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The Rebel Allocator
Good capital allocation is the secret sauce of business success and investment returns. How could what you spend money on inside a business NOT be of utmost importance?
I looked for a business person’s guide to effective capital allocation for years. I thought, “What a nice gift to send to the CEOs of my portfolio companies!” as visions of outsized returns danced in my head. To my dismay, the search came up dry. I decided I’d have to write my own.
I started at the individual customer transaction level and built all the way up to M&A, share buybacks, and beyond. To keep from boring you, I wrapped the lessons in a coming-of-age story of a college grad crossing paths with a wealthy Midwesterner. Imagine if The Karate Kid‘s Mr. Miyagi was modeled after a certain well-known Oracle. (OK, it’s not The Brothers Karamazov, but I’m not the most original guy.)
This book is for you if:
** You’re a business decision-maker who was never taught good capital allocation and you’re wondering what you’re missing. These lessons apply to small business people and Fortune 100 titans, and everyone in between. It doesn’t matter if you’re public or private, this book will help.
** You’re building or advising start-ups. Today’s disrupter is tomorrow’s capital allocator. Learn it early and save yourself a ton of headache.
** You’re an investor who appreciates the studies finding good capital allocators outperform the S&P 500 by 20x (no joke), and you want an easy way to help management and board members make better decisions. This book will also aid you in spotting those doing capital allocation right–such a huge advantage. (This was my original itch I wanted scratched. Part of me wanted to keep this book to myself and only send it to the management teams in my portfolio.)
** You’re fresh out of school and want to learn the good, and sometimes bad, sides of business. Or you might want to kindle an appreciation for the wonders of capitalism. (Please don’t send a copy of this book to Bernie Sanders.)
And perhaps most importantly, your journey will be less painful when mixed with a splash of humor and movie-like pacing. Even if you’re like me and read non-fiction almost exclusively, you’re going to be glad you took a chance on this one. This is fiction for the non-fiction reader.
Yours in improving capital allocation,
Jake
I looked for a business person’s guide to effective capital allocation for years. I thought, “What a nice gift to send to the CEOs of my portfolio companies!” as visions of outsized returns danced in my head. To my dismay, the search came up dry. I decided I’d have to write my own.
I started at the individual customer transaction level and built all the way up to M&A, share buybacks, and beyond. To keep from boring you, I wrapped the lessons in a coming-of-age story of a college grad crossing paths with a wealthy Midwesterner. Imagine if The Karate Kid‘s Mr. Miyagi was modeled after a certain well-known Oracle. (OK, it’s not The Brothers Karamazov, but I’m not the most original guy.)
This book is for you if:
** You’re a business decision-maker who was never taught good capital allocation and you’re wondering what you’re missing. These lessons apply to small business people and Fortune 100 titans, and everyone in between. It doesn’t matter if you’re public or private, this book will help.
** You’re building or advising start-ups. Today’s disrupter is tomorrow’s capital allocator. Learn it early and save yourself a ton of headache.
** You’re an investor who appreciates the studies finding good capital allocators outperform the S&P 500 by 20x (no joke), and you want an easy way to help management and board members make better decisions. This book will also aid you in spotting those doing capital allocation right–such a huge advantage. (This was my original itch I wanted scratched. Part of me wanted to keep this book to myself and only send it to the management teams in my portfolio.)
** You’re fresh out of school and want to learn the good, and sometimes bad, sides of business. Or you might want to kindle an appreciation for the wonders of capitalism. (Please don’t send a copy of this book to Bernie Sanders.)
And perhaps most importantly, your journey will be less painful when mixed with a splash of humor and movie-like pacing. Even if you’re like me and read non-fiction almost exclusively, you’re going to be glad you took a chance on this one. This is fiction for the non-fiction reader.
Yours in improving capital allocation,
Jake
270 pages, Kindle Edition
Published January 13, 2019
149 people are currently reading
1073 people want to read
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August 10, 2020
I liked this book because it teaches the basics of capital allocation in an entertaining, if slightly cringe-worthy, way.
It tells the story of Nick, an early 20’s man who is trying to figure out his life. He believes business is a force for evil but is drawn to a finance job by the appeal of a high salary. His boss pressures him to do an MBA while working, and the MBA leads him to hear a talk from Mr. Xavier (“Mr. X”).
Mr. X is a billionaire who has built an empire of hamburger joints called “Cootie Burger”. Mr. X is impressed by Nick and improbably asks him to write a biography of his life, while there is time left, as Mr. X has terminal cancer.
They organize a series of meetings, during which Nick learns from Mr. X the principles of capital allocation. Anyone familiar with Warren Buffet will know that Mr. X is a stand-in for Buffet.
As a novel it’s rough around the edges but succeeds in pulling you along to absorb the business lessons.
