Guest User

August 25, 2022

Episode 215: Asynchronous Work & Effective Equity Duration (plus Reading Habits w/ Harley Finkelstein)

Guest User

August 25, 2022

In today’s episode, we start the show with a brief highlight of recent episodes, upcoming guests, and feedback we have received about the show. We then review the book Running Remote, which provides evidence for the benefits of working remotely and asynchronous management. We also outline the three essential principles of an asynchronous mindset. We discuss the positives and benefits of remote work, why hybrid work is a flawed approach, and how to recreate face-to-face meetings in a remote world. We also give listeners a breakdown of an interesting journal article about inferring stock duration and equity trades, including key takeaways from the papers. We then welcome our special guest, Harley Finkelstein, to talk about the role that reading plays in his life. Harley is a lawyer, entrepreneur, and the President of Shopify and uses what he reads to push him further in his professional life. In our conversation, we learn the role reading has played in Shopify’s culture, what his favourite books are, and inner details about his reading habit. Tune in for another jam-packed episode!

Key Points From This Episode:

We start the show with a recap of previous episodes and upcoming guests. [0:00:00]
A brief highlight of some of the reviews we have received about the show. [0:03:41]
An update on the Rational Reminder 22 and 22 reading challenge. [0:06:35]
This week’s review of the book, Running Remote. [0:09:24]
The three fundamental principles of the asynchronous mindset. [0:16:58]
Hear what the seven deadly sins are regarding remote team transitions. [0:24:35]
Cameron shares a compelling paragraph from the book, Running Remote. [0:28:04]
Learn a mind-blowing statistic Cameron read in a Bloomberg article. [0:32:31]
Ben breaks down a journal article about inferring stock duration. [0:33:47]
Another interesting paper regarding the retail price of equity trades. [0:44:10]
Introduction to our guest Harley Finkelstein to talk about our 22 and 22 challenge. [0:47:20]
Harley shares details about his reading habit. [0:47:50]
How he incorporates what he has learned from reading into his professional life. [0:49:57]
Ways in which Harley finds interesting books to read. [0:51:58]
The role reading has played in Shopify’s culture and work ethic. [0:53:57]
What books have had the biggest impact on him. [0:58:12]
Find out whether his daughters have embraced his love for books. [1:02:29]
Advice that Harley has for people who want to read more. [1:04:32]

Read the Transcript:

Ben Felix: This is the Rational Reminder Podcast, a weekly reality check on sensible investing and financial decision making from two Canadians. We're hosted by me, Benjamin Felix, and Cameron Passmore, portfolio managers at PWL Capital.

Cameron Passmore: Welcome episode 215. My first note says personal updates and I wrote in, "I got nothing," which luckily, we have so much to get through today that I think we can just keep rolling on. Do you agree?

Ben Felix: Yeah. I wrote nothing also.

Cameron Passmore: So fire away.

Ben Felix: One thing I wanted to mention that a paper that we mentioned a couple of weeks ago, the author is a listener to the podcast, I guess, and they sent in an email saying that they were very tickled, is the way they described it, to hear us discuss their paper, and they thought that we did a great job explaining the paper, which was nice to hear. It's honestly surreal hearing that, and it makes sense, though, that people that would be writing papers on financial economics would be listening to our podcast because that's what we talk about, but it's still quite an experience to hear from somebody whose paper we've discussed saying that they listen and that we explained their paper well. So it was just cool. Wanted to mention it.

Cameron Passmore: Yup.

Ben Felix: Crypto Podcast we had last week was David Gerard, two weeks ago was Quinn DuPont. Quinn was another instance of, based on the comments on YouTube at least, being both the best and worst our episode ever. So I don't know if that deserves an award or something, but that happens a lot with the crypto episodes. David Gerard last week, staunch critic. I mean, pretty aggressive with the criticism. I don't think his criticism's unfounded, so that's fine, but I was surprised that the response from listeners was positive overall. Usually, there's a bunch of people who are angry about the episode and a bunch of people who loved it, but with David Gerard, it was surprisingly similar across the board, where most people were just, "Eh, I liked the episode." One listener said that it felt like a chat over a beer. Maybe that's why people liked it.

Cameron Passmore: Yeah, over a beer in August.

Ben Felix: Yeah, right.

Cameron Passmore: Makes people more chill.

Ben Felix: Yeah, right. Maybe it's the time of year. This week, we have William Magnuson. Lots of them have been fantastic conversations. This was another one. He's an associate professor of law at Texas A&M, and he wrote the book, Blockchain democracy, and he's written tons of papers. He's also got a book coming out on the history of corporations and the relationship with society, get a feel for the flavor of the way he thinks, but I thought that was a cool conversation. I think you liked that one too, Cameron.

Cameron Passmore: Absolutely, learning so much. So upcoming guest next week is Gus Sauter, the former CIO of Vanguard, and we had that conversation last week, and it was really interesting, really good guy with incredible experience. He was there right at the beginning of the ETFs and indexing, really, at Vanguard. In three weeks, Colleen Ammerman is here. She's the director of Gender Initiatives at Harvard and coauthor of the book, Glass Half-Broken, which is an excellent book.

In five weeks, Cassie Holmes will be here. So she's professor at UCLA's Anderson School of Management, where she teaches a course called Applying the Science of Happiness to Life Design, and she's also the author of the book, Happier Hour, which I just finished reading. She sent us an advanced copy and I just finished it last week. Loved it. Like Ashley Whillans' book, very similar, but it was great read, really good read, and that book comes out I think September 12th. So she's on the podcast right around the date of it being released.

Recent review from M012712 in the states said, "This is the best financial podcast. It's the best finance podcast, and in the running with EconTalk for best podcast, period. Said something, said we're curious and thoughtful and have a nice mix of host discussions and guest interviews. "It's one of my must listens every week and appreciates it very much."

Recently on LinkedIn, I heard from Richard. It's amazing who reaches out on LinkedIn, actually. It's so much fun for me. So Richard's a senior person with a large investment firm in Toronto, commented to me about the lag and private investment valuations and the implications that I compared to real pricing for public securities.

Alexander Montreal, who's an entrepreneur, finds the podcast instructive and relevant, and then Ellen from Calgary sent me a note and, get this, a picture of the group she was leading in the Rockies, and they used the talking Cents cards as an icebreaker by the campfire.

Ben Felix: Yeah. I love that.

Cameron Passmore: It's pretty cool. The picture of the fire in the background was really nice.

Ben Felix: Yeah. That is cool. In the Rational Reminder community, there's a topic in there called Introduce Yourself Here. So when new people sign up, not everybody does it, but some people when they sign up to join the community, they'll write a post explaining who they are and why they join and all that kind of stuff. I usually glance at them when I see them come in, but I thought this one was worth reading out.

So this is from Jamie in the Rational Reminder community. Oh, and by the way, it's at almost 8,000 users now in the community, which is pretty crazy. I remember when we set it up, we were thinking like, "If we ever got to 600," I don't know where we came with that number, "that would be huge." Now it's at nearly 8,000.

Cameron Passmore: Remember this package level and we took the basic package level. Let's figure, "Oh, that'll be more than enough." I think we've operated twice, three times to the top package.

