Max Mednik

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                            Reading completed in 2011 12/30/2011
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                            Below are the 50 books I was able to complete in 2011 (next year I'm shooting for 52!). It's mostly non-fiction and entrepreneurship-related, but there is a sprinkle of fiction and humanities in there somewhere. Most of these books have separate blog posts written about them (you can also search).

                            Happy holidays everyone, and happy new year!
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                            Notes on IMVU Method of Experimentation 12/21/2011
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                            The New Science of Product Development
                            View more presentations from James Birchler
                            James is the VP of Engineering at IMBU, the very first Lean Startup founded by Eric Ries. IMVU experimented heavily on its way to tens of millions in annual revenue. In his talk, James describes how to build a culture and team of experimentation in your startup. You can watch the video and see the slides above.

                            Below are my notes on James Birchler's talk on experimentation at IMVU. I enjoyed his talk, particularly the segments that dealt with the specifics of IMVU's processes.
                            The Scientific Method is based on experimentation.

                            Core:
                            1. culture
                            2. technique
                            3. examples

                            Story of Copernicus
                            • heliocentrism
                            • experimental observation
                            • was met with violence; Church threatened him

                            Giordano Bruno (burned at stake)

                            Galileo
                            • scientific method
                            • put on house arrest

                            It was hard for these guys because the folks in charge didn't like hearing "bad news."

                            IMVU
                            • experiments
                            • share results freely, no matter who's pet project
                            • rapid iteration and learning

                            1. ask question
                            2. do research
                            3. form hypothesis
                            4. test (science?)
                            5. analyze data
                            6. conclusion
                            7. report results

                            And cycle back to beginning

                            Lean startup: build, measure, learn loop

                            1. talk to customers for use cases
                            2. form a hypothesis to test
                            3. write code, test on dev machine
                            4. test in production as QA/admin
                            5. roll out to a % of customers
                            6. analyze results, conclusion
                            7. share learning

                            Culture of experimentation:
                            Started out as simple as this:
                            if (setup_experiment(...) == "control") {
                            // do it the old way
                            } else {
                            // do it the new way
                            }

                            Then later built robust experiment management system
                            • Columns: experiment name, to which users (QA and admin only, 100%, 50%, etc.), status/close date

                            Also built tool to calculate statistical significance
                            • sample count: control and treatment
                            • mean: control and treatment
                            • variance: control and treatment
                            • p-value
                            • significance
                            • chance of occurring randomly
                            • table of user data with rows highlighted to show which validated or invalidated experiment

                            Embrace failure with exec team and whole company.

                            Embrace failure as an opportunity to learn.

                            Highest paid person's opinion (HiPPO) is not assumed to be correct.

                            Reference to paper "Practical guide to controlled experiments on the web."

                            Easy to screw up process at every stage
                            • use cases
                            • test hypotheses
                            • rinse, repeat

                            Don't ask customers what they want.

                            Instead, ask customers what they are trying to do.

                            Focus on use cases and not what they say they want.

                            What not to do: build what customers say they want.

                            Do this:
                            • start with use cases
                            • test hypotheses to learn best ways to fulfill them

                            It takes a lot of courage to balance experience, instinct, imagination, and experiment results.

                            "If you design a toaster oven and need to include directions for making toast, you have failed at designing a toaster oven." -Laura Klein

                            Don't just run a bunch of experiments without a strong point of view of what trying to learn.

                            Experiment design
                            • start with use cases
                            • have a specific hypothesis
                            • ask the right questions
                            • ask the right people
                            • ask enough people
                            • randomized control trial

                            experiment interpretation
                            • use the right p test
                            • don't rely only on p test
                            • don't confuse correlation with causation
                            • find psych or stats PhD's to help

                            Experiments are a great way to test hypotheses, not form them.