Sophisticated investors will unlikely benefit as the lessons only brush the surface of many concepts like zero-based budgeting, the role of markets in allocating resources to their best uses, how to think about acquisitions, real estate, and Return on Invested Capital (“ROIC”).
For someone just getting acquainted with business and finance, however, it’s an excellent primer and a transition to a deeper dive into capital allocation.
For me, the value of the book lies in the analogies and ways of thinking that arise from the conversations between Nick and Mr. X (read: Buffet)
- Mr. X tells the students that he will buy them any car they want, but the catch is that it must be the only car they will ever own. How would you treat such a car? Likely you would drive it sparingly, maintain it meticulously and inject only premium fuel. But the thought experiment is real: we only get one body and it must last our whole lives.
- If you get 1% better at something each day, how much better will be at the end of a year? Answer: 37x better. The magic of compounding!
- When companies set prices close to customer value, they maximize profits but neglect goodwill. Goodwill can be regarded as the excess value customers place on your product compared to its price. “You can store a lot more value in your customers’ minds than on your own balance sheet”. Profits are immediately available energy like glucose and goodwill is like fat reserves that can be tapped for future use.
- On acquisitions: “Deals fail in practice, but they never fail in projections”. You can present the numbers attractively to support any acquisition. You should be highly sceptical of synergies, especially revenue synergies.
- Return on Invested Capital (“ROIC”) is like your weight-lifting form. Just as you shouldn’t add more plates unless you can do so with good form, you shouldn’t invest fresh capital in a project until you have demonstrated a good ROIC (ideally in a small scale, low risk way)
- Profits are a sign that a company has done something good for its customers and for society (an efficient use of capital). Conversely, write-downs, restructurings and layoffs are the outcome of bad capital allocation.
- Like nature, economies are cyclical: “trees don’t grow to the sky in nature or in business”; Reversion to the mean is a truism. Be wary of late-cycle investments.
- The combination of industry overcapacity and a commodity product spell doom. When capacity self corrects, or demand grows the industry enthusiastically invests in new capacity and the cycle repeats
- Follow your own “internal scorecard” vs. abiding by someone else’s. Be useful in your own unique way.
- Success in business enables you to serve your fellow man, often more aptly than you could by joining a social movement or protest
- The secret to good capital allocation is to have a lot of options and pick the best one
- Leave your kids enough that they can do anything, but not so much that they can afford to do nothing
It tells the story of Nick, an early 20’s man who is trying to figure out his life. He believes business is a force for evil but is drawn to a finance job by the appeal of a high salary. His boss pressures him to do an MBA while working, and the MBA leads him to hear a talk from Mr. Xavier (“Mr. X”).
Mr. X is a billionaire who has built an empire of hamburger joints called “Cootie Burger”. Mr. X is impressed by Nick and improbably asks him to write a biography of his life, while there is time left, as Mr. X has terminal cancer.
They organize a series of meetings, during which Nick learns from Mr. X the principles of capital allocation. Anyone familiar with Warren Buffet will know that Mr. X is a stand-in for Buffet.
As a novel it’s rough around the edges but succeeds in pulling you along to absorb the business lessons.
Sophisticated investors will unlikely benefit as the lessons only brush the surface of many concepts like zero-based budgeting, the role of markets in allocating resources to their best uses, how to think about acquisitions, real estate, and Return on Invested Capital (“ROIC”).
For someone just getting acquainted with business and finance, however, it’s an excellent primer and a transition to a deeper dive into capital allocation.
For me, the value of the book lies in the analogies and ways of thinking that arise from the conversations between Nick and Mr. X (read: Buffet)
- Mr. X tells the students that he will buy them any car they want, but the catch is that it must be the only car they will ever own. How would you treat such a car? Likely you would drive it sparingly, maintain it meticulously and inject only premium fuel. But the thought experiment is real: we only get one body and it must last our whole lives.
- If you get 1% better at something each day, how much better will be at the end of a year? Answer: 37x better. The magic of compounding!
- When companies set prices close to customer value, they maximize profits but neglect goodwill. Goodwill can be regarded as the excess value customers place on your product compared to its price. “You can store a lot more value in your customers’ minds than on your own balance sheet”. Profits are immediately available energy like glucose and goodwill is like fat reserves that can be tapped for future use.
- On acquisitions: “Deals fail in practice, but they never fail in projections”. You can present the numbers attractively to support any acquisition. You should be highly sceptical of synergies, especially revenue synergies.
- Return on Invested Capital (“ROIC”) is like your weight-lifting form. Just as you shouldn’t add more plates unless you can do so with good form, you shouldn’t invest fresh capital in a project until you have demonstrated a good ROIC (ideally in a small scale, low risk way)
- Profits are a sign that a company has done something good for its customers and for society (an efficient use of capital). Conversely, write-downs, restructurings and layoffs are the outcome of bad capital allocation.
