Book Club: The Art of War

[this transcript has been edited for clarity]

Jacob: The Art of War.

Jeff: The Art of War. So, when I was trying to do recaps of them, I was just looking for a nice 30-minute recap on some podcast or something—like, you know, “we’re revisiting The Art of War today and its relevance in modern life.” And it’s like, I couldn’t find anything except stuff that would appeal to finance bros or—

Jacob: I know.

Jeff: It’s like, ugh. So we’re providing the service to the public right now.

Jacob: This is why I didn’t want to pick up the book, because I thought the book was going to be like this macho-man brutalist mindset. And I just thought it was a novelty to be like, I’ve never read that before, but—

Jeff: I can’t believe—like, had you never heard of it before?

Jacob: No, I’ve heard of it, but I’ve only heard of it…

Jeff: In the context, yeah. In the context of like, how The Art of War can help you conquer your finance enemies or something.

Jacob: Yeah. Or like corporate takeovers. I mean…

Jeff: Yeah, stuff like that.

Jacob: Hey Jeff, welcome to another episode of the Human Friend Digital Podcast.

Jeff: Hey Jacob. Today we’re doing a little—I don’t know, are we going to make this the first of a book club series? 

Jacob: I would like to. I feel like in business life I have to read a lot of books, and at other companies people recommend reading, and some of those readings are so business-focused that I hated them.

Jeff: They’re like textbooks, you know? It’s like going back to college.

Jacob: Yeah, they feel very much like the art of how to sell stuff, or how to advertise things, or branding, or finding your unique purpose in life as a company.

Jeff: Yeah.

Jacob: They’re just not fun. So our book club’s going to be a little different. We want to find the things that are related to business or—

Jeff: That can be, yes.

Jacob: Then we can learn from them that are fun or different to read for business. And that’s basically it. That’s our book club. Welcome.

Jeff: And yeah, welcome to episode one, which we are doing—Sun Tzu’s The Art of War. 

I read this back years ago in high school, and Jacob just picked it up. So Jacob, you’ve got the freshest memory. I did some refreshing myself this week before the podcast, but tell us what it is. What’s it about?

Jacob: Yeah, it’s a short book. Usually if it’s thicker, it’s because there’s like three hours of exposition after the book.

Jeff: Like annotation?

Jacob: Yeah, just people talking about how to apply it and all this stuff. But essentially, it is a 2,500-plus-year-old book—more like a set of treatises—on The Art of War.

But you know, how I picked it up and why I see it around is that it’s usually a joke. Like you’re watching 30 Rock or Better Off Ted or some corporate thing and someone jokes about how they’re going to read The Art of War, or they’ve read The Art of War, and they make some comment. It feels very much like, “I am a corporate power-hungry monster, and I read things like The Art of War.”

Jeff: Yes. This actually reminds me of Machiavelli’s The Prince, because everyone sees it as, like, Machiavellian—the meaning of Machiavellian being ruthless, will stop at nothing to conquer. But actually The Prince was intended more as a satire, and that is lost in a lot of things.

So it just reminded me of that, which we can do The Prince on another one.

Jacob: That could be a fun one. That’s an unexpected one as well. I would put a pin in that.

Jeff: Yeah. But it’s like The Art of War is not—I mean, it’s about war, but it’s about more than that.

Jacob: Well, I think that I should say about half the book is very tactical. Like here’s how warfare is handled with fire. Here is how warfare is handled on the terrain. Here’s how warfare is handled depending on the troops’ positions in relation to your enemy’s position and the yin and the yang of the landscape and the heavens.

Jeff: So Jacob, you said it was 2,500 years ago, and it’s from China. And the author is attributed to be philosopher Sun Tzu. Although it could be like many people put together. And like the Warring States period of China, right?

Jacob: Yeah.

Jeff: Am I remembering right?

Jacob: Yes. I was doing a little more context of it because the way that The Art of War—and this is what kind of surprised me when I was reading it—isn’t so much all about war. It’s also the art of state: how to maintain power, and actually maintain a group of people from generals to the actual masses, to the ruling class in a complex society during a warring time period. Like, it is about making sure that you are benevolent. You actually have to have a balance to get people on board.

