Book SummaryBusiness Adventures, by John Brooks

1-Page Summary1-Page Book Summary of Business Adventures

Business Adventures is a collection of essays about the unpredictability of corporations and Wall Street—and the people behind them. Through 12 in-depth essays, longtime New Yorker contributor John Brooks examines how businesses and economies can rise and fall based on people’s behavior, which is often driven by emotions, habits of thinking, and human tendencies.

(Shortform note: Some might say that the book, published in 1969, is outdated, but Microsoft’s [Bill...

Business Adventures Summary Truth No. 1: People Can Be Irrational, Leading to Disastrous Decisions

In the following essays, we’ll see how letting gut reactions override logical thinking can lead to dire results.

Collective Panic Can Rock the Stock Market

Brooks’s first essay illustrates how emotions can drive market behavior, making the stock market inherently unpredictable.

He writes that on May 28, 1962, the stock market saw a sharp drop reminiscent of the crash of 1929, leading to widespread panic. Fortunately, the crash didn’t last for long and the market recovered within days. (Shortform note: This is known as a “flash crash”—a steep, rapid decline in stock prices over a very short period of time. While the 1962 flash crash played out over a few days, more recent flash crashes have occurred in a matter of minutes. For example, the 2010 flash crash lasted for only a quarter of an hour.)

Pundits tried to determine what caused the crash, since it happened during a healthy economic period. They floated many theories, but Brooks posits that a key factor was the ticker tape that recorded every transaction. Unable to keep up with the unusually high volume of transactions on...

Business Adventures Summary Truth No. 2: Success Can Make People Complacent

People can spend years working hard to achieve success, then relax once they get there. Brooks describes how this complacency can make you blind to threats and weaknesses.

Some Companies Stop Innovating Once They’ve Achieved Success

In this essay, Brooks writes about how Xerox’s commitment to innovation led to its success and how its subsequent neglect of innovation led to its decline.

He narrates that Xerox initially invested all its resources and energy into developing the first automatic xenographic office copier, spending several years and over $75 million on the project. The copier became an all-or-nothing venture, with some executives taking their pay in the form of stocks and even mortgaging their homes to support the endeavor.

Xerox finally debuted its first copier in 1959, and it became a massive success. By 1964, the company landed in the Fortune 500, the annual ranking of the 500 biggest companies in the US. However, Xerox lost the strong sense of innovation that drove the company in its early days: By 1966—the year Brooks wrote about Xerox—the company showed signs of faltering. It faced dozens of new competitors that were eating into its share of the office...

Business Adventures Summary Truth No. 3: People Will Take Advantage of a Complex System to Get Ahead

Laws and regulations are meant to protect citizens and create an egalitarian society, but they’re often so complicated that people are able to circumvent them on technicalities. In the following essays, Brooks writes about the ways people have exploited loopholes for their personal gain.

Rich People Find Creative Ways to Minimize Their Income Tax

In this essay, Brooks traces the roots of the federal income tax and discusses how the wealthiest people can get away with paying hardly anything at all.

Brooks writes that in its original 1913 form, the income tax law was simple and straightforward, featuring graduated rates that were friendlier to those in lower income brackets. While the current law still features graduated rates, Brooks writes that amendments over the years have led to loopholes that have enabled wealthy people to minimize their taxes. These loopholes include lower tax rates for capital gains and tax exemptions for charitable foundations. Each amendment has also made the law more complex, making it harder for the average taxpayer to understand; meanwhile, rich taxpayers can pay professionals to advise them on how to use loopholes to their...

Business Adventures Summary Truth No. 4: People Tend to Copy What Others Are Doing—Even When It’s Illegal

While laws and regulations on taxation and insider trading can be somewhat open to interpretation, antitrust laws are more unambiguous: Section 1 of the Sherman Act of 1890 explicitly states that any act restraining trade is considered illegal. One such act is price-fixing, which happens when companies collude to increase their profits by agreeing on a price instead of competing for contracts. (Shortform note: Some argue that going after price-fixers is a waste of time because price-fixing is hardly ever successful anyway—the free market makes it unsustainable, the maneuvers to make it possible (such as getting foreign companies on board) are impractical, and competitors can’t trust and rely on each other in the long run.)

However, despite the clearly stated laws prohibiting price-fixing, in 1961, 29 companies in the electrical manufacturing industry—most notably General Electric (GE)—were found guilty of repeatedly engaging in the practice for years. (Shortform note: GE was the biggest company to be indicted, but it was only one of many; price-fixing was a widespread practice in the industry. In _[The Art of...

Business Adventures Summary Truth No. 5: One Person’s Battle Can Set a Precedent

Though laws and regulations can shift based on the whims and follies of Wall Street’s big players, Brooks writes that even one individual can change the legal landscape. In this essay, he discusses a landmark case involving a man named Donald W. Wohlgemuth, whose employer tried to prevent him from accepting another job offer because he had knowledge of trade secrets. The case generated a lot of interest as its outcome would influence other people’s employment terms—if they knew trade secrets, did that mean that they were tied to their employer for life?

The case centered around Wohlgemuth, who was working as a manager of the B.F. Goodrich Company’s department of space-suit engineering in 1962. Dissatisfied with his job at Goodrich and enticed by higher pay, he accepted a job offer from the International Latex Corporation, one of Goodrich’s main competitors.

When Wohlgemuth told his bosses that he was leaving for Latex, they worried that he would reveal trade secrets to a direct competitor. They threatened to sue, reminding Wohlgemuth that he had signed a contract that kept him from divulging confidential information. Wohlgemuth called their bluff and quit; Goodrich...

Business Adventures Summary Truth No. 6: People Can Be Good, Too

The previous essays illustrate how people on Wall Street and the larger financial world sometimes engage in unscrupulous behavior, but Brooks also writes about a few cases when institutions and individuals acted for good.

Financial Institutions Are Willing to Absorb a Loss for the Sake of the Greater Good

Brooks writes about two instances when institutions came together and funded what amounted to bailouts to prevent financial crises. The first case was when the NYSE rescued one of its member firms from the brink of insolvency; the second case was when some of the world’s biggest central banks tried to save the pound sterling from devaluation.

1) NYSE Bails Out a Member Firm

In the first case, Brooks narrates that in November 1963, one of the NYSE’s member firms was in dire straits: Ira Haupt & Co. had borrowed millions from various US and UK banks to invest in Allied Crude Vegetable Oil & Refining Co., a company involved in the speculation of commodity futures contracts, particularly in cottonseed and soybean oil. (Shortform note: A commodity futures contract is an agreement to buy or sell...

Shortform Exercise: What Career Will You Choose?

With so much uncertainty in the business world, you’d be well-advised to choose a career that suits your goals beyond financial wealth, as David E. Lilienthal did. Brooks writes that Lilienthal only seemed truly happy when he’d found ways to help others.

Examine your current professional role—how much of your responsibilities are aimed at helping society?