- Like nature, economies are cyclical: “trees don’t grow to the sky in nature or in business”; Reversion to the mean is a truism. Be wary of late-cycle investments.
- The combination of industry overcapacity and a commodity product spell doom. When capacity self corrects, or demand grows the industry enthusiastically invests in new capacity and the cycle repeats
- Follow your own “internal scorecard” vs. abiding by someone else’s. Be useful in your own unique way.
- Success in business enables you to serve your fellow man, often more aptly than you could by joining a social movement or protest
- The secret to good capital allocation is to have a lot of options and pick the best one
- Leave your kids enough that they can do anything, but not so much that they can afford to do nothing
April 12, 2020
Fantastic read!!
This book brought to life Complex business concepts and ideas through the power of storytelling and analogies. Enjoyable read throughout.
This book brought to life Complex business concepts and ideas through the power of storytelling and analogies. Enjoyable read throughout.
January 17, 2024
Stories are always easier to read than non fiction books. It’s a quirk of the human mind that this is the case; I think we’re basically built for stories.
The Rebel Allocator is a story distillation of Warren Buffet’s (and Charlie Munger’s) business philosophies. The author, Jacob Taylor, said that he wrote this book for his kids, because it would be way more interesting to them than a non-fiction book. What applies to Taylor’s kids applies to the general reader: I believe the book is better for it.
I’ll echo what other reviewers have said here: if you’re already familiar with Buffett and Munger’s writings on business and life, skip this novel. But if you’re not, or if you have kids (or friends who are interested in business!) buy this book for them. You won’t regret it.
The Rebel Allocator is a story distillation of Warren Buffet’s (and Charlie Munger’s) business philosophies. The author, Jacob Taylor, said that he wrote this book for his kids, because it would be way more interesting to them than a non-fiction book. What applies to Taylor’s kids applies to the general reader: I believe the book is better for it.
I’ll echo what other reviewers have said here: if you’re already familiar with Buffett and Munger’s writings on business and life, skip this novel. But if you’re not, or if you have kids (or friends who are interested in business!) buy this book for them. You won’t regret it.
January 27, 2019
The book is exceptionally well written and keeps you hooked as the story progress.
While most Buffett-Charlie fans won’t find much new material - what makes it interesting is how a (semi)-fictional story is woven around their lessons.
If you have teen kids - make sure you get a copy for them. I plan to hold on to a copy to give to my one year old daughter at the right time.
While most Buffett-Charlie fans won’t find much new material - what makes it interesting is how a (semi)-fictional story is woven around their lessons.
If you have teen kids - make sure you get a copy for them. I plan to hold on to a copy to give to my one year old daughter at the right time.
August 2, 2019
This is a wonderfully written book by Jacob Taylor, presenting ideas/teachings from Warren Buffett and other businessmen in fictional format, with a touch up on personal life lessons as well. The book is certain to have life long impact on readers, if put to application.
July 7, 2019
Exceptional book.
This is a phenomenal read & highly recommended for heads of companies, corporate VPs, Portfolio managers, individual investors and even someone starting out with their investment research.
Jacob (Jake) explains the basic concepts in such simple terms that even someone new to investing would understand complex topics of capital allocation, buybacks, M & As, expansion & growth, ROIC, etc. I am so glad that a book has been written on the subject of capital allocation. One of the main characters in the novel Mr. X could be considered to be either Mr. Munger or Mr. Buffett and the book contains lot of their eternal wisdom. A great value for money and well worth reading again & again.
Thank you Jake, for this wonderful work of literature.
This is a phenomenal read & highly recommended for heads of companies, corporate VPs, Portfolio managers, individual investors and even someone starting out with their investment research.
Jacob (Jake) explains the basic concepts in such simple terms that even someone new to investing would understand complex topics of capital allocation, buybacks, M & As, expansion & growth, ROIC, etc. I am so glad that a book has been written on the subject of capital allocation. One of the main characters in the novel Mr. X could be considered to be either Mr. Munger or Mr. Buffett and the book contains lot of their eternal wisdom. A great value for money and well worth reading again & again.
Thank you Jake, for this wonderful work of literature.
February 2, 2019
It's a book for someone who's new to investment world and who hasn't read much about Buffett & Munger. If you happen to be one of those then this book is definitely for your. You can learn the business nuggets of Buffett in a tightly woven fictional story. It's not very detailed but will certainly help the person to build a basic framework on how and what to look at businesses.
But if you have read decent amount on Buffett & Munger, I would give a pass to the book.
But if you have read decent amount on Buffett & Munger, I would give a pass to the book.
May 28, 2019
Nothing of particular value for anyone familiar with the teachings of Buffett and Munger. The novel-like style results in a mixed bag of endearing approachability and irritating meandering.
January 4, 2025
If you are new to understanding how large businesses allocate capital, but find non-fiction or finance jargons overwhelming, this novel is perfect for you. It weaves a story about an unexpected bond between an old billionaire and a young student and their conversations about the timeless wisdom of Warren Buffett.