But yeah, it comes through this warring period, which is about somewhere between 400 to 500 years’ worth of just constant battle and wars through these regions. And I’m not a historian by any means, but essentially the book is dripping with this mentality. Basically, for that period, if you were born anywhere in that period, you were born during a war.

Jeff: Yeah, your parents were, your grandparents were: it was war. Just constant.

Jacob: Yeah. So the way that the book opens is it takes on the premise that war is the norm from the beginning. So that was a little jarring at first to be like, damn, that’s a little—

Jeff: Yeah. And that’s interesting coming from one of the longest periods of peace for Western society. And it’s like our default is peace, and their default was war.

Jacob: Yeah, but I think a lot of the balance of power, the balance of how things are supposed to run and, there’s so many philosophies that are ingrained in it right off the bat. It is also a way to see how to not be at. Which I thought was interesting and I did not expect, I was totally expecting this to be a, you know, macho man. Let’s kill all the people.

Jeff: There are so many people who see the book and think the exact same thing, I think.

Jacob: Yeah, I think it’s the title too. But, it should, it really feels like if I was going to do a translation of it now it would be the art of state,

Jeff: Okay. Because war was the default, that was, you know: art of state, art of war. They’re equivalent.

Jacob: And it’s part of, one of his opening lines is about how like the war is the state. Like there is a clear quote from him at the beginning that clearly articulates this setup.

So, but let’s get into it. Let’s talk about the good stuff. Let’s get to those meat and potato topics.

Jeff: . So, Jacob, you were saying, you know, applying these books that we’re gonna read in our book club to business, and hopefully like our business digital marketing. But yeah, you want to talk about sort of the sections of the book that you think are most applicable to business. ‘Cause, you know, probably fighting with fire is not one of them.

Jacob: No, we’re understanding the use of the terrain, as you wage war etc. No, the things that talk about leadership, organizational levels and, the overall philosophies of state are the most helpful. And that’s where you start the book.

It drops you into the first one, “Chapter One: Laying Plans” is about the five constant factors of war. And, they don’t really have much to do with war, which surprised me. That’s why I kept reading the book,

Jeff: Sure, yeah. What are the five?

Jacob: So I have them written down here, because I thought they were so succinct, was the Dao or the moral law—you see sometimes the translation is moral compass—and it’s kind of like a way to say there’s a higher power at play in these people’s lives that, the emperor, the ruling, the religion, whatever it is, there is something that is greater than the sum of its people, that they’re working towards. So that is really true because if you—I mean, I’ve read a lot of business books, but start with why, which I’ve joke about a few times on this podcast—that’s one of the essential things, is finding out that “why,” that higher compass that you are running your state by. 

But then the next one is the heavens, which the way he talks about it in the books is like the elements of the wind, the rain, fire, weather conditions, basically anything that comes from above that is outside of your control: uncontrollable factors. But in a philosophical sense, acknowledging these uncontrollable conditions is very important.

Then the other one is the earth, the actual locations or where you are. And again, that’s from a philosophical sense as a business, it’s not only your uncontrollable conditions there, but where is your location inside of this uncontrollable world? How are you positioning yourself? And so that is really good.

And then comes the commander, the general, the leader, depending on the translation. And this is where it hooked me good, because it said the biggest qualities of a good general or commander would be personal self-control, benevolence—that was up there, that was like, number two was benevolence actually being kind—courage, and then strictness. And they go into strictness later in the book about how you can’t impose strictness until you display your benevolence. Like you have to prove that you are a good moral leader first, then you can impose your strictness. Which is kind of funny now ’cause I feel like we have some people in power who do it the other way: it’s only strictness.

Jeff: A lot of people who gain power and have never had it before, or don’t care about wielding it well—yeah, I think they have that exact same approach where it’s like, “I’m the boss, so do what I say.” But it’s like, why should we follow you?

Jacob: Why should we want to? And they talk about that as a way to destroy the morale of your organization, your troops—if you are strict without reason, without moral compass, without benevolence in the beginning. If you’re strict too early with people, and I’m like, wow. In the first, I don’t know, couple of pages of this book, this guy has summed up how to organize an organization—any organization—really well.

