Eat People: And Other Unapologetic Rules for Game-Changing Entrepreneurs by Andy Kessler 

 

WHO IS THIS BOOK FOR?

This book is for anyone who is interested in the business of technology innovation, and the responsibilities of entrepreneurs for a productive and advanced society.

This is the main idea: we should support ideas and technologies that eliminate jobs. New (and possibly more) jobs will be created with the implementation of the new technology and our standard of living will rise. 

Kessler has gotten criticism because some of his ideas are influenced by objectivism, but I think he is worth noting. He differs from the typical “cut-throat” businessman because his primary interest isn't in personal gain; it is in the betterment and evolution of our society (a higher standard of living and reducing unemployment).

Rule #7 “Eat People” was the most thought provoking chapter for me. You can read it here (scroll down under the rules). 

Forbes has the introduction here.  

 

Something from Nothing p.1

  • As costs go down, all of us get wealthier p. 2
  • Many successful CEOs started small, but saw something big on the horizon and created a process to constantly improve, constantly innovate, and constantly sell exactly what was needed and then identify the next big thing on the new horizon. For the most part, society didn’t do them any favors. p. 3
  • If all you want to do is take over some old-line company and milk it for all it’s worth, I can’t help you. You may get rich milking the rest of us, but society won’t get rich along with you. p. 6

 

Musée      p.7

  • Definition of economy: a system that increases the standard of living of its participants. Period. p. 11
  • The only way to truly succeed over time is to use your head, think our long-term trends, figure out where productivity exists (and therefore wealth is being created) in the economy, and invest your mind or your money alongside it. p. 12

 

Circus and Inspiration      p.13

  •  Message to our kids: get back to the basics. Develop and deploy the skills to hunt and gather for yourself and your tribe but with today’s technologies. p. 17
  • This is what we’ve come to, isn’t it? Claims of moral authority from someone who hasn’t contributed a single thing to society. p. 18
  •  We have a moral imperative to do well, to invent the future, to create wealth, to raise everyone’s standard of living. p. 18
  • Too many rules and regulations slow down change, stifle innovation, and maintain the status quo. p. 21
  • Alinsky does not promote a responsible society because people do not take accountability for their actions or spend too much time blaming others. Ex: the status quo is oppressive. Down with establishment. You’re living in poverty, so it must be someone else’s fault, most likely those big ugly corporations that are stealing us blind. p. 22
  • Alinsky’s change is about redistribution of wealth, not the creation of wealth. p. 22
  •  Ask Lenin: You can take over government, but you can’t create wealth. p. 22
  •  It’s really more about the Makes and Takes, isn’t it? It’s not zero sum. Someone’s Making wealth, while others are Taking it. p. 23
  •  A Free Radical is someone who not only creates wealth for themselves, but at the very same time, improves the world, makes life better, and increases everyone else’s standard of living. p. 24
  • Lots of house cleaners lost their jobs to vacuum cleaners. p. 24
  • A Free Radical is someone who gets wealthy inventing the future by helping others live longer and better. p. 25
  •  You should be a scalable, wasteful, horizontal, edge-hugging, Tom Sawyer-ish, productive, human-adapting, people-eating, market-driven, exceptional, market-entrepreneuring, zero-marginal, virtual-pipe-controlling return maximizer. p. 28  

 

Rule #1 If It doesn't Scale, It Will Get Stale       p. 29

  • As costs go down, demand rises. p.29
  • In 1972, an iPhone at a buck a bit would cost $128 Billion. p. 30
  • A free radical should ask – can it be used by a million people? p. 31
  • Competition works. But that’s old news. p. 33
  • Every time you lowered the cost per bit, some new application opened up to take advantage of the cheaper functionality. p. 35
  • Ford said, “If I’d asked my customers what they wanted, they’d have said a faster horse.” p. 42
  • On the other hand, some things get cheaper but don’t scale. Drugs for irritable bowel syndrome don’t scale. Cigarettes don’t scale. Twinkies don’t scale. Coffee doesn't scale. I’m not sure energy scales anymore. p. 44

 