Since I work in the mutual fund industry, the finance concepts were too basic and fiction wise, very mid.
Since I work in the mutual fund industry, the finance concepts were too basic and fiction wise, very mid.
Want to read
March 30, 2020Tobias Carlisle interviews Jake Taylor on The Acquirers Podcast:
https://acquirersmultiple.com/2019/03...
Jake Taylor's interview on TIP:
https://www.theinvestorspodcast.com/e...
https://www.theinvestorspodcast.com/t...
https://acquirersmultiple.com/2019/03...
Jake Taylor's interview on TIP:
https://www.theinvestorspodcast.com/e...
https://www.theinvestorspodcast.com/t...
October 12, 2020
Jake Taylor takes a combination of free market economics and value investing to distill it in an easy to read piece of fiction with several subtle and not so subtle to some of the world's greatest investors and economists.
As a typical reader of nonfiction, this story was refreshing and informative.
As a typical reader of nonfiction, this story was refreshing and informative.
April 7, 2020
Huh. I didn't mark when I started reading this book (shrug).
Well, I just finished and MUST give this an 11-star rating. (Read the book to understand.)
There is much wisdom in this book about managing one's capital. Every person I know is their own CEO and, even though the focus is on CEO's the fictional format makes it invaluable to every person.
I am amazed at how much I enjoyed this book. Thank you, Jacob Taylor, for inspiration, wisdom and re-energizing my lif.
Well, I just finished and MUST give this an 11-star rating. (Read the book to understand.)
There is much wisdom in this book about managing one's capital. Every person I know is their own CEO and, even though the focus is on CEO's the fictional format makes it invaluable to every person.
I am amazed at how much I enjoyed this book. Thank you, Jacob Taylor, for inspiration, wisdom and re-energizing my lif.
February 1, 2020
Jacob Taylor tried hard to create a definitive book on capital allocation...and even harder to create an engaging read out of a dry subject by inter-weaving it through a fictional story. Unfortunately, he fails on both counts. I have read many outstanding books on capital allocation; all far superior to the lessons of The Rebel Allocator. Jacob Taylor is correct....capital allocation is one of the most important, but often neglected or mismanaged, responsibilities of CEO's. However, The Rebel Allocator provides little insight into the mastery of capital allocation theory, techniques and applications. The fictional story detracted further from the effectiveness of the book. It was predictable and shallow, though Mr. Taylor does have a sense of humor. I assume that he was trying to emulate the style of Eliyahu Goldratt's business classic: The Goal. He did not succeed. The Goals remains a classic due to the quality of the writing, the mastery of the subject matter, the novel business lessons and, as an "extra", a delightful fictional story. The Rebel Allocator falls miles short of the standard established by The Goal. I do not recommend The Rebel Allocator.
October 7, 2020
I picked it up after it was mentioned in the Investors Podcast. They recommended the book highly. After hearing that Mr. Munger called the author I was intrigued to give it a try. I listened to the audible version.
The book is well written. I watched an interview on The Acquirers Podcast and Jacob's hard work to write a story has paid off well. It is simple to follow and hard to stop reading. Charlie Munger said that he finished it with one sitting and I had pretty much the same experience. I listened to the parts of Mr. X's teachings twice.
I strongly recommend reading it if you are in management or investing.
The book is well written. I watched an interview on The Acquirers Podcast and Jacob's hard work to write a story has paid off well. It is simple to follow and hard to stop reading. Charlie Munger said that he finished it with one sitting and I had pretty much the same experience. I listened to the parts of Mr. X's teachings twice.
I strongly recommend reading it if you are in management or investing.
August 13, 2019
I've come across this book as a recommendation from one of the investors I follow and appreciate. It does distill all the core concepts on how to evaluate a business which is run well and how best to simplify decision making for investors. It is told as a fictional story where a young student working a job with an investment firm is taught by an investor (who seems very similar to Mr.Buffet).
This is particularly helpful for any new investor and who doesn't have a great finance background but are trying to enter into world of investment. Kudos to author for the style.
This is particularly helpful for any new investor and who doesn't have a great finance background but are trying to enter into world of investment. Kudos to author for the style.
March 17, 2019
Engaging novel that percolates financial and investing wisdom from the greatest
Fun novel that pulls at your heart strings narrated in literary embellished and aptly put figures of speech that's an excellent primer on how to invest for the novice and a reminder to the pro on focusing on the simple and what's truly important!
Fun novel that pulls at your heart strings narrated in literary embellished and aptly put figures of speech that's an excellent primer on how to invest for the novice and a reminder to the pro on focusing on the simple and what's truly important!
August 2, 2020
Decent basic book. Story is a bit corny and basic but is just a vehicle for the business lessons within.
November 12, 2021
Decent for some investment strategy, but the underlying story is pretty mediocre.