                            Product development

                            Build:
                            • 2-3 week sprints
                            • stop and adjust process each sprint
                            • agile and XP methods
                            Agile & XP methods:
                            • change, flexibility, iteration, continuous improvemnt
                            • Agile and XP support each other
                            • physical scrum board with post-its
                            • self-organizing teams, short sprints, daily stand-ups (15 min), no emails (just talk)
                            • clear roles and responsibilities: product owner, tech lead, visual designer, UED, QA
                            • stay flexible, don't be dogmatic
                            Measure:
                            • projects/stories completed
                            • time spent on tasks
                            • story points delivered
                            • unplanned vs. planned work completed
                            • how productive and happy do we feel
                            Learn:
                            • project postmortens
                            • sprint retrospectives
                            • 5 why's root cause analysis
                            • support open communication
                            Open communication:
                            • engineering project managers (just to assure engineering communicates ok)
                            • matrix management (managers manage people across teams to get slice across company)
                            • scrum of scrums (weekly uber-scrum mtg)
                            • team swaps (individuals switch teams liberally)
                            • open floor plan
                            Postmortems and retrospectives:
                            • meeting roles
                            • metrics
                            • action items
                            • all levels of organization must be in it
                            Meeting success:
                            • appoint a skilled facilitator
                            • foster communication and engagement (talk about elephant in room)
                            • table: days, project, story points
                            • whiteboard columns: misc., keep, stop (action item), start (action item)
                            5 Why's: fix root cause

                            Make the size of the fix commensurate with the size of the problem.

                            Handling interrupts
                            • Share interrupts among teams
                            • Create "interrupts" team; establish home team and rotate others through it
                            • Whenever someone commits code that fails battery of tests, interrupts team needs to fix the tests or the code.
                            Time tracking (used to do it more but now do it less):
                            • Focus on features and value to customers, not time
                            • Short planning meetings
                            • Caution: reduced ability to predict progress
                            Scrum 2.0: continuous planning
                            • based on successful process experiment
                            • just-in-time planning: kanban
                            • are we working on the right stuff?

                            User testing:
                            • pay $50 for 30 min of someone's time
                            • ask them to play your game, watch their reaction
                            • stop them after 15 min. and say they can go
                            • if they want to keep playing, then you're doing well
                            Keep your team together: embed designers, QA, data analyst, engineering and product in same location

                            Have a fixer: remove blocks, remain objective, team happiness = team productivity

                            Technical project reviews:
                            • organized by team tech lead: tech review of code, improve quality, reduce tech debt
                            • in-depth reviews of code
                            • all engineers welcome
                            • note follow-up action items
                            • prioritize actions and do them
                            Experiment they ran: small teams in a bare garage + no rules = big win
                            • break out of routine
                            • minimize process overhead
                            • focus on value to customers
                            Self-selecting teams: let people self-select to the teams they want to work on

                            Shake things up
                            • Switch to continuous planning
                            • Story points vs. Ideal Days
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                            Daily and weekly time slices 12/14/2011
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                            I wanted to write a short post on the topic of time management, mainly asking a question as opposed to providing an answer. I'm curious to learn how readers manage their busy schedules and what time slicing method works for them.

                            By "time slicing," I'm referring to two opposing methods that I've considered for time management:
                            1. Intra-day/small slices: Each day is filled with many types of activities that you need to be involved in. This means everyday you exercise, meet with customers, network with colleagues, do informational interviews, recruit, write code, do online marketing, eat, have fun, and sleep. That's a ton to fit in to one day, and each slice is necessarily small (or non-existent on certain days).
                            2. Intra-week/large slices: Separate days are devoted to separate activities. Huge swaths of time are devoted for intense focus on 1-2 important activities. For example, all coffee meetings, interviews, phone calls, etc. are on Fridays. All marketing work is on Wednesdays. Workouts are 2-3 days a week. And the rest of the days are all for intense work on ____ (fill in the blank for your most important function, like coding, recruiting, designing, etc.).

                            There are clearly pros and cons to each method. Large slices allow more intense focus and less switching costs. Small slices allow more "balance" in each day and quicker responses to opportunities that come up (like for phone calls, meetings, etc.). And sometimes you don't have a choice: if you really need to meet with someone who can only meet on a day that's not your "meeting day," it will disrupt your rhythm.

