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Business adventures
This business classic written by longtime New Yorker contributor John Brooks is an insightful and engaging look into corporate and financial life in America.
What do the $350 million Ford Motor Company disaster known as the Edsel, the fast and incredible rise of Xerox, and the unbelievable scandals at General Electric and Texas Gulf Sulphur have in common? Each is an example of how an iconic company was defined by a particular moment of fame or notoriety.
These notable and fascinating accounts are as relevant today to understanding the intricacies of corporate life as they were when the events happened.
Stories about Wall Street are infused with drama and adventure and reveal the machinations and volatile nature of the world of finance. John Brooks’s insightful reportage is so full of personality and critical detail that whether he is looking at the astounding market crash of 1962, the collapse of a well-known brokerage firm, or the bold attempt by American bankers to save the British pound, one gets the sense that history really does repeat itself.
What do the $350 million Ford Motor Company disaster known as the Edsel, the fast and incredible rise of Xerox, and the unbelievable scandals at General Electric and Texas Gulf Sulphur have in common? Each is an example of how an iconic company was defined by a particular moment of fame or notoriety.
These notable and fascinating accounts are as relevant today to understanding the intricacies of corporate life as they were when the events happened.
Stories about Wall Street are infused with drama and adventure and reveal the machinations and volatile nature of the world of finance. John Brooks’s insightful reportage is so full of personality and critical detail that whether he is looking at the astounding market crash of 1962, the collapse of a well-known brokerage firm, or the bold attempt by American bankers to save the British pound, one gets the sense that history really does repeat itself.
408 pages, Hardcover
First published August 14, 1969
About the author
John Brooks
227 books220 followersJohn Brooks (1920–1993) was an award-winning writer best known for his contributions to the New Yorker as a financial journalist. He was also the author of ten nonfiction books on business and finance, a number of which were critically acclaimed works examining Wall Street and the corporate world. His books Once inGolconda, The Go-Go Years, and Business Adventures have endured as classics. Although he is remembered primarily for his writings on financial topics, Brooks published three novels and wrote book reviews for Harper’s Magazine and the New York Times Book Review.
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July 19, 2014
I had heard, as I think everyone else has, that Business Adventures was a favorite book of Bill Gates and Warren Buffet. I read the ebook, and I understand a print version will be forthcoming in September.
This book makes me feel as though I'm sitting at the knee of my grandfather, listening to wise recollections.
A writer of articles in the 1950's and 1960, many for the New Yorker, the author intelligently and thoughtfully steps through 12 events, one per chapter.
At first I thought perhaps I was particularly dense and wasn't getting the message. What held these stories together? Eventually, I realized that the author is not driving home a point, selling anything, or giving advice. His observations leave room for the reader to consider events, their connections, their parallels to today, the importance of character, and the question of morality in business. It was refreshing not to be told what to think.
I enjoyed the stories of Ford's Edsel, Piggly Wiggly, Xerox, Goodrich vs Latex.
The chapter on the federal income tax is particularly relevant, given the wide-spread debate about taxes and modern conversations about the 1%.
John Brooks' perspective is firmly rooted in the past, when the book was written, and provides readers opportunity for a sense of omniscience since we can consider ramifications the author himself could not be aware of, at that time.
Details may change. People do not.
This book makes me feel as though I'm sitting at the knee of my grandfather, listening to wise recollections.
A writer of articles in the 1950's and 1960, many for the New Yorker, the author intelligently and thoughtfully steps through 12 events, one per chapter.
At first I thought perhaps I was particularly dense and wasn't getting the message. What held these stories together? Eventually, I realized that the author is not driving home a point, selling anything, or giving advice. His observations leave room for the reader to consider events, their connections, their parallels to today, the importance of character, and the question of morality in business. It was refreshing not to be told what to think.
I enjoyed the stories of Ford's Edsel, Piggly Wiggly, Xerox, Goodrich vs Latex.
The chapter on the federal income tax is particularly relevant, given the wide-spread debate about taxes and modern conversations about the 1%.
John Brooks' perspective is firmly rooted in the past, when the book was written, and provides readers opportunity for a sense of omniscience since we can consider ramifications the author himself could not be aware of, at that time.
Details may change. People do not.
July 29, 2014
I had such a great time reading this book. Like I have said before, I am not an educated man. I only have a GED. But that did not stop me from understanding and enjoying this book. I learned so much and the authors style kept my attention locked. i hope you enjoy.
November 29, 2020
12 vignettes on very different business situations.
Wall Street woes, Ford Emodel issues, intellectual property litigations, FOREX, shareholding times, market volatility, corporate communications vs labirintine relationships... etc. Lots of indusctries and cases to observe: GE, Ford and Xerox are next to Piggly Wiggly and Texas Gulf...
Everything's a bit dated, of course. Still, the salient points of this caliber are never lost since nothing's new under the moon.
Wall Street woes, Ford Emodel issues, intellectual property litigations, FOREX, shareholding times, market volatility, corporate communications vs labirintine relationships... etc. Lots of indusctries and cases to observe: GE, Ford and Xerox are next to Piggly Wiggly and Texas Gulf...
Everything's a bit dated, of course. Still, the salient points of this caliber are never lost since nothing's new under the moon.
April 6, 2019
Recommended by Bill Gates.
3.5 stars. The author has a talent for making complex financial concepts accessible. The essays on the Edsel, Xerox, and the non-compete were especially good.
Annotations added 4.6.19:
"The [Internal Revenue] Code, a document longer than 'War and Peace,' is phrased--inevitably, perhaps--in the sort of jargon that stuns the mind and disheartens the spirit...." (p. 112)
"I find that companies are inclined to be at their most interesting when they are undergoing a little misfortune...." (p.179)
"After apologizing for the fact that he had only a few minutes to spend with me, he said, rapidly, that in his opinion the success of Xerox was proof that the old ideals of free enterprise still held true, and that the qualities that had made for the company's success were idealism, tenacity, the courage to take risks, and enthusiasm. With that, he waved goodbye and was off." (pp. 196-197, on meeting Xerox in-house counsel Linowitz)
3.5 stars. The author has a talent for making complex financial concepts accessible. The essays on the Edsel, Xerox, and the non-compete were especially good.
Annotations added 4.6.19:
"The [Internal Revenue] Code, a document longer than 'War and Peace,' is phrased--inevitably, perhaps--in the sort of jargon that stuns the mind and disheartens the spirit...." (p. 112)
"I find that companies are inclined to be at their most interesting when they are undergoing a little misfortune...." (p.179)
"After apologizing for the fact that he had only a few minutes to spend with me, he said, rapidly, that in his opinion the success of Xerox was proof that the old ideals of free enterprise still held true, and that the qualities that had made for the company's success were idealism, tenacity, the courage to take risks, and enthusiasm. With that, he waved goodbye and was off." (pp. 196-197, on meeting Xerox in-house counsel Linowitz)
November 23, 2014
Dated, slow, and failed to carry a common theme are among the criticisms of this republished book, which has been touted by wunderkind, Bill Gates. Sadly, the criticisms are all quite true. Most of these "classic tales" date from the late 50s and 60s, ranging from the colossal failure of Ford's Edsel model, to the vagaries of the federal taxation system, to the syndicate of nations that avoided a collapse of the British pound, to a case of cornering the market (Piggly Wiggly), to a case of trade secrets vs. free employment. The only story that I found interesting was the career and philosophy of Tennessee Valley Authority chairman, David Lilienthal.
February 4, 2018
Twelve Wall Street stories from the 60s. These type of lessons are valuable to understand, but unfortunately not all were readable. I was still able to get the summary of each except one. I have no idea what nine was about.
One
Market fluctuations is about a three day dip in the market in 1962, of which was caused by the delay in information. Not exactly applicable today.
Two
Ford’s introduction of the Edsel was a bust. This appears to be due to over hype and marketing at the wrong time, and going all in on it. But companies can make mistakes and bounce back. This story was a bit long.
Three
Federal Income Tax developed out of the need to supply war, but was highly unpopular. It has since been modified to the point of complexity that only favors the rich. Trump now claims simplicity, but favors the rich and screws the poor. It’s only getting worse. Loopholes can be exploited by the rich.
