stock work (lots of trade-offs, but still noteworthy): I got to work alone, but plenty of joking and yelling back and forth. I could yell or sing when I wanted. I got to walk around. There were very few irate customers at 3am, unlike a Saturday afternoon bagging groceries. There’s also a good bit of healthy destruction involved (wielding a box cutter, breaking down cardboard, tossing damaged product out in the aisles, etc.). And on most nights, things looked perfect when I’d leave in the early morning. I love that severe contrast. Make an absolute mess when I’m working, and then polish it to something where no one can tell it was any different.

The Back of the Napkin (review: 3.5/5)

The Back of the Napkin
Dan Roam does a pretty good job with this one: The Back of the Napkin: Solving Problems and Selling Ideas with Pictures. One of Roam’s main arguments (sometimes belabored) is that we were all comfortable drawing when we were in kindergarten. Somehow we got frigid. We play visually dumb. We don’t need to.

Visual thinking is neglected, but luckily we’re hard-wired for it. When we see things, we instinctively begin to sort out the essentials and answer a few questions. We can’t help it:

  • who/what?
  • how much/many?
  • when?
  • where?
  • how?
  • why?

Visual thinking borrows from that natural process a bit more intentionally. It starts with looking (collecting & screening data), seeing (selecting & grouping), then imagining (reconfiguring, manipulating, analogizing), and finally showing (cleaning up, putting it all together). And, hey, what do you know… according to Roam’s model, the ways we see things and the questions we need to answer match up directly with the tools we have to show things:

  • who/what? = portraits
  • how much/many? = charts
  • when? = timelines
  • where? = maps
  • how? = flowcharts
  • why? = multi-variable plots

That’s one of the basic insights that’s really nice to be reminded of. We have specific tools to answer specific questions. Roam also has the SQVID, a framework that helps you figure out how to present the information in the most appropriate way for the intended audience, tracing your way through 5 choices:

Simple vs. elaborate
Quality vs. quantity
Vision vs. execution
Individual attributes vs. comparison
Delta (change) vs. status quo

And when you cross-reference the SQVID with the model, you get a codex that guides you to whatever pictures you need to make for the problems you need to solve. The acronyms and frameworks sound a bit confusing outside of the book, but Roam ties it together pretty nicely with lots of visuals throughout. And it’s actually kind of… practical. That doesn’t mean that the products of visual thinking are guaranteed to be easy or simple, no more than writing or talking about the ideas would be:

One of the most important virtues of visual thinking is its ability to clarify things so that the complex can be better understood, but that does not mean that all good visual thinking is about simplification. The real goal of visual thinking is to make the complex understandable by making it visible—not by making it simple.

An obvious weakness for the book: it’s really hard to learn something like this from a book. You can learn about it. But it’s one of those things that you have to DO, and more examples are always helpful. The long case study that takes up the last 40% of the book lets you see the different frameworks in action, but it’s also kind of boring to read about the same fictional software company and its fictional competitors and fictional customers for 100 pages. I imagine this was a tough part of the book to write as well.

I’d still recommend it. Heaven knows it’s refreshingly different from most of the other books in the business section, and there’s some real meat in there.

For one year I worked at a regular nine to five job, and I remember well the strange, cozy feeling that comes over one during meetings. I was very aware, because of the novelty, that I was being paid for programming. It seemed just amazing, as if there was a machine on my desk that spat out a dollar bill every two minutes no matter what I did. Even while I was in the bathroom! But because the imaginary machine was always running, I felt I always ought to be working. And so meetings felt wonderfully relaxing. They counted as work, just like programming, but they were so much easier. All you had to do was sit and look attentive.
Meetings are like an opiate with a network effect
.

Shop Class as Soulcraft, an article about the value of working with your hands and the increasing assembly-line nature of knowledge work:

Much of the ‚Äújobs of the future‚Äù rhetoric surrounding the eagerness to end shop class and get every warm body into college, thence into a cubicle, implicitly assumes that we are heading to a ‚Äúpost-industrial‚Äù economy in which everyone will deal only in abstractions. Yet trafficking in abstractions is not the same as thinking. White collar professions, too, are subject to routinization and degradation, proceeding by the same process as befell manual fabrication a hundred years ago: the cognitive elements of the job are appropriated from professionals, instantiated in a system or process, and then handed back to a new class of worker—clerks—who replace the professionals. If genuine knowledge work is not growing but actually shrinking, because it is coming to be concentrated in an ever-smaller elite, this has implications for the vocational advice that students ought to receive…

The trades are then a natural home for anyone who would live by his own powers, free not only of deadening abstraction, but also of the insidious hopes and rising insecurities that seem to be endemic in our current economic life. This is the stoic ideal.