                            This decision also gets into the need to say no to various requests for help or meeting (or at least delays if not no's), which can often be painful to do.

                            What do you do? What methods have you found useful in managing your time along this axis?
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                            Rant on poor customer service 12/12/2011
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                            This post won't be news for anyone. I believe customer service is critical for long-term business success and customer retention, and I don't understand how business owners who fail in customer service can look themselves in the mirror without shame.

                            In The Thank You Economy, Gary Vaynurchuk argues that the next economy we're entering into is one where direct customer engagement will be required of all companies, and those that don't grasp this will fail to survive. In Delivering Happiness, Tony Hsieh explains how striving fanatically after customer service became his company's mission. Even in Onward, Howard Schultz talks about how he got inspiration for customer service from Italy's oldest artisan cafe owners.

                            There are some everyday bad customer experiences that I just can't believe keep on occurring. Here are a few that come to mind immediately from my personal life:
                            • The dry cleaners that destroyed my wife's wedding dress and failed to fess up or take responsibility
                            • The hotel in New York that put us in a room right above an outdoor heating unit that was blaring louder than the traffic and rain outside the window (and claimed they weren't aware of the problem with the room beforehand)
                            • The vendor that installed a bunch of equipment in our home that kept failing (with each return visit containing a threat of charging us for service calls)
                            • Long lines at the post office and only one clerk at the window (the other one on an extended "break" or just not even there)
                            • The property management company that stopped servicing our building when we discovered they had failed to do regular required government filings
                            • The "customer service" phone lines that have wait times in excess of 5 minutes (and then make you repeat your personal information 3 times, each time from scratch with each new agent you're transferred to)
                            I truly hope our generation can put a stop to this and do things differently. For me, it's an ethical issue: poor customer service is the same as not providing the expected or promised value in a product or service, which is the same as stealing money or being dishonest.

                            Be responsible. If your shit breaks, man up and fix it; don't try to make more money from "service." Take end-to-end responsibility for your product or service, and do whatever you'd like to have been done to you if you were the customer. It's not a privilege to be your customer; it's a privilege for you to service the customer. Get it straight; our generation has choices, access to competitive information and online reviews, and is getting more and more used to amazing service. I hope you can keep up.
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                            Help me support New Orleans start-up culture 12/10/2011
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                            A good friend of mine from UCLA gave a speech in our first quarter about New Orleans, his hometown. Through his speech, I learned so much about the city and how much more complex and multifaceted it is than the media or tourism industry makes it out to be.

                            When he recently told me about the NOLABound program, I was really excited.  It a program to position New Orleans as a great place for start-ups and to increase awareness of the entrepreneurial culture in the city. I was really impressed with the initiative and want to do my part in helping to revive the city and increase entrepreneurship in areas outside the major tech hubs already out there. My friend encouraged me to apply to the program, and so I did.

                            You can check out my application here. I would appreciate your clicking the Like, Tweet, +1, and inShare buttons (not only for my own application but on any other page) so that we can get the word out. Thank you.
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                            Notes on Steve Jobs by Walter Isaacson 12/08/2011
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                            I really, really enjoying the book Steve Jobs by Walter Isaacson. It was a long book (my first three-part audiobook ever, over 17 hours of narration [definitely helps to listen at triple speed]) but very well written. Isaacson's style is very factual and to the point; lots of dialogue and many people's perspectives interlaced, and his narrative highlights all the important elements of the story. I definitely learned a lot about Jobs as a person and the legacy he created. I wished the book went even lower level into the details of the time between the Apple II and going public and how they actually managed to build and sell their products (those details were still pretty high level).