Ben Felix: Yeah. Ah, okay. So Jamie said, "I can't put into words the life-changing impact these podcasts have had on me and my family, but let me try to summarize some of the things we've done and learned since listening to you guys. We've been inspired to discuss and document our future and financial retirement goals. We have a clear strategy to take us there and have implemented it ourselves. We have automated most of our decision making and processes so we can spend time doing other things. Our financial education has increased immeasurably," which, by the way, is the main topic we're going to discuss later on in this episode.

"We have been able to stick to our strategy through ups and downs as we witness some of our friends lose their heads, and we've been inspired to read more and have learned about subjects we never would have done had it not been for you guys, examples, Sapiens, Thinking in Bets, Dopamine Nation." I just thought that was cool to see the impact that listening to us, talking to each other has had on other people.

Cameron Passmore: That is our goal, so very well put. That's a great list. They mentioned Thinking in Bets. Annie Duke has a new book coming out this fall, which I'm looking forward to. Speaking of reading, the 22 in 22 reading challenge marches on. We have 567 readers in the challenge. We're getting new readers every week. It is never too late to join. This will continue into next year, for sure. So just hop to the Rational Reminder website and you'll see the link at the top to sign up, and there's an app for your phone that keeps track of everything, and you can link with us. Our links are on that page. There's been 2,766 books read, and there's 315 book reviews in there, Ben. It's incredible.

Ben Felix: Wow.

Cameron Passmore: I wanted to give a shout to one of my friends on the app, Amanda, who, I don't know if you use the app very much, Ben, but you can look and see who's read the most books in the past 30 days. You can't do all time. You can only do 30 days. She's always number one and always 17, 18, 19 books over the past 30 days.

So I took a look I click-through, and you can see that she's read 93 books so far this year, and it's actually really fun to scroll through and see what people are reading and see what they're reviewing. So I really enjoy the app. I'm learning a lot, getting different book ideas in there.

So of course, time for our regular guest to come in and hopefully inspire people to read more. We have a super guest this week. Harley Finkelstein joined us, and I'm sure many people who are listening know Harley for probably lots of different reasons. He's an unbelievable example of a Canadian success story. So he's an entrepreneur, a lawyer, and he is also the president of Shopify, and he is a voracious reader of books and applies a lot of what he learns in his books to his personal and professional life, and that's exactly why we invited him on. Ben and I know Harley pretty well, and so we knew of his love for reading and his love for learning, and the conversation was really interesting, and some really cool hacks that you'll hear.

Ben Felix: Like you said just now and like we talk about with Harley, they made reading an important part of Shopify's culture from the beginning. I remember being around the offices in the early days, and they always had around the office shelves with books and all the shelves had the same set of books and they would switch them out as time went on, but it made it so that everybody was reading similar stuff, gaining similar knowledge, and would be able to use the language that was used in the books to share ideas, which is pretty cool part of a successful culture.

Cameron Passmore: So that was a fun conversation. As always, connect with us on Twitter, LinkedIn. I'm on Goodreads good, on the Peloton CP313, and also #RationalReminder. Ben, anything else to add?

Ben Felix: No, I don't think so. Let's go ahead to the episode.

Cameron Passmore: So this week's book review, as you know, Ben, is a reflection of a whole lot of thinking that I've been doing, we've been doing. So you get to listen to me self-indulge in how I've been thinking about this whole hybrid work from home, remote model.

Ben Felix: Can I say something before you start?

Cameron Passmore: Sure.

Ben Felix: This is probably the book review that I'm most excited about ever because it's a topic that's important to me, but also I read through your notes and it's incredible, not only the book that you're talking about, which is great, but you've tied in ideas from so many other books that you've read in the last year or couple of years. It's incredible. I told you, you've got to make this into a blog post or something. It's an incredible set of information that you've collected here. Anyway, carry on.

Cameron Passmore: Well, that's very kind, but frankly, it's just the tip of the iceberg. Once you dig into this, I have so many more ideas that I'd want to put into this, but it would be a two-hour conversation. So I'm just taking the most recent stuff we've done, but it comes back to you really have impressed upon me and certainly all the listeners to use evidence in making decisions, and I found this topic about work from home and remote that most people have opinions aren't really founded in anything.

This book, so the book we're going to talk about is called Running Remote: Master The Lessons From The World's Most Successful Remote-Work Pioneers, and it's written by Liam Martin and Rob Rawson. So Liam's a Canadian, Rob's an Australian. They built a global company. I heard Liam on a podcast with our friend, Aiden, talk about this subject, and I looked up his book and it just dropped last week. I ordered it on the Kindle and just devoured it in two days.

This whole decision about how to structure the working environment is being debated and thought through by everybody you talk to, I find, and it's on every podcast about business you listen to, and there's just this broad spray of opinions and beliefs. I'm not saying I have all the answers, but, boy, some things really start to crystallize when you're bringing up these pieces together. So we're living through this as well in our world. So let's jump in.

So six weeks ago, episode 209, we reviewed the book Deep Work by Cal Newport. So this book, as you guys know, just hit me big time, and the message was super clear. So one of life's greatest pleasures is getting into a state of flow and this is where the world needs people to go to solve today's great problems, and therein lies a great paradox for companies in that society today is distracted by all kinds of stuff, be it our phones, be it whatever's going on in our world. So there's this opportunity for companies to enable employees to get into states of flow, okay? That's number one.

Then four weeks ago in episode 211, we reviewed the book Fearless Organization by Amy Edmondson. So the main point of her book was that nearly everything in the modern economy is the result of decisions that benefited from effective teamwork, and effective teamworks come from being able to safely share ideas. However, humans are wired to be fearful of sharing our ideas. Okay? So you park that idea.

Then last week, we had Jay on, Jay Van Bavel, episode 214, author of The Power of Us. I re-listed to that episode, and I think about the same time you said to me, "Oh, you could include the notes from him in this conversation," and I just listened to that part that I thought mattered. He talked about how groups suffer from group think to the point of almost becoming cultish and how you need to have norms to avoid group think. He linked this back to the need for psychological safety and the ability to welcome dissent in your team. Here's what he said, "Dissent is a service you do to make it safer for others to present ideas that might be more innovative. This makes groups smarter."

Then lastly as I mentioned earlier, I just finished reading the advanced copy of Happier Hour by Cassie Holmes. So she's coming up at episode 220. So her message is similar to Ashley Whillans, and talked about how much evidence there is around what makes us happy, and that one strategy to become happier is to eliminate things that make us unhappy. Commuting is one of the least meaningful and least fun activities in our survey.

So you link this all back to the book The Culture Code by Dan Coyle, which we reviewed back in episode 187. Again, the main point from that was the success of a company rests not on the intellect or experience of the team, but rather on the ability of the team to work together as a unit. The three keys in that unit are safety, vulnerability, and purpose.

So you see it all starts coming together, to have a purpose, the ability to do deep work in a safe environment where you can share ideas, and this all comes back to culture. So you roll this all up, these are important building blocks to understand the benefits of working remote and running remote.