And then the last one is about the method and discipline. So, your support, your structures, and your ability to execute your plans. And that is basically your day-to-day grind, making sure that you have really good systems in place that follow through on that.

And all of that really doesn’t have anything to do with war. And that’s what threw me off. I mean, it does, but it doesn’t have to only do with war.

Jeff: Yeah. It has to do with war, and it has to do with anything that people try to do as a collective unit.

Jacob: Yeah. So that one was great. But I do want to say one other thing about all of these chapters in the book. This book is like a one-hour read, maybe an hour and a half. It is straight to the point. There is no exposition. It is: these are the things, this is the truth. I don’t care to explain it or give you millions of stories: this is the truth. 

And he hands it down in such a clear, succinct way that I think that’s part of its sustaining power and why it’s so applicable—he doesn’t, the writers of it don’t spend so much fricking time explaining it.

Jeff: Justifying it, like covering their asses sort of thinking?

Jacob: Yeah. Yeah. They just know that this is true. And I think that’s what’s so powerful about the book, is it’s just boom, boom, boom. And you know, I read so many business books today, and they feel like they just deal with one of these topics, right? And they expound on it for 400 pages. It’s like the heavens, the elements, the earth—that reminded me a lot of Seth Godin’s Purple Cow, like, this is a book about being a unique selling proposition of location, and dealing with market conditions and all these things, and standing out in the market, and that’s great. But I feel like a lot of marketing books or business books that I’ve read are always about one piece of this puzzle. And then in this one, I don’t know, handful of pages—it’s all of them, done, and then we’re onto the next ones.

So, back to the question of… there are about four chapters I noted, and “Waging War” or “The Economy of Warfare,” the second chapter, was also really good. It talked about the downfalls of long-term, protracted wars.

Jeff: When we were planning this episode, we had a couple recent ones [wars] in mind that we thought were really relevant to that.

Jacob: Yes. No, I’ll spell it out here. I thought within the first two chapters of reading this book, it was clear to see why our involvement in Iraq and Afghanistan did not work. And it took me 20 minutes to clearly see all of the reasons why you shouldn’t have done that. And I was like, you could have read the— I wish, I mean, you’ve told me this before: the generals read this. Our generals do read these books. And it is the leadership that does not.

Jeff: Well, yeah, exactly, like the political leadership.

Jacob: Leadership does not.

Jeff: I mean, it doesn’t necessarily—I’m sure many of them do. Maybe they take the wrong lessons from it. Or take none at all. Yeah, I have a couple friends who went to West Point. I’m pretty sure it’s required reading there. But, you know, it wasn’t required reading for us. And I mean, you studied marketing. I studied science. And we both went to high school. Never mentioned, ever.

Jacob: I know.

Jefff: But it’s like, everyone talks about teaching the next generation of leaders. Well, here’s a great book about leadership.

Jacob: Yes. And I felt like by the time I was done reading it—especially this “Economies of War”—where if, like, you’re going to… there was one math equation in it that I thought was fun. If you’re taking, I think he said like, a thousand troops, and you’re going to march them a thousand fathoms, and they have these thousands of things, you’re going to be spending a thousand gold pieces a day. You’ll lose the faith of the people that are funding it. You’ll lose the faith of the people. You’ll lose the faith of the emperor at the time, or whatever. You know, you’ll lose so much.

So everything was about weighing the economies of a move, but also the social implications of waging war improperly. That’s why protracted wars were never recommended. Like, basically, it seems that by the time Sun Tzu’s talking about this, after hundreds of years of war, the best generals were very strategic with their energy. They did not just go and spend it to spend it. They did not go in the seeking of conquest. They were patient.

I think that was a really nice undertone of all of this stuff—how patient these leaders were. Talking about both their troops, their people… I mean, there’s just an overall sense of zen-like patience with this situation, which I was again not expecting. I was expecting this was going to be written by an orc warlord, you know?

Jeff: Well, like, think about Napoleon. What would’ve happened if Napoleon had been patient with Russia? Because he went with 600,000 troops—the largest army that had ever been assembled on Earth—and it was reduced to like, I don’t know, 30,000 or something within six months or nine months.