April 4, 2019
One of those books you need to give to your children to read...
I didn`t have time to wonder whether this book was going to be great or dreadful as I first heard of it directly from the author on a new podcast - Tobias Carlisle`s The Acquirers Podcast - that had appeared in my list, where it was introduced as having been positively reviewed by Charlie Munger: if it`s good enough for him...
I suspect that it is somewhere between difficult and impossible to write a book that both explains the basic principles of capitalism as a trade and makes the technical-sounding function of capital allocation understandable and enjoyable, but with this novella Jacob Taylor has done a pretty good job. So good in fact that I have no hesitation in recommending this to a) anyone in business b) definitely anyone who owns and runs a business (irrespective of size) c) anyone looking to enter the business world or study business or economics d) anyone with a private sector job who wants to understand the system they are in e) anyone with even the vaguest responsibility for formulating public policy especially legislation that impacts business owners and entrepreneurs f) anyone responsible for running other peoples money g) anyone who thinks they need to comment on - positively or negatively - the capitalist system and h) anyone visiting from another planet who needs a primer on this strange, seemingly chaotic system of resource allocation that we have fashioned over the past 1.000 years (or so). Everybody else can safely ignore this book.
Those of us who have spent our adult lives being influenced by the Buffett/Berkshire paradigm will recognize many or most of the nuggets of wisdom and the intellectual framework into which they have been set. That makes this novella feel comfortable rather than trite as Jacob Taylor has managed to weave the wisdom he thinks we should learn from Buffett et al. into a good little story and made what should be dry material into wearable homespun. Tolstoy it is not, but this is definitely one of a handful of books that I would recommend that my late teenage, student age children read in order to get them thinking „right“ about the commercial world into which they are slowly emerging in whatever function.
I didn`t have time to wonder whether this book was going to be great or dreadful as I first heard of it directly from the author on a new podcast - Tobias Carlisle`s The Acquirers Podcast - that had appeared in my list, where it was introduced as having been positively reviewed by Charlie Munger: if it`s good enough for him...
I suspect that it is somewhere between difficult and impossible to write a book that both explains the basic principles of capitalism as a trade and makes the technical-sounding function of capital allocation understandable and enjoyable, but with this novella Jacob Taylor has done a pretty good job. So good in fact that I have no hesitation in recommending this to a) anyone in business b) definitely anyone who owns and runs a business (irrespective of size) c) anyone looking to enter the business world or study business or economics d) anyone with a private sector job who wants to understand the system they are in e) anyone with even the vaguest responsibility for formulating public policy especially legislation that impacts business owners and entrepreneurs f) anyone responsible for running other peoples money g) anyone who thinks they need to comment on - positively or negatively - the capitalist system and h) anyone visiting from another planet who needs a primer on this strange, seemingly chaotic system of resource allocation that we have fashioned over the past 1.000 years (or so). Everybody else can safely ignore this book.
Those of us who have spent our adult lives being influenced by the Buffett/Berkshire paradigm will recognize many or most of the nuggets of wisdom and the intellectual framework into which they have been set. That makes this novella feel comfortable rather than trite as Jacob Taylor has managed to weave the wisdom he thinks we should learn from Buffett et al. into a good little story and made what should be dry material into wearable homespun. Tolstoy it is not, but this is definitely one of a handful of books that I would recommend that my late teenage, student age children read in order to get them thinking „right“ about the commercial world into which they are slowly emerging in whatever function.
January 7, 2020
A book with the potential to be an extraordinary reference to learn about business reduced to an incredibly annoying book to read.
Let me start with the good side of things. I found the content of this book regarding business TRULY invaluable. As a newbie in this world, I adored the simplicity with which the author was able to explain incredibly complex subjects and make total sense out of them. In that aspect, it is nothing short of the perfect book to learn and I'll be going back to it indefinitely.
On the other hand, I could not get over it as I read along: Why, whyyy whyyy in the world would this guy choose fiction to teach business???. The novel side of it is not only incredibly poor, as in downright elementary level poor, but ends up being so detrimental to the object of the book which is teaching capital allocation. It is far from surprising though. The author isn't a novel writer nor was I expecting him to delight me with a captivating novel. Instead, he seems to have thought for some reason that it would be a great idea to teach business through it, regardless of obviously not having the proper literary skills to do so. Well, it isn't, it definitely isn't a good idea.
It was a constant turn off, and disturbing and I'd find myself skipping all the terrible story trying to stick to the true value in this book alone, which is not surprisingly, the field in which the author shines.
Last but not least. It is such an extremely lame ideological resource to have the cheap message of: "socialism is bad and capitalism is the saviour of this world" underlying the whole book. It doesn't take a genius to know already what the author believes in terms of economic religion, thus it was completely unnecessary to pass on that message in such a paternalistic way throughout a completely crappy story. It's exactly the same kind of condescending propaganda the Communists in the USSR used to show the wonders and beauty of Communism. All crap and BS, both, the communist and the capitalist, two sides of the same coin.
