Review – Dreamland

A future classmate of mine recently asked me, based on my stated love of books, whether there was a single book that I’d recommend everyone read. Though of course it’s very much fresh in my mind, I believe that Dreamland is as good of a candidate as any nonfiction book in recent memory.

dreamlandDreamland: The True Tale of America’s Opiate Epidemic, by Sam Quinones (Bloomsbury 2015)

Dreamland presents a nuanced and well-researched story of the rise of the opioid epidemic in the United States, and the associated havoc that it has wreaked through US towns and cities, through a dual lens: the evolution of the heroin trade, funneled to the United States via Mexico, and the history of medically-sanctioned pain treatment, leading to the discovery and subsequent sales and marketing efforts of Purdue Pharma’s “blockbuster” drug: OxyContin.

Aside from onerous restrictions on medications at your local chain pharmacy, most who have yet to experience opioid addiction in their own lives see a minimal connection with the innocuously named Vicodin, Percocet, and the aforementioned Oxycotin and the insidious heroin. However, as clearly laid out by Quinones, the path from a medically sanctioned prescription for a common injury to a debilitating or life-ending addiction to heroin falls in a fairly straight line, from mostly sincere doctors (with a smattering of abusive/criminal cases) seeking to treat the pain of their patients, to Mexican peasants in search of a better life for themselves and their families back home importing their locally grown chiva (potent black tar heroin) to blighted American cities with an unestablished drug presence in the market. To satisfy their increasingly hungry customers, Quinones chronicles the savvy strategies to boost their drug trade, mirroring the optimization tactics of any normal corporate operation: from production, to logistics, to marketing and prospecting new clients (mostly outside of “pain clinics”), to steering clear of law enforcement.

Dreamland is a heartbreaking, infuriating, tragic, and gripping story masterfully told (and reported on) by Sam Quinones, a seasoned journalist and with twenty seven years’ worth of experience, including decades reporting on immigration issues on both sides of the US/Mexico border. Without Quinones‘ deft capacity for tying together disparate threads and humanizing his story through the stories of DEA and local police officers, scientists studying the link between opiates and addiction, former addicts and their surviving families, the story would be an ineffective tale of corporate malfeasance on the part of Purdue Pharmaceuticals. Instead, Quinones makes you question your stance towards addiction, and root for a revitalization of the communities and families that the “morphine molecule” has destroyed.

It is a beautiful book, and a worthy read for anyone even moderately curious about the massive opioid crisis taking place across the United States.

Review – God Is in the Crowd

One of the fundamental concepts I’ve long found important to my personal connection to Judaism is the Jewish propensity for self-criticism and -reflection — the tendency to look deeply inward, guided by long-held values and religious precepts. The desire to look critically upon oneself and one’s own community and leaders (quite literally one’s “tribe”) is an essential aspect of Judaism in my mind.

With no established global Jewish leader, Rabbis, prominent Jewish thinkers, and “ordinary” Jews take it upon themselves to diagnose and seek to improve Judaism, to help sustain it as a religion and tribe of people, and to keep it relevant and grounded in its core principles. In a global society that’s growing increasing areligious, the need to reaffirm the meaning and importance of Judaism is an important job, and a mantle that has been taken up by Jews around the world.

god_is_in_the_crowdGod Is in the Crowd: Twenty-First-Century Judaism, by Tal Keinan (Spigel & Grau 2018)

Tal Keinan is one of those individuals. Keinan is a US-born Israeli emigre who rose up the ranks of the Israeli Air Force (an extremely rare accomplishment for an ordinary Israeli, let alone a Jewish-American “outsider”), before transitioning to the private sector via a Harvard MBA, eventually becoming the founder of a global asset management firm (Clarity Capital), with offices in New York and Tel Aviv.

Given Keinan’s background as a Jew who has lived and participated in Jewish communities and non-profit leadership organizations in both Israel and the major center of Jewish diaspora today, the US, Keinan takes it upon himself to diagnose the various internecine conflicts currently taking place within 21st century Judaism, including:

  • Between diaspora Jews and Israelis over Israeli culpability in the Israeli-Palestinian conflict
  • Growing intermarriage and dissociation with Jewish life and traditions in the US, Israel, and around the world
  • The widening divide in Israel between three distinct camps:
    • The territorialists fighting to expand Israeli borders via the active expansion of its legally ordained land rights
    • The secularists, the generally moneyed, educated, and English-speaking population that is based in Tel Aviv and the surrounding suburbs
    • The theocrats, the ultra-Orthodox Jews who prioritize study and a maintenance of “traditional” values above all else

Keinan deftly demonstrates that these conflicts are unsustainable and represent a real threat to not only Judaism as it is currently recognized, but also the future of the state of Israel and its sustenance and sustainability as an autonomous global home for Jews.

Keinan’s ambition in this book is impressive, as the book itself manages to not only survey the varied and diverse issues stated above with a remarkable amount of clarity (sorry) and firsthand insights, but also offers some non-traditional solutions that would serve to improve these issues. Ideas include anointing a Israeli President voted on by Jews around the world to represent the interests of global Jewry (in concert with the Israeli-focused, parliamentary-elected Israeli Prime Minister), as well as an endowment fund paid for by Jews put towards the funding of summer camp experiences, post-high school service projects, and tuition for college education for all eligible Jewish children.

These solutions are ingeniously designed to provide “skin in the game” for Israeli and diaspora Jews alike by providing participation in the democratic process, as well as monetary commitment to the Jewish cause for participating parents, while simultaneously exposing young, impressionable Jews to their counterparts from different countries and levels of observance. Both of these initiatives would create crucial crosscultural connections, while binding them together via their common identity as Jews.

While the book relies a bit too much on concepts from his personal trade, financial markets (including a century-long “moving average” of Jewish thought), and at times delves too deeply into memoir and autobiography, losing the thread and not always additive to the broader book, it is a worthwhile and important read for Jews seeking solutions and ownership over our current state of affairs.

Review – The Fifth Risk

Like Giridharadas’ Winners Take All, Michael Lewis latest book points its lens towards the government. However, as opposed to the vague monolithic concept of “government” that Giridharadas offers as solutions to our current solution, Michael Lewis argues that the functional and effective government that we need already exists, and merely needs to be left alone and kept out of politics so that they can actually do their jobs.

the_fifth_riskThe Fifth Risk, by Michael Lewis (Norton 2018)

Lewis dives deep into some of the most unfamiliar (yet costly) corners of the US Federal Budget, including the United States Departments of Agriculture ($151 billion annual budget!), Energy ($28B), and Commerce ($10B).