                            Takeaways
                            • Jobs had many positive and negative attributes. He was really weird and difficult to deal with as a person, which both helped and harmed him at many times.
                            • There are many paths to entrepreneurship, and every person operates differently in finding success.
                            • Apple and Jobs were not always the sources of creativity; Apple used acquisitions, outside contractors, and ad agencies to design many of the products and ad media that we now consider iconic Apple.
                            • Jobs went direct and always called on the top people for help; he didn't go it alone. From looking up the CEO of HP in the phone directory and calling him for a part as a teenager to calling up Bono, Bill Gates, and Bill Clinton, Jobs went to the source and the decision maker and never felt shy to state what he wanted.
                            • Walks can be a great way to connect with someone else.
                            • Sharing your feelings and being honest with others can be motivating.
                            • Entrepreneurs can convince everyone around them to work hard and believe in them through reality distortion fields.
                            • Don't worry about hyperbole or reputation; every product Jobs every released was "the greatest thing ever."
                            • There are some interesting parallels between Eastern spiritual traditions and entrepreneurship.
                            • Entrepreneurs must be constantly pitching and enthusiastic.
                            • A supportive family affects a person in fundamental ways.
                            Notes
                            • Jobs asked Isaacson to write his bio.
                            • Jobs was constantly pitching and enthusiastic.
                            • Wanted to be at intersection of humanities and tech
                            Childhood
                            • Abandoned, chosen, special
                            • Adopted
                            • Wants to control everything around him like product
                            • Father mechanic who taught him to build and design
                            • Care about parts, backs, and insides even when not visible
                            • Moved to Silicon Valley, defense contractors, loved computers
                            • Realized was smarter than parents
                            School
                            • Bored at school
                            • Played pranks
                            • Zen Buddhism
                            • Spirituality not dogma
                            • Home electronics kits
                            • Joined HP Explorers
                            • Did drugs, part of hippie movement
                            • Hated authority
                            Steve Wozniak
                            • Met in electronics class
                            • Built his own microprocessors
                            • Lots of pranks
                            • Phone phreaking
                            • Woz engineered, Jobs packaged for sale
                            • Dropout
                            • Patience was never his virtue
                            • Loved zen, Dylan, and acid
                            • Zen Mind, Beginners Mind
                            • Zen emphasis on intuition
                            • Vegetarian and weird diets
                            Reality distortion field
                            • Staring and silence, intensity
                            • Loved calligraphy and typography, nice design
                            • Atari
                            • Search for enlightenment, time in India
                            Breakout
                            • The Apple I
                            • Altair
                            • Counterculture and technology
                            • Wozniak had idea for personal computer with CPU, keyboard, and mouse in one package.
                            • Jobs thought of idea to sell computer.
                            • Apple name came from Jobs' fruit diet, simplicity, counter culture
                            • Simple partnership agreement
                            • Third partner left from personal liability fear, gave up 10% stake for $1600
                            • Sold first computers to retail shop, assembled in garage
                            • Bought parts after got customer order
                            Apple II
                            • Integrated package
                            • Great case
                            • Sequoia VC told him to get marketing guy
                            • Apple marketing philosophy (3 points from VC partner)
                            • Empathy
                            • Focus
                            • Impute (people judge book by cover)
                            • Girlfriend got pregnant but he ignored daughter
                            • Courts forced him to pay child support
                            • Xerox PARC
                            • GUI
                            • Bit mapping
                            • Great artists steal
                            Going public
                            • The Mac is born
                            • Reality distortion field
                            • Belief that rules didn't apply
                            • Incorporated vision and able to lie and deceive because deceives himself
                            • Binary distinction between great and horrible for the people he worked with
                            • Perfectionism
                            • Bad at making trade-offs
                            The design
                            • Simple and clean modernism
                            • Inspired by CuisinArt (funny that it's not the other way around)
                            • Friendly look
                            • Hired and contracted with designers
                            • Obsessed with perfect box and packaging
                            Building the Mac
                            • Crusade against IBM
                            • Mac incompatibility with other Apple models
                            • Wanted to give masses a controlled experience
                            • It's not done until it ships. (Different philosophy from "great engineers ship" or "perfect is the enemy of good.")
                            • The journey is the reward.
                            • Customer doesn't know what he wants.
                            • Dream of laptop and tablet
                            • Don't compromise.
                            • Some could stand up to him.
