Weekly Briefing No. 112 | Holiday Homework for Two Thousand and Greateen

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Want to set yourself up for a great next year? If so, here’s a handpicked list of videos and podcasts to take in, some “long reads” to check out and, if you’re blessed with the gift of added time, some books to read:

  • Andrew Lo on understanding market behavior
  • Will Beeson talks core banking with Thought Machine’s CEO, Paul Taylor
  • Community banker Jeffrey Ball dishes on de novos, marijuana and fintech
  • Crypto University’s Ryan Chadha talks about crypto-crash predictions
  • Why is charter school guru Eva Moskowitz idolized by hedge fund kingpins?
  • Insight by Tasha Eurich will help and humble you
  • Dawn of the New Everything by Jaron Lanier will provoke you
  • Raising the Floor by Andy Stern will inform you on an important topic

VIDEOS/PODCASTS

Wisdom of the crowd or madness of the mob?

“The fossil record is filled with examples of species that over-optimized for their environments and became extinct when those environments changed.” That wisdom is courtesy of Andrew Lo, and if you don’t have the time to read his 150,000-word book, Adaptive Markets: Financial Evolution at the Speed of Thought, we’d encourage you to watch his lecture below. In it, the AlphaSimplex chief and MIT professor explains how he migrated away from a steadfast belief in market rationality to one that emphasises adaptation to changing environments. The result is that depending on the circumstances, sometimes the crowd is wise, and sometimes it’s nuts. Given the present crypto-craze (See more in LONG READS), Lo’s perspective is especially useful to consider.

Bringing Google-style thinking to core banking.

We became a fan of Will Beesen’s Rebank podcast after hearing his excellent interview of Usama Fayyad, the former chief data officer at Barclays and Yahoo. In that discussion, Fayyad shed considerable light on the enormous challenges facing banks seeking to migrate from their legacy systems to ones optimized for new technologies. More recently, Beeson featured Thought Machine’s CEO, Paul Taylor, which is a great follow-up on that theme, particularly now, as several major banks have launched new app-only product initiatives. Chase’s Finn and Wells Fargo’s Greenhouse are two such examples in the US. In the UK, Taylor’s start-up is seeking to be on the front lines of similar efforts by focusing on reimagining an institution’s foundational layer with a “Google-style” core technology stack infused with smart contract innovation, cryptographic signatures and data analytics technologies.

A community banker’s take on de novos, marijuana banking and fintech.

Some financial innovation enthusiasts have an outmoded or overly harsh perception of community bankers. But like most things in financial services, things are often more nuanced than they first appear. A case in point is Jeffrey Ball, head of the American Bankers Association’s Government Relations Council and founder/CEO of Friendly Hills Bank in Los Angeles County. In the podcast below, Ball, an ex-investment banker, discusses the challenges posed by fintechs (“We operate with handcuffs”), his emphasis on relationships as being vital to the community bank value proposition, the “expanding issue” of banking the marijuana industry and de novo banks. We were impressed with Ball’s thoughtfulness throughout.

LONG READS

Cryptocurrency crash test dummies.

“Most of the economists and pundits who are eagerly anticipating (or even hoping for) a crash are from elite universities. More importantly, they are schooled in very old (200 years, some older than that) models and theories of government and economy. They swear by economic theories that start with assumptions like ‘Every consumer is a utility maximizing individual’ and ‘Economic agents are assumed to be rational.’” That’s an excerpt from The Crypto University’s Ryan Chadha, and while we diverge from his perspectives on a number of fronts, we nonetheless found value in reading his take on an impending crypto-asset crash.

An educator idolized by hedge fund managers.

Eva Moskowitz is founder and CEO of New York City’s Success Academy, a 46-school charter network attended by 15,500 mostly underprivileged students spanning kindergarten through 12th grade. By most accounts, the results of Success are “eye-popping.” In fact, 14 of the top 30 elementary schools in the entire state of New York, as ranked by standard test scores, were Success Academies. The kicker is that Moskowitz has done this despite being hampered and demonized by New York’s teachers unions, its current mayor and many other status quo protectors. Bold, bellicose and billionaire-backed, Moskowitz has demonstrated that poor children coming from challenging backgrounds can consistently outperform privileged kids from tony suburbs if they have the right tools. As a result, for brash fund managers and entrepreneurs dedicated to outperformance and contrarian thinking, Moskowitz has become a font of inspiration. On the back of Moskowitz’s recent memoir, The Atlantic published a thoughtful piece about her.

EVEN LONGER READS (I.E., BOOKS)

Insight. (Tasha Eurich)

We enjoyed every page of Eurich’s examination on the importance of self -awareness, which she describes as “the meta-skill of the twenty-first century” that is surprisingly developable. From the opening story about an American general’s humiliating defeat as a young man to her examination of blind spots to the “Cult of Self,” this book can knock you off the high horse you didn’t even know you were perilously riding. Our favorite passage on corporate self-awareness can be found on page 251: “Unaware companies fail to ask the rather arresting question that my colleague Chuck Blakeman likes to ask his clients: ‘What are you pretending not to know?’ Put simply, companies who fail to appreciate their market realities are fostering a collective delusion that will almost always sow the seeds of their undoing… It is often due to what Chuck calls ‘Quarterly Report Syndrome.’”

Dawn of the New Everything: Encounters With Reality and Virtual Reality. (Jaron Lanier)

Lanier is one of the most persuasive technology skeptics around. He’s also an accomplished computer scientist and musician. And one more thing: he’s generally thought to be one of virtual reality’s forefathers. If Elon Musk is the 21st century’s Thomas Edison, then Lanier is like a modern-day, highly eccentric blend of Buckminster Fuller, Marshall McLuhan and Arnold Schoenberg. His new book, which is off-putting at points, nonetheless serves as an insightful meditation on VR’s past and future. And like all of Lanier’s books/manifestos, this book offers a fascinating perspective on technology’s evolving role in society.  

Raising the Floor: How a Universal Basic Income Can Renew Our Economy and Rebuild the American Dream. (Andy Stern)

We received this book from one of the most thoughtful fintech VCs active today. At first, we thought it would be like all of the other “UBI is the only answer” stuff we’ve read, but to our surprise, Andy Stern’s 2016 book is more than that. Stern, who was arguably the most effective labor union leader of his generation (before abruptly resigning), travels far and wide in his journey to make the case for UBI. His particular brand of UBI ($10,000/year, tax-free, to everyone between the ages of 18 and 64) isn’t earth-shattering, but that’s okay. Since this book was published, other leading voices including Sam Altman have added their twists on UBI; however, this book remains a useful foundation for understanding the concept, whether you love it, hate it or are on the fence (that’s us).