True to Lewis’ masterful skill at drawing meaning and incredible stories out of seemingly obscure topics, an ability that makes him peerless in popular non-fiction, he profiles career government bureaucrats with decades of experience and untold devotion to their jobs. Through these chapters, Lewis elucidates the pivotal positions held by these individuals, and their participation behind the scenes of some of most crucial innovations and consequential (and potentially looming) crises that have, and will continue to define the United States as a country.

Lewis’ reporting is focused mostly in the present day, seeking to stoke rage at the sheer apathy and incompetence of the Trump transition and ongoing administration, and the scores of non-qualified loyalists brought in to administer the aforementioned tens of billions of US taxpayer funds.

That said, the book is far from Lewis’ best work, as it lacks cohesion and a straightforward structure to guide its broader thesis. Those curious would be well-served by reading excerpts published in Vanity Fair, which capture the book’s verve but function much better as standalone pieces:

Review – Winners Take All

After initially reviewing Winners in my last reading wrap-up, I picked up the book again and finished it — a decision that I feel very much rewarded for making.

winnersWinners Take All, by Anand Giridharadas (Knopf 2018)

On its face, Winners is a familiar screed of late against shareholder-first capitalism, growing concentration and power of monopolistic corporations, and the increasing inequality that’s resulted from the aforementioned changes, as shareholder- or private equity-driven cost-cutting and concurrent globalization of labor have kept workingclass wages low, while simultaneously reducing the number of stable, well-paying middle class jobs and associated pension plans and other fringe benefits that have helped families build wealth and traverse socioeconomic classes.

If the book simply ended there, it would be mostly forgettable. However, Giridharadas chooses to take his critique much further by indicating an unfamiliar cast of villains traditionally cast as the “good guys:” the impact investors, socially-conscious capitalists, glad-handing philantropists, inspirational thought leaders, and well-meaning, if not sheltered and misguided “elite.”

Through a series of chapters, Giridharadas develops his concept “Marketworld,” another name for the capitalist-first worldview driven by the continued rise of the United States its collection of private industries and industrialists as superior and oftentimes sole drivers of solutions to “public” problems, traditionally tackled by the public sector.

Marketworld is driven by “win-win” solutions, or suboptimal outcomes designed to retain the supremacy (power/wealth) in the hands of the elite, who have anointed themselves the necessary saviors to seek out and implement these initiatives, given their relevant private sector experience in the elite proving grounds of consulting, banking, and private equity before oftentimes transitioning into Non-profit Consulting (e.g., Bridgespan, Redstone) and philanthropic foundations (e.g., Ford Foundation, Bloomberg Philanthropies, Soros’ Open Society Foundations).

As I see it, the crux of Giridharadas’ solution is driven by higher taxation, a “win-lose” for the upper-earners and wealthy accustomed to apportioning their income as they see fit, as opposed to surrendering it to the government. Underpinning this solution is the need for a rapprochement between private individuals (especially the wealthy) and government, the reestablishment of a trust in the concept and execution of government as a voice and advocate for all of its citizens.

Giridharadas’ assessment as government as a “dirty word” is a correct one, I believe, though not a baseless one, supported by countless examples of graft, nepotism, and inefficiencies across all levels of government, as well as wasteful spending and poor execution of high profile projects like healthcare.gov. Any increase in overall government revenue through the form of increased taxation of the wealthy should come with a reappraisal and refresh of popular attitudes towards government-led programs, a herculean task, but a well-intentioned and extremely important one.

The Ongoing Battle Over Data in Creative Industry Decisionmaking

It seems like everywhere you look, you can’t escape ‘data.’ Once obscure arguments about the data accumulation and handling of “free” technology services like Facebook and Google have exploded into the mainstream. Data Science has become an increasingly popular field, as has the use of data-driven “analytics” in a wide ranging number of fields, from healthcare to sports, to city planning and wealth management. The primacy of data (especially “big data,” or the accumulation and synthesis of vast amounts of data enabled by increasing computing power) seems to be a near-consensus: more data will improve our lives, and make us happier, healthier, and more informed.

However, the one area where data’s supremacy remains in doubt is in the creative industries, including the arts, film and television production, and book publishing. Whereas many industries have leaned into data head-first as a key (if not sole) determinant behind decision-making, the creative industries have taken a more cautious approach, wary of confronting the artists and their creative (and oftentimes highly analog) processes and (in my view) inherently skeptical of the power of “data” to yield a breakout success. Whereas data may be helpful in determining the correct number of stoplights per square mile or the perfect amount of risk in one’s portfolio, leaving a computer to assign cultural importance, popularity, and commercial success to an unknown and volatile combination of artist, author, actor, director, designer, etc. remains a task mostly left to human beings.

Yuval Noah Harari’s 21 Lessons for the 21st Century (my review here) takes on this issue head-first, arguing that rather than an inherent inability for computers to create or select art that resonates with people on an emotional basis, it is merely a question of time and data. One of the central theses of his book deals with the merging of biotech (data about our bodies, emotions, neurology), and infotech (data about the rest of the world), and computers’ ability to synthesize that data into actionable and/or tangible outcomes.

As Harari explains:

..in the long run no job will remain absolutely safe from automation. Even artists should be put on notice. In the modern world art is usually associated with human emotions. We tend to think that artists are channeling internal psychological forces, and that the whole purpose of art is to connect us with our emotions or to inspire in us some new feeling. Consequently, when we come to evaluate art, we tend to judge it by its emotional impact on the audience. Yet if art is defined by human emotions, what might happen once external algorithms are able to understand and manipulate human emotions better than Shakespeare, Frida Kahlo, or Beyonce?

After all, emotions are not some mystical phenomenon –they are the result of a biochemical process. Therefore, in the not too distant future a machine-learning algorithm could analyze the biometric data streaming from sensors on and inside your body, determine your personality type and your changing moods, and calculate the emotional impact that a particular song–even a particular music key– is likely to have on you.”

Netflix was long seen as the leading vanguard of this data-first movement in the entertainment industry. Netflix has become famous for its fealty to algorithms in recommending content for its users to watch, and even created a million dollar prize (known as the “Netflix Prize”) to create a tool to accurately predict user’s ratings of films and television shows. Over time, this approach extended to Netflix’s content acquisition strategy – upfront investment for exclusive rights to television shows and movies. Famously, the algorithmic combination of the popularity of the UK political series “House of Cards,” director David Fincher, and Kevin Spacey led to the adaptation and subsequent break-out success of House of Cards, Netflix’s first high-profile content acquisition.