And that’s, you know, the Western curriculum, all of our history classes, it was Julius Caesar, Napoleon, Hitler—not saying Hitler was good—but like all these people who tried to conquer Europe or conquer the world, and you don’t study the generals who were patient and thoughtful about how they waged war.

Jacob: Yeah, because their wars were about maintaining their state in longevity. Napoleon apparently did read Sun Tzu’s Art of War.

Jeff: Again, did he take the right lessons?

Jacob: Yeah, did he take the right lessons? I think that maybe he did in the beginning, because he was extremely successful and strategic. But I think towards the end, it was his ambition that got in his way. Because what I see from this too, is that there are emperors—people at the top—and then there are generals beneath. And I think one of the problems with Napoleon is he decided to wear all of the mantles at all times, and then his ambition got the better of him, and he was not able to check himself.

Which is another thing that gets brought up later in the book about power structures being able to say no to each other.

Jeff: Sure, yeah. Yeah. If you’re both emperor and like, head general, who is there for you to say no to?

Jacob: Yeah, so you can make really bad choices.

So, all right, I’m spending more time than I thought I would, because this is an interesting book.

Jeff: This is why I was like, we can’t do two books in one episode. It’ll be forever.

Jacob: Yeah. So the last two chapters, which I think are a little easier to talk about—Chapter Five was The Use of Energy, which highlights what we’re talking about—momentum, timing, making sure that you’re actually doing the right moves at the right time. You’re letting the enemy see you, not see you, appear far, appear close, all these little idioms that show up in the book that are really interesting.

But I thought the nice thing about it was this patience, this calculation. You weren’t meant to win. You’re not here to win today, you’re here to win it all, right? You’re here to survive for the long haul. And so I thought that was really smart—just trying to conserve what you have, because in their lifestyle there is no end to this war. There will be war after you are done. And so it’s just a different mentality shift to think about that. So I thought that was smart.

Jeff: So with business, you know, today everyone’s about like growth, growth, growth, growth, growth. Do you think this book teaches against that strategy, or how do you feel like these chapters apply?

Jacob: I feel like in this context, what I would take away from it is: it would be a lot different if you thought about the business that you were going to hand over.

Jeff: Okay.

Jacob: Like, your business is beyond you at this time. What is the business that you will leave to X?

Jeff: Right.

Jacob: To this person, to this other company. Are you trying to sell this or become part of a larger corporation? Are you wishing to grow this business and then hand it to your children? Are you wishing to grow this business and hand it to your employees to continue this journey?

Then this would be more for larger-scale businesses—like P&G, for instance—would probably be a company that would benefit more from this versus us. We’re very small. If we make it 20 years, great.

Jeff: But I don’t think anyone in P&G’s boardroom is being like, “We can be patient with our growth models.” It’s like, if we don’t hit X growth percentage next quarter, our stocks will fall and heads will roll, apparently.

Jacob: Right. That’s the wrong mentality.

Jeff: That’s what I’m saying—you think that’s the wrong way to go about doing business, you know, based off of the philosophy of Sun Tzu.

Jacob: Yeah. I think that would be the biggest takeaway—that you are not the final chapter. You are not, and you were probably not the first chapter, you know? I mean, I think if you work for a big corporation like P&G that’s been around for over 150 years, or you’re working for even Cintas or something a little smaller that’s been around a while, you’re in charge of a chapter in this legacy. You are not in charge of the entire history at this time.

And that kind of mentality: you have to not only be able to win this battle, but you will have to win one in 20 years.

Jeff: Yeah, well, the incentive structures of most modern corporations do not encourage that sort of behavior, but it—

Jacob: No.

Jeff: —It would probably be better if they did.

Jacob: Yeah. And it’s like Amazon. I mean, what has Amazon done but destroy books, destroy retailers of all sorts of varieties—

Jeff: Eviscerated unions, stripped the Earth of its resources along with everyone else.

Jacob: It’s just not a sustainable long-term model. Like, eventually this corporation will be toppled by its own hubris.

Jeff: Maybe. I mean, but we did get my microphone from it, and my headphones, and my keyboard that I’m working on right now from Amazon.

Jacob: It won’t be us, it’ll be them that’ll take it. They have waged a battle with everything, for what? And then when Jeff Bezos goes from this and leaves behind this wreckage of economic turmoil that he’s created—what then?