So I told you a bit about the background of these guys, and I actually dropped Liam a note on this, "I read Running Remote. I loved it. In my opinion, this is not about working remotely. This is about the benefit of working asynchronously." This to me is absolutely vital to understand. I don't care where you work. I don't care how you work. It imparted to me that you must work asynchronously, and then once you embrace that, you can then understand the argument for why working remote makes sense.

Whenever you talk about working remote to me, it's a very polarizing topic as people have very strong opinions one way or another, "Oh, our culture's based on being in the office," then you ask why, and I've done this a bit lately. You get these answers that go in directions that don't make a ton of sense after you've read this book. So you have to read this book with a real open mind to understand the argument.

So let me give you the definition of an asynchronous management. So this is right from the book. It's the practice of leading individuals or teams with those simultaneous or synchronous communication. All collaboration and information are funneled through online systems. Work focuses on individual autonomy, allowing all team members to maximize their own productivity without being dependent upon others to complete a task or provide updates. Asynchronous management requires process documentation, asynchronous measurement of goals, and the discipline to optimize work efficiently.

However, we are all used to working synchronously, realtime, colliding with colleagues, just having random pop-ins, basically, a land of interruptions, but that's what we are used to, and that I think a lot of people equate with culture. This book presents compelling arguments that working synchronously is completely disastrous, not just bad, but disastrous for deep work and dissension. So this was by far my biggest takeaway from the book.

Another quote, "Synchronous on-premise work life is a disastrous machine, a brutal chain of false starts that destroys the flow for every individual all day long."

Ben Felix: A distraction machine. You said disastrous machine.

Cameron Passmore: Oh, I'm sorry.

Ben Felix: "Synchronous on-premise work life is a distraction machine."

Cameron Passmore: Yeah. I meant a disastrous distraction machine. So once you think about that, I think we can all agree that's pretty true. That's not all positive, and we'll talk about that, but let's go through the three fundamental principles of the asynchronous mindset. So number one, deliberate, purposeful communication. This is a big deal. So instead of doing emails that say in an unthought way are not fully thought out way, just put an idea out and say, "We can meet on Teams or meet face-to-face to talk about this and then think it through." No. This is about being deliberate in every form of communication and be intentional on purpose, and this requires deep focus.

Put more time into that email so it's crystal clear to the person that receives it and they know exactly what's expected and how to reply to it. So as I say, processed documents are not there to give you fish. They're instructions on how to fish for yourself.

So number two, democratize with open processes. In an async, asynchronous, in an async organization, the platform is the office. Think about that. The platform is the office. Documentation is the manager. All knowledge is recorded and categorized so that any single individual can consume that information and perform any role in the organization without synchronous explanations of any kind.

Now, I'm a little skeptical. That sounds great in a book, but to understand the point of where it's going, whatever you have in that process, it must be impossible to misunderstand. It has to be crystal clear processes for your operation.

The third thing you need is detailed metrics, not just grades, but they must mark a vivid path, as they say, for achievement and encourage complete accountability. Every role needs clear shared metrics. Gotcha so far, Ben? Yeah, I know this is music to your ears, and they highlight that in the book. This is very appealing for people who are more introverted than extroverted.

Ben Felix: I would argue it goes beyond it. It just makes sense. It just makes sense. I don't even know if it's about introversion. I guess the inverse of that is that being in the office is it feels good for extroverts, maybe.

Cameron Passmore: Yeah. That's what I mean. It's easier to convince an introvert at this.

Ben Felix: Right. I agree.

Cameron Passmore: Anyways, the past two and a half years, many of us have been largely remote. I think we've thrived in this environment. We as a company, we've been very effective and efficient, but we're trying to figure out what we do going forward. There's probably no universal right answer, but every company's got to figure out, as we talked about in Infinite Game, every company's got to figure out what works for them.

Anyways, let's get back to the book. So the asynchronous mindset completely reimagines the very meaning of work, and here's some of the features and benefits, and I think some of these are a little bit controversial. So the focus is on deep work, which is better for the person and better for the company. As Cal Newport said, "Reduction of interruptions. The platform is a manager." This one is a big deal. "Meritocracy wins over ego, charisma, and power." The strength of your thought on how well you communicate, it will carry the day more so than if you're a powerful speaker or physically imposing in meetings or more aggressive style.

Next one, companies move faster when they collaborate less. Think about that. I think that's pretty impressive. Pretty cool idea. Introverts thrive more. The experience of autonomy, freedom to decide on deep work and willingness to dissent is actually created by the async remote environment. Async work dismantles useless hierarchies and office politics. No more of the loudest voice wins the argument. There's less gossip. People are not stuck at a desk for a set number of hours. Work calls become more focused and employees are less tempted to waste time squandering their energies with bitterness and triviality.

Perks don't matter, so the snacks, foosball table, nap pods, whatever. Perks aren't culture or true freedom. Water cooler chat and collisions, which is a very frequent counterargument that I hear, don't spark creativity, individuals do. That one I'm sure a lot of people disagree with.

Ben Felix: Why? Why would people disagree with that?

Cameron Passmore: Because that's the argument I have heard a lot. Well, what about that random collision? Ben, when you and I run into each other in the hallway and we have an idea, that goes away. No. It just means that we talked, and the Cal Newport discussion means you have to be delivered about what are you trying to solve, what's the problem, then you set up a time to discuss a problem. Well, you and I could say, "Here's the problem. Here's my thinking." Go back to the book we talked about on Amazon. So thinking backwards, the six page memo, the model of Amazon. Bezos doesn't allow you to go to a meeting and just throw out an idea. You know what, Ben? We should make the podcast four hours. I can't just throw an idea out without it being thought through. You have to write a six page memo.

So if I wanted to make the podcast longer, do it twice a week instead of once. I can't just throw it out there and say, "Let's just chat about it," because that's a waste of your time. You haven't thought about it. I haven't thought about it. Neither of us have anything but anecdotal thoughts, which is a complete waste of time. Now, it's nice to run into each other in the hallways. So that's one of the challenges. Well, how do you replace what might be missing? If it's about being thoughtful and doing deep work in a dissension-free environment or an environment that creates dissension and welcomes dissension, I think you have to embrace this. If you're going to work remote, you must learn the async mindness, period. I don't care where you work. I think you got to learn this asynchronous mindset.

So the questions of when and how to go asynchronous, the book is full of all kinds of action items. The part they say is the most important is a deliberate, purposeful communication. That's the most essential, those three fundamental principles. All communication lies on some continuum between fully synchronous like that live collision you and I might have in the hallway and fully asynchronous.

Knowing when to choose which mode they say is a key to growth and success. I'm not quite sure what the best thing is to do. How do you get younger people as proficient as the more experienced employees to the team? How do you exchange enough to spur creativity? How much face-to-face should you have? How do you do that? How do you accommodate roles that are more synchronous in nature?

For example, we have advisors that meet face-to-face with people. Should firms be shifting some of their savings from real estate if they shrink their real estate footprint over to home office improvements to different travel models? You need to change the profiles of people you hire. Do you really need to focus on self-starters or people who love their freedom? In managing, a lot of the book talks about managing people in an async world.