Four
A story about Texas Gulf drilling for natural resources in Canada, and the information didn’t make it to the media quickly. And the belief of how big the find was didn’t resonate with what the market knew from the first report. Also that only the employees knew the real story and was able to buy up stock. This lead to an SEC court case of insider trading. Not an issue today with the internet available and information updates are instant. This may be about practicing emotional intelligence by not rushing a public statement until all facts are set. Insider trading at the level of thousands of shares is a red flag when purchased directly after a major company strategic event.
Five
Xerox unknowingly put themselves right in the behind enabling copy-write law infractions. Books were being copied and the situation became political very quick. Thus, the company became involved and more political. They turned out to be a company that also donates to their local university.
Six
A company is discovered to have no assets and is illiquid. They report to Wall Street and JFK is assassinated that morning. The market is stopped. They basically spend the time to regroup and figure out what to do. They decide to borrow money and repay the customers that lost money. This would never happen again, not when it’s so easy to go bankrupt nowadays. And that Wall Street is the devils lair.
Seven
This appears to be a purposeful lack of communication about price fixing and violating anti trust laws at the executive level of GE. Conniving stories spinner as poor communication. Typical.
Eight
Cornering the market is when bears sell off and try to get the price to drop so they can buy low. Bulls will then corner the market by buying up all those floating shares and selling at whatever price they want. They flood the news with propaganda that the stock is bad. This was about Piggly Wiggly and it’s founder.
Nine
....
Ten
Stockholder meeting in AT&T with everyone arguing with one another in 1966. Then another in Atlanta for GE. Small shareholders want more say. Then another about Pfizer’s meeting with open arms and communication. No arguments between stockholders and managers. Evident respect. Chief executive personalities are evident in a public forum of this kind.
Eleven
A man is approached by another competitor for a better job. Goodrich, his employer, won’t let him leave and threaten to sue him. This one is about the protection of trade secrets. Though one cannot be held guilty before a crime is committed. But could be investigated if found to have used trade secrets.
Twelve
The US Federal Reserve holds funds for Great Britain, and if they crash or lose money, the Federal Reserve Bank loses. Thus began the defense of the Pound Sterling. Mitigation solutions like devaluation of the currency is explored. Cheaper to export, but making standard of living at home more expensive and cannot buy goods or import. The worry was it would lead to a devaluation of the dollar as well leading to world depression. Great Britain was not good at managing their funds and did not operate to grow, which can leave open for risk and loss in drastic times. Preventative measures weee taken and a crash was vehemently fought. Sterling eventually failed but they bankers that fought it felt a structure was established that made the crash less impactful.
I would skip this book. Not very enjoyable to read. Only a few stories were interesting. Recommended by Warren Buffett and Bill Gates but I bet they don’t even remember that.
One
Market fluctuations is about a three day dip in the market in 1962, of which was caused by the delay in information. Not exactly applicable today.
Two
Ford’s introduction of the Edsel was a bust. This appears to be due to over hype and marketing at the wrong time, and going all in on it. But companies can make mistakes and bounce back. This story was a bit long.
Three
Federal Income Tax developed out of the need to supply war, but was highly unpopular. It has since been modified to the point of complexity that only favors the rich. Trump now claims simplicity, but favors the rich and screws the poor. It’s only getting worse. Loopholes can be exploited by the rich.
Four
A story about Texas Gulf drilling for natural resources in Canada, and the information didn’t make it to the media quickly. And the belief of how big the find was didn’t resonate with what the market knew from the first report. Also that only the employees knew the real story and was able to buy up stock. This lead to an SEC court case of insider trading. Not an issue today with the internet available and information updates are instant. This may be about practicing emotional intelligence by not rushing a public statement until all facts are set. Insider trading at the level of thousands of shares is a red flag when purchased directly after a major company strategic event.
Five
Xerox unknowingly put themselves right in the behind enabling copy-write law infractions. Books were being copied and the situation became political very quick. Thus, the company became involved and more political. They turned out to be a company that also donates to their local university.
Six
A company is discovered to have no assets and is illiquid. They report to Wall Street and JFK is assassinated that morning. The market is stopped. They basically spend the time to regroup and figure out what to do. They decide to borrow money and repay the customers that lost money. This would never happen again, not when it’s so easy to go bankrupt nowadays. And that Wall Street is the devils lair.
Seven
This appears to be a purposeful lack of communication about price fixing and violating anti trust laws at the executive level of GE. Conniving stories spinner as poor communication. Typical.
Eight
Cornering the market is when bears sell off and try to get the price to drop so they can buy low. Bulls will then corner the market by buying up all those floating shares and selling at whatever price they want. They flood the news with propaganda that the stock is bad. This was about Piggly Wiggly and it’s founder.
Nine
....
Ten
Stockholder meeting in AT&T with everyone arguing with one another in 1966. Then another in Atlanta for GE. Small shareholders want more say. Then another about Pfizer’s meeting with open arms and communication. No arguments between stockholders and managers. Evident respect. Chief executive personalities are evident in a public forum of this kind.
Eleven
A man is approached by another competitor for a better job. Goodrich, his employer, won’t let him leave and threaten to sue him. This one is about the protection of trade secrets. Though one cannot be held guilty before a crime is committed. But could be investigated if found to have used trade secrets.
Twelve
The US Federal Reserve holds funds for Great Britain, and if they crash or lose money, the Federal Reserve Bank loses. Thus began the defense of the Pound Sterling. Mitigation solutions like devaluation of the currency is explored. Cheaper to export, but making standard of living at home more expensive and cannot buy goods or import. The worry was it would lead to a devaluation of the dollar as well leading to world depression. Great Britain was not good at managing their funds and did not operate to grow, which can leave open for risk and loss in drastic times. Preventative measures weee taken and a crash was vehemently fought. Sterling eventually failed but they bankers that fought it felt a structure was established that made the crash less impactful.
I would skip this book. Not very enjoyable to read. Only a few stories were interesting. Recommended by Warren Buffett and Bill Gates but I bet they don’t even remember that.
December 25, 2014
Business Adventures is well written, as John Brooks is able to tell these stories entertainingly by emphasising funny dialogues, and his generally great way with words. Brooks takes a human interest angle and describes the character of key people not just the facts, and thus adds a richness to each ‘adventure’. Essentially this similar to long form journalism today.
However, the book requires the reader to read between the lines and draw its own conclusions, as Brooks does not deliver read-made solutions or answers but merely describes the stories and challenges.
Some of the stories are more useful than others - my view on all 12:
1. Story of the mini stock market crash on 28 May 1962, shows how it is all about mood and trend in short run, rather than underlying economics of the market / firms.
2. The story of the Ford Edsel failure cannot easily be allocated to a single reason, but while I still think the bad name (not taking into account research) is an issue, it ultimately boils down tone thing: Product focus matters: The Edsel just wast a good car to drive, especially the initial batches that were reviewed by consumer magazines.
3. History of the US Income Tax. Interesting to learn its history (e.g. initially only raised in war times, and required 16th amendment as not apportioned to states). However, less insightful than other stories. It does however have some good evidence of progressiveness of the tax apart from richest as they can afford better lawyers and mainly earn money in stock (especially options) and can utilise charity deductions.
4. Insider trading case of Texas Gulf discovering a rich ore mine at Kidd 55 in Canada makes for interesting story. The company understated reports even though officers were buying shares internally, posing the crucial question: When exactly does something become official?
In this case, there was also an interesting angle whether the press conference or the information appearing on Dow Jones broad tape would make it publicly known. While the nature elf this has changed due to the advances in telecommunication, this remains an important issue.
Of course, the U.S. court of appeals for second circuit reversed judgment clarifying most stock buying in the case was illegal since knowledges existed since first drill hole.
5. Story of how Xerox invented photocopying as we know it today is mainly one of believing in the product. Xerox spent twice their revenue ($75m) on it until it worked, executives took payment in stock and put mortgages into it (and even got support from university of Rochester).
But it also offers insight into other areas:
Describes the impact of copying onto copyright and how some thought books may disappear; apparently some things never change…
Furthermore, there are lessons to be learned about the executives attitude to not taking stock movements too seriously, and the challenge of keeping company culture during rapid growth (e.g. becoming more impersonal when lot of new employees join.
Overall, one of the best ones in the book.
6. Brooks outlines how Ira Haupt & Co are likely going to go bankrupt because of forged collateral by one of its clients, and the stock exchange works with banks to bail them out. Not hugely insightful, but has interesting parallels to the situation of Long Term Capital Management roughly 40 years later, down to the bank negotiations and people taking hold of floors in exchange buildings (even though the reasons each firm finds itself in precarious situation are very different indeed).