With its center of operations in the tech-based San Francisco as opposed to the power center of Hollywood, Netflix has been seen as a rebel to the traditional Hollywood studios, with its ingrained ecosystem of agents, actors, and studio heads. Further, Netflix’s reputation as a ruthlessly meritocratic place to work, with a high rate of turnover and emphasis on producing results, gave further credibility to its status as a innovative company with start-up roots. Investors eager to load their portfolios with disruptive and highly profitable technology companies have driven up Netflix’s stock price, leading to its inclusion into the FAANG acronym of ‘must-own’ stocks (Facebook, Apple, Amazon, Netflix, and Google). Comparing Netflix’s 5-year stock performance against traditional entertainment companies (Viacom, Comcast, Disney) is a telling indicator – in the minds of investors, Netflix is the future of entertainment, while its immediate industry competitors are poorly equipped to handle this ongoing ‘disruption.’

netflix vs competitors

However, in Netflix’s continued pursuit of subscriber growth and improved financial results, as well as growing competition for licensed content from the film and television studios that initially produced the data, as well as Amazon, Apple, HBO, Hulu, and other company’s entrance into the film and tv-streaming platform business, Netflix has increasingly moved towards producing its own content. In order to meet the growth and profit demands of its investors, Netflix could no longer rely on expensive acquisitions of existing content that included pricey royalty payments to the producer and short rights windows subject to renewal negotiations. Suddenly, Netflix began acquiring and producing hundreds of different films and tv shows, including awards-focused fare and commercially-driven projects alike. In order to sate its consumer, Netflix has chosen to focus on quantity more than quality, to grow its catalog of shows and ensure that consumers paying a monthly subscription fee would never run out of things to watch (this year, Netflix will produce ~700 “original” shows and movies). In the process, Netflix has racked up more than $6.5B in long-term debt, using bonds to finance this spree of content investment.

As a result, Netflix has transformed into a traditional Hollywood studio, mostly unrecognizable from its immediate competitors. Every week, Netflix seemed to poach executives from media and entertainment companies to join its ranks (just search “Netflix hires” on Google to bring up a spate of Hollywood press releases), bringing the entrenched and systemic mindset of Hollywood with them. In the process, Netflix has bifurcated its path forward between its religious devotion to data and innovative approach with its need to build credibility and work within the traditional Hollywood system (or generously, a balance of the two) in the continued pursuit of subscriber growth and financial returns.

This contrast and conflict between Netflix’s technology-based, data-driven origins and its increasing turn to becoming a traditional media company was reported on by the Wall Street Journal in interesting detail, in an November 10th article entitled “At Netflix, Who Wins When It’s Hollywood vs. the Algorithm?” (again, doubling as this week’s Best Thing I Read This Week.)

The article provides an interesting look at how decisions across the company are made with competing considerations pitting “the data” against the more human- and art- and business-driven parts of the company. The article leads with the decision whether or not to exclude one of the two main actresses from the sitcom Grace and Frankie in major promotional and marketing materials (“the data” said that images excluding Jane Fonda, and solely featuring Lily Tomlin resulted in more clicks), but expands into broader and more existential concerns, including whether or not to “green-light” projects or renew television shows, how to incorporate actor/director input, maximizing the effectiveness of film/show titles and trailers, and even whether or not to spend on billboards and other traditional advertising outlets. In each of these cases, Netflix has run up against the complex calculations whether or not to placate agents and their representatives (the “creatives”), or to trust the algorithms and their cold, “rational” calculations.

The Wall Street Journal piece cites several examples where the Hollywood “arm” has won out over the Silicon Valley arm, further underlining Netflix’s continued shift in focus from Northern to Southern California. As the article explains:

Some shows at risk of being canceled due to poor performance have gotten a reprieve because netflix doesn’t want to damage relationships with key producers or actors, people familiar with Netflix’s deliberations say.

At times, the efforts to appease stars don’t sit well with the company’s technology and product teams, triggering heated discussions between the Hollywood and Silicon Valley arms of the company, the people say.

While no doubt Netflix still prominently features data as central to many of its audience-focused experimentation and other key decisions, it’s interesting to see where Netflix’s seemingly all-powerful algorithms have limits. While computers may have gotten better at sniffing out under-the-radar topics and given further credence to the popularity of beloved actors and actresses, it has yet to capture the nuance and importance of interpersonal relationships, and how to navigate the dynamic, highly interconnected Hollywood environment.

On the other hand, the majority of Netflix’s kowtowing has been to established and renowned Hollywood players in an attempt to win them over and convert them to seeing the tech giant as a worthy home for its work. Recent projects by the Coen Brothers (The Ballad of Buster Scruggs) and the restoration and resuscitation of Orson Welles last project, The Other Side of the Wind, as well as the related marketing and promotional spend, are moreso vanity projects than ones expected to generate a significant return. In both cases, the films were released in theatres via short runs in select theatres, hardly the reception that would accompany a similarly high profile release by an established studio. One could argue that over time, as Netflix and other streaming-first services continue to grow in power and incidence, that there will be fewer and fewer auteurs and agents to win over, leading to a reversion to the algorithms and data that will only get better and more accurate over time.

As engineers and product heads likely argue, over the long-term, the results of the algorithm are likely to win out and result in more successful outcomes. However, it’s fascinating to think through the (temporary) limits of these algorithms, and/or whether this is yet another aspect of life that is at risk of being supplanted by machines in the future.

Publishing as Venture Capital: A Deep-ish Dive

A well-worn adage from organizational leaders at my company is that “book publishing is the venture capital of the media world.” While cynics or the uninitiated might be prone to roll their eyes at this attempt to draw a connection between the high-flying and innovative world of venture capital investing and the seemingly staid, stagnant, and predominantly print-based publishing industry, the comparison is a lot less farfetched than you’d think.

Inspired by the October 31st Wall Street Journal article These Independent Publishers Are Challenging the Corporate Players (paywalled, sorry), and doubling as this week’s Best Thing I Read This Week, I thought I would flesh out this idea in more detail.

 

Core Idea

Before we go much further, it’s important to explain one of the key concepts that underlies book publishing: the “advance.” The book advance refers to the amount of money paid by a publisher to an author for the rights to publish the half-baked idea / proposal / partially-completed manuscript being pitched by the author. The actual amount accepted as a book advance varies widely, but in every instance is more akin to a bet than a calculation – a wager that a book will perform in line with (or even exceeding) the acquiring editor / publisher’s expectations. The estimate is normally derived from either comparable books by different authors, a previous book by the same author, or on the strength of the proposal, as well as the acquirer’s belief in the future success of the resulting finished product. Of course, competition is often involved in the advance amount, propagated by a literary agent working to sow interest across different publishing houses to create a competitive dynamic (i.e., unnecessary time pressure, preemptive / exclusive offers, etc.) and drive up the price.