The biggest point I took away is that team leaders must go past the usual criteria and really understand each employee's unique life challenge, including how they manage their time, their work life, work home life time, split desire, their higher purpose in their life, and it's really a paradox. They talked about where you have to get a lot more personal than traditional in-office hiring practice. So there's a huge section of the book on managing in an async world. Successful people in this environment are not looking to be told what to do, but rather want to show what they have done.

Ben Felix: Yup. I like that.

Cameron Passmore: So I got a ton of notes. I don't know how long you want me to go on for, Ben. I think people might get the point here.

Ben Felix: Maybe do the-

Cameron Passmore: The bottom line?

Ben Felix: Yeah. Maybe just skip the etiquette maybe and do the deadly sins.

Cameron Passmore: The deadly sins of remote team transition because a lot of people are telling they're going hybrid. So one deadly sin, recreating the office. Remote isn't just recreating the officer remotely. It's a different animal all together.

Ben Felix: Hold on, hold on. Does the book talk about hybrid?

Cameron Passmore: Yeah, very much so.

Ben Felix: Because I've talked to Liam about hybrid, and he's not a fan.

Cameron Passmore: That's putting it mildly.

Ben Felix: Yeah. Okay. So it comes through in the book. That's good.

Cameron Passmore: Yeah. So that's the main point of the book. The main point I take away is the asynchronous side.

Ben Felix: The main point is that hybrid is bad.

Cameron Passmore: Oh, it's awful. Well, hybrid's the worst of both worlds.

Ben Felix: Right. That's what I remember him telling me.

Cameron Passmore: Yeah. So another deadly sin is having meetings as show and tells. When it comes to taking up someone else's time, less is better. Another sin, not talking about the issues. Get behind the metrics. Explore their deep hidden meeting and be open to every opinion offered. Right. Allow dissension. Another sin, if we don't already know everything you want to talk about, you're wasting everyone's time.

Ben Felix: I've got a friend, he's an engineer at a software company and he will reject any meeting that doesn't have a specific agenda and desired outcomes.

Cameron Passmore: No agenda, no attendance, they say. Another sin, drowning in work for his own sake. Repeat after us. Thou shalt get a life. So happiness is a big part of this and to be able to ... Just think about it. If you're happier not commuting, if you're happier doing deep work, it's good for everybody. They even talk about how it's good for the community you live in because you might have more free time to do more volunteering, help kids' soccer team, whatever might be going on. There's all kinds of rules and tools for managing async remote teams.

So bottom line is everything you know about what makes an office tick has to be abandoned to fully grasp the remote-ready async mindset. The core of the mindset is don't ask me what to do, tell me what you did. If you work on-premise, that shouldn't stop you from working asynchronously. It's that live collision. "Oh, let's just go to the boardroom and brainstorm something." It's like if you're not even thinking about something, what good is that? If you think about it, it's crazy, and the whole open office idea is crazy.

Beware of a mixed office and remote culture. Remote team members need to have just as much access to information and decision makers as on-premise ones. When you hire, look for people who are egoless, independent, and self-starters. Chit chat comes with collateral damage. Reducing our capacity to get deep work done, that moves the business forward. Here's the line that you're going to like, "Working fully remote is hard, but hybrid is even harder." Do not forget that it is our brain's natural tendency to put preference on those people in places that are nearer to us.

Ben Felix: Talk about lines that you always hear about this. That one's also super common, "Yeah. We're going to go back to a hybrid model."

Cameron Passmore: Yeah. They equate culture to the relation ... This is my observation. They equate culture to how people react to each other in an office, just that feeling. When we were all in the office, it was great. We enjoyed it, tight team, but that's not culture. Culture is how you work together, how you get your stuff done together, how your team interacts. They argue in the book that that can effectively be done remotely, but it should be done asynchronously.

Ben Felix: Love it.

Cameron Passmore: I know you love it. Anyways, I'm just going to read one compelling paragraph that I took from the book. So here they go. "We're not robots. We understand that most people instinctively prefer synchronous communication or at least think it's better. After all, humans are at their core synchronous beings. We move through space and time facing all the inevitable distractions that real life delivers by the second. Paradoxically though, it's this very unorthodox state of being that makes asynchronous activity so special and so useful from an organizational standpoint.

As author Cal Newport really argues in Deep Work, the really meaningful work can only be done by working deeply in a state of high concentration without distractions with all your energies hunkered down on a single task. For people to achieve the extended flow state of deep work, they'll need an environment that subtracts as much normal life as humanly possible while keeping present all the tools necessary to accomplish their task."

So to me, the only question is if you do go remote, how do you get the benefits back of face-to-face communication? How do you do that? I don't have those answers. That's my big question.

Ben Felix: I mean, the argument that I've been making for the last few months at least is people can still meet face-to-face. We're not working as synchronously because we're in a pandemic and we can't see each other, and I guess that's different if somebody's across the country, but I've had lunch with people from PWL a few times over the last couple months, and that's nice, but my observation from that is, and this is personal observation, I don't feel any more connected to people after I've had lunch with them than I did before, and I don't think we work any better together. I don't think that we ... I don't know. There are a lot of people at PWL that I knew, that sounds weird, knew physically, knew from being ... You know what I mean.

Cameron Passmore: You knew synchronously.

Ben Felix: Yeah, sure, knew synchronously and, sure, it's nice to see those people, and I'm sure it would be nice to see people that I've never met before, but does it make me work better with them? Do we get more done afterwards? Are we more comfortable with each other? My experience so far, and I've done this, there's people that I've worked with for a year at PWL and met them for the first time a month ago, nothing about our working relationship changed after we met in-person or spent time together in-person. So I don't know. I don't know if that's necessary I guess is what I'm saying. The seeing people face-to-face and having those relationships, I don't know if it's a necessary part of working with people.

Cameron Passmore: So I had the opposite experience last week. As you know, one of our teams had an offsite, went for a short hike and then a meeting at a restaurant, private room at a restaurant. There's things I learned about people that I don't think I ever would've learned in this kind of environment. So that's the part, and different people have different needs for that. So you have to respect that. So that's the question I have. We'll see.

Ben Felix: What I would ask is will you work better with people once you know more personal details about them?

Cameron Passmore: In this case, I believe so, but even something as basic as how you communicate. In a synchronous world, you become lazy because you lean on the team more. I got this problem, Ben. I don't know the answer. Instead of me going doing some thinking at what the real problem is, "Ben, let me ..." I just burn your time because you have to restart everything, and that happens all the time in a traditional work environment.

Ben Felix: Yeah. I don't know. I told you I was excited for this book for you. It's not just because, I'm realizing now, it's not just because it's a good book, which it is or because you tied in a bunch of other books, which you did, but it's also because you as the leader of a firm with 70 employees or whatever we have, you've been thinking about this practically for the last couple of years, and just watching the evolution of your thinking, I think, maybe that's why I was so excited about it or one of the reasons I was so excited about it.

Cameron Passmore: You got to come at it open-minded, right? It's very different. I've worked synchronously for 45 years. Now, some rules have to be synchronous if you work in a grocery store or whatever. So not everyone can have this, but knowledge workers, certainly, it's compelling. If someone's negative on it, just ask why. Ask why three times. Why? Why? This book is very good at the counterargument. So anyways, I really enjoyed the book Running Remote. Check it out.