Rule #2 Waste What's Abundant to Make Up for What's Scarce   p. 47

  • Waste what is abundant to make up for what is scarce p. 50
  • The more wastefully refine energy, the more useful it comes and the more we use it, and the cheaper the ultimate functionality it delivers. p. 51
  • Apple iPhones are getting better and better while the costs to make them keep dropping faster than the prices. When that stops, the game stops and it’s time to find another one. p. 55
  • These guys made the pie bigger. It’s those successful entrepreneurs who created wealth for everyone else in the room. Not the lawyers, not the doctors, not the finance guys, but the creators. p. 57

 

Rule #3 When in Doubt, Get Horizontal            p. 59

  •  The do-it-all corporations ruled. But when technology proliferated, that stopped working. p. 60
  • The digital world is made up of discrete layers of highly valued scalable intellectual property, not the complete finished product that generates returns on capital for a vertically integrated organization. p. 62
  • Price and pace. p. 63
  • Some signs that companies are leaning vertical:
  • They insist on designing everything themselves
  • They build a huge sales force
  • They compete with everyone in the industry, rather than partner
  • They build their own stores (like Apple)
  • They piss and moan when you accuse them of being vertical           p. 65

 

Rule #4 Intelligence Moves Out to the Edge of the Network          p. 73

  • There is no voice anymore. Or music. Or TV shows or magazines or movies; there is just data. p. 75
  • Having a fast cloud is useless if you keep it closed. p. 78
  • Bill Gates said: “We don’t make all the money. We only make money because we are a platform for others to use our software to make money themselves.” p. 78
  • Any time you lower costs, good things happen. p. 83

 

Rule #5 Wealth Comes from Productivity; Everything Else Is Gravy       p. 85

  •  With power comes wealth, or at least the power to redistribute wealth. p. 86
  •  According to one MIT study, a modern worker needs to work just eleven hours today to produce as much a worker putting in a forty-hour workweek in 1950. p. 87
  • A gold standard implies a static world. No thanks.
  • The only real wealth is wealth that is created through productivity. p. 95
  • Productivity vs. efficiency. p. 95
  • Sustainability and efficiency are not for Free Radicals. When something’s price goes up, it’s no longer scales. p. 100
  • If you don’t have the economic system to create productivity, you end up stealing it from your neighbors. p. 101
  • Free radicals need a continuum of productivity gains to keep creating new wealth. p. 104

 

Rule #6 Adapt to Humans; Don't Make Them Adapt to You           p. 105

  • True adaptive technologies are things that adapt to how you think. p. 108

 

Rule #7 Be Soylent-Eat People p. 111

  •  The best way to leverage Abundance and Scale and to create Productivity is to get rid of people. p. 111
  • Adam Smith wrote in The Wealth of Nations, “all useful machines and instruments of trade” were designed to “facilitate and abridge labour.” Reduce. Condense. Curtail. Swim with the fishes. p. 112
  • If you look at the world through a productivity filter, a lot more things start making sense, especially about who is pulling their load and who is along for the ride. p. 113
  • There are two types of people in the world – Creators and Servers. p. 114
  • Creators are at the top of the food chain – those who create productivity. p. 114
  •  If I pay $5 for a two-by-four at my local lumber yard verses $3 at Home Depot, I am not only wasting $2 (I might as well burn two George Washingtons), I am encouraging the local lumber yard to keep doing what they are doing, overcharging and then not reinvesting their profits into a more productive system that would make their price competitive. In effect, I’m doing a disservice to society by overpaying. p.115
  • Everyone who is not a Creator is a Server. Creators can’t do it all by themselves. p. 116
  • Sloppers are one mutation of servers. They are the middlemen or brokers, marking up the price for slopping stuff around – milking someone else’s inventions and adding costs. p.117-118
  • Technology eats people. Someone inevitably complains, but progress cannot be fought for long. Creating wealth meaning finding those jobs to eat. p. 119
  •  Super sloppers are those who use marketing and branding to create value out of nothing. p. 121
  •  Sponges are ones who employ several little tricks to increase their pay without their really adding value, like real estate brokers or lawyers who would be just ordinary Servers but instead are highly paid, sponging off the rest of us. p. 123-124
  •  Slackers don’t do anything, so you can’t get rid of them. p. 126
  • Thieves are political entrepreneurs who rob society blind. p. 126 They are destroying wealth by making all of us overpay for their services. p. 127
  •  Banks, the Federal Reserve, and ESPN are also thieves. p. 128
  • A Dartmouth College study suggests that $700 million of the $2 Trillion that the United States spends on health care every year is wasted on unnecessary or unwanted procedures.
  • Thieves usually hide behind some piece of legislation. p. 130
  •  People in finance are slimers. p. 131
  •  I kind of think of Slimers as lubrication on the gears of the economy, which would overheat and turn brittle without capital. p. 132
  • Microsoft Word replaced secretaries. Oracle database software replaced a lot of in-house accountants. Google replaced millions of librarians we didn't know we needed. p. 134