The book publishing industry makes thousands of such bets on the books they publish each year (yes, thousands). And more often than not, these books fail to meet those initial expectations, and can even fail hard (<100 copies sold hard), due to any combination of poor execution by the author (i.e., a bad book) or publisher, and/or a failure to capture the interest or imagination of the bookbuying public in an environment of shrinking shelf space for physical books and an over-saturation of choices online. On the positive side, many books manage to “earn” their advance, after which the author receives a flat/scale-based percentage of the book’s cover price for every copy sold – a royalty. In even rarer cases, a book manages to exceed all expectations and “break out,” far surpassing its estimated sales due to a crucial endorsement (e.g., Oprah’s Book Club), a film or television adaptation (e.g., Crazy Rich Asians), a controversy surrounding the book (i.e., anything Trump-related), or even based on all-powerful word of mouth.

Given the difficulties and lack of formula for a break-out or bestselling success, publishers mostly pursue a ‘blockbusters’ strategy (a term and concept popularized by HBS Professor Anita Elbrse in her academic work and book Blockbusters: Hit-making, Risk-taking, and the Big Business of Entertainment). The strategy refers to placing a large number and range of bets every year, with an expectation of a high rate of failure, and the hope that a single bet yields outsized returns, compensating for all of the other bets made.

 

Publishing As Venture Capital

If you’re still with me, I doubt it’s too hard to draw parallels between the publishing industry and venture capital. As with technology investing, for every “unicorn” valuation that exceeds $1 billion (e.g., Uber, Twitter, Dropbox, etc.), there are 100 similarly placed bets by venture capitalists that don’t materialize, or fail altogether. Both industries are seen as more of an art than a science, with a high rate of failure “priced in.”

Like venture capital, within the universe of placed bets there are different types of investments, with differing relationships between the level of risk and potential reward. While “pre-seed,” or angel investing, normally takes the form of a series of smaller, diversified bets, late stage venture capital is usually focused on established successes, more complete information, and a much smaller band of expected return (or at least a higher floor.) The same dynamic exists in publishing: it’s much easier to make the case for a celebrity author with an established audience and name recognition than it is for a geeky story about being stranded on Mars by a completely unknown, part-time author.

Post-angel investing normally takes the form of alphabetically-ordered stages, or ‘seed’ rounds, whereby each successive round results in a higher valuation and more capital expended (lest a company undergo the death knell of a “down round,” whereby a company’s valuation shrinks).

Following this logic, the range of publishing bets might look something like this:

Category Fiction Non-Fiction
Pre-Seed / Angel Investment Unknown/debut author Unknown author writing about niche topic
Series A Repeat author with history of moderate success Unknown author writing about topic with established audience
Series B Award-winning author with strong reputation / established audience Renowned author with track record of commercial success
Series C Well-known author with a longtime record of publishing success, strong legacy Celebrity memoir, author with highly established platform
Series D and beyond John Grisham, Nora Roberts, James Patterson Post-Presidential memoirs, or a book by an incredibly prominent public figure

As you go down the chain of investment rounds, the expected value and “floor” of the book’s success of the book is higher, driving more certainty and a higher price. Of course, on the other hand there’s occasionally a chance that a small bet placed by on an unknown entity will have massive returns, such as Paula Hawkins’ The Girl on the Train.

Of course, in any of these cases there’s a risk of failure, so the probability of success can never be 100%. A notable recent example is the ongoing delay associated with George RR Martin’s sixth book in the Game of Thrones series – a book that has already garnered significant investment, but may never actually be completed.

 

Deal Flow

Everywhere you look, it seems like there are new venture capital firms popping up, with new theses on how to achieve “alpha” (performance in excess of market returns): crypto-dedicated funds, machine learning-informed investments, or just an excess of capital (and some hubris) on the part of the founding partners.

Venture capital firms that are unknown or have a limited track record oftentimes have difficulty sourcing opportunities, otherwise known as “deal flow,”  while well-known VC firms with decades of operation a history of successful exits, and a strong reputation in the marketplace are highly sought after, and are oftentimes offered many more deals than they can feasibly participate in.

The result is that smaller or more unknown entities seeking to establish themselves and achieve success akin to the established players resign themselves to one of the following approaches:

  • Overpay: One’s willingness to dramatically overpay or overvalue relative to competing investors will yield a seat at the table that would otherwise not be offered.
  • Make riskier bets: Focus one’s efforts on opportunities that are deemed to risky or unproven by the more established players.
  • Make smaller bets: Deals that have smaller upside are less appealing to established venture investors, who must allocate their finite resources to meet a required return.

Similarly, in the publishing industry authors are much more likely to seek out and sign with an established publishing house, with a renowned roster of authors, a proven commercial track record, strong name recognition and reputation in the marketplace, and well-established relationships with value-added partners (e.g., bookstores, online platforms, book reviewers) to help further propel the book, and the author’s career, to success.

As a result, smaller publishers are oftentimes forced to rely on specific niches that may be seen as having a smaller potential audience (e.g., fiction in translation), and take more chances investing their efforts and capital on unknown entities such as debut authors, or books on obscure topics with limited perceived commercial appeal. As recounted in the WSJ article, this strategy has recently led to both critical and commercial success for publishers like Europa Editions (publisher of Elena Ferrante’s Nepolitanan series), Archipelago Books (Knausgård’s My Struggle series), and Graywolf Press (various recent successes, including Carmen Macado’s Her Body and Other Parties, the adaptation rights to which have been purchased by FX). All three of these publishers, as well as many of their “independent” (i.e., smaller) contemporaries, were prominently featured in the recent 2018 National Book Awards, demonstrating their outsized impact relative to their size (both in books published and invested capital).

In each case, these publishers were able to successfully publish authors that were either overlooked or deemed too obscure for mainstream presses. While these risks have paid off handsomely for their investors, there are countless examples of similiarly-placed and -believed in bets that didn’t perform nearly as well.

 

The Incumbent’s Advantage and Brain Drain

A phenomenon recently seen in the world of venture capital investing, both in the United States and China, is the seismic impact that the established and well-capitalized players in the market can have on innovative companies and their valuations. In the US, Google and Facebook have led the charge of making large investments or outright acquisitions at perceived high valuations (some of which seem shocking low in retrospect) in order to absorb talent and innovation, stymie potential competition, or de-risk their long-term future by diversifying away from their existing products. These investments come at the expense of traditional VC players, who can’t match the offers nor the promises of guaranteed resources and support of the tech elite.

To varying degrees, Facebook’s acquisition of Whatsapp and Instagram fit this category, as does their more imaginative acquisition of the virtual reality company Oculus Rift. On the Google / Alphabet front, they continue to be among the largest corporate investors across its various investment vehicles, and have made major investments into self-driving vehicle technology (covered in fascinating detail by Charles Duhigg in a recent New Yorker issue), as well as a wide variety of futuristic bets in robotics, artificial intelligence, and biotechnology. In China, the impact of the established players is even more pronounced, as a two-horse race to acquire the next great technology by Alibaba and Tencent has led to an explosion of VC investment and outsized deals.