Jeff: He made a lot of value for shareholders, and that was his job.

Jacob: Yes. I think he probably has his own weird moral justification.

But anyway, the last chapter I thought was the most useful was Chapter Thirteen.

So really, from the middle of the book to the end, it’s mostly tactical stuff—like, you should not wage a war here, you should not wage a war under these conditions with this wind. If you’re going to use fire, you have to use it under these circumstances. He even brought up astrology at one point, which was interesting but not as applicable to business. 

But the last chapter was The Use of Spies, which was really interesting because in the beginning—the first chapter—was almost an altruistic view of the world, and in the last chapter was a bitter truth about information.

Jeff: Yeah, yeah, yeah. It’s a very cynical view.

Jacob: Yeah, and it talked about: if you do not control information and the gathering of information successfully for your state, for your organization, you will not succeed. And they were talking about manipulating and getting double spies and moles, and it was like the whole structure of the CIA 2,500 years ago.

Jeff: Yeah, it always amazes me to read the history of spies—like how sophisticated spying was so early on. You know, if you consider warfare today as “fully formed,” espionage has been fully formed for millennia.

Jacob: Absolutely.

Jeff: Same tactics, same thought processes.

Jacob: Everything he outlined in this Use of Spies is everything you hear today in a good crime or spy thriller.

Jeff: Sure.

Jacob: And I’m like, that was another surprising one—like you just said. I didn’t expect the longevity of that to be so accurate. But I thought for business, it was so interesting to talk about how you have to make decisions on good information. You have to spend the time to get it. Now, you don’t have to be spying on people—

Jeff: There is literal, yeah, corporate espionage. But that’s not what you’re talking about here. You’re talking about, are you investing in the next Theranos thing?

Jacob: Oh, oh—the blood thing where they would tell you all your results. Yeah, that scam. I forgot about that. Man, that thing’s crazy. Yes, that’s a good example. What is all the information? Do you know everything that’s going on with your organization? The factors that are going against it? If you’re going up against a competitor, do you know everything you can know about your competitor in this situation and the value of that information?

And, you know, I do a lot of web analytics for people and—I mean, it’s much more innocent than this, of course. You know, number of visitors who go to your website and click on stuff. But I was talking to a client today who does not have any analytics going for their website, which blew my mind considering it’s 2025.

Jeff: I feel like a lot of people who have no exposure to… They know, “I need a website, and here’s a website designer or Canva or whatever.” But once it’s built, it’s just a static thing to them.

Jacob: Yeah, and that’s just crazy. You can’t make actionable decisions without good information. You can’t know if the vendor you’ve hired to help you with your advertising or SEO or marketing efforts did a good job without having analytics that track and show proof of that information happening in real time.

And I feet like that was just a really interesting end to all of it—that so much of it was philosophy, but the very last chapter was nuts and bolts, here people: You have to get spies. You have to have information. And you have to be willing to sacrifice some of your morals, even, to get that information in his time period. That’s the way it was viewed.

It felt like so much of it was: you have to make sure your troops are fed, you have to be benevolent to them, you have to be strict, you have to be honorable, you have to have a good moral compass, you have to have all these things. Things have to make sense to you and the troops. But you also have to have latitude in order to be a full human as a general.

And it’s like, yeah, you really need the info. You have to turn some people and sacrifice spies in order to sabotage your enemy, and let your spies die—that’s okay.

It was so dark. And it’s such a rapid, dark turn at that chapter that I was a little shocked. But I was like, “well, I guess it’s very practical.”

Jeff: Yeah, absolutely. 

So Jacob, what do you think are the final takeaways you got from The Art of War in terms of leadership style or management style, insights?

Jacob: Yeah, I think the first chapter lays it out so well, and then the rest of the chapters help fill in all the information. I think leading with a place of benevolence is so important. Leading with a purpose, and leading with knowledge of the world that you are in. You are not only you, on your little land and in your little organization. You have factors at play—like the heavens and the earth, as they say in the book. Outside factors that are outside of your control, and placement, and the stuff that you do have in your control—where you can move to do these things.

Jeff: Like, your communities, the people you work for—benevolence towards not just your team but also your neighborhood.