 

Rule #8 Markets Makes Better Decisions Than Managers p. 139

  •  Free radicals should embrace all markets. Not just stock markets, but all market mechanisms, because the markets will do the work for you, pointing the path toward the best places to allocate capital. Markets make better decisions than people. p. 143
  • Trading in the open market is all about profit expectations, not absolutes. p. 145
  • Markets don’t create wealth. They allow for price discovery and productivity to be priced into the value of companies. p. 150

 

Rule #9 Embrace Exceptionalism          p. 155

  •  How can we be free if we are all forced to be equal? p. 156
  • Equal opportunity is not some one-size-fits-all égalité. p. 157
  • Morris West comparing how novelists are like programmers. p. 161
  • Big thought, big ideas are important. p. 162
  • Andrew Ferguson article Nudge Nudge, Wink Wink p. 163
  • Q: Why do you have to go to college? A: Corporations have no legal way of testing how smart you are, so they rely on colleges and universities to do their screening for them. p. 167
  •  When you are at college (because you are forced to go as a screening process for businesses) be, or at least find, exceptional people who can both see and lead the way to great things. p. 169

 

Rule #10 Be a Market Entrepreneur and Attack Political Entrepreneurs            p. 171

  •  Over years, politics has the advantage. Over decades, competition triumphs. Cost cutting and innovation can’t be changed. Choose wisely. p. 174
  • Thomas DiLorenzo’s book How Capitalism Saved America p. 175
  • Vanderbilt p. 175
  • Free radicals should never rest on their laurels. Process is a continuum. What seems like it is risk-free today carries the greatest risk tomorrow. p. 178
  • So often, publicly managed and funded projects can cost two or three times as much to build, and take two or three times as long, as similar projects done by the private sector. p. 180
  •  Political entrepreneurs are robbing us blind. Cops, firefighters, and teachers have a faulty pension and benefits system. p.181

 

Rule #11 Use Zero Marginal Cost to Create a Flood (or Someone Else Will)     p. 185

  •  Don’t ask, just do it. p. 186
  •  If it can be had for free, it will be had for free or close to free. A Free Radical shouldn't get in the way of this. Instead, use it to your advantage. p. 187
  •  If someone can copy your stuff, they will, so you might as well be the one to do the copying. p. 189
  • As a Free Radical, you can’t fight zero marginal cost. But you can sure as heck use it to your advantage. p. 191

 

Rule #12 Create Your Own Scarcity with a Virtual Pipe       p. 193

  • Media is about controlling the pipe. p. 195
  • Media includes newspapers and magazines and even billboards, the root of practically every media empire is control of some pipe. Spectrum, bandwidth, cable lines, phone lines, sewers – any closed system. p. 195
  • Sitcoms and sports (entertainment) along with news and weather (perishable information) draws in viewers, in whose face you jam branded advertising until they can’t see straight, so they are (indirectly) led to go forth and buy a lot of Bud Light, Gillette Fusion razors, Avodart, and Mazda zoom-zooms. p. p. 197
  •  Control the pipe and charge whatever you like. p. 198
  •  New technology comes along and renders obsolete old ways of doing things. p. 211

 

Bonus Rule: Money Sloshes to the Highest Returns          p. 215

  • Ask yourself, is it a Feature, an Application, or a Business (FAB)? p. 217
  • Profit is derived from the Latin profectus: advantage, progress, increase, growth. Or proficere: to go forward, be useful. p. 218

 

How Many?      p. 223

  • Things change fast and today’s unknowns are tomorrow’s winners. p. 224
  • There are a lot of ways to make money, ever a lot of money, don’t let my Rules get in the way. p. 224

 

Hackers vs. Slackers        p. 227

  • Take more from the Haves but to create more Haves, whatever it takes. p. 228

Epilogue       p. 233

Index p. 243