For the entrepreneurs accepting these large investments, the rationale is clear: beyond the sticker valuation, the entrepreneurs are offered access to a near-infinite amount of resources, as well as widespread public credibility in pursuit of their mission that invites further interest, attention, and higher valuations. However, these benefits come with the attached downside of being one in a series of many investments and priorities by these highly diversified behemoths, without the attention that they would be likely to receive from a smaller investor with far fewer bets and a larger stake in the company’s success. Oftentimes, the entrepreneurs opt to take the money, and see the upside outweighing the downside.

In publishing, this is an all-too-common trend: an author is “poached” from a smaller publisher who invested in them early in their careers to take a “risk” on publishing them as an completely unknown entity. Authors oftentimes feel forced to put personal loyalties aside to accept an life changing advance amount, as well as the promise of increased exposure and association with a storied institution. The smaller publishers, who can’t reasonably expect to match the amount and associated promises made by the major players, are forced to accept their role as “incubators” of literary talent (with some limited exceptions). Suddenly, these authors go from being the prize of their smaller houses to just another author on a vast roster and crowded publishing schedule. While this “poaching” strategy is far from a guaranteed success, acquiring these authors is a relatively low-risk way for the larger publishers to acquire market share amidst a stagnant sales environment.

I’m sure there are further parallels to draw, and more concepts to be fully fleshed out, so will likely revisit this topic in the future.

On Ben Hunt’s Epsilon Theory Manifesto

From a young age, I’ve always been fascinated by financial markets. My fascination began as curiosity; a desire to understand the daily movements of the S&P and Dow Industrial Average that I read in the newspaper or heard on NPR on my way home from high school.

This desire led me to studying finance as an undergraduate student, where I gained an entree into the theorizing behind the markets’ mysteries: the efficient market hypothesis, modern portfolio theory, and the relationship between risk and return. I supplemented my college coursework with books that poked holes in the arguments and dented the authority of my theory-first finance professors: Lowenstein’s When Genius Failed, Michael Lewis’ Liars Poker, and Taleb’s Black Swan and Fooled by Randomness. These books (especially Taleb), as well as the ongoing financial crisis that served as the backdrop for my initial finance education, led to an ingrained skepticism of markets and the strange mix of rationality and irrationality belying their daily movements

From this early education onwards, markets always seemed to be a human construction more than a mechanical reliability, subject to fashionable trends, human hubris, and a level of inherent enigma that captivated me. I relished the opportunity to accompany the markets as a casual observer: an intellectual exercise of (mostly) intelligent individuals squaring off against one another for an “edge,” with extremely high stakes coloring their emotions and behavior.

A tidy summary of the mystery of investing were recently summed up by Morgan Housel on his Collaborative Fund blog, which gets at what I find so inherently interesting about the practice:

If investing were all about math, mathematicians would be rich. If it were all about history, historians would be rich. If it were all about economics, economists would be rich. If it were all about psychology, psychologists would be rich. In reality it’s a mix of many disciplines, but some of the brightest people specialize in one topic and can’t see the world through another lens.

To me, it seemed like these individuals, with decades of experience under their belts and a full and nuanced understanding of efficient markets and the average return of so-called “active” investors (one thing professional investors aren’t lacking is information), had to be a bit crazy, arrogant, or both to clear-headedly take on such a massive challenge. Further, the key players  operating within “the market” seemed pulled from the pages of classic novels, with their stories of espionage, closely-held tradecraft, economy-shaking speculation, and robber baron behavior. Active investing seemed like a contact sport — as entertaining to watch as football, and potentially as dangerous to play.

I first came across Ben Hunt’s Epsilon Theory blog via Tyler Cowen’s Marginal Revolution, a repository of curiosity and knowledge from the wide-ranging mind of Cowen and his team. The first blog post I read, offering advice to a passive college-aged observer like I was once was, rang immediately true to me, and as with other writers that I quickly fall in love with, I traveled back in time to familiarize myself with his work and broader worldview.

Undergirding Hunt’s observations and analyses, I soon learned, was the Epsilon Theory Manifesto, explaining the origins of the blog’s title and his view of markets.

Hunt believes that the Greek letter “epsilon,” meant to signify error in the modern portfolio theory (return = alpha + beta + epsilon), is a vastly underexplored concept worthy of its own school of study. Whereas countless ink had been spilled on the relevance of beta (i.e., the passive return of the market) and alpha (i.e., unique characteristics of a specific security that made it differ from beta), epsilon is an afterthought. However, Hunt sees that ‘error’ as something that merits an equal amount of study to the other two Greek letters it shares an equation with, and even further can be an opportunity for ‘arbitrage’ – to outwit other market participants via a clearer picture of the environment around you. Every single active investor in the world has a position on their ability to achieve alpha – i.e., returns above a passive investment strategy – but very few offer a position on epsilon.

In Hunt’s interpretation, the “error” underlying the equation are humans themselves, and our strategic decision-making capabilities and shifting behavioral preferences. The discipline of behavior economics has provided an introduction to the human role in markets’ imperfection, but Hunt suggests taking things a step further: using the study of game theory (“a methodology for understanding strategic decision-making within informational constraints”) and informational theory to analyze the oftentimes counterintuitive movements of the markets. Like a game of poker (beloved by investors), movements are made up of “dynamic interactions,” considerations that are far beyond traditional investment indicators or financial ratios.

Following the hypothesis of the efficient market theory, as more and more information has become available over time, the markets theoretically should be closer to perfect, with limited legal ability to gain an informational edge on other market participants. This has led to an environment of “alpha scarcity,” and countless examples of one-time esteemed market “gurus” with multiple years of sub-passive performance, an embarrassing reality for any billion/millionaire who grew rich on their initial rightness and their hubristic belief in themselves to beat the monolithic market.

(Note: Another example of investors ‘seeking alpha’ was highlighted in this week’s New York Times via a profile of Farnam Street’s Shane Parrish, who pitches “reading, reflection and lifelong learning” as the antidote to the attack on the active investor: “These days, if you are not getting better you are falling behind. Reading is a way to consume people’s experiences, to learn something timeless and then apply it to your life.”)

According to the Manifesto, Epsilon Street represents Hunt’s attempt to analyze the markets through the lens of game theory, by studying “narrative” and “common knowledge,” two concepts that seemingly color the day-to-day political newscycle than the financial markets. However, as Hunt presciently explains, narrative is far from truth (it just has to sound truthful), and is normally driven by our human appetite for “news,” even in its absence. The competing narratives of Trump’s impact on global trade, and the ongoing EU/Brexit spat, and the various competing interests (oftentimes without “skin in the game”) inserting their views into the global conversation, serve as ongoing examples of the power of narrative, and its divergence from the “truth.” Per Hunt, the ability to “identify narratives, measure their strength, assess their likely impact” through an analysis of narrative through the lens of game and information theory is an underexploited and worthy of examination.