7. Highly interesting insight into the challenges of corporate communication, told through the case of price fixing in electrical equipment, with a focus on GE. Shows that stating price fixing isn't allowed in company handbook isn't enough if there is culture of it (such as executives using winks to show they’re not serious about it), and consistency of message is also key: Even if staff is admonished by senior person (here the CEO Paxton) not to do price fix, others may communicate something different, and ultimately a senior person may simply not be told (like Paxton wasn’t - apparently).
Additionally, if you don't believe message you’re communicating, that will come across.
8. Clarence Saunders, founder of Piggly Wiggly stores, tried to corner short sellers but failed since exchange halted trading and extended call for stock by five days. Not particularly insightful, though it brings home the point to 'Don't try to beat Wall Street at their own game’.
The story does however contain a few interesting nuggets, such as Saunders founding the first supermarkets with Piggly Wiggly, as they were self service; and his attempts to further streamline the service when founding chains Keedoozle and Foodelectric. In the latter, customers used a key to tabulate what they wanted from showroom, and then collect it - which shows that Saunders was years ahead, as this is similar to companies such as Argos today.
9. A very narrow story about an individual, and thus rather limited: Lilienthal, previously a high ranking government employee (in charge of Tennessee Valley Authority and then chairman of Atomic Energy Commission - AEC), talking about how fulfilling running a Company is, but also the risks to getting lost in it; as well as the balance between being involved in detail but keeping far enough away to think strategically also.
10. Brooks describes visiting various stockholder meetings - entertaining but limited learning: Maybe that professional stockholders like to profile themselves, and CEOs can sue that in annual meetings, as smaller stockholders tend to be more likely to support management.
11. Brooks illustrates the issue of trade secrets using the case of Wohlgemut - an engineer working sued upon switching jobs from Goodrich to Latex Corporation, as both were making space suits and Goodrich thought they would lose trade secrets. Court ultimately decided he can switch jobs, but injunction against revealing trade secrets.
12. Great story of Black Friday, but a poor economic take on fixed currency, especially the Pound Sterling. The pound was fixed to dollar as a result of Bretton Woods agreement of 1944, while the dollar was fixed to gold.
Pressure from speculation and companies hedging against devaluation finally results in Black Friday (17th Nov 1967) and devaluation of Pound from 2.80 to 2.40 on sat.
Unfortunately, since a lot of factors, such as fixed currency and a Bank of England not independent, are a factor of their times, it has limited insight for current policies apart form the power of free market.
However, the book requires the reader to read between the lines and draw its own conclusions, as Brooks does not deliver read-made solutions or answers but merely describes the stories and challenges.
Some of the stories are more useful than others - my view on all 12:
1. Story of the mini stock market crash on 28 May 1962, shows how it is all about mood and trend in short run, rather than underlying economics of the market / firms.
2. The story of the Ford Edsel failure cannot easily be allocated to a single reason, but while I still think the bad name (not taking into account research) is an issue, it ultimately boils down tone thing: Product focus matters: The Edsel just wast a good car to drive, especially the initial batches that were reviewed by consumer magazines.
3. History of the US Income Tax. Interesting to learn its history (e.g. initially only raised in war times, and required 16th amendment as not apportioned to states). However, less insightful than other stories. It does however have some good evidence of progressiveness of the tax apart from richest as they can afford better lawyers and mainly earn money in stock (especially options) and can utilise charity deductions.
4. Insider trading case of Texas Gulf discovering a rich ore mine at Kidd 55 in Canada makes for interesting story. The company understated reports even though officers were buying shares internally, posing the crucial question: When exactly does something become official?
In this case, there was also an interesting angle whether the press conference or the information appearing on Dow Jones broad tape would make it publicly known. While the nature elf this has changed due to the advances in telecommunication, this remains an important issue.
Of course, the U.S. court of appeals for second circuit reversed judgment clarifying most stock buying in the case was illegal since knowledges existed since first drill hole.
5. Story of how Xerox invented photocopying as we know it today is mainly one of believing in the product. Xerox spent twice their revenue ($75m) on it until it worked, executives took payment in stock and put mortgages into it (and even got support from university of Rochester).
But it also offers insight into other areas:
Describes the impact of copying onto copyright and how some thought books may disappear; apparently some things never change…
Furthermore, there are lessons to be learned about the executives attitude to not taking stock movements too seriously, and the challenge of keeping company culture during rapid growth (e.g. becoming more impersonal when lot of new employees join.
Overall, one of the best ones in the book.
6. Brooks outlines how Ira Haupt & Co are likely going to go bankrupt because of forged collateral by one of its clients, and the stock exchange works with banks to bail them out. Not hugely insightful, but has interesting parallels to the situation of Long Term Capital Management roughly 40 years later, down to the bank negotiations and people taking hold of floors in exchange buildings (even though the reasons each firm finds itself in precarious situation are very different indeed).
7. Highly interesting insight into the challenges of corporate communication, told through the case of price fixing in electrical equipment, with a focus on GE. Shows that stating price fixing isn't allowed in company handbook isn't enough if there is culture of it (such as executives using winks to show they’re not serious about it), and consistency of message is also key: Even if staff is admonished by senior person (here the CEO Paxton) not to do price fix, others may communicate something different, and ultimately a senior person may simply not be told (like Paxton wasn’t - apparently).
Additionally, if you don't believe message you’re communicating, that will come across.
8. Clarence Saunders, founder of Piggly Wiggly stores, tried to corner short sellers but failed since exchange halted trading and extended call for stock by five days. Not particularly insightful, though it brings home the point to 'Don't try to beat Wall Street at their own game’.
The story does however contain a few interesting nuggets, such as Saunders founding the first supermarkets with Piggly Wiggly, as they were self service; and his attempts to further streamline the service when founding chains Keedoozle and Foodelectric. In the latter, customers used a key to tabulate what they wanted from showroom, and then collect it - which shows that Saunders was years ahead, as this is similar to companies such as Argos today.
9. A very narrow story about an individual, and thus rather limited: Lilienthal, previously a high ranking government employee (in charge of Tennessee Valley Authority and then chairman of Atomic Energy Commission - AEC), talking about how fulfilling running a Company is, but also the risks to getting lost in it; as well as the balance between being involved in detail but keeping far enough away to think strategically also.
10. Brooks describes visiting various stockholder meetings - entertaining but limited learning: Maybe that professional stockholders like to profile themselves, and CEOs can sue that in annual meetings, as smaller stockholders tend to be more likely to support management.
11. Brooks illustrates the issue of trade secrets using the case of Wohlgemut - an engineer working sued upon switching jobs from Goodrich to Latex Corporation, as both were making space suits and Goodrich thought they would lose trade secrets. Court ultimately decided he can switch jobs, but injunction against revealing trade secrets.
12. Great story of Black Friday, but a poor economic take on fixed currency, especially the Pound Sterling. The pound was fixed to dollar as a result of Bretton Woods agreement of 1944, while the dollar was fixed to gold.
Pressure from speculation and companies hedging against devaluation finally results in Black Friday (17th Nov 1967) and devaluation of Pound from 2.80 to 2.40 on sat.
Unfortunately, since a lot of factors, such as fixed currency and a Bank of England not independent, are a factor of their times, it has limited insight for current policies apart form the power of free market.
August 12, 2014
I give this one a middling review not because it was middling, but it is a 40 year old anthology of business stories and some of them are boring and dated...ie. tax changes of the early 60s, a profile of a forgotten New Deal mandarin and an inconclusive analysis of the Edsel flop. The other stories are really good, I understand why Gates and Buffet cite this book as a favorite. The opening chapter on the mini-crash in '62 and the tech/messaging/quote issues they had reads almost like a tale from today minus their Fred Flintstone technology--ooh a computer that can read the NYC phone book in 7 minutes. The mini-panic caused by a fraudulent vegetable oil trade that killed a couple firms and forced Wall Street to pool its $$ to bailout innocent acct holders reads like a premonition of our Age of Bailouts. I also liked the chapter on insider trading in which SEC ruled that insiders trading on info they put out 1 1/2 hours before hand had not allowed enuff time for info to be disseminated, which is comical compared to the instant standard used now.
In all a breezy read once you skim the more dated chapters.
In all a breezy read once you skim the more dated chapters.
July 28, 2020
This book is not your modern "business" book. It's not a book where a trivial idea is stretched to 500 pages, filled with carefully cherry-picked studies on how well-known brands are successful because of your great idea. There is none of it.