Jacob: Yes, and everything that surrounds your business and anything that you can affect, and that can affect you. I think it needs to be, like 1) a greater awareness of all the things that are around you; but also having that discipline to be benevolent, to focus on treating kindness not as an add-on but a central feature to inspire loyalty in your people who decided to help you. Even if you’re paying them, even if you’re doing whatever you can—they did make a choice to be with you. They did make a choice to join this endeavor. And you need to have that straight benevolence to them.

But I think one thing that was interesting was that—it was kind of, muddled in a couple of the chapters—was this orthodox versus unorthodox, and that was in the translation I was reading. You give everybody the tools and the strictness to follow the rules and to stick with them, but you also give them the latitude to break those rules when the time is right. When you need to have the pressure release.

Jeff: So did The Art of War give examples of when a general should, I don’t know, disobey the emperor?

Jacob: Yes. That’s a good question. It did give examples of when to disobey, and it was when the emperor’s decision would put your overall long-term strategic objectives in harm’s way—putting your troops in harm’s way when you know that would result in the death of so many people needlessly, or exacerbate the costs of the war itself.

Having the ability to say no to your leadership, and having the ability to do something unexpected and be praised for that, is a super valuable thing. This balance where you’re benevolent, you’re strict, but you give wide latitude to these people to act independently.

I think there was one line: it is the unorthodox moves that win. It is the orthodox moves—if they’re too orthodox, if they follow the same program over and over again—that fail. And I thought it was so elegantly put, that you can foster a place of safety and control, but allow for freedom.

Jeff: Sure. Yeah. I mean, you said strictness and latitude, and it fits with a lot of Chinese philosophy being self-contradictory, ‘cause it’s a bit of a thinker. You want them to be independent but also not independent; orthodox, but unorthodox.

And I think they probably had the flexibility of thinking to operate within those two paradigms at the same time. And I think so much of the way we run businesses, institutions, schools, really doesn’t allow for that sort of flexibility enough. You know, really good ones do…

Jacob: I like what you’re saying there. A lot of organizations don’t. They want you to follow their company policies—

Jeff: To the letter.

Jacob: To the letter. And I find that the companies that have the least amount of policies are the most enjoyable to work for.

Jeff: Sure.

Jacob: But at the same time, the people at the company—because they don’t have the policies—are the most involved. So I have more involvement, which is kind of like the strictness, this oversight. But I have less rules to follow.

Jeff: Right, right, right. But those companies probably don’t have huge market capitalizations and shareholder dividends, you know?

Jacob: That’s true. I’ve only worked for very small organizations.

Jeff: But, I mean, do you need all of those things to be… how you define a successful company is variable. You can define it by things other than percent growth during a quarter. But that’s just how most of them are defined today.

Jacob: Yeah. I think what’s nice about this book is that since it is about war and it is about state, there is no talk of raising money. It is more about being judicious with the money that you have, to make sure it’s very effective. So, you know the ruling class is going to have to support this, so basically your shareholders, are going to have to support this.

But it’s not about giving them a perfect return on investment every single time. It’s maintaining the longevity of this organization. And that ends up becoming something that returns back to them over and over again. Because if you have stability, you can provide.

Jeff: So this is actually a really interesting point. So, the aristocrats funding the war in The Art of War would be the equivalent of an employee-owned company—or employee-invested company—because outside investors investing in a corporation, all they want is their money, back plus a return.

But if you are the same people under the leadership that you’re funding—yeah, exactly what you said. It’s like a cycle. They’ll give money if you’re behaving well as a leader, and you’ll behave well as a leader because they’re giving money.

So it’s like, can you even have a leadership structure that can adhere to the philosophy of Sun Tzu, the way we currently conceive of corporate America? I don’t know.

Jacob: I don’t know if they do it in corporate America as much. I know this is very popular in Japanese corporations.

Jeff: Well, they’re eating us alive—to quote a Simpsons episode.

Jacob: Yeah, it’s interesting because it does require, again, that sustainability of the momentum and the energy that you have. 

I really liked your analogy of an employee-owned corporation, because it is very much like that. You just need the stability to go. We’re here to make this state last. We’re not here to, “okay, great, we won this quarter.” I want to be here for 20 years, you know?