                            • Intra-company rivalry between Mac by Jobs and Lisa computer where he was kicked out.
                            Sculley
                            • Pepsi president
                            • Jobs more showman than businessman
                            • Rise of IBM PC
                            • Launch of Mac
                            • Chiat/Day made famous 1984 Mac ad
                            • 1/24/84 launch
                            • Greatest commercial ever
                            • Make product intros epic moments
                            Gates and Jobs
                            • Microsoft started programming apps for Mac (!)
                            • Licensed Microsoft's BASIC
                            • MS wrote Excel for Mac
                            • MS ripped off Windows but actually just ripped off Xerox PARC
                            • First version crude but iterated
                            • Thought MS had no taste
                            • Sculley just wanted to please Steve.
                            • Steve controlled him.
                            Exodus
                            • Wozniak quit to work on own remote control.
                            • Scully never became product person.
                            • Jobs abusive in organization
                            • Made Jobs resign because couldn't operate business
                            • Feeling of rejection at early age
                            NeXT
                            • Left and took key employees
                            • Was sued
                            • People couldn't trust his integrity.
                            • Many failures at NeXT matured his personality.
                            • Very stubborn
                            • Paid $100K for logo design consultant for 1 option only before any product existed
                            • Took minor design issues to extremes
                            • Education workstation product
                            • Ross Perot invested.
                            • Gates and Jobs fought over NeXT.
                            • Jobs wanted one controlled platform.
                            • Gates wanted compatibility.
                            • Huge launch party
                            • Jobs was the Andrew Lloyd Webber of product launches.
                            Pixar: technology meets art
                            • Jobs bought majority stake from George Lucas
                            • Was Lucasfilm animated division
                            • Pixar did deal with Disney.
                            Family man
                            • Met a woman, fell in love
                            • She was much older than him and Jobs eventually wanted kids
                            • Reconnected with biological family and sister
                            • Became more involved with his own daughter
                            • Jobs very mercurial, embrace and coldness
                            • Could be very romantic
                            • Met wife at talk he gave at Stanford GSB
                            • Fluctuates focus of attention between extremes of love and work
                            • His favorite place for vacation: Kona Village, Hawaii
                            • Married at Ahwahnee resort in Yosemite
                            • Moved to Palo Alto unpretentious house
                            • No security guards or live-in servants
                            • Kept backdoor unlocked
                            Toy Story
                            • Disney licensed Pixar computers
                            • Pixar went public after Toy Story release
                            The second coming
                            • Apple chose to license NeXT os and hardware
                            • Apple lost to Windows
                            • Jobs wanted to return to Apple as CEO and innovate
                            • Wanted to find Unix OS to build upon
                            • NeXT built a Unix OS
                            • Contest against BeOS
                            The restoration
                            • Kicked out CEO
                            • Came back, kicked out board
                            • Microsoft invested and committed to making Office for Mac
                            • Lots of phone calls between Jobs and Gates
                            • Cried a lot at emotional moments
                            • "Think Different" campaign
                            • Called famous people out of the blue when needed help or favors or when needed CEO somewhere to give exception
                            • Many wanted them to license OS
                            • Got out of all product lines except 4
                            • Many layoffs
                            Design principles
                            • Johnny Ive designer at Apple
                            • Hand drawn, emotional designs
                            • Jobs designed case, engineers had to make boards fit
                            • Design of packaging, have patents for boxes design
                            The iMac
                            • All in one
                            • Clear case
                            • Handle to grab, humanizes it
                            CEO
                            • Zero tolerance for poor performance of staff or suppliers
                            • Built just-in-time supply chain and build-to-order sales like Dell
                            • Hired Tim Cook for supply chain management
                            • Cut inventory
                            • Got 100 turtlenecks from Japanese designer of Sony uniform (Issey Miyake)
                            • Would park his Mercedes over 2 handicapped spots
                            • Claimed others' ideas as own
                            • Didn't take any salary or stock at first
                            • Asked for airplane instead
                            • OS X came from NeXT
                            Apple Stores and Genius Bars
                            • Store size conveys size of brand
                            • Wants to be in most expensive locations
                            • Visual and touching design studio
                            • If something is not right, fix and delay launch instead launching imperfectly.
                            • Insisted on only stone from Florence sidewalks.
                            • Signature staircase
                            • Jobs has patents on staircase design.
                            • Apple has highest traffic and sales volume in retail.