Quickly, I know we'll get to the main stuff here in a sec, but I just thought there was a mind-blowing stat that came out that I saw from Eric Balchunas, who's the senior ETF analyst at Bloomberg. The Vanguard S&P 500 ETF is on pace to break all time cash flow, incoming cash flow records. We're doing a billion a week into that ETF. 32 billion so far this year, and that's twice as much as the next most popular ETF, which of course is from Vanguard, the Vanguard total stock market ETF. That's done 16 billion year to date.

Over the past 18 months, the Vanguard S&P 500 VOO has taken in more cash than Goldman, Fidelity, and ARC having total ETF assets. The scale is just beyond belief. So it's neat to have that in your mind when you listen to our interview with Gus Sauter shortly.

The other top five, there's some interesting ones that I saw, the number five one was TLT, which I didn't know, is the iShares 20 plus year treasury bond ETF. That's the number five most inflows for any ETF, and it's down 22% year to date. Duration's 18.

Ben Felix: Good time to buy, maybe. I don't know.

Cameron Passmore: Guess so. Anyways, we got to keep moving on here.

Ben Felix: Okay. So there's a journal article that Dan on the Mod team in the Rational Reminder community sent to me and suggested that I read. So I looked through it and it was a really good paper. So I thought we could talk about it. The paper is Inferring Stock Duration Around FOMC Surprises, Estimates, and Implications. Sounds thrilling, I know. So this is a March 2022 paper in the Journal of Financial and Quantitative Analysis, the JFQ. So the premise of the paper is applying the duration concept from fixed income, which estimates bond price sensitivity to market discount rate changes. Applying that concept to stocks poses a challenge because while the cash flows from bonds, from fixed income are fixed, relatively fixed, discount rate changes affect stocks through both the discount rate channel and the cash flow channel because expected cash flows also vary with discount rates. So that's tricky problem.

The author explains that for stocks expected future cash flow growth often increases with the discount rate and he cites a bunch of papers for evidence of that, including one from Ralph Cohen, a recent guest. Estimating equity duration matters for portfolio choice and risk management. If you own extremely long duration assets and discount rates rise or change, say, you get hit with big price movements.

Now, like we talked about with bonds the other day, the other week, couple weeks ago, if your time horizon or if the duration of your liabilities matches the duration of the long duration stocks that you might own, you're immunized, you don't really care about those price swings, but if they don't match, then extreme price swings related to market discount rate changes can be a bad thing. I mean, I think growth stocks are an interesting recent example where discount rates changed, prices fell a lot.

If you're a long-term investor, you don't really care about that because growth stocks tend to be very sensitive to market discount rates, but what happens is that prices fall, but expected returns increase. So if you have a, whatever, 80-year time horizon, whatever matches the duration of growth stocks, you're actually indifferent about the rate change, but if you have a five-year time horizon and you get hit with market discount rates affecting the prices of your long duration assets, that can be very painful, and a lot of people learn that recently, both fixed income investors and long duration equity investors.

The effective equity duration can be viewed as the Macaulay duration, which I'll explain in a second, which is what we use for fixed income, adjusted by the co-movement between the discount rate and the expected future cash flow growth. So the effective equity duration, which is what this paper is about, the measure that this paper develops, can be viewed as the Macaulay duration adjusted by the co-movement between the discount rate and the expected future cash flow growth.

The Macaulay duration is the length of time taken by an investor to recover the money they invested in a bond through coupons and principal repayment. So that's the duration measure people typically talk about. The paper uses an event-based estimation of the effective equity duration using FOMC policy surprises as the events and they're using the federal funds futures traded at the CME to measure the rate expected by the markets to detect policy surprises. So they've got the implied federal funds rate based on futures as the market expectation, and then they're measuring surprises relative to the FOMC policy. The FOMC is the Federal Open Market Committee, which is responsible for open market operations, which is the purchase and sale of securities in the open market by the central bank in the US financial system.

So the event sample in the paper includes 47 FOMC announcements from 1995 to 2016, and the paper finds that the effective equity duration has a mean value of 41.22 years.

Cameron Passmore: No kidding.

Ben Felix: That's long. That's long duration. That's a long duration asset, and it's cool to have that number for stocks.

Cameron Passmore: Do you know if it's cap weighted?

Ben Felix: Yeah, I think that was the value weighted.

Cameron Passmore: That's really interesting.

Ben Felix: Mean average across all of the 47 events that they studied. So then they sorted stocks into duration deciles. We've got 10 portfolios sorted by duration. The average monthly portfolio return increases from 1.05% in portfolio one. So shortest duration to 2.28% in portfolio four, and then it decreases to 0.01% in portfolio 10. So portfolio returns increase with the portfolio duration from portfolios one through four, deciles one through four, and then decreases from portfolio four to 10. Portfolio one's got a duration of 3.39 years and portfolio 10, so the longest duration stocks in this sort, in this sample have a duration of 114.6 years. Pretty crazy. So you'd expect a lot of sensitivity to discount rate changes.

Firm's size increases over the first six portfolios and then decreases over the next four portfolios, and portfolios one and two, the shortest duration, have the smallest size. The equity yield curve, which we'll put a image of in the video in the YouTube version of this episode, is hump-shaped. So it increases with duration up to the fourth portfolio sort, and then it decreases downward sloping after that. So cool. Overall, longer duration stocks have lower returns. The hump shape in the equity yield curve arises, what the paper says, is it arises from the co-movement between the discount rate and the future cash flow growth. So this hurts your brain to think about it. Hurts my brand, anyway.

So portfolio returns increase with the effect of equity duration when the duration is short due to the co-movement between the expected future cash flow growth and expected returns, and then in their data we see the cash flow effect dominating up until portfolio four, and then the discount rate effect dominates after that.

Cameron Passmore: Are you going to tell us why or is that coming up?

Ben Felix: Maybe a little bit.

Cameron Passmore: What's going?

Ben Felix: Well, there's the two mechanisms, the discount rate effect, so the cash flow is being discounted at a different rate, and then there's the cash flows themselves are also changing. I think the next thing in my notes is about your question.

Cameron Passmore: All right. Gotcha. Discount rate and rate of growth of-

Ben Felix: Of the cash flows. So here, listen. An increase in the discount rate pushes returns down through the discount rate channel suggesting a downward sloping yield curve, all else equal, but because future cash flow growth increases with the discount rate, cash flows in the far distant future become larger and more important producing the hump shape before the discount rate effect takes over in the curve is again downward sloping.

Cameron Passmore: That is really cool.

Ben Felix: It is cool. The paper finds that value and profitable stocks generally have shorter duration, but among short duration stocks, more profitable firms have longer duration and among long duration stocks, value firms have shorter duration. The paper suggests that this might explain why value and profitability tend to be negatively correlated, why those premiums tend to be negatively correlated.

Now, that paper made me think of a different paper called good beta, bad beta, which is a 2004 paper, which breaks out the CAPM beta of stocks into two components, one reflecting news about the market's future cash flows and one reflecting news about the market's discount rates. You can see how that ties into the paper we just talked about. The others find that value stocks and small stocks have considerably higher cash flow betas than gross stocks and large stocks, and this can explain their higher average returns, and I'll explain why.