It tells 12 stories about the business. They are very well written, and there is plenty to learn from them. I wish I read it ten years ago. It's also a favorite business book of Warren Buffet and Bill Gates.
It tells 12 stories about the business. They are very well written, and there is plenty to learn from them. I wish I read it ten years ago. It's also a favorite business book of Warren Buffet and Bill Gates.
January 1, 2015
Semi-entertaining read. Gates & Buffett have successfully pushed this book into "massively overhyped" territory however. Some of the chapters are rather boring, despite Brooks' engaging prose, which is often tongue-in-cheek. Best chapters:
-Texas Gulf Sulphur chapter... this was interesting, learned a lot about the SEC and was fun to read about how the Kidd Mine guys thought they were being clever enough to get away with what was obviously insider trading. Good work from the SEC on this one.
-Xerox ... interesting to see the rise of this important company, and how it was one of the first to adopt the notion of "corporate social responsibility" ... I have a new respect for Xerox now.
-"Non-communication at GE" ... definitely the funniest chapter of the book. The stuff about communication via winking is just gold.
-"One free bite" ... most entertaining chapter in the book. Very interesting stuff about the development of trade secrets law in here. Raises some interesting moral questions too - loyalty to a company vs. free will to make career moves. Was Wohlgemuth in the right or wrong here? I think compelling arguments can be made on both sides.
That said, the "Making the customers whole", Income tax and Lilienthal chapters were just boring. "Piggly Wiggly" chapter was mediocre, and felt the opening/closing chapters on the '62 crash and '67 sterling devaluation were informative but far from memorable. The famous Edsel chapter was just kinda "meh" to me... maybe it would mean more to people who actually care about cars, which I don't. Nevertheless, it's hard NOT to learn some valuable things about business from reading this book, although note that it is very American-centric.
-Texas Gulf Sulphur chapter... this was interesting, learned a lot about the SEC and was fun to read about how the Kidd Mine guys thought they were being clever enough to get away with what was obviously insider trading. Good work from the SEC on this one.
-Xerox ... interesting to see the rise of this important company, and how it was one of the first to adopt the notion of "corporate social responsibility" ... I have a new respect for Xerox now.
-"Non-communication at GE" ... definitely the funniest chapter of the book. The stuff about communication via winking is just gold.
-"One free bite" ... most entertaining chapter in the book. Very interesting stuff about the development of trade secrets law in here. Raises some interesting moral questions too - loyalty to a company vs. free will to make career moves. Was Wohlgemuth in the right or wrong here? I think compelling arguments can be made on both sides.
That said, the "Making the customers whole", Income tax and Lilienthal chapters were just boring. "Piggly Wiggly" chapter was mediocre, and felt the opening/closing chapters on the '62 crash and '67 sterling devaluation were informative but far from memorable. The famous Edsel chapter was just kinda "meh" to me... maybe it would mean more to people who actually care about cars, which I don't. Nevertheless, it's hard NOT to learn some valuable things about business from reading this book, although note that it is very American-centric.
May 25, 2015
I really enjoyed this book! The author has a real gift for making the financial world extremely interesting. Not since Jeffry Archer and Kane and Abel have I read an account of financial dealings that was so exciting! I particularly enjoyed the struggle to save the sterling, the corner, the life of david lilienthal, and other pieces.
Some pieces were kind of boring though. Sadly, the author does not have the gift of brevity, and tends to ramble on and on.
Highly recommend for anyone interested in business!
Some pieces were kind of boring though. Sadly, the author does not have the gift of brevity, and tends to ramble on and on.
Highly recommend for anyone interested in business!
March 22, 2016
Yeah, more people have read this in the past two months than in the prior forty years. I'm glad as the New Yorker + Finance angle is a good one for me. While reading I found the stories interesting, but didn't once think of them afterwards. Guess that's why I'm not one of the two richest folks in America.
August 11, 2015
A very dated book having an anthology of business stories. Some are interesting while others read like a scientific journal. Coincidentally, a few stories mirror real life business dilemmas!
April 12, 2015
This little-remembered collection of New Yorker essays from the 1960s surged into popularity recently when both Bill Gates and Warren Buffet, who, depending on the week or month, are the two richest humans in history, declared it their favorite business book ever. Surprisingly to many, however, this is not a typical business book. It does not feature the typical managerial bromides or numbered lists of MOST IMPORTANT LEADERSHIP ATTRIBUTES. What it does have are 12 extremely well-written, well-thought-out stories about disparate events, usually crises, often concerning finance, in business history. As the author John Brooks says in an article on the phenomenally successful Xerox company (appropriately titled "Xerox Xerox Xerox Xerox") "I find that companies are inclined to be at their most interesting when they are undergoing a little misfortune." Not surprisingly the flubbed Edsel car merits an extended discussion. Many essays, in fact, focus on the public or legal implications of business mistakes, and aim to suss out the human impact of different policies. For instance, the Xerox article goes into detail on the legal wrangling the technology caused about "fair use" exception to copyright, and how the machine seemed to pose as much a threat to writers as the internet does today. There are few obvious lessons to be gleaned from the book overall, and the author tries hard to convey a narrative instead of a moral; those are probably the reasons why it may be one of the best business books ever.
John Brooks has an obvious affinity for intricate details and the importance of subtle differences. One essay, in fact, is merely a droll stroll through the history of income tax provisions. Another details the first real insider trading prosecution, of geologists at Texas Gulf, who traded on a potentially massive Canadian ore fine in 1959. Here Brooks describes the details of prospective ore drilling and of the changing rules of the SEC, and emerges with a confession of how difficult it is to draw a clear line about who or what is an insider. Another article focuses on the collapse of the Ira Haupt brokerage company in November 1963, little remembered today because it coincided with the weekend of the Kennedy assassination. Yet Brooks dives into the nature of the "salad oil scandal" of false warehouse receipts and shoddy auditing that allowed the company to go under, and into how the New York Stock Exchange made the important decision to bail out all the customers of Ira Haupt so there wouldn't be a run on mutual funds. President Johnson, on his first Monday in office, took time to congratulate the Exchange for averting a panic.
Some of the stories, such as the stock exchange bail-out, seem to have only grown in importance with time. There is for instance, philosophical disquisition on the General Electric antitrust prosecution, the first criminal antitrust prosecution in the U.S., and how hints and communication nudges could push people into crime while keeping the higher ups plausibly out of danger. There is also the thrilling description of the Federal Reserve's by any means necessary defense of the British pound from speculative attack in 1964.
With a focus on finance and financial flubs, this book offers a lot of grist for the modern reader, and, although every story doesn't shine, they are all both thoughtful and entertaining. I think that's why Bill and Warren love it.
August 4, 2021
It is definitely one of the finest books I’ve read. The author is a master storyteller of the financial world. It contains disparate tales from Wall Street to the labs of Xerox. Each of the 12 tales is unique in its lesson, though all are not equally enjoyable. The author refrains from giving any advice regarding the tales; it is indeed up to you, as a reader, to draw the conclusions you seem fit.
I learnt a lot during the course of this book and it has lead to a considerable increase in my esteem of business as a trade, given my profession is that of a humble academic and generally business people are considered the vilest among us for their relentless trail of money. I particularly loved the tales of Ford Edsel, Federal Income Tax, Xerox and Piggly Wiggly. However the gem of the book was the last chapter. It is about the attack on Sterling Pound and US Dollar by the French, who were uneasy with the prestige beholded by the two currencies and its goal to devalue and cripple the system that enforced this strata. It is certain the most tumultuous and exciting of stories I’ve read in a long time.
I heartily recommend this book to anyone who has a budding interest in business and money. If you want to learn how the world works, follow the money. As a friend recently said to me, “The governments of a country have no power. It resides with Goldman Sachs”.
I learnt a lot during the course of this book and it has lead to a considerable increase in my esteem of business as a trade, given my profession is that of a humble academic and generally business people are considered the vilest among us for their relentless trail of money. I particularly loved the tales of Ford Edsel, Federal Income Tax, Xerox and Piggly Wiggly. However the gem of the book was the last chapter. It is about the attack on Sterling Pound and US Dollar by the French, who were uneasy with the prestige beholded by the two currencies and its goal to devalue and cripple the system that enforced this strata. It is certain the most tumultuous and exciting of stories I’ve read in a long time.