Similarly, the concept of common knowledge, known as “what everyone knows that everyone knows,” adds a further, postmodern wrinkle to narrative. Common knowledge, or the “second order” consensus (“the consensus view of the consensus view”), represents a war of competing narratives to reach a consensus, and the second order effect of how those competing consensus arrive at a universally held view. The battle for common knowledge is a battle of loudly promoting one’s view and one’s ability to conquer competing views to reach ubiquity, either by virtue of the loudness with which one shouts, or the ability to compound-grow these beliefs onto others. Confusing, but actually incredibly insightful.

An example of the impact of narrative and common knowledge pertain to the recent rollercoaster ride associated with Tesla’s ($TSLA) stock. For the past few years, short sellers, who seek to profit from poor performance of a stock, have sought to create a narrative around Tesla’s inevitable decline, associated with production shortfalls and a perceived inability to ever meet demand for vehicles in a cost-effective way. Meanwhile, Tesla products continue to wow both consumers and automotive reviewers, coloring their view of Tesla’s ability to dominate the market in the future, driving up its stock price. In both cases, the truth is not the underlying driver of their ongoing attempts at creating common knowledge – their behavior is guided by their financial and human incentive to be right. Even more recently, comments made by Elon Musk, who has every right to be incensed by the economically-counterproductive efforts of short sellers, have sent the stock plummeting among questions of his fitness as a leader, and Tesla’s future as a result. In all of these cases, the actual value of Tesla is far from point – it’s very quickly turned into a battle of competing narratives in an attempt to reach a common consensus.

Amid all of this news, a fascinating but incredibly rare volte-face was recently published by a Tesla short seller, which shared the underlying assumptions behind their initial dour view of Tesla, followed by information that rebuts these initial hypothesis and has now led them to reverse their decision. The fact that this type of reversal is so rare gets at the heart of Hunt’s thesis – that a better understanding of how we shape narratives to reach common knowledge is a fundamental tool worthy of study.

Per their summary page:

The story has become too compelling to ignore.

As much as you can’t believe you are reading this, we can’t believe we are writing this!

The most challenging part of being a short seller is to constantly check your thesis to make sure nothing has changed. You must let all predispositions and prejudices disappear and stay focused on only the facts. It is in that spirit and with a great deal of analysis and due diligence that we can say for the first time, Citron is long Tesla as the Model 3 is a proven hit and many of the TSLA warning signs have proven not to be significant.

It has been almost 5 years since Citron published the following line: “By the time this product is even approaching market, there will be multiple other 200-mile range plug-ins that have been out for years.”

Rumors of the Tesla killers have been as constant and unfounded as Bob Lutz’s call for Tesla’s bankruptcy.

While the media has been focused on Elon Musk’s eccentric, outlandish and at times offensive behavior, it has failed to notice the legitimate disruption of the auto industry that is currently being DOMINATED by Tesla.

What has changed?? Plain and simple — Tesla is destroying the competition.

A new narrative? Maybe. There inlies the challenge of the markets, and the reason that so many are drawn to its magic and mystery as a hobby, career and/or vocation.

On “The Mystery of the Havana Syndrome”

The New Yorker has a habit of posting their longform articles weeks before their physical publication to the benefit of their online readership. This week’s edition of The Best Thing I Read This Week (still a working title) comes from the November 19th issue, entitled ‘The Mystery of the Havana Syndrome.’

The article is a fascinating inside look at the insider’s game of US / Cuba diplomatic bartering leading up to the historic normalization of relations in 2015 (which Wikipedia calls ‘the Cuban thaw.’) The article counts as its primary sources many of the principal players leading the US side of the negotiations, including Deputy National Security Advisor and Obama’s right-hand man, Ben Rhodes and Ricardo Zuniga, a career Foreign Service Officer with with extensive LatAm experience (matched with Rhodes to buoy his limited knowledge of the region and lack of Spanish).

On the opposite side of the negotiating table was Alejandro Castro, the only son of Cuban leader Raúl Castro, then thought of as the third most powerful person in Cuba (after Raúl and the now-deceased Fidel). Faced with shrinking revenues and resources from its ideological partner in the region, Venezuela, Alejando’s appointment to lead the Cuban side of the negotiations underlined its importance to the Cubans, and the seriousness with which they were pursuing a potential agreement.

The article capably sheds light on the complicated history that colored the considerations on both sides leading up to the deal, further underlining just how unlikely the accord actually was. On the surface, the deal was an almost overnight success, leading to an almost six-fold increase in US tourists arriving to Cuba by 2017, just three years later.

However, the initial optimism of a rapprochement and normalization of diplomatic and economic ties was always beset by a vast and ingrained ideological chasm, including Cuban anti-imperialism and historic (and warranted) distrust, as well as hawkish views on both sides. Neither side sought to cede any ideological territory in the agreement — it was more so a typically Obama-ian attempt at hoping cooler, more logical heads prevail — letting progress take over, and getting out of the way. After Obama’s historic visit to Cuba, Fidel Castro wrote an editorial in the Communist Party daily (the primary Cuban government mouthpiece), where he wrote: “Nobody should be under the illusion that the people of this noble and selfless country will renounce the glory, the rights, or the spiritual wealth they have gained.”

The teetering balance of voices that formed the US / Cuban agreement was thrown into disarray with the death of Fidel Castro and election of Trump. In the infamously disorganized leadership transition which followed, career Foreign Service Officers were kept out of the loop, and hundreds of State Department roles were left unfilled by the inept management of Secretary of State Rex Tillerson. Many of the deal’s architects were suddenly disempowered (and soon to quit) or outright fired, creating vast uncertainty and an ununified voice towards Cuba.

The US priorities in Cuba seemingly shifted overnight from opening up dialogue, normalizing relations, and trying to rehabilitate a 70 year relationship of distrust and antagonism to trying to “make Rubio happy” (Trump’s words, per a source), referring to Trump’s need to placate Senator and Republican leader Marco Rubio. Rubio, the now-Senior Florida Republican Senator, is a loud anti-Cuban voice and leader of the all-important Latino-Republican union in Florida that has been fundamental to recent Republican victories in Florida (including the recent Republican victories of Rick Scott for Senate [over Bill Nelson] and Ron DeSantis for Governor [over Dem darling Andrew Gillum]).