The high cash flow betas should theoretically result in higher expected returns in an ICAPM world, in an intertemporal asset pricing world, this is some intense stuff right here, get ready, because conservative long-term investors should view returns due to changes in discount rates more favorably than those due to changes in expected cash flows. The comment that I made earlier about if your growth stocks just plummeted in value because of market discount rate changes, if your time horizon matches the duration of those growth stocks, you don't really care because you're indifferent to the change, but if you have liabilities with a shorter duration than the growth stocks, then it can be very painful.

A loss of wealth today caused by an increase in the discount rate is offset by improved future investment opportunities, but a loss of wealth caused by a reduction in expected cash flows has no offsetting mechanism. So that makes growth stocks, even though they've got a higher sensitivity to market discount rates, safer for long-term investors, and then that safety for long-term investors is the horizon hedging demand argument for growth's lower returns and value.

Gross stocks have lower returns in value because a lot of investors want to own growth stocks to hedge against stuff, and one of the things they want to hedge against is long horizon returns, which gross stocks are better at hedging.

To use an analogy, a fixed income analogy, a long-term corporate bond will lose value if discount rates increase, and that's a relevant to you as a long-term investor if you're holding the bond to cover a liability matched to its duration, but if the bond defaults, if it stops paying its coupons, that is a permanent loss of wealth. So following that analogy, growth stocks are sensitive to interest rates, but value stocks are more likely to default. So value investors are taking on that risk, which is why they expect to earn a premium.

Anyway, it's just interesting to tie that into the concept of equity, duration, value stocks being of shorter duration than growth stocks, but then putting some numbers to it like that average effective equity duration at 41.2 years. Very interesting. That same estimate, I didn't write the number down, but using effectively the Macaulay duration, which doesn't do the adjustments for the effect on cash flows of market discount rate changes, that equity duration was 16 years. So the effect of equity duration gets much longer when it's calculated.

Cameron Passmore: Wow. So interesting.

Ben Felix: Yup. Real quick, I had one other quick paper. We could just not do our main topic. I don't know. What do you think?

Cameron Passmore: Keep going. We'll see.

Ben Felix: Okay. This other paper, the actual retail price of equity trades is just fascinating. It's coauthored by Brad Barber and Terrence Odean among a few other coauthors. They compared execution quality of six brokerage accounts across five brokers by generating a sample of 85,000 simultaneous market orders. Commission levels-

Cameron Passmore: Just think about that.

Ben Felix: Yeah. It's cool.

Cameron Passmore: That's very cool.

Ben Felix: Yeah. Commission levels and payment for order flow differ across the accounts. They find that execution prices vary significantly across brokers. The mean account level round trip cost ranges from seven basis points to 45 basis points. They have the brokers. They give you all the information. So TD Ameritrade was the cheapest, total all in cost to do a trade, and IBKR was the most expensive at 45 basis points, approximately.

The dispersion in execution is due to off exchange wholesalers, systematically giving different execution prices for the same trades to different brokers. Crazy. So they used a sample of brokers with and without commissions, some were accepting the payment for order flow, some were not, and some were directing to the same wholesale venues, some were not. There's no evidence that payment for order flow harms price execution. How about that? That's interesting. That's the thing everyone's worried about with Robinhood about you're getting bad execution because they're doing payment for order flow. In this study, they're saying that it does not seem to harm it or it's not related to it.

Cameron Passmore: It's amount you're paying for that order flow.

Ben Felix: It's the execution you're getting at the wholesaler. So the wholesalers, the big firms like Citadel that are taking the order flow. The best performing broker does accept payment for order flow. Another broker does not accept payment for order flow, but has worse performance and still routes most of the trades the same wholesale venues widely used by payment for order flow accepting brokers.

Cameron Passmore: Wow.

Ben Felix: Crazy. They find that the price differences are due to different brokers getting different execution prices for the exact same trade of the same venue. I already said that. Yeah. I don't know. It's crazy, but it makes you think IBKR is often, I mean, I think everyone's at zero cost now, but IBKR is known for, I don't know, cheap leverage, for example, but it shows, as you would probably expect, maybe you're paying those costs somewhere else, but it depends how you're using it too. If you're doing ETF trades with limit orders or something, then it's less of an issue. If you're day trading, then those costs will start to add up, but big differences. I mean, that's a 40 basis point difference in execution costs. That's an unpublished paper, but it was cool enough to mention.

Cameron Passmore: Awesome. All right. Well, let's go to the 22 in 22 challenge with our special guest and very good friend, Harley Finkelstein. Harley. It's so great to have you join us on the Rational Reminder Podcast.

Harley Finkelstein: It is a great honor to be here. I'm a huge fan of the podcast. I'm also a huge fan of you two. I've known you guys for quite some time and it's an honor to be here.

Cameron Passmore: Awesome. Well, thanks for joining us. So we've known each other a long time. How you apply what you read to your craft as a leader I think is something that we and the audience can learn a lot from. So let's jump right in. Tell us about your reading habit, Harley.

Harley Finkelstein: So I have two streams of reading. The first is an audio stream and the second is a physical stream. I know that sounds a little bit strange or random, but I'm either one of two places. I'm either mobile, meaning I'm running or I'm in the car and I simply can't read a textbook or a paper book, physical book or I'm sitting around the house or on vacation or somewhere where a physical copy is obviously accessible to me. So part of what I try to do with these books that I read is to take out the main takeaways, is to create a set of to-dos or tasks after the book, things I want to do based on what I just listened to or based on what I just read.

So often when I'm reading, listening to an audio book on Audible or any type of platform or even a podcast for that matter, one of the things that I do is I simply say, "Hey, Siri, take a note," and I find it's a really effective way for me to capture some lesson, some tactic, some interesting concept in the book from an audio perspective. So very simple hack. If I'm on a run or I'm in the car, I just say, "Hey, Siri, take a note," and then I give the note, and then later on I'll go back and I'll organize the note because often I think when you use Siri on an Apple device to take a note, it just puts in a random section. It doesn't categorize it very well. So that's what I do for audio books.

For more physical books, it's way easier because in those cases, usually page three of the book, not numbered page three, but if you literally are to count three pages, the third page of most physical books is almost always blank. So I will just make a numbered list from one to, whatever, to 50 or one to 30 or one to 10 of certain takeaways or things that I read in the book that I really enjoyed. In both cases, what I'm left with after I finish the book is some note, some reminder that allows me to do something with that.

Cameron Passmore: How do you do something with that? I'm really obsessed with how people take what they learn. I guess you've got a list and how do you apply it? Because when you apply something in your professional world, that could have huge scale and impact.

Harley Finkelstein: Yeah. So I view books, whether audio or physical books, in three categories. Books that inspire me is the first category. In that category, I get a lot of biographies that come up. The second is a book that teaches me something, and that often is a deep dive into a particular topic. Then the third one is something that entertains me, and I find, this is a terrible term, but it's like storytelling about an anomaly, something strange that happened. I slot all books into one of three categories, teach me, entertain me or inspire me. It really is usually in the teach me or inspire me category where I get the most amount of actual context or content that I can apply to my job.