I heartily recommend this book to anyone who has a budding interest in business and money. If you want to learn how the world works, follow the money. As a friend recently said to me, “The governments of a country have no power. It resides with Goldman Sachs”.
February 16, 2015
Great book. Since it was written in 1968, a lot has taken place. I wish each story could be updated. The author had a great idea in writing this book. He has written about 12 business adventures during the 60s. It would be great for someone to do a current day version of this book with more current business adventures. An updated version of this book should be included in all MBA programs. I really learned a lot about business from this book.
August 14, 2021
Putting this one on hold for the moment. 70% read. It's an excellent book 👍 but I just can't concentrate on it right now.
May 8, 2023
Read for research. John Brooks is a serviceable but by no means remarkable journalist. The twelve New Yorker pieces in this volume do offer a pretty good idea of what it was like to be a day trader or a businessman in the 1960s. Brooks tackles the Edsel disaster, the rise of Xerox, the fluctuations of the stock market (which feels incredibly quaint by today's standards), and how the Brits contended with debt and credit defaults. A good volume for getting the feel of the 1960s, but you're not going to get William Greideresque depth here, I'm afraid!
March 2, 2021
Odd book. It consists of 12 accounts of crucial points in the life of a specific business, or the world economy.
The good: The accounts are fascinating. The author is a regular contributor to the New Yorker, and writes with both a depth of knowledge and a feel for narrative tension that is unusual in business writing. The stories themselves are illuminating. For example, most people know that the Ford Edsel is THE example of a failed car that everyone points to. But do you know how it came to be designed? how it was named? How it was marketed? And most importantly, WHY it failed so badly? I certainly did not. Each of the twelve stories are similarly illuminating.
The bad: So why only three stars? The stories are VERY dated. The book was written in the mid-1960’s. A computer with the power of the iPhone I am using to write this review were the size of buildings. The dollar was still on the gold standard. Making photocopies was cutting edge technology. On Wall Street fortunes were made because a broker got news an hour before his competition read it on the ticker tape (today, such advantages are measured in nanoseconds, forcing firms into a technology race to build the fastest optic cables).
As a result, many of the stories which would have illuminated cutting edge issues of the day when written, now read as quaint historical artifacts of a by-gone era.
All in all, I found this book to be an interesting read—illuminating slices of economic history I had not know about. But if you are looking for a book with solid advice on running a business in 2021, I suggest looking elsewhere.
The good: The accounts are fascinating. The author is a regular contributor to the New Yorker, and writes with both a depth of knowledge and a feel for narrative tension that is unusual in business writing. The stories themselves are illuminating. For example, most people know that the Ford Edsel is THE example of a failed car that everyone points to. But do you know how it came to be designed? how it was named? How it was marketed? And most importantly, WHY it failed so badly? I certainly did not. Each of the twelve stories are similarly illuminating.
The bad: So why only three stars? The stories are VERY dated. The book was written in the mid-1960’s. A computer with the power of the iPhone I am using to write this review were the size of buildings. The dollar was still on the gold standard. Making photocopies was cutting edge technology. On Wall Street fortunes were made because a broker got news an hour before his competition read it on the ticker tape (today, such advantages are measured in nanoseconds, forcing firms into a technology race to build the fastest optic cables).
As a result, many of the stories which would have illuminated cutting edge issues of the day when written, now read as quaint historical artifacts of a by-gone era.
All in all, I found this book to be an interesting read—illuminating slices of economic history I had not know about. But if you are looking for a book with solid advice on running a business in 2021, I suggest looking elsewhere.
January 8, 2015
may not be worth your time...
Out of print for over 40 years and recently resurrected(#508 on Amazon eBooks and #76 in paperback-and still a few days out from release) this book is cited by Warren Buffet and Bill Gates as their favorite book on business. I'm wagering this book will take over from Piketty's Capital as the most purchased yet unread book of the season and yet the difference in reading pleasure is so stark. Brooks wrote these essays nearly 50 years ago and you can't help but recall that Buffet and Gates are 83 and 58 respectively. The writing feels dated and stilted -- I found the much lauded Edsel piece exceptionally arduous but hardly an outlier.
This book is not without merits however. In twelve parts, Brooks does cover many timeless aspects of business from stock markets swings, to non-compete issues, to income tax, insider trading. The story of business, like any history, is rife with repetition and so contemporary parallels abound. The frantic efforts to cleanly dissolve the Haupt brokerage firm eerily resonates the start of the Great Recession and the final chapter on international coordination to defend the sterling in the late 60s reminds you of the last few years as well.
Still, I can't say this is worth the necessary investment in time.
Out of print for over 40 years and recently resurrected(#508 on Amazon eBooks and #76 in paperback-and still a few days out from release) this book is cited by Warren Buffet and Bill Gates as their favorite book on business. I'm wagering this book will take over from Piketty's Capital as the most purchased yet unread book of the season and yet the difference in reading pleasure is so stark. Brooks wrote these essays nearly 50 years ago and you can't help but recall that Buffet and Gates are 83 and 58 respectively. The writing feels dated and stilted -- I found the much lauded Edsel piece exceptionally arduous but hardly an outlier.
This book is not without merits however. In twelve parts, Brooks does cover many timeless aspects of business from stock markets swings, to non-compete issues, to income tax, insider trading. The story of business, like any history, is rife with repetition and so contemporary parallels abound. The frantic efforts to cleanly dissolve the Haupt brokerage firm eerily resonates the start of the Great Recession and the final chapter on international coordination to defend the sterling in the late 60s reminds you of the last few years as well.
Still, I can't say this is worth the necessary investment in time.
August 21, 2019
I liked it, mostly. Well-written but ancient (1960s). See mixed reviews at Amazon. Worth a quick look, if your library has a copy -- it's recently been reissued. Not sure why Warren Buffett & Bill Gates are so fond of it. But here's Bill Gates' review: https://www.gatesnotes.com/Books/Busi...
So you can judge for yourself. He first read it some 25 years ago (1991). Hey, worked for him, worked for Buffett . . . .
So you can judge for yourself. He first read it some 25 years ago (1991). Hey, worked for him, worked for Buffett . . . .
February 5, 2018
Read this book for the joy of exploring old school style of writing and to experience what good business journalism looks like.
Examples are a bit dated, but the storytelling skills of the author make up for it. Author has a unique style of creating a Sherlock Holmes type suspense even while narrating business stories which most people find boring. The book was a bit difficult to read in the beginning, but the style grew on me.
Examples are a bit dated, but the storytelling skills of the author make up for it. Author has a unique style of creating a Sherlock Holmes type suspense even while narrating business stories which most people find boring. The book was a bit difficult to read in the beginning, but the style grew on me.
March 23, 2020
I had such a great time reading Business Adventures by John Brooks. As someone who might as well have been the father of Michael Lewis, John Brooks is simply a fantastic writer.
Even though the book is written from a collection of twelve New Yorker articles in the 1960s, each story is as relevant to business today as ever. The settings might have changed but the key lessons have not, because the rules of business success and failure haven’t. That is why the book is up there as one of my favorites on the shelf.
I’m not alone in this opinion. Since Bill Gates blogged about his admiration for the book, it has been relisted at the top of the Amazon and New York Times bestseller lists.
Born in 1920, John Brooks grew up in the Roaring Twenties, lived through the Great Depression, graduated from Princeton, and served in World War II, until becoming a contributing editor for Time Magazine. After writing for a couple of years, Brooks longed for a looser style and longer-form writing and moved on to the New Yorker as a financial writer which he called the lucky break that made his career.
Many of Brooks’s pieces were about business profiles and economic affairs throughout the 1950s and 1960s. While not being a breaker a big stories, Brooks realized early on that it was storytelling – and not financial jargon – that would propel readers through his pieces. He simply wrote about business, people, and how it went for them in a very intriguing way. And it served him very well.
***
Business Adventures consists of twelve stories from the business world and Wall Street with each comprising a chapter that details critical moments in American industry.
By the first impression, the stories appear rather unrelated but in a subtle way seem to reach every fragile key point of almost any business and its relation to capital providers. But what scrutinizing readers will find is that there is a common theme behind every story.
I think Brooks's purpose was for the reader to take a mental leap in getting to the conclusion and lesson for each story in order for it to sink in much better. Brooks does not deliver read-made solutions or answers but merely describes the stories and challenges of the human characters and stakeholders involved. It allows the reader to really think the issue through and discover how timeless the ideas really are.