                            The digital hub
                            • FireWire
                            • Control hardware, software, media devices
                            • Adobe didn't put Photoshop on Mac and Jobs was pissed; didn't put flash on iPad
                            • iTunes (had bought SoundJam startup)
                            • iPod
                            • Scroll wheel
                            • Pure white color
                            • Iconic ads
                            • Outspent all other music players in ads because improved Mac image

                            iTunes store
                            • Legal alternative to piracy
                            • Individual songs
                            • Had to sign up music companies
                            • Sony could have done same as Apple with computer, music, and player, but its divisions didn't work together.
                            • Moved to PC against Steve's wishes
                            • Never worry about cannibalization of own products with new ones
                            • Microsoft attempt (Zune) failed.
                            • Mini, Shuffle
                            • iTunes sold 1 million songs in 6 days
                            • Started to sell magazines, videos, apps
                            Music man
                            • A person is defined by their iPod list.
                            • Bob Dylan, Beatles were his favorites
                            • Bob Dylan digital boxed set sold, huge marketing
                            • Apple gave musicians brand to leverage (reverse of celebrity endorsement); iPod gave access to younger listeners.
                            • Beatles Apple Core trademark suit
                            • Later suit when Apple went into music
                            • Bono wanted to do ad for Apple promoting new album
                            • Black Nano with royalty to U2
                            • Red iPod for philanthropy
                            • Loved Yo-Yo Ma
                            Pixar's friends and foes
                            • Dreamworks came out with Ants competing with Pixar's A bugs life
                            • 2nd product syndrome: don't understand why first product successful so if can survive second one, will be fine
                            • Creativity comes from spontaneous meetings and random collaboration; must meet in person, not by email
                            • Eisner and Jobs clashed
                            • Iger worked better with Jobs
                            • Introduced iPod video including Disney ABC shows
                            • Disney wanted to buy Pixar
                            • Took a lot of walks with everyone he met with

                            21st century Mac
                            • Intel architecture
                            • New desktop iMac design
                            • Huge stock grants and CEO compensation controversy
                            • Kidney stones from overwork on Apple and Pixar
                            • Cancer diagnosis
                            • Refused surgery for a while and did vegan diet and acupuncture
                            • Stanford commencement address
                            • Tim Cook helped when was out for surgery
                            • Monday morning executive meetings across divisions from 9am-12pm
                            • Focus on 2-3 things at a time
                            • Mortality keeps all in perspective

                            iPhone
                            • Hated all phones
                            • Tried partnership with Motorola for Rockr
                            • Wanted to build phone they wanted to use
                            • iPad idea had already been in progress and merged with iPhone
                            • Multitouch feature
                            • Acquired Fingerworks company with gestures parents
                            • Rounded rectangles
                            • Swipe to open
                            • Light sensor for when on phone
                            • Guerilla glass by Corning
                            • Famous speech for product launch

                            Round 2
                            • Lost a lot of weight due to diets
                            • Cancer returned
                            • Didn't give full truth
                            • Stock price dropped due to health
                            • Didn't jump the queue for liver transplant
                            • Dual listed on Tennessee list and got transplant there
                            • Hated design of various medical apparatuses
                            • Tablet project
                            Apps
                            • Journalism and books
                            • Apple owns the customer and credit card
                            • Mad at Android
                            • Wants end-to-end control
                            • Hates Flash
                            • Apple: design before engineering
                            • Antenna problem in iPhone 4
                            • Got Beatles finally in iTunes Store