Conclusion: the author should've kept his novel writing as a hobby, his ideology be self-explanatory and stuck to what he knows best which is business. Had he done so, the book would've been half the size, way more useful and a bible to me.
Let me start with the good side of things. I found the content of this book regarding business TRULY invaluable. As a newbie in this world, I adored the simplicity with which the author was able to explain incredibly complex subjects and make total sense out of them. In that aspect, it is nothing short of the perfect book to learn and I'll be going back to it indefinitely.
On the other hand, I could not get over it as I read along: Why, whyyy whyyy in the world would this guy choose fiction to teach business???. The novel side of it is not only incredibly poor, as in downright elementary level poor, but ends up being so detrimental to the object of the book which is teaching capital allocation. It is far from surprising though. The author isn't a novel writer nor was I expecting him to delight me with a captivating novel. Instead, he seems to have thought for some reason that it would be a great idea to teach business through it, regardless of obviously not having the proper literary skills to do so. Well, it isn't, it definitely isn't a good idea.
It was a constant turn off, and disturbing and I'd find myself skipping all the terrible story trying to stick to the true value in this book alone, which is not surprisingly, the field in which the author shines.
Last but not least. It is such an extremely lame ideological resource to have the cheap message of: "socialism is bad and capitalism is the saviour of this world" underlying the whole book. It doesn't take a genius to know already what the author believes in terms of economic religion, thus it was completely unnecessary to pass on that message in such a paternalistic way throughout a completely crappy story. It's exactly the same kind of condescending propaganda the Communists in the USSR used to show the wonders and beauty of Communism. All crap and BS, both, the communist and the capitalist, two sides of the same coin.
Conclusion: the author should've kept his novel writing as a hobby, his ideology be self-explanatory and stuck to what he knows best which is business. Had he done so, the book would've been half the size, way more useful and a bible to me.
January 31, 2026
Fun, easy read that distilled many important business topics in fiction format. I found this book more useful for explaining some of these foundational business lessons than as a groundbreaking work of literature, but it excels in the former. I got a better understanding of some things in this book than I got from two business degrees. Some of my favorite lessons:
-Paying a dividend is essentially an admission of defeat by management that they are out of good ideas. You shouldn’t issue a dividend just because that’s what everyone else is doing. And even if you are out of good ideas, it’s often preferable to do stock buybacks instead of dividends because you’re giving the capital to the shareholders who actually need liquidity, not everyone evenly.
-For a business to work, it needs to be the case that cost < price < value to customer. The difference between price and cost is profit, and the difference between price and value to the customer is brand value. Moving price as close to value as possible will maximize near term profits, but it invites more competition and will lessen your brand with customers. Alternatively, having less profit and more brand value can reduce competition, spur growth via word of mouth, establish network effects, and build a moat that could actually maximize profitability in the long run.
-Without moving price around, you can increase profits by relentlessly trying to cut costs without harming experience, and you can increase brand value by trying to improve experience for a given cost.
-Effective capital allocation is basically an exercise in using the earth’s resources in a way that best meets people’s needs. A market based system promotes efficient capital allocation. This inherently has all sorts of environmental benefits and promotes people thinking of ways to use resources only in ways they are actually needed.
-Paying a dividend is essentially an admission of defeat by management that they are out of good ideas. You shouldn’t issue a dividend just because that’s what everyone else is doing. And even if you are out of good ideas, it’s often preferable to do stock buybacks instead of dividends because you’re giving the capital to the shareholders who actually need liquidity, not everyone evenly.
-For a business to work, it needs to be the case that cost < price < value to customer. The difference between price and cost is profit, and the difference between price and value to the customer is brand value. Moving price as close to value as possible will maximize near term profits, but it invites more competition and will lessen your brand with customers. Alternatively, having less profit and more brand value can reduce competition, spur growth via word of mouth, establish network effects, and build a moat that could actually maximize profitability in the long run.
-Without moving price around, you can increase profits by relentlessly trying to cut costs without harming experience, and you can increase brand value by trying to improve experience for a given cost.
-Effective capital allocation is basically an exercise in using the earth’s resources in a way that best meets people’s needs. A market based system promotes efficient capital allocation. This inherently has all sorts of environmental benefits and promotes people thinking of ways to use resources only in ways they are actually needed.