Although it’s really kind of a shame to summarize Brooks’s stories since one in no way can capture his brilliant, thorough, and thrilling storytelling, here is a quick recap for you to get an idea of what each of his stories is about:
The 1962 market flash crash: Over the course of only three days, fear and panic lead the stock market to crash tragically only to recover one day later. No one could find any rational explanation for the crash, and when the Dow came close to hitting 500, mutual funds stepped in and bought aggressively. The lesson showed that investors are irrational and that markets are unpredictable guided by mood.
As J.P. Morgan said about the only thing that can be predicted about the markets: “It will fluctuate”.
The 1962 flash crash is a great story about the role of the exchange, mutual funds, and retail investors.
The fate of the Edsel: In 1955, Ford developed what was determined to be its new flagship car but which turned out to be a historical fiasco. Today, it’s a timeless case study on how not to develop and launch a product. The Edsel was supposed to be the ultimate choice of car by middle-class Americans created by excessively poll-testing every feature of the car, but that’s not exactly how it went.
As Bill Gates explains on his blog:
Ford ended up spending $250 million in developing the car and lost a total of $350 million.
The U.S. federal income tax system: Over the years, the U.S tax system had become very complex and convoluted. The system was so filled with loopholes that richer citizens were able to evade considerable taxes by hiring better lawyers. It was a very complex problem to solve. The only real recourse would be to scrap it and revert it back to its simpler 1913 state.
Texas Gulf insider trading case of 1959: Texas Gulf found huge sulfur mines in Eastern Canada, and when executives of the company found out, they began accumulating shares and telling their families to follow suit all the while keeping the public in the dark. When the rumors spread that the company had discovered something worthy of interest, Texas Gulf held a conference downplaying the case and spreading disinformation. When the news was finally revealed, the stock price shot up and everyone who had bought it became very wealthy.
The problem at the time was that insider trading laws hadn’t been properly enforced before, which posed important questions like when information exactly becomes official. In the end, the SEC issued a guilty verdict against Texas Gulf insiders and insider trading has been regulated extensively ever since.
The story of Xerox: When Xerox launched the copy machine in 1959, the popularity took off in a huge way and the company became a significant market leader in copiers. But by 1964, the company earned so much money that executive attitude started to become complacent. Even though Xerox had worked up a huge R&D department, the company failed to capitalize on its ideas and research. Others started to develop products based on Xerox’s own research and started to overhaul. It's is one of my favorite stories from the book.
The rescue of Ira Haupt & Co: A brokerage firm ends up in trouble by a collateral issue with one of its clients. The New York Stock Exchange, in collaboration with banks, ends up bailing them out. At the time, it prevented a financial crisis in the heat of national panic. This story has interesting parallels to the Long-Term Capital Management bail-out which happened about 40 years later, threatening to take down the global financial system.
Miscommunication at General Electric: From the years of 1956 to 1959, 29 companies selling heavy electrical machinery engaged in illegal price fixation. When it was found out that General Electric was the leader in this scheme, the matter was brought before the court and senate subcommittee. No higher-level executives from General Electric were charged. This story is an interesting case of how executives can blame immoral or criminal actions on communication errors.
The Piggly Wiggly story: Clarence Saunders invented the first self-service grocery store called Piggly Wiggly. When some Piggly Wiggly franchises operating in New York ran into financial trouble, word quickly spread, and the Piggly Wiggly share price plummeted being started by a bear raid of short-sellers. Wanting to teach these short-sellers a lesson, Saunders decided to corner the market of the company’s stock. Using largely borrowed money to fulfill his idea, he was able to drive up the share price three-fold.
However, the short-sellers were able to convince the exchange to suspend trading and later grant an extension for these short-sellers to pay up.
Saunders’s position was not tenable due to his debts, and he eventually suffered so large losses that he was forced to declare bankruptcy.
The story of David Lilienthal: A highly influential government employee moves on to work in the private sector and creates a great career.
Serving as chairman at the Tennessee Valley Authority in charge of developing and distributing cheap hydroelectric power in areas that private providers didn’t cover and later as first chairman of the Atomic Energy Commission, Lilienthal decided to finally leave public office in 1950.
His background in the energy field made him fit to start his private business in minerals and so he acquired the distressed Minerals and Chemical Corporation of America and became widely successful in turning it around.
Here's a great excerpt from Lilienthal's diary at his early years in the business world.
Amid old government employees accused him of being a sell-out, Lilienthal wrote a controversial book on how important big business is to society.
The power of shareholders: This story includes descriptions of Brooks’s experiences by visiting several shareholder meetings.
Although companies’ boards are elected by the shareholders, it was a general observation that directors at big corporations did not view the shareholders as their bosses. Cases that Brooks wrote about involved management making attendance to the meetings hard and avoiding critical questions by droning on about the company’s great performance and brilliant future.
Brooks found that smaller shareholders cared more about regular dividend payments while appropriate corporate governance depended on professional investors challenging the company through activism.
Wohlgemut’s secret: Donald Wohlgemuth, a scientist, decided to switch job from the space suit engineering department of B.F. Goodrich Company to International Latex, a competitor.
At the time, the race to reach the moon was in full swing and Goodrich was the leader as supplier to spacesuits. However, when Goodrich lost the contract for the Apollo project to International Latex, Wohlgemuth received an offer from the competitor with a prestigious responsibility and salary, and he jumped at it.
Obviously, Goodrich wasn’t pleased and was frightened that Wohlgemuth might reveal vital trade secrets. So, they decided to sue him.
The case became of a very philosophical nature without precedent. If one hasn’t broken an agreement or shown intention of doing so, can preemptive action be taken against them on the assumption that they will? The court finally decided that he could not found guilty and he was free to enter the position with International Latex. That court decision marked an exemplar of employee rights for the future to come.
The attack of pound sterling: A neatly told story about the fragile Bretton Woods system initiated in 1944. When the pound came under attack from speculators and hedging businesses in 1964, central bankers around the world felt obliged to defend it, and Britain was at last forced to devalue the currency in 1967. The book’s ending story is a great lesson on the power of the free market and the forces going behind a fixed currency system.
***
That Brooks has documented these stories in such detail really is a gem. How else would you find out the entire story leading up to the launch of the world’s ugliest car? Or how a culture of miscommunication, intended or unintended, can spread slowly throughout an organization like Gresham’s Law? It's hard to find anything better in understanding how these things come into being than by reading John Brooks's work.
After reading Business Adventures, it was very clear to me what Brooks’s central theme is throughout every story. Business success and failure, including that of the stock market and the economy, is about human behavior and that will never change.
To really master business, one has to be able to identify and navigate destructive human behavior - and to unleash human potential.
Even though the book is written from a collection of twelve New Yorker articles in the 1960s, each story is as relevant to business today as ever. The settings might have changed but the key lessons have not, because the rules of business success and failure haven’t. That is why the book is up there as one of my favorites on the shelf.
I’m not alone in this opinion. Since Bill Gates blogged about his admiration for the book, it has been relisted at the top of the Amazon and New York Times bestseller lists.
Born in 1920, John Brooks grew up in the Roaring Twenties, lived through the Great Depression, graduated from Princeton, and served in World War II, until becoming a contributing editor for Time Magazine. After writing for a couple of years, Brooks longed for a looser style and longer-form writing and moved on to the New Yorker as a financial writer which he called the lucky break that made his career.
Many of Brooks’s pieces were about business profiles and economic affairs throughout the 1950s and 1960s. While not being a breaker a big stories, Brooks realized early on that it was storytelling – and not financial jargon – that would propel readers through his pieces. He simply wrote about business, people, and how it went for them in a very intriguing way. And it served him very well.
***
Business Adventures consists of twelve stories from the business world and Wall Street with each comprising a chapter that details critical moments in American industry.
By the first impression, the stories appear rather unrelated but in a subtle way seem to reach every fragile key point of almost any business and its relation to capital providers. But what scrutinizing readers will find is that there is a common theme behind every story.
I think Brooks's purpose was for the reader to take a mental leap in getting to the conclusion and lesson for each story in order for it to sink in much better. Brooks does not deliver read-made solutions or answers but merely describes the stories and challenges of the human characters and stakeholders involved. It allows the reader to really think the issue through and discover how timeless the ideas really are.
