“The principles of a free constitution are irrecoverably lost, when the legislative power is nominated by the executive.”
— Edward Gibbon, The Decline and Fall of the Roman Empire, Vol 1, p 70
Interview of Simple Mills Founder Katlin Smith, February 15, 2021. This is one of the most interesting podcasts I have listened to in a while. Starting and growing a business based on just an idea, hard work, and a small amount of funding represents the best aspects of capitalism. “In 2012, 22-year-old Katlin Smith was growing restless at her consulting job, so she started experimenting with grain-free, paleo-friendly muffin recipes in her Atlanta kitchen. … 8 years after launch, Simple Mills has expanded to include cookies and crackers and other treats; it’s available in 28,000 stores and does roughly $100M in annual revenue.” (How I Built This)
Socialism as Popular as Capitalism Among Young Adults in U.S. by Lydia Saad, November 25, 2019. In recent years, there have been many reports of increasing support for socialism among young people. However, I suspect that critics of capitalism do not have entrepreneurs like Katlin Smith in mind. When you dig beneath the surface of these polls, it is clear that there is widespread support for “small business”, “free enterprise”, and “entrepreneurs”. But fewer people support “big business” and “capitalism”, presumably because these terms are associated with cronyism and corruption. (Gallup)
Letter to Constellation Software Shareholders by Mark Leonard, February 15, 2021. Since 1995, Constellation Software has acquired and managed vertical market software companies that specialize in providing solutions for specific industries. Although I have never studied Constellation in depth, I have occasionally read about Mark Leonard’s exceptional capital allocation skills. This two page letter to shareholders is a very good overview of capital allocation principles at Constellation, especially as it relates to retaining earnings versus paying dividends. And any letter that starts off with “One of our directors has been calling me irresponsible for years.” is worth reading. (Constellation Software)
The Uberization of Private Jets Might Be Here to Stay by Jon Sindreu, February 15, 2021. In retrospect, the growing popularity of private aviation seems like an obvious consequence of a pandemic. Avoiding large crowds adds to the normal allure of private aviation but only a tiny percentage of travelers can come anywhere close to affording a private plane or even a fractional share of a plane offered by companies like Berkshire Hathaway’s NetJets subsidiary. A true “uberization” of this market could bring down costs due to networks effects and increase pricing transparency opening up private aviation to more passengers. This article describes some of the recent trends in the industry. (WSJ)
What I Worked On by Paul Graham, February 2021. In this long essay, Paul Graham reflects on how he chose what to work on throughout his life. Although Graham is well known as cofounder of Y Combinator, his interests extend far beyond venture capital, ranging from computer programming to painting. This is a long read but I found it very interesting. I also recommend browsing his other essays including a very short one: Coronavirus and Credibility. As an aside, Graham’s simple website looks like it is a relic from the 1990s which may be a message that he wants the reader to focus on his words rather than superficial imagery. It reminds me of Warren Buffett’s design paradigm for berkshirehathaway.com.
Carlos Brito – Creating an Ownership Culture February 18, 2021. Patrick O’Shaughnessy interviews Carlos Brito, the CEO of Anheuser-Busch InBev. Brito discusses his early years growing up in Brazil, how he pursued a business education in the United States, and was mentored by Jorge Paulo Lemann. As CEO of Anheuser-Busch InBev, Brito now runs the largest brewer of beer and maintains a portfolio of hundreds of beer brands across the globe. He discussed his views regarding corporate culture and how he requires employees to demonstrate an ownership mindset before they are provided with an equity stake in the business. (Founder’s Field Guide)
Respect the Base Rate by Nick Maggiulli, February 16, 2021. “The base rate is simply the probability of some event occurring when you have no other information. In this case, the base rate of getting accepted [to Stanford] as regular applicant was 8%, while the base rate for getting accepted as an early applicant was 16%. Without any other information, you should assume that you will experience the base rate.” (Of Dollars and Data)
February Reading
A few weeks ago, I mentioned that it was difficult to put Gibbon’s The Decline and Fall of the Roman Empire into the proper historical context because he seemed to assume that his readers would have a working understanding of the Roman Republic. Perhaps that was true of Gibbon’s late 18th century readership but it was not true for me.
Two books have gone a long way toward gaining that historical background:
- Mary Beard’s SPQR: A History of Ancient Rome covers a thousand year period from the founding of Rome in 753 BCE to 212 AD, more than two centuries after the demise of the Republic. I found that this book provided an excellent survey of a long sweep of history.
- Tom Holland’s Rubicon: The Last Years of the Roman Republic covers a much shorter period of history, and one that I was particularly interested in. What caused the death of the Republic? Holland’s narrative goes into more depth and I particularly liked how he painted a portrait of the characters of many of the people who lived during the fateful years in the middle and late first century BCE. Julius Caesar, Pompey, Mark Antony, Cato, Cicero, and Cleopatra are all fascinating characters of the late Republic years and vividly described by Holland.
I would recommend both of these books for anyone who is unfamiliar with Roman history and is looking for more accessible contemporary narratives before approaching Gibbon.
I have also been working my way through John Steinbeck’s novels recently. The Grapes of Wrath tells the story of three generations of an Oklahoma family who lose their land during the dust bowl years of the Great Depression and are lured to California by the prospect of plentiful work, beautiful weather, and scenic landscapes. After a harrowing journey, the Joads found the beautiful and fertile landscape they expected but in the midst of a dystopian scene featuring a massive oversupply of labor and a power imbalance between destitute migrant workers and a few large landowners in cahoots with corrupt county sheriffs.
Photo of the Week
NASA’s Mars Perseverance rover successfully landed on the Red Planet yesterday after a 203 day journey covering 293 million miles. The rover is about the size of a car and will embark on a two year mission after preliminary testing is complete.
Amazing!
Copyright, Disclosures, and Privacy Information
Nothing in this newsletter constitutes investment advice and all content is subject to the copyright and disclaimer policy of The Rational Walk LLC.
Your privacy is taken very seriously. No email addresses or any other subscriber information is ever sold or provided to third parties. If you choose to unsubscribe at any time, you will no longer receive any further communications of any kind.
The Rational Walk is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.