June 3, 2022
If you usually read fiction for the stories and just now transitioning into science, selfhelp, investing or whatever then this might be good for you. I specifically avoid story-based and fiction books, yet half of this is that kind of "filler" which made it very hard for me to digest the take home message, the useful material. Like once we are onto something then 15 minutes of storytelling until the next interesting bit... Why do I need to hear someone's life story to make myself a better investor or business owner? I liked some discussions such as on stock repurchases and the analogies like making a lemonade stand on borrowed money from your parents... But the real material is so little in between stories with his first sexy encounter with the girlfriend behind a waterfall and letting Mr. X go, it was just long and meh. And tried to end on an emotional note yet failed to reveal who Mr. X was? Why? Because he isn't a real person, just an imaginary dad figure. I prefer to learn from named someones directly via their books or letters (Buffett, Munger, Pabrai, etc). There must be something wrong with me but I prefer more "just give me the facts" kind of textbook-style investment books. Do I allocate my money better now because of this book? No. Have I heard about these allocation methods, principles, from other books detailing good CEO decisions and other sources? Yes. So not much new, just refreshing and rehashing stuff I learned already. Would prefer to give it bit better than neutral, probably a 3.5.
June 16, 2024
This book was terrible. I read it on a plane, and even as a plane book it was bad.
It seems to be yet another attempt to copy "The Goal" in its "novel with a business lesson format". The novel aspect is laughably bad -- the characters are ridiculous stereotypes, the plot is ridiculously contrived, and the author has a bunch of shticks that are just tiresome instead of funny (oh yes, another sex joke. And there's another jab against Marxism... how "insightful"). TBH, I would rate the quality of the prose as about on-par as the average fanfiction (which is to say, very bad), complete with an obvious self-insert and a totally unnecessary romance arc.
The actual business lessons presented are also... weirdly lacking? Like it has a couple of ideas (mostly copied from Warren Buffett AFAICT), but none of them are explored in very much depth and they're all just portrayed as "obvious" truths. What's the point of using a fictional format if you're not even going to explore the idea in interesting ways? Instead, we just get bland lectures from a "guru" character that we're just supposed to intrinsically believe.
I suspect the entire book could be condensed into maybe 20 pages of actual material (and honestly, I think I'm being very generous there). The rest is just pointless and poorly-written fluff.
It seems to be yet another attempt to copy "The Goal" in its "novel with a business lesson format". The novel aspect is laughably bad -- the characters are ridiculous stereotypes, the plot is ridiculously contrived, and the author has a bunch of shticks that are just tiresome instead of funny (oh yes, another sex joke. And there's another jab against Marxism... how "insightful"). TBH, I would rate the quality of the prose as about on-par as the average fanfiction (which is to say, very bad), complete with an obvious self-insert and a totally unnecessary romance arc.
The actual business lessons presented are also... weirdly lacking? Like it has a couple of ideas (mostly copied from Warren Buffett AFAICT), but none of them are explored in very much depth and they're all just portrayed as "obvious" truths. What's the point of using a fictional format if you're not even going to explore the idea in interesting ways? Instead, we just get bland lectures from a "guru" character that we're just supposed to intrinsically believe.
I suspect the entire book could be condensed into maybe 20 pages of actual material (and honestly, I think I'm being very generous there). The rest is just pointless and poorly-written fluff.
May 24, 2019
Simplemente genial!
Atraves de una novela, el autor logra que el lector aprenda mucho sin sentir que este es un libro tecnico o de difusion.
Definitivamente un libro que es digno de ser leido multiples veces.
Me es dificil encuadrar este libro en un tema, pues el autor ilustra temas que son muy utiles para conocer a inversionistas. Pero al mismo tiempo es un cofre de tesoro para administradores que llevan empresas.
Todo con ejmplos muy claros, unos popotes y mucho ingenio.
Me encanto que hace bastante hincapie en los errores de BBQ (tal vez carne asada aca en Mexico). Es decir errores que administradores e inversionistas hacen solo por tener algo que presumir a sus amigos ejecutivos o inversionistas cuando son invitados a una carne asada.
En fin, cierro con señalar que este libro es recomendado por el mismisimo Charlie Munger!
Un absoluto tesoro que de haber podido me hubiera leido sin parar en una sentada!
Atraves de una novela, el autor logra que el lector aprenda mucho sin sentir que este es un libro tecnico o de difusion.
Definitivamente un libro que es digno de ser leido multiples veces.
Me es dificil encuadrar este libro en un tema, pues el autor ilustra temas que son muy utiles para conocer a inversionistas. Pero al mismo tiempo es un cofre de tesoro para administradores que llevan empresas.
Todo con ejmplos muy claros, unos popotes y mucho ingenio.
Me encanto que hace bastante hincapie en los errores de BBQ (tal vez carne asada aca en Mexico). Es decir errores que administradores e inversionistas hacen solo por tener algo que presumir a sus amigos ejecutivos o inversionistas cuando son invitados a una carne asada.
En fin, cierro con señalar que este libro es recomendado por el mismisimo Charlie Munger!
Un absoluto tesoro que de haber podido me hubiera leido sin parar en una sentada!