Although it’s really kind of a shame to summarize Brooks’s stories since one in no way can capture his brilliant, thorough, and thrilling storytelling, here is a quick recap for you to get an idea of what each of his stories is about:
The 1962 market flash crash: Over the course of only three days, fear and panic lead the stock market to crash tragically only to recover one day later. No one could find any rational explanation for the crash, and when the Dow came close to hitting 500, mutual funds stepped in and bought aggressively. The lesson showed that investors are irrational and that markets are unpredictable guided by mood.
As J.P. Morgan said about the only thing that can be predicted about the markets: “It will fluctuate”.
The 1962 flash crash is a great story about the role of the exchange, mutual funds, and retail investors.
The fate of the Edsel: In 1955, Ford developed what was determined to be its new flagship car but which turned out to be a historical fiasco. Today, it’s a timeless case study on how not to develop and launch a product. The Edsel was supposed to be the ultimate choice of car by middle-class Americans created by excessively poll-testing every feature of the car, but that’s not exactly how it went.
As Bill Gates explains on his blog:
[Brooks] refutes the popular explanations for why Ford's flagship car was such a historic flop. It wasn't because the car was overly poll-tested; it was because Ford's executives only pretended to be acting on what the polls said.
"Although the Edsel was supposed to be advertised, and otherwise promoted, strictly on the basis of preferences expressed in polls, some old-fashioned snake-oil selling methods, intuitive rather than scientific, crept in."
It certainly didn't help that the first Edsels "were delivered with oil leaks, sticking hoods, trunks that wouldn't open, and push buttons that … couldn't be budged with a hammer."
Ford ended up spending $250 million in developing the car and lost a total of $350 million.
The U.S. federal income tax system: Over the years, the U.S tax system had become very complex and convoluted. The system was so filled with loopholes that richer citizens were able to evade considerable taxes by hiring better lawyers. It was a very complex problem to solve. The only real recourse would be to scrap it and revert it back to its simpler 1913 state.
Texas Gulf insider trading case of 1959: Texas Gulf found huge sulfur mines in Eastern Canada, and when executives of the company found out, they began accumulating shares and telling their families to follow suit all the while keeping the public in the dark. When the rumors spread that the company had discovered something worthy of interest, Texas Gulf held a conference downplaying the case and spreading disinformation. When the news was finally revealed, the stock price shot up and everyone who had bought it became very wealthy.
The problem at the time was that insider trading laws hadn’t been properly enforced before, which posed important questions like when information exactly becomes official. In the end, the SEC issued a guilty verdict against Texas Gulf insiders and insider trading has been regulated extensively ever since.
The story of Xerox: When Xerox launched the copy machine in 1959, the popularity took off in a huge way and the company became a significant market leader in copiers. But by 1964, the company earned so much money that executive attitude started to become complacent. Even though Xerox had worked up a huge R&D department, the company failed to capitalize on its ideas and research. Others started to develop products based on Xerox’s own research and started to overhaul. It's is one of my favorite stories from the book.
The rescue of Ira Haupt & Co: A brokerage firm ends up in trouble by a collateral issue with one of its clients. The New York Stock Exchange, in collaboration with banks, ends up bailing them out. At the time, it prevented a financial crisis in the heat of national panic. This story has interesting parallels to the Long-Term Capital Management bail-out which happened about 40 years later, threatening to take down the global financial system.
Miscommunication at General Electric: From the years of 1956 to 1959, 29 companies selling heavy electrical machinery engaged in illegal price fixation. When it was found out that General Electric was the leader in this scheme, the matter was brought before the court and senate subcommittee. No higher-level executives from General Electric were charged. This story is an interesting case of how executives can blame immoral or criminal actions on communication errors.
The Piggly Wiggly story: Clarence Saunders invented the first self-service grocery store called Piggly Wiggly. When some Piggly Wiggly franchises operating in New York ran into financial trouble, word quickly spread, and the Piggly Wiggly share price plummeted being started by a bear raid of short-sellers. Wanting to teach these short-sellers a lesson, Saunders decided to corner the market of the company’s stock. Using largely borrowed money to fulfill his idea, he was able to drive up the share price three-fold.
However, the short-sellers were able to convince the exchange to suspend trading and later grant an extension for these short-sellers to pay up.
Saunders’s position was not tenable due to his debts, and he eventually suffered so large losses that he was forced to declare bankruptcy.
The story of David Lilienthal: A highly influential government employee moves on to work in the private sector and creates a great career.
Serving as chairman at the Tennessee Valley Authority in charge of developing and distributing cheap hydroelectric power in areas that private providers didn’t cover and later as first chairman of the Atomic Energy Commission, Lilienthal decided to finally leave public office in 1950.
His background in the energy field made him fit to start his private business in minerals and so he acquired the distressed Minerals and Chemical Corporation of America and became widely successful in turning it around.
Here's a great excerpt from Lilienthal's diary at his early years in the business world.
Business has its man-eating side, and part of the man-eating side is that it’s so absorbing. Making a million – I was surprised of course. It’s like when you are a boy and you try to jump six feet. Then you find you can jump six feet, now what?
Amid old government employees accused him of being a sell-out, Lilienthal wrote a controversial book on how important big business is to society.
The power of shareholders: This story includes descriptions of Brooks’s experiences by visiting several shareholder meetings.
Although companies’ boards are elected by the shareholders, it was a general observation that directors at big corporations did not view the shareholders as their bosses. Cases that Brooks wrote about involved management making attendance to the meetings hard and avoiding critical questions by droning on about the company’s great performance and brilliant future.
Brooks found that smaller shareholders cared more about regular dividend payments while appropriate corporate governance depended on professional investors challenging the company through activism.
Wohlgemut’s secret: Donald Wohlgemuth, a scientist, decided to switch job from the space suit engineering department of B.F. Goodrich Company to International Latex, a competitor.
At the time, the race to reach the moon was in full swing and Goodrich was the leader as supplier to spacesuits. However, when Goodrich lost the contract for the Apollo project to International Latex, Wohlgemuth received an offer from the competitor with a prestigious responsibility and salary, and he jumped at it.
Obviously, Goodrich wasn’t pleased and was frightened that Wohlgemuth might reveal vital trade secrets. So, they decided to sue him.
The case became of a very philosophical nature without precedent. If one hasn’t broken an agreement or shown intention of doing so, can preemptive action be taken against them on the assumption that they will? The court finally decided that he could not found guilty and he was free to enter the position with International Latex. That court decision marked an exemplar of employee rights for the future to come.
The attack of pound sterling: A neatly told story about the fragile Bretton Woods system initiated in 1944. When the pound came under attack from speculators and hedging businesses in 1964, central bankers around the world felt obliged to defend it, and Britain was at last forced to devalue the currency in 1967. The book’s ending story is a great lesson on the power of the free market and the forces going behind a fixed currency system.
***
That Brooks has documented these stories in such detail really is a gem. How else would you find out the entire story leading up to the launch of the world’s ugliest car? Or how a culture of miscommunication, intended or unintended, can spread slowly throughout an organization like Gresham’s Law? It's hard to find anything better in understanding how these things come into being than by reading John Brooks's work.
After reading Business Adventures, it was very clear to me what Brooks’s central theme is throughout every story. Business success and failure, including that of the stock market and the economy, is about human behavior and that will never change.
To really master business, one has to be able to identify and navigate destructive human behavior - and to unleash human potential.
December 13, 2022
2022 reads, #56. Let me confess right off the bat that my score here for today's book is somewhat of a misnomer, in that I only ended up reading one chapter from this collection of long-form journalism pieces by famed New Yorker financial reporter John Brooks; in fact, that's the entire reason I picked it up in the first place, because I recently read in someone else's book that Brooks in this book does one of the best jobs ever at explaining what exactly happened behind one of the most notorious failures in American business history, the release and subsequent tanking of the Ford Edsel in the late 1950s, a story I've always been curious to know more about. And indeed, it turned out to be as fascinating as you would expect, especially now when we've long forgotten what the state of the automobile industry was in the '50s when these events occurred, or for that matter what the state of the modern marketing and advertising industry was in these years as well.