So in the case of, this is going to sound hyperbole but it's not, I think the best book on management ever or leading a team is High Output Management by Andy Grove, and famously, he ran into it. He's brilliant leader, but it's an incredible book, I think, that almost every few pages has another lesson, another tactic, something that you can apply if you're leading a group of two people or 2,000 people or 20,000 people.

So in a book like that, I actually read the physical version of that. So you'll see that I have page three, page four, and page five are filled up, and over time, I've gone back and highlighted certain things, and then I brought it back into, I use Notes, Apple Notes, quite religiously, and I'll have a section on leadership, and I'll have a bunch of lessons there. So I'll simply just bring it back there.

Actually, in a similar vein to how I studied in law school, which was mostly just repetition, writing things, repeating things, writing them again, transferring one note to another note, condensing, summarizing, that, for me at least, that's the way that it sticks, but those are really the three categories.

One thing I just wanted to mention is like many of your listeners, there's no shortage of book recommendations that come my way. Almost on a daily basis, somebody is recommending some book to me on some particular topic, and often, it's a topic that is fairly esoteric. Sometimes it's a topic that is random. People noticed over the summertime, this past summer, that I was using my yakitori grill quite often with my family to make yakitori around the pool. So a lot of people started recommending me a book on yakitori, and I think it's called Chicken and Charcoal is the book name. If there were five people or eight people that recommended me a book on yakitori, five out of the eight was the same book, Chicken and Charcoal. So it was obvious, "Hey, that's a book I probably should read," but more times than not, I'm just getting bombarded with book recommendations.

So years ago, I'd developed the hack, and actually, I just read recently, I think it was Andrew Wilkinson, who's a friend, he actually tweeted about this exact hack, and I told him that I subscribe to that as well, which is if a book is recommended to me, before I start reading the book, before I start making that commitment to read the book, I will almost always go to YouTube and try to find an interview with the author, and what I find is that in a very simple 20-minute chat with the author, usually, and you have to look at the date of the YouTube video, but usually right on time that the book came out, so it's almost fresh or the author is on a bit of a book tour. I find by listening to a 20-minute interview usually summarizes the main key points of the book.

If I want to know more, if I'm enthralled or I'm interested about the topic and the video makes me more excited or more enthralled, I'll almost always read the book. Oftentimes, though, I find that I get the gist out of it, get the gist of the book just through that interview, and I don't need to read the book. Now, am I missing certain contexts or nuance or more of a deep dive in certain elements? Unequivocally, but there's absolutely no other way for me to keep up with the amount of book recommendations that come my way, and that's the best way for me to do it.

Ben Felix: What role has reading played in Shopify's culture?

Harley Finkelstein: I've heard people say that Shopify is a book club disguised as a company because it plays a huge role even in the early days of Shopify. We've always had a book bar, and the book bar, it was things like Imagine Ink. I think it's the name of the book, which is the Pixar story. I think it's Imagine Ink is the one, which is an incredible book, but you have that, and then next to that you'd have Crucial Conversations, and next to that you'd have Crossing the Chasm. So there wouldn't necessarily be any one particular theme or category of book on our bookshelf, but it would just be filled up with books that we thought were interesting, and then anyone could go grab the book and just take it.

So even at the early days of Shopify when we were a single office company, we always had books available for people to read. I think the importance of it was the nomenclature that you would be in a meeting and you'd hear someone describe, let's just say someone would say, "Well, that's an antifragile moment." Had you not read Antifragile by Nassim Taleb, which for those that have not read it that are listening, fragility is quite obvious, and robustness is quite obvious. If you drop a glass, it breaks, it's fragile, and if you drop a glass and it doesn't break, it's robust, but what happens if you drop a glass and it breaks and it puts itself back together in a stronger mode or stronger system than it was originally? That's what Taleb refers to as an antifragile system just like the immune system might be in somebody's body.

So if you're in a meeting and you hear someone talk about antifragility, you immediately want to understand more about it. Otherwise, you are at a disadvantage in that meeting. You don't have the requisite understanding of what that person is talking about, which again puts you at a disadvantage. So there's this immediate desire, I think, by most people at Shopify, certainly most ambitious people at Shopify, to want to understand the nomenclature of the company. It's like the beats per minute of the company, and the best way to do that is to be a bit of an archeologist, and I think the best way to be an archeologist is to read as much as you can about the history of the company, to read old board letters, but also, "Hey, what have people read that they really enjoyed in building this company?"

So there's no rule that you have to read every book in the book bar, but certainly, that does create a great advantage for you. There's a lot of books that I think are seriously part of our company's makeup. Stanley McChrystal has got this great book called team of teams, which General McChrystal, of course, a famous US General, but he talks about creating multiple teams, a team of multiple team leaders.

Actually, I remember years ago when we were building up our support organization, and it was, I don't know, maybe 1,000, 2,000 people, the model that we used to do meetings for that organization was a Team of Teams model, where every team can listen in to a larger meeting. More recently, I read a book that, you guys know my kids, but Bailey's turning six years old, our eldest daughter, and I want to begin to talk to her about money and I wasn't really sure what book I should read in anticipation of that.

I asked my parent role models, meaning people that I look up to that are role models around parenting, and this book came up more than almost any other book, which is The Psychology of Money by Morgan Housel, and I read that book and, immediately, I marked up the third page of that book, but I did so in a way that was with the anticipation that I was going to have to present this to a six-year-old, and that was a whole different experience of taking notes because I wasn't ... Some of the nuances of compound interest I didn't really take a note of, which I normally would have, but I want just to explain just a very general, basic definition of confide, interest, and that book Amy tools to do so.

As I think about over time how some of these books have changed my life, I know you may not necessarily agree with some of the rhetoric around Rich Dad Poor Dad, but I remember being given Rich Dad Poor Dad when I was, I don't know, 12 years old, and just thinking about ... There's this line in the book about when you want something, the difference between saying you can't afford it versus asking yourself, "What do I have to do to be able to afford something that I really want?" I just thought that was a mentality shift for me, a psychology shift for me that I don't think I would've ever received as a 12-year-old kid pre-entrepreneur, and that book did that for me.

So I guess to answer your question more directly, Ben, I think the foundation of Shopify is based on our own insights, our own experiences, but also insights and experiences of people that came before us, and the best way to capture that is through reading and those books.

Ben Felix: Are there other titles probably that come to mind that have had a big impact either on you like Andy Grove's book or on Shopify?

Harley Finkelstein: I thought, I mean, one of the best books in the biography category, so again, books that inspired me, I think Shoe Dog was incredible. I mean, I know it's well-documented that Phil Knight is a wonderful, incredibly inspiring entrepreneur, but very few books for me take you through a journey of that much vulnerability in someone's journey.

Ben Felix: Absolutely.

Harley Finkelstein: If you read a lot of the other great founders or great CEO books, you see a lot of washing out of the bad times. You see a lot of glorification of what went well and mitigation of things that didn't go well, and I think what Phil Knight did with Shoe Dog was incredibly brave. He showed great courage to just save the thing, and he did it in a way that I thought was incredibly inspiring for me.