For Trump to secure his hold over the the Republican Party, the buy-in of Rubio was crucial. The sudden shift in US policy towards Cuba was best summed up by the condolences offered by outgoing President Obama and President-elect Trump towards deceased Cuban leader Fidel Castro:

Obama: “At this time of Fidel Castro’s passing, we extend a hand of friendship to the Cuban people,” he wrote. “History will record and judge the enormous impact of this singular figure on the people and world around him.”

Trump: “Today, the world marks the passing of a brutal dictator who oppressed his own people for nearly six decades. Fidel Castro’s legacy is one of firing squads, theft, unimaginable suffering, poverty and the denial of fundamental human rights.”

The article also provides a fascinating picture of the symbiotic relationship between the State Department and CIA, and the CIA’s dependence on the State Department to provide diplomatic cover and on-the-ground resources for its field agents operating around the world.

Some time beginning in 2016, these field officers, operating under diplomatic cover in the US Embassy in Havana, began complaining of concussion-like symptoms (difficulty concentrating and sleeping, blurred vision, pounding headaches). Before long, after numerous complaints surfaced, officials became convinced that ousted CIA officers were being specifically targeted. Initially dubbed “the thing,” later morphing into “the immaculate concussion” (for its concussion-like symptoms despite a lack of impact), before landing in the name its taken on publically, “the Havana syndrome.”

As the article hints, the Cuban government vociferously deny any involvement in the attack, forcing US officials to speculate the origin and motivation behind the attack. Popular theories include include the denying Cuban leadership, hardline dissidents within the Cuban intelligence establishment angry with the ‘thaw,’ foreign agents of Russia or China seeking to create distance and sow discord between the two countries, or a malfunctioning of Cuban spy technology. The article cites a private suggestion by Raúl Castro that China was behind the attacks, certainly plausible given the Chinese’s growing strength in surveillance and espionage technology, but given the high stakes of US/Chinese relations at this moment, it feels like an incredibly risky adventure halfway around the world.

Meanwhile, incidents of the attack continued to be perpetrated in private residences and hotel rooms alike against CIA officers, their support staff, and State Department Foreign Service Officers. In all, the State Department announced that twenty-one Americans had been “targeted in specific attacks.” As a direct result of these attacks, in an attempt to to protect the identities and careers of the cia officers, as well as the livelihood of the diplomatic staff in Cuba, Secretary Tillerson announced that the US would significantly reduce its US footprint in Havana from 54 staff on-the-ground to 18 or so, including a near-complete exit of the CIA (at least that’s what they’ve publically claim.)

If the ultimate aim of the unknown perpetrator was to create distance between the US and Cubans, it’s clearly been successful in its aims, and have given further ammunition by US hawks that the Cubans are not to be trusted. Meanwhile, the “Havana Syndrome’s” actual cause, effect, and intent remain a medical, technological, and intelligence mystery.

Maintaining Perspective in the Publishing Industry

I joined the publishing industry because I love books, and want to share that love of books with the world. It’s as simple as that. After almost four years working in publishing across two continents, I still get a surge of energy every time I enter a bookstore (especially a new one), start a new book, or think about my “antilibrary,” the term coined by Nassim Taleb currently making the popular rounds for the books in your personal library you’ve yet to read. Books have changed my life, almost exclusively for the better.

The past year or so have not been especially great for books.

A sexual harassment scandal has led to an indefinite suspension of the Nobel prize for literature, the first time the award has not been awarded since 1949. Similar accusations from famous authors and publishing insiders have roiled the industry and shocked booklovers around the world.

In the US, an embarrassing and distracting spat between newly-appointed Barnes & Noble CEO Ron Boire and Chairman Len Riggio led to Boire’s ousting (B&N’s 4th CEO in 5 years) and a messy and publicly-aired wrongful termination lawsuit. Meanwhile, rumors of a buyout of B&N by opportunistic investors (though hardly booklovers) continue to loom.

At a more macro level, the continued movement of book-buying consumers online (i.e., Amazon) has not only has made it more difficult for independent booksellers to compete and sustain themselves, but has also made it harder and harder for readers to discover new fiction, and for publishers to introduce those readers to new authors. As ably recounted in a recent article in Publishers Weekly (What’s the Matter with Fiction Sales? – Oct 26, 2018), amidst shrinking bookstore footprints and the declining incidence of dedicated book review sections in newspapers and magazines, publishers have increasingly few avenues to promote new authors, and an ephemeral leash for supporting non-commercially successful authors. Excluding the success of 2015’s Go Set a Watchman (the opposite of a “new” author), fiction sales have fallen every year since 2013, falling 16% in total from 2013-17. The number of 1M+ unit sales in fiction can be counted on one hand: Watchman (1.6M), Grey (E.L. James – 1.4M), The Girl on the Train (Paula Hawkins – 1.3M), and All The Light We Cannot See (Anthony Doer – 1M).

Think about it: it is easier than ever to find a book about a nonfiction topic of interest, especially written by an author with an established platform, but discovering a completely new author has become more-and-more difficult. As mentioned in a previous post, the messy and unorganized nature of the internet begs for curation – an area where booksellers and the more-biased publishers should readily step in.

Further complicating the consumer book-buying experience, Amazon continues to fiddle with its bookselling algorithm, leading to more and more third party or obscure editions of titles as opposed to linking the publishers’ version (i.e., the version you most likely set out to buy). This type of obfuscation would be impossible at a bookstore, aside from the potential availability of a used copy (readily evaluated via the all-important eye test). See Tyler Cowen’s recent experience trying to acquire a copy of Guillver’s Travels on Amazon (Amazon search is getting worse, especially for classic books – Nov 5, 2018) for reference.

Here in Brazil, my adopted home and publishing market, the past year has been especially grim, also due to changes in the bookselling portion of the publishing value chain. Over the past two months, the two largest booksellers in Brazil, Saraiva (a commercially-focused, 100-location behemoth) and Livraria Cultura (a booklover’s paradise with just 10 stores, but arguably a greater cultural impact) have each taken actions that signal an existential threat to their ongoing bookselling activities.

Over the past few years, both stores have sought to expand their sales offerings, diversifying into so-called “geek” goods (board games, toys, t-shirts, etc.), movies, DVDs, and video games, and most recently, electronics (cellphones, televisions, etc.). Audaciously, Cultura (associated with bookselling for 30+ years) assumed the assets & liabilities of the Brazilian operations of French electronics store FNAC (think Best Buy) in July 2017 – a unlikely, if not outright doomed, marriage from the start, especially considering FNAC’s desire to exit the country altogether.

In both cases, this expansion and movement away from their respective strengths has been catastrophic.

Cultura has now closed all of the acquired FNAC operations (~11 stores) a little more than a year after the change-of-hands was announced, assuming the French retailer’s closing-related costs in exchange for a 14 months of organizational confusion. Cultura has now entered into a Chapter 11-esque process called a recouperação judicial, admitting defeat on their current debts and leaving publishers dependent on Cultura despondent.