December 27, 2020
I'm under the impression this is the best book I've read this year (over 25+). I have literally finished it in one day, so it's probably true and I'm not just being fooled by recency bias :)
It is a fiction book, but delivering important on businesses, capital allocation but also on life in general (same genre of books such as "The Goal" and "The Phoenix Project", which are less philosophical about life though).
Telling a story about about a dying man was very powerful and poignant, I'm definitely going to look for similar books: if you want to appreciate more the impermanence of life, it's definitely worth reading a cohesive narrative over a hundred of blog posts on memento mori.
In conclusion, I'm definitely emerging out of this book not only with a new framework on how to evaluate businesses, but also with greater appreciation for life.
It is a fiction book, but delivering important on businesses, capital allocation but also on life in general (same genre of books such as "The Goal" and "The Phoenix Project", which are less philosophical about life though).
Telling a story about about a dying man was very powerful and poignant, I'm definitely going to look for similar books: if you want to appreciate more the impermanence of life, it's definitely worth reading a cohesive narrative over a hundred of blog posts on memento mori.
In conclusion, I'm definitely emerging out of this book not only with a new framework on how to evaluate businesses, but also with greater appreciation for life.
March 25, 2019
This is a nice book about investing. It comes in the form of a novel which makes it much easier to read and much more interesting. It is very well written as well. I would definitely recommend this book to people.
The only two negatives that I could find are that if you are interested in investing, you definitely know about Warren Buffet and his strategy. Many books have been written on his philosophy. Hence, if you have done a bit your "homework" this doesn't add much. The other negative that personally didn't like is that the main character (the old guy) is way too similar to the character of Warren Buffet. I would prefer if the author had given some similarities but at least change the character a bit. Even some main events of the old guy's life are similar with events from Buffet's life..
The only two negatives that I could find are that if you are interested in investing, you definitely know about Warren Buffet and his strategy. Many books have been written on his philosophy. Hence, if you have done a bit your "homework" this doesn't add much. The other negative that personally didn't like is that the main character (the old guy) is way too similar to the character of Warren Buffet. I would prefer if the author had given some similarities but at least change the character a bit. Even some main events of the old guy's life are similar with events from Buffet's life..
July 10, 2019
A very unique way of giving basic and somewhat advanced lessons in business and economics (mainly from Warren Buffett, Charlie Munger and even Jeff Bezos). I currently know of no other fictional book that even attempts to do what Jacob Taylor did with this book. He easily navigates and explains many fundamental principles and how you can not only apply them to business but life as well.
It's a great book for someone in high school. I wish I'd had this book 15 years ago. It's just a little too young adult at this point in my life. That's not to say I didn't enjoy the book and get things from it. I learned quite a bit, actually.
This book will be a gift I hope to give to a few teenagers, including my own someday.
It's a great book for someone in high school. I wish I'd had this book 15 years ago. It's just a little too young adult at this point in my life. That's not to say I didn't enjoy the book and get things from it. I learned quite a bit, actually.
This book will be a gift I hope to give to a few teenagers, including my own someday.
July 13, 2019
This is a wonderful book. It is written in the form of a novel, the plot is simplistic but the lessons are valuable. For those who have read or familiar with Buffett and Munger, there maybe no new materials, but then I don't think it distract from the book. It actually enhances the lessons that one needed to learn. Jason Zweig of WSJ said of his job as "saying the exact same thing in such a way that neither my editors nor my readers will notice I'm repeating myself." I know I need constant reminder/refresher and this book just provided it. For those new to business or investment, this book is a great start of your journey.
May 25, 2020
Capital allocation is a fascinating yet under-explored subject. There are scores of good articles, blog-posts and published books about business strategy. However capital allocation is a under-explored
theme best left to few masters like Warren Buffett and Charlie Munger. Jacob has delved into this area and did a wonderful job. He has explained a complex subject in the form of fictional narrative. The book keeps reader hooked and curious all the time. Jacob has borrowed heavily from other authors and master practitioners like Buffett and Munger and explained the concepts lucidly. There are few ideas helpful not only in the areas of business/investing, but life in general.
theme best left to few masters like Warren Buffett and Charlie Munger. Jacob has delved into this area and did a wonderful job. He has explained a complex subject in the form of fictional narrative. The book keeps reader hooked and curious all the time. Jacob has borrowed heavily from other authors and master practitioners like Buffett and Munger and explained the concepts lucidly. There are few ideas helpful not only in the areas of business/investing, but life in general.
January 9, 2021
If you are not keen on reading Warren Buffet's letters but would like to learn what he's all about, maybe you should consider The Rebel Allocator. Learning value investing in fiction form is arguably unconventional yet very effective. The stories shared throughout the book are not only applicable to investors but also to board members, managers, employees, and even self-proclaimed socialists and environmentalists like the author and I! Loved the insights into behavioral psychology research which has always driven so much of crowd thinking and investing. Good capital allocation is good for everyone!
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