Sebastian Mallaby

Outsiders of the tech/startup world have a skewed view of VCs.

VCs are villains for the media. Some entrepreneurs view them as saviors. Many young folks want to become VCs to make a dent or “change the world.”

When I took a plunge into startups a decade ago, I wore all the above lenses to view the VCs. But the truth is somewhere in the middle.

This book does an excellent job of compiling the history of VCs. Doesn’t valorize or villainize or victimize VCs. It paints a good picture of what VCs do and why they do it. It also rightfully criticizes the lack of diversity and other follies. It also contains some damn good company founding stories.

Highly recommend it for business history enthusiasts.… (plus d'informations)

Since 9/11, many have observed that global security depends upon improving conditions for the world's poor. But how to make that happen? No institution has grappled harder with this challenge than the World Bank. Drawing on some 200 interviews, including twenty hours of discussions with World Bank President James Wolfensohn, Washington Post editorial columnist and former Council Fellow Sebastian Mallaby takes readers inside the world's premier development institution. The World's Banker brings to life some of the bank's battles, from the reconstruction of Bosnia to the 1997 Asian crisis, to the battle against AIDS and the push to attain the Millennium Development Goals. And it maps the bank's evolution away from the macroeconomic focus of the "Washington Consensus" to a broader understanding of development that considers corruption, democratic participation, and the quality of political institutions. For the growing circle of people who care about international development, here is a book that explains the 800-pound gorilla of the field.

The explanation is at times unsettling. Mallaby's account shows how hard it is for a big multilateral institution to be effective. Rich countries are forever saddling the World Bank with new mandates, declaring one year that its priority must be universal education and the next year that it must concentrate on AIDS, and undermining its focus in the process. Nongovernmental groups complicate the bank's efforts, too, mounting campaigns against its projects that are sometimes dishonest and unscrupulous.

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Banking

International Organizations

Economics

The World's Banker is at once a portrait of an intellectual quest for ways to turn a sliver of the rich world's plenty into progress against poverty and a case study in the frustrations of the global system. Never has the bank's work been more important, more in the public eye, or more controversial than it is today, when the emergence of terrorist sanctuaries in failed states have dramatized the connection between development and security. And never has the place of multilateral institutions in U.S. foreign policy been so politically contested. Mallaby parlays his extraordinary access to the World Bank and its leader into a revealing account of the challenges and contradictions of the West's efforts to enlarge the world's wealth. The result is a smart narrative joyride written by an author who combines enthralling storytelling with fresh and incisive analysis.… (plus d'informations)

An excellent history of hedge funds that combines narrative with more technical analysis. It combine the detailed luck and idiosyncratics of history with clear examples explaining concepts such as crowding, balance sheet effect, leverage, shorting, currency trades and survivorship bias. It's to be expected from someone who wrote for the Economist. The book is denser than I thought, but it was thoroughly enjoyable.

The book's protagonists are hedge funds and their founders. Sometimes for a book this length, the descriptions of their idiosyncrasies drags on, and their features tend to blend anyways but the book is generally excellent.

There's a few themes that the author returns to, which are explored in depth. The main theme is the tension between efficient markets theory and the success of hedge funds. The author makes several interesting observations. Some of the hedge funds' success can be attributed to exploiting well known problems with efficient markets hypothesis, such as currency bets against stubborn central banks/governments, Steinhardt's block trading, and institutional needs that are not driven by economic rationale. Other successes are more difficult to explain within the theory, and the author seems to believe that there exist trends that can be exploited. This part of the author's hypothesis seems more vulnerable to attack. For one, the strategies of quantitative firms like the Renaissance fund are highly secretive (the author has the good grace to admit so), so it's difficult to evaluate trend surfing claims. Other themes are the difficulty of hedge funds keeping their edge (typically their competitive advantage is learned by others or changes in the market moot them), or how many times hedge funds had pre-empted academia. In particular AW Jones's measurement of volatility of stocks to hedge, (years before CAPM) and his use of shorting and longing to hedge (years before portfolio theory) seems to demonstrate Taleb's complaints against academia to be based on some truth. Another background theme is the question of whether hedge funds act as correctional forces to the market, bringing prices in line with their fundamental value (allocating capital correctly) or just make the gyrations of the market more extreme. The author brings up the societal good that hedge funds have done by providing liquidity, bringing exchange rates to the proper rate, increasing the endowments of universities, and leading the charge of investments into emerging markets.

The book really does an excellent job (as far as I can tell) explaining Soros's breaking of the pound and the collapse of LTCM in detail (both giving and detracting credit where deserved). I was impressed by the detail of the book. In particular that it referred to Mandelbrot's power law observations and the fact that the 20% performance fee comes from AW Jones's contention that it was the fee of phoenician merchants. I wish the book spent more time on Paulson's bet, and the book does not even mention Bridgewater, but the breadth of the book was still impressive.

The book has an interesting conclusion, even though it seems a bit disjointed from the rest of the book. The author contrasts hedge funds with investment banks and commercial banks during the crisis. He argues that hedge funds, with their paranoid culture, and performance fee incentives generally fared better than banks. Additionally, hedge funds rarely became too big to fail, when they did they did not disrupt the broader market generally. He recommends that the government not regulate hedge funds unless they become too large. It's a long read generally, but enlightening and does not disrespect the intelligence of the reader.… (plus d'informations)