Saraiva, citing increased e-commerce competition from Amazon and local players B2W and resulting shrinking margins, has announced a closure of 20 stores (20% of their footprint), and a formal exit from the electronics market as well. A cursory glance at their publically available financials tells a dire story: increasing current liabilities, a shrinking gross margin, and negative operating margins.

Inarguably, it’s a near-worse-case scenario, a perfect storm akin to Books-a-Million suddenly reneging on its obligations while B&N shuts down stores across the US.

Meanwhile, there’s a very real concern that small- and medium-sized publishers in Brazil will not be able to withstand this sudden whiplash and their need to honor their payment obligations to their own employees, suppliers, and authors. There’s an expectation that things are likely to worsen before they improve, as Cultura continues to teeter on the fragile edge of outright bankruptcy, while (optimistically) Saravia begins the sobering process of a complete restructuring of their corporate strategy and future.

(On a personal note, as someone thrust from the cozy confines of a huge, US-based business to a comparatively miniscule Brazilian publisher, this has been educational, to say the least.)

Amid this onslaught of bad news, my priority has been to maintain perspective. Not only as a lover of books (I’ll never forget my first time visiting the Cultura flagship location on Avenida Paulista, São Paulo), but as someone working in the book publishing industry, there’s a continued tendency towards despair (oftentimes shared by the publishing industry itself). The so-called “death of books” has been called for countless times, citing numerous boogeymen (namely eBooks, Amazon, Youtube, Netflix, etc. etc. etc.), with somewhat halfhearted pushback on the part of the publishers themselves each time.

There’s a very strong case to be made that book publishing is not the best industry to invest all your money going forward. There are very real challenges (some of which cited above), and minimal expectation of explosive topline growth (aside from the very real, continued expansion of audiobooks around the world, something we’re working on bringing to Brazil).

On the other hand, books are inarguably as relevant as ever – the richest and most visible people in the world are infatuated with books (Gates, Zuckerberg, Buffet), and take to blogs like my own humble site to talk about the books they love. Even the much maligned Jeff Bezos saw books as his entryway into world domination way back when, and continues to carve out market share in this space, despite seemingly bigger fish to fry (like space). Books about President Trump have consumed weeks of news cycles, and sold millions of copies. And President Barack Obama and Michelle Obama are set to release their own memoirs over the next two years, sure to be similarly explosive megasellers that will provide intangible solace to countless Americans (and people around the world) in search of hope.

In summary, books aren’t going anywhere. We may see less books overall published in the future, and a continued decline in brick-and-mortar bookstores, but as long as consumers continue to want to read books (not only the thousands of new books published every year, but also the hundreds of thousands of books beloved and passed down over generations), there will be places to buy these books. Discoverability will continue to be an issue, and some great books will almost certainly fall through the cracks, but classics are still being published every year (Lincoln in the Bardo’s genius still haunts me), and there will be many more classics in the years to come.

And if you’re still feeling despair even after reading this post: don’t worry – Sam Hinkie’s on the case.

On Twin Profiles of Larry Krasner, Philly DA

Over the past two weeks, the New Yorker and NYTimes published pair of profiles on Philadelphia District Attorney Larry Krasner, one year into his term.

Between the NYTimes Magazine piece on the Kensington neighborhood of Philadelphia and the recent obsession with the Philadelphia Flyers’ new mascot, Gritty, it seems like Philadelphia has suddenly been thrust into the national spotlight. Even the South Philly Mexican restaurant Barbacoa was given Netflix’s Chef’s Table treatment in October, leading to even-longer lines. Stretching further back into this extremely long year, Philadelphia’s unlikely Super Bowl LII ascendance and subsequent parade captured the hearts of millions. In some ways, it really does feel like the Year of Brotherly Love.

However, much more quietly and behind the scenes, Larry Krasner has been remaking Philadelphia’s criminal justice system from inside the institution — a career-long criminal defense attorney with no prosecutorial experience suddenly given the keys to the opposing side’s castle.

In an national environment where Trump’s ‘tough on crime’ rhetoric seems to have won over voters nationally, and his appointed (but mostly reviled) DA Jeff Sessions has become renowned for the impunity with which he carries out his job, it feels like strict adherence to law-and-order would be in ‘vogue’ politically.

However, as both articles recount, there has been a countervailing wave of ‘progressive’ district attorneys being voted into office across the country (and not just on the overwhelmingly-Democratic coasts). In cities like Kansas City and Corpus Christi, voters are clearly exhausted with a broken system that overincarserates offenders into overcrowded jails, boasts extremely high rates of recidivism, and shields violence committed by policemen.

Krasner is at the vanguard of this movement, seeking to radically rethink managing urban crime in one of the most historically violent cities in America, and bravely trying to do so within the system, as opposed to as an system-opposing activist or from within an academic institution.

Aside from the obvious sympathy one must feel for the reporters who worked for months on their respective articles, I do think they are mostly complementary. For the most part, they use different sources, and choose to focus on different aspects of Krasner’s assumption of the job.

Drawing on the work and literature of inspiring individuals like Michelle Alexander, Bryan Stevenson, Adam Foss, and others, Krasner has dramatically changed how crime (especially minor crimes) are prosecuted in Philadelphia, removing minimum bail and minimum sentencing for crimes like petty theft, marijuana possession, and prostitution, and instructing his prosecutors (including pre-Krasner city prosecutors and new recruits) to share the estimated cost of incarceration associated with any prison sentence.

In the wake of Obama’s Presidency, where an idealist and (mostly) outsider was suddenly charged with ‘change’ in an institution that is designed to impede dramatic action, Krasner’s first year is a fascinating case study in trying to change an ingrained culture, bring along naysayers, make an immediate impact on a broken cycle of criminal justice, and operate within the political system, all while trying to maintain the support of the activists and idealists who brought Krasner into office in the first place.

The articles are also a useful look into the bifurcated politics of Philadelphia, a city I continue to call home even while away — where no-tolerance district attorneys (Specter, Rendell, Abraham) have been a consensus for the past 30-odd years despite overwhelmingly liberal Congressional and Presidential voting, and the local policemen’s’ union, the Fraternal Order of Police, is a powerful and unified voice in support of the police force. In addition, the articles are cast in the backdrop of an opioid epidemic that has completely ravaged parts of Philadelphia, compelling Pennsylvania Governor Tom Wolf to declare the drug-laden North Philadelphia a ’state emergency’.

While Philadelphia has long been an afterthought, proclaimed part of the ‘acela corridor’ (i.e., between NYC and DC), or ‘the sixth borough’ of NYC every couple of years by story-starved NYC journalists, it is heartening to see innovative thinking and progressive action being taken in the city.