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Business Adventures: Excerpts

As part of Fab Faber Series, we are glad to share few excerpts from another wonderful book, Business Adventures by John Brooks. Happy Reading!

Business Adventures (by the late John Brooks, originally published in 1969) is Bill Gates’ favorite all-time business book and even better, it came recommended to him from none other than Warren Buffett!

gatesgettyWhat hooked me was considering when Bill Gates received the book from Warren Buffett with his imprimatur, in 1991, and that nearly 25 years later Gates can say this is also his favorite business book is impressive, and no doubt Gates must have read it with great interest having come with the highest of recommendation from Buffett at that time.

The stories in the book might be old and the names unfamiliar, but Brooks’ retelling is superb – a near perfect balance of breadth and depth to the stories. From Wall Street to Main Street, John Brooks, longtime contributor to the New Yorker, brings to life in vivid fashion twelve classic and timeless tales of 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.

Business Adventures details 12 critical moments in American industry, including the rise of Xerox and Piggly Wiggly, the Ford Edsel fiasco, and the GE and Texas Gulf Sulphur scandals. Perhaps above all, Business Adventures teaches lessons about people – how they act, what makes them thrive and flounder, and what devilry they’re likely to get up to if left to their own devices. Business Adventures’ lessons are about human nature in the context of business, and though technologies and best practices change, people never do.

We can take 7 key lessons from this John brook’s Business Adventure.

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1. A lesson from the 1962 Flash Crash:

At their core, humans are basically emotional, irrational beings. Over the course of only three days, fear and panic led the stock market to plummet $20 billion only to boomerang back up a day later. Facts are a lot less compelling than the dictates of the lizard brain.

2. A lesson from the Ford Edsel fiasco:

Pay close attention to your market. Customers’ wishes can change very quickly and it’s important to keep a finger on the collective pulse. When Ford wasn’t looking, mid-sized dropped off of their buying radar.

3. A lesson from the income tax system:

Sometimes, the best solution is to scrap it. Over the years, the US tax system became so convoluted, corrupt, and loophole laden that it now encourages inefficiency. The only real recourse would be a do-over.

4. A lesson from the Texas Gulf case of 1959:

Just as people are inherently irrational, you can also count on them to be pretty self serving, too. In summary: when Texas Gulf executives found out about mineral-rich ground the company had just struck, they slowly began buying up stock shares and telling their families to follow suit – all the while denying the find to the public. Thus, insider trading laws were born.

5. A lesson from Xerox’s rollercoaster success:

Never trust a rapid success. Nobody expected copy machines to take off when Xerox launched its product in 1959, but by 1964, revenue was so good that the company could afford to drop $4 million to support the UN. By 1965, however, Xerox was in trouble: while they’d been busy philanthropizing, competitors had caught up fast.

6. A lesson from Piggly Wiggly’s investment debacle:

Revenge isn’t actually so sweet – and it certainly doesn’t pay. To teach them a lesson, incensed Piggly Wiggly owner Clarence Saunders sought to buy back all of his stock from tricky prospectors. What he got instead was near bankruptcy.

7. A lesson from the Bretton Woods Conference of ‘64:

A small group of determined individuals can prevail against a bigger, stronger foe. When a collective of savvy prospectors believed Britain couldn’t keep up the currency exchange rates, they started betting against the pound in the market. Despite odds (and a strong central bank alliance against them) they won.

In closing, the current reprinting of Business Adventures is yet another, timely, reminder that “History does not repeat itself, but it often rhymes.” — Mark Twain.

Adapted by: Raveena Rathi

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