Basically, in the '50s there were only three types of cars on the market, known as the "cheap" one, the "middle" one, and the "expensive" one, with the rapidly expanding American middle-class expressing their newfound wealth by officially "trading up" as soon as they could afford it; but while Ford had a good-selling cheap car and expensive car at the beginning of the '50s, they lacked a middle-priced car, which is how the idea for the Edsel first came about. Unfortunately for them, a sort of perfect storm of problems happened on the way to the car's release half a decade later, including a too-long development period that misjudged what the future of cars would be (the Edsel finally got released in 1957, just in time for the big new trend in "compact" cars, including Ford's own Falcon in 1960 which quickly eclipsed the Edsel in sales); a wasteful developmental period as well, which spent way too much money on frivolous details (including having armed guards manning the doors of Ford's drawing rooms as a form of publicity stunt, and hiring famed poet Marianne Moore to suggest names for the car [including such hilarious options as the Utopian Turtletop and the Pastelogram]); what at the time was a brand-new obsessive reliance on public opinion polls and customer psychological profiles (one of the very first examples of a type of marketing that was to eventually become the national norm); too much of an attempt to make the Edsel the everything car for everybody (after discovering that most Americans assigned their own mental beliefs to a car make no matter if the car company wanted them to or not, the Ford marketers decided to get ahead of the game and start aggressively promoting the Edsel as the car for young people and old people and men and women and rich and poor and everyone else, leading to four main lines of the car with 18 varieties apiece, or 72 different kinds of Edsels one could ultimately choose from); heavily overinflated expectations the car itself could never live up to (among other terrible decisions that sounded wise at the time, the company made a national public spectacle out of recruiting 12,000 new Edsel dealerships across the country, keeping the dealers' sneak preview of the car under lock and key, leading a frenzied public to believe that the new vehicle was essentially going to be a futuristic rocket car in the style of The Jetsons); massive overspending in advance of the car's release (today's equivalent of over three billion dollars before a single car had been sold, including an entire million dollars on one single press conference on release day); and simply too much overconfidence on the part of Ford's employees, who in a glorious postwar environment thought they were the business that could do no wrong, assuming as the saying goes that if they simply built it, "they would come."
As promised, Brooks does a thorough, plain-spoken, and highly entertaining job covering the entire thing, including such delightfully snotty lines as, "Three days after release, an Edsel was stolen from a north Philadelphia dealership; it can reasonably be argued that the crime marked the high-water mark of public acceptance of the car." I imagine he does this in all the other chapters of this book as well, including stories about the meteoric rise of the Xerox Corporation, the Wall Street "mini-crash" of 1962, the history of the federal income tax, GE's Congressional antitrust hearings during the Kennedy years, and other such issues; but I'm so ridiculously behind on my reading at this point that I simply can't justify spending time on these subjects I just barely care about, so I simply finished up this Edsel piece and declared myself done with the book. It therefore comes strongly recommended, but with the understanding that this is based on only reading a small bit of it, with the suspicion but not the confirmed knowledge that the rest of it is as good as well.
Basically, in the '50s there were only three types of cars on the market, known as the "cheap" one, the "middle" one, and the "expensive" one, with the rapidly expanding American middle-class expressing their newfound wealth by officially "trading up" as soon as they could afford it; but while Ford had a good-selling cheap car and expensive car at the beginning of the '50s, they lacked a middle-priced car, which is how the idea for the Edsel first came about. Unfortunately for them, a sort of perfect storm of problems happened on the way to the car's release half a decade later, including a too-long development period that misjudged what the future of cars would be (the Edsel finally got released in 1957, just in time for the big new trend in "compact" cars, including Ford's own Falcon in 1960 which quickly eclipsed the Edsel in sales); a wasteful developmental period as well, which spent way too much money on frivolous details (including having armed guards manning the doors of Ford's drawing rooms as a form of publicity stunt, and hiring famed poet Marianne Moore to suggest names for the car [including such hilarious options as the Utopian Turtletop and the Pastelogram]); what at the time was a brand-new obsessive reliance on public opinion polls and customer psychological profiles (one of the very first examples of a type of marketing that was to eventually become the national norm); too much of an attempt to make the Edsel the everything car for everybody (after discovering that most Americans assigned their own mental beliefs to a car make no matter if the car company wanted them to or not, the Ford marketers decided to get ahead of the game and start aggressively promoting the Edsel as the car for young people and old people and men and women and rich and poor and everyone else, leading to four main lines of the car with 18 varieties apiece, or 72 different kinds of Edsels one could ultimately choose from); heavily overinflated expectations the car itself could never live up to (among other terrible decisions that sounded wise at the time, the company made a national public spectacle out of recruiting 12,000 new Edsel dealerships across the country, keeping the dealers' sneak preview of the car under lock and key, leading a frenzied public to believe that the new vehicle was essentially going to be a futuristic rocket car in the style of The Jetsons); massive overspending in advance of the car's release (today's equivalent of over three billion dollars before a single car had been sold, including an entire million dollars on one single press conference on release day); and simply too much overconfidence on the part of Ford's employees, who in a glorious postwar environment thought they were the business that could do no wrong, assuming as the saying goes that if they simply built it, "they would come."
As promised, Brooks does a thorough, plain-spoken, and highly entertaining job covering the entire thing, including such delightfully snotty lines as, "Three days after release, an Edsel was stolen from a north Philadelphia dealership; it can reasonably be argued that the crime marked the high-water mark of public acceptance of the car." I imagine he does this in all the other chapters of this book as well, including stories about the meteoric rise of the Xerox Corporation, the Wall Street "mini-crash" of 1962, the history of the federal income tax, GE's Congressional antitrust hearings during the Kennedy years, and other such issues; but I'm so ridiculously behind on my reading at this point that I simply can't justify spending time on these subjects I just barely care about, so I simply finished up this Edsel piece and declared myself done with the book. It therefore comes strongly recommended, but with the understanding that this is based on only reading a small bit of it, with the suspicion but not the confirmed knowledge that the rest of it is as good as well.
January 23, 2018
John Brooks tells stories that any business can learn from. Written in detail and entertaining.
There are 12 different stories that can be read separately as I knew most of the cases.
There are 12 different stories that can be read separately as I knew most of the cases.
March 31, 2022
Bill Gates said this is one of the best business books he has ever read - he would need to explain to me how? This was a difficult and boring read. Difficult in the sense that to understand the content you would need a firm grasp on the how stocks and shares operate and boring in the sense that the length of some of the chapters were just insufferable.
December 22, 2019
Business is the only employment you can offer to yourself for a life time.
February 20, 2020
Love this book, which it was written 2 years ago instead of 50s. However it's great
March 13, 2023
(3.5/5)
John Brooks was probably the Matthew Lewis of his era. Business Adventures comprises 8 financial and business stories. I skipped the last one after the first 20-odd pages. It was about the falling pound. Not that it wasn't an interesting topic, but after a bit I sort of wanted to finish it more than enjoy it, and I knew that was my cue to exit.
That said, most stories are both crisp and engaging. I especially liked the one about the price-fixing scandals of General Electric. (Executives there would tell their juniors to "especially not talk to their competitors," which those juniors would take as a wink wink way of saying exactly the opposite.)
Overall though I can see that Brooks set the tone for a generation of narrative-driven financial writers, including some of those that I love today.
John Brooks was probably the Matthew Lewis of his era. Business Adventures comprises 8 financial and business stories. I skipped the last one after the first 20-odd pages. It was about the falling pound. Not that it wasn't an interesting topic, but after a bit I sort of wanted to finish it more than enjoy it, and I knew that was my cue to exit.
That said, most stories are both crisp and engaging. I especially liked the one about the price-fixing scandals of General Electric. (Executives there would tell their juniors to "especially not talk to their competitors," which those juniors would take as a wink wink way of saying exactly the opposite.)
Overall though I can see that Brooks set the tone for a generation of narrative-driven financial writers, including some of those that I love today.
October 5, 2014
Interesting to see the mention of this book as a "favorite" of Bill Gates, given to him by Warren Buffet with a strong recommendation. Article in the Wall St. Journal mentioned it was out of print. Within days, miraculously back in print, complete with kindle edition (which I purchased) and climbing the best seller lists. The book's "business adventures" take place in the mid 60's and it was fun to journey back to those days when I could not have cared less about business and finance - provides an interesting perspective after 40 years in business and finance - especially with regard to well paid executives and engineers making an astounding $13k a year! Frankly, they don't write them like this anymore. Probably one of the best written tomes of a non-fiction nature in terms of vocabulary, erudition, grammatical precision and article structure that I have read. Some will find the long detailed stories on the role of the SEC, happenings in the currency exchange markets to be overdone, but for those with and interest it is a treasure trove to explore these things when the U.S. would still pay off foreign currency claims in gold at $35 an ounce.
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