I just finished a book. This is a little bit of recency bias, but it's by a mentor of my father, it's Charles Bronfman, and he tells the story of Seagrams, and growing up, the son of Sam Bronfman, who was truly one of the greatest entrepreneurs of the 20th century and who built an empire and built cities and community. I thought that was an incredible book.

I mean, anything by Walter Isaacson I think is always really great because Walter has this incredible ability to go deep with subjects and get on the inside track of them. I thought that was really neat. When Lindsay and I decided to have children and Lindsay was pregnant after trying for a few months, I remember asking around what book I should read about fatherhood or being a parent, and I got bombarded with different parenting books.

Toby had actually mentioned to me, Toby, who's our CEO at Shopify, founder of Shopify, he said, "Hey, there's this one book that is really, really better than all the others," in his view, "which was Brain Rules for Baby." The reason I loved Brain Rules for Baby so much was it felt a little bit like a how-to guide as opposed to ... It wasn't speaking down to me. It felt like it was helping me, giving me a cheat sheet.

So very simple things that it provided me with that I still use today, which is parents naturally fight in front of their children, but very few parents actually make up in front of their children. So for a child to see real conflict resolution happen in realtime, you see the fight happening and the argument happening in realtime, you see the debates and often heated debate happening in realtime, but often the resolution to that fight or argument or debate happens behind closed doors. At least the way the book describes it, you end up depriving your children of the entirety of the journey. They're only seeing one part of that conversation. So Lindsay and I, like most couples, not all couples, we have arguments, but we also try to resolve the argument in front of the kids as well. So that was something that came out of Brain Rules for Baby.

Another one that I loved was Carol Dweck's Mindset. There's a lot of aspects of the book that I found to be interesting, but just the concept of growth mindset versus fixed mindset, and my ability now to spot people in my life that have growth mindsets, and in many ways, there's a weird association. I'm more attracted to people that have growth mindsets, but I didn't have nomenclature for that. Now I do. Whereas I am often confused by folks that I meet when we're having a discussion with something, who clearly have a fixed mindset. Now, I think I'm less judgemental about those that have fixed mindset because now I understand, oh, this is just their view of the world. They view things a little bit differently, whereas I very much subscribe to the growth mindset side of things.

One book that I really loved I read when I was a kid, it's a big book, but it's a fascinating story, is a book called Barbarians at the Gate. It's a story of RJ Nabisco, and it also introduced me to Henry Kravitz of KKR and Private Equity and Hostile Takeover. I don't know why, but I read it as probably a 14 or 15-year-old kid, and I thought it made the world of finance incredibly interesting to me in a way that I'd never encountered before. So Barbarians at the Gate is one.

Then I just started The Greatest Trade ever by Greg Zuckerman, which I don't know ... Do you guys know that book?

Cameron Passmore: Yup.

Ben Felix: Yeah. We had him on.

Harley Finkelstein: So I've just started reading the book. I probably heard about Greg and the book from your podcast, but I just started reading this. That's the one I currently have next to my bed stand.

Cameron Passmore: So you mentioned you have two daughters, and I love your hack from Morgan's book. I think that's a very interesting idea. Have the girls embraced your love of books?

Harley Finkelstein: They have in their own way. We made books part of the evening ritual. Both my kids, myself, my wife, we are fairly, as you folks know, very high energy. Sometimes that comes with some anxiety as well. So the ritual of settling down before bed I think is made far better and far nicer when accompanied with a book. So with both of our kids, part of our bedtime routine is after their baths, we read a book together. It's funny because some of them, in some cases, I mean, Zoe's three, so she's not reading Walter Isaacson yet. I'm sure it's disappointing to some listeners, but just the routine of the way that we drift off to sleep and the way that we end the day, we bookend the day is with story time I think is incredibly important.

In some ways, I almost prefer certain books to ... I know a lot of movies have been made about certain books, but in some cases, I mean, the movies are amazing. I've never read The Godfather book. I've been told it's amazing, but The Godfathers are my favorite movies. I don't know if I'd enjoy the book as much because I just love the movies so much, but there's many cases where I just find the book to be so much richer and deeper.

I actually think that the introduction of audiobooks has just been a massive advantage for this topic because it means that my ability to find an hour every day to read quietly on my own in a static place is quite challenging, but my ability to find an hour between commuting and working out and running and walking to grab a coffee in the morning at the local coffee shop, I can pretty much always find an hour.

For an average book, I can pretty much get through an entire book in about five to eight days, an audio book in about five to eight days. Whereas a physical book will often take me, in some cases, three, four weeks because I just don't have the time, and I enjoy those experiences on their own quite a bit, but they're different experiences for me.

Ben Felix: What advice, Harley, do you have for someone who wants to be reading more?

Harley Finkelstein: Take notes like everything else. If you want to get more value from meeting people, whether it's meeting mentors or meeting advisors or just going to talks of interesting people at your local school or college or even watching Ted Talks, take three or four notes from those talks. Take three or four notes from an article you are reading. I actually think that one of the things you create is you create this perpetual cycle of an additional desire or an appetite to gain more. I have a pretty good memory, but I don't remember every book that I've ever read, but because I have a directory of takeaways from most of the books I've read over the last five to 10 years or so, I have this appetite and desire to keep reading, keep learning more of these things because I can see a direct correlation between the time spent on that book, a return on reading time.

The way that I'm able to gauge that return on reading time is by taking really good notes, and then I apply it in meetings or I apply it in a situation, and I immediately think about, "I'm really happy I read that book," which then that night encourages me to read more of those books. That'd be one.

The second one, the YouTube one is so obvious. I almost was not going to bring it up because I know your listeners are really smart and really sophisticated, but it's such an amazing hack because so many of us are bombarded with book ideas and book suggestions. If you watch a 20-minute or a 10-minute interview with the author and you are just captivated by that conversation, there's a very good chance you're going to be even more captivated by the book that that person wrote, and if you find it to be incredibly boring and you feel like in the first couple of minutes you get it right away, you probably don't need to read that book. So I don't know why more people don't use that tactic. That feels just so obvious.

Ben Felix: It is a great hack. I agree. Then we do similar things when we're assessing potential podcast guests as opposed to going to read the book right away. We do the exact same thing that you just described. All right. Well, Harley, this has been fantastic. We really appreciate you coming on and your insights and wisdom are always valued.

Harley Finkelstein: Oh, thank you, guys. Like I said, it's an honor to be on the show. I'm a huge fan of the podcast. So thank you, guys. You have taken a subject that is so complicated and so in-depth and you've made it digestible and you've made it interesting and you've made it compelling in a way that, frankly, I don't know very many other people on the planet that have done so. So I'm really a listener here, not really a guest here, but as a listener to the podcast, I'll speak on behalf of all your other listeners. Thank you for doing this. You guys make the really complicated things digestible and compelling, and we're all grateful for that.

Ben Felix: Oh, thanks, Harley. That means a lot.

Cameron Passmore: Yeah. Thank you, Harley, and thanks everyone out there for listening. We do appreciate it!