                            To infinity
                            • Ipad 2
                            • Detachable cover
                            • Took wife to original wedding site for 20 year anniversary
                            • iCloud
                            • MobileMe sucked
                            • New signature office campus

                            Round 3
                            • Son did cancer research at Stanford
                            • Loved Kyoto
                            • Jobs always dismissive of philanthropic efforts
                            • Involved with helping Obama
                            • Medical leave
                            • Lack of integrated approach among caretakers
                            • Wanted orderly transition of power at Apple
                            • Visits at his house by Gates, Clinton, etc.
                            Legacy
                            • End-to-end integration
                            • Intensity
                            • Hero/shithead dichotomy
                            • Food is best thing ever or inedible
                            • Open vs. closed systems
                            • Delight the user vs. empower the user
                            • Got people to do things they never thought possible
                            • Didn't invent much outright but put things together in good design
                            • Apple II, Macintosh, Toy Story, Apple stores, iPod, iTunes Store, iPhone, App Store, iPad, iCloud, Apple itself
                            • Not exceptionally smart but a genius in another way
                            • Magician genius (intuition not processing power)
                            • Design sensibility
                            • Perfectionism
                            • Products, not profits, are his motivation
                            • Figure out what customers will want, not market research or giving what they ask for directly.
                            • Deep current of humanity in innovation
                            • Great artists were great at science
                            • For Microsoft, winning business was more important than making great products
                            • Tell people to their face if something sucks.
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                            Lessons Learned from Week 10 of Fall Quarter 12/06/2011
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                            Ethics
                            • Re-read The Great Gatsby by F. Scott Fitzgerald from an ethics perspective (not from a literature one)
                            • Really different perspective thinking about ethics and also doing re-reading it 10 years after my first read
                            • Truth vs. dishonesty
                            • Nobility vs. status
                            • Old money vs. nouveau riche
                            • Cultural transplants, boredom
                            • Moral values in '20s
                            • importance of novels and short stories as conveyors of ethical lessons and questions (and thermometers of social values)
                            • There is one moral truth, but all people have a different view of it and only see a portion of it.
                            Behavioral finance
                            • Average SAT score of college attended by fund manager positively related to performance
                            • Manager age negatively related to performance
                            • # of items a stock has been in the news related to weight in mutual fund portfolios
                            • Media coverage affects stock picking
                            • Mutual funds not sophisticated
                            • Media just grabs their attention and they go for it (not very careful)
                            • No relationship between brand visibility and future returns
                            • Individual's stock market participation influenced by social interaction and level of sociability
                            • Higher wealth, higher education level, race (non-Hispanic) have higher investing participation rate
                            Doing deals
                            • Major changes and risks in newspaper and broadcasting business in last 10 years
                            • Secular change (growth of internet impacting traditional media businesses)
                            • Regulatory risks
                            • Tender offers in public companies
                            • Tax liability issues
                            • Public letters to management
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                            Lessons Learned from Week 9 of Fall Quarter 12/04/2011
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                            Ethics
                            • Duties of fiduciary
                            • Loyalty (no self-dealing)
                            • Care (reasonable study, judgment)
                            • Candor/disclosure (have to tell what you know, can't hold back for yourself)
                            • Foreign Corrupt Practices Act
                            • Bribes vs. grease payments
                            • Must be authorized and booked properly
                            • Professional codes of ethics: CYA codes (not about morality)
                            • Business experience, societal norms, values
                            • Trust, integrity, fairness, caring/compassion
                            • Normative ethics (I'm ok, you're ok, based on society at time)
                            • Kantien ethics (rigid, rules-based for what required for being considered human race; never can lie)
                            • Utilitarianism (greatest good for greatest number; leaves some people out)
                            • Social justice
                            • Religion
                            • Insurance value of average American dying in airplane (based on average age, earnings power): $1.2 million
                            • Insurance value of average Portuguese fisherman dying in airplane (based on average age, earnings power): $60K
                            • Is one worth more than other?
                            • 4 ways of reading Dante
                            • Surface level: plot
                            • Allegorical: myths and heroes
                            • Moral: custom and law
                            • Deep: spiritual, ethical
                            Behavioral finance
                            • Trading biases or How not to lose money in financial markets
                            • People tend to sell their winners too quickly and hold on to losers too long.
                            • Experts overconfident too; attribute success to effort not luck
                            • People take too much credit for their own success.
                            • Don't confuse brains with a bull market.
                            • Overconfidence leads to excessive trading.
                            • Trading is hazardous to your wealth.
                            • High portfolio turnover => low return
                            • Transaction fees kill.
                            • Women have less turnover in portfolios and do better than men.
                            • Marital status doesn't matter.
                            • Marriage helps make men better traders, but hurts women.
                            • Psychology: men need marriage, but not very good for women
                            • Single man has nothing to do (an idle man is the devil's workshop)
                            • Study of online trading
                            • People performed well before going online
                            • Accelerate trading after going online
                            • Trade more speculatively after going online
                            • Perform poorly after going online
                            • Self-attribution bias: take too much credit for successes, little blame for failures
                            • Illusion of knowledge (knowing vs. knowing the relevant, useful issues)
                            • Illusion of control (people prefer to roll their own dice)
                            • Individuals prefer stocks w/ high skewness and volatility (institutions prefer opposite)
                            • People with more speeding tickets and greater overconfidence in personality profile trade more.
                            Doing deals
                            • Oaktree: Real estate and CMBS deals
                            • Focus more on risk than reward in this type of asset management
                            • Don't lose others' money
                            • When market up, want average results
                            • When market down, want to beat others by not going down as much
                            • Responsibility to others, relationship
                            • Some properties can fetch ego buyers.
                            • Don't always destroy competitors; help them and be "go to" option that others turn to in time of need.
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                            Lessons Learned from Week 8 of Fall Quarter 12/02/2011
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                            Picture
                            Ethics
                            • Different leadership styles
                            • Coercive: force POV
                            • Authoritative: leader defines vision, team does details
                            • Affiliative: develops bonds with individuals for harmony
                            • Democratic: leader develops consensus in teams
                            • Pacesetting: leader sets the example by working hard
                            • Coaching: personality development of employees

