Private Equity: A Memoir

Author: Carrie Sun

Hedge Funds have always had this air of mystery about them. I picked up this book as it promised to give a first hand view into what goes on at the very top of a hedge fund. Carrie Sun, the author, is the daughter of Chinese Immigrants who have made a lot of sacrifices so Carrie can have the best education and be well set up for life. She graduated  from MIT with dual degrees in Mathematics and Finance and at just 25 years of age she got to work as an analyst at Fidelity Investments where she was making over $300K a year. However she was burnt out by the intense work culture and was disillusioned with her job, so she quit and of all things decided to become the personal assistant and right-hand to the hedge fund’s billionaire founder, “Boone Prescott”

We only have Carrie’s word for it, but by all accounts she was very good at her job. She had an inside view to everything happening in and around her, but the book is scant for details (probably for good reason as I can’t imagine why her employer would consent to her sharing any company or personal secrets).  There’s details of the opulent trappings of the upper echelons of power and privilege.  The only things that stick with me are company events and some food and sundries. 

What is clear from the start is that Carrie is expected to work 24/7 and she has no work/life balance of any sort. She ends up taking on more tasks than she can possibly complete by herself. The drama is around how the assistants don’t want to help each other and to cut a long story short, Carrie gets eventually burnt out here as well.  

The book is very well written and is a breeze to read. However there’s not much to sink your teeth into.

How Big Things Get Done

Author: Bent Flyvbjerg and Dan Gardner

The first thing I did before reading this book was to try and figure out how to pronounce Bent Flyvbjerg’s last name. After that I read his biography and was floored at what “Big” means for him. In a nutshell, he is the guy to call if you have a big project that is beyond anything that humankind has done before. 

It turns out that he is also a professor and has done extensive research on big projects and their metrics. It comes as no surprise to learn that 92% of large scale projects are late and over budget. This book summarizes his years of experience and what you can do to watch out for problematic situations and better still, avoid getting into them.

He writes that “Most projects start with an answer, for example, renovate your house. Instead, you want to start with the question. ‘Why are you doing this project?’”. It is very important to realize that “Projects are not goals in themselves. Projects are how goals are achieved”.

One of the key points that Flyvbjerg makes is that you don’t want your project to be a unicorn. He realizes that this is not something easy to do as most super-large projects tend to be unique by definition. His very strong recommendation is to break it down into modular pieces. Even if it is unique, try to make it a repetitive bunch of smaller pieces so you pick up experience as you go along. His most compelling example is the empire state building that finished under budget and ahead of schedule. It was constructed in less than 15 months for $24.7 million, which was 57% of the original budget. Their secret was that they treated every floor as a unit and repeated that construction 102 times!

Another key factor in the construction of the Empire State Building is that they assembled the raw materials for construction directly at the site itself. By doing this they eliminated the complexities that arise out of staging all the materials and transporting them between different sites. 

Flyvbjerg makes an often overlooked point that delivery is not always doomed to fail and be late. For most projects, well before the delivery you have the forecast, and “If those forecasts were fundamentally unrealistic, a team expected to meet them would fail, no matter what they did.”

In creating forecasts, he eschews working up an estimate from fundamentals. For complex projects it is hard to estimate everything as there are lots of parts and many unknowns that will be hard to get right. He much prefers “reference forecasting”, where you compare with another similar project and adjust it up or down. For example, if you are doing a kitchen remodel, get an estimate from a friend who has done the same thing and mark it up 20% if you feel you will buy more expensive appliances, or other raw materials than your friend. He quotes Daniel Kahnemann who wrote in thinking fast and slow that reference forecasting is “the single most important piece of advice regarding how to increase accuracy in forecasting”

I learned one interesting piece of trivia. Apparently the word deadline comes from the American Civil War, and it refers to the boundary (line) that prison camps drew, which, if any prisoner crossed they were shot dead. Set a deadline for when you want to start reading this book.