                            Doing Deals
                            • Warren Buffett never negotiates or lowers price he pays
                            • He wants CEO who cares about business and sticking around after purchased (not looking for payday)
                            • He never reads analyst reports
                            • Reps & warranties much lighter in public M&A than private; don't survive after closing
                            • Value prop of Berkshire to CEO: permanent home
                            • Warren almost never pays in equity; never gives CEOs equity in BH
                            • Material adverse effect: material and adverse but excludes general economic conditions, industry conditions, and other carve-outs
                            • Break-up fees
                            • Operating covenants: after seller signs and until closing, will operate the biz in accordance with covenants (restrictions on dividends, etc.)
                            • Regulatory risk (antitrust): horizontal concentration (effects on competitors) in US vs. vertical relationships (effects on suppliers, customers) in EU
                            • Indemnifications and insurance: when selling public company, board wants protection from lawsuits that may come in relation to the deal and other lawsuits (D&O insurance with high limits); buyer indemnifies you and agrees to maintain D&O insurance at same limits for 3-5 years
                            • Employee benefit matters: single and double trigger option policies; need to examine which triggered by M&A transaction (part of due diligence)
                            • Negotiable: compensation of management, termination fees, mechanics of termination provisions, what will happen to management in general (not issue in Berkshire transactions)

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                              About Max Mednik

                              Max is an avid entrepreneur and student of life. He is a graduate of Stanford and founder of Ridacto and AMA Capital. He is a member of the business school class of 2012 at UCLA Anderson. He lives in Los Angeles with his family and spends his free time enjoying his many hobbies and interests.

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