Jacob: Yeah, but that’s just where most capital is. I mean, this is getting into the weeds and philosophy of modern capitalism, which is not really our purview. But it raised an interesting question and I just wanted to point that out: Today, the people funding the wars are not the same people being protected by the warfare, you know?

Jacob: That’s true. Yeah. There’s not as much at stake, which I do think is an important takeaway from this—that during this time period, your nation did not have separation from these conflicts. Like, you know, it’s not “over there.” It’s not like if I was an investor in New York buying stock in a company in California. If it goes up, great, I’m happy. If it goes down, why did it go down? I’m mad.

Jeff: Right. And if it exploits its neighborhood, well, it’s not my neighborhood. I don’t care.

Jacob: Right. But if you’re in California, and it is a company you work for and have part ownership in, then yeah, you would feel this presence, the need to have this structure.

Jeff: That is really interesting. I’d never read it with that lens in mind—well, I never read it with a specifically business lens in mind because I was in high school. But that’s a fun thought, or fun question, to sort of end the episode on, like: what sorts of companies do we need, or how should we structure companies so that they can thrive in these ways? Not just for the investors, but also their communities, the people that work there.

Jacob: I think it would be really nice if there was a law. This wouldn’t happen, they would never do this—

Jeff: If you ran the world.

Jacob: If I ran the world, here’s my corp—

Jeff: To borrow from Trevor Noah.

Jacob: If I ran the world of corporations, I would make sure that every employee, maybe after two or three years of working with any organization, automatically opts into a percentage of that company. And that publicly traded companies should not be a thing.

Jeff: I think at the very least, public trading of company shares—you should be required to hold them… And I don’t know, I’m spitballing here, and we could probably go back and forth about this for hours and hours. But if you buy public stock, you have to hold it for X amount of time. You can’t be a day trader, or flip it after a quarter. Or there’s people who short, buy a company—

Jacob: Short stocks.

Jeff: Well, I mean, I don’t think shorting is immoral inherently. But the whole… I don’t think any of it’s immoral. It’s just the consequences of all these “I only care about what I get in the short term, because that’s all I’ve invested in.”

Jacob: Right. And to them, it’s a number. They don’t see people, they just see a number. They see the Coca-Cola number go up, they see the Coca-Cola number go down. They don’t really care. They don’t know that maybe a whole plant in Atlanta had to go, 50% of the workforce has to get laid off in order to make sure that number went up two clicks.

Jeff: Because if it didn’t go up two ticks by the end of trading that quarter, the CEO would lose his bonus. And his bonus is $30 million. So he’s got a lot of incentive to make sure it goes up those two points.

Jacob: Yeah. Maybe the stock market just has to go away.

Jeff: But Jacob, the stock market has made so much value for shareholders.

Jacob: Yeah, and that’s the point though. It’s made a lot of value for shareholders, but not for people—not everyday people who work at these jobs.

Jeff: I’m a shareholder. You’re a shareholder.

Jacob: That’s true, we’re all shareholders. It’s very interesting. 

How do we solve this problem? What I want from Sun Tzu is I want the people that are invested in the organization to feel the need for the organization to succeed. That’s what I want.

Jeff: Yeah. It reminds me of those people who buy a struggling company and just sell it for parts. And a whole community dies because it’s the main employer. All these people lose their houses or lose their insurance—because this is America. And the people who invested in that takeover—there’s a word for it, but I forget what it is— but those people who invested in it: They don’t care. They got their 7% return, they beat the market. The people who managed the transactions got their bonuses, and everybody had a happy Christmas on Wall Street.

Jacob: Yeah. No, I think it’s true. And I think that’s what The Art of War was trying to prevent at that time period was generals, or emperors, squandering the potential of their own people, their own state, their own power, their own longevity.

Jeff: Yes. I think it’s a warning against the people in charge of a society losing a conception of how their decisions are actually impacting people. And the political class today pays lip service to that on every side, but they’re totally disconnected from anything that’s actually happening.

Jacob: It is hard to understand a way to keep society at the scale and breadth that it has connected, without having all of these superstructures—like the stock market—that are imposed on top of it to keep some sort of shared valued purpose. Because then it goes beyond a company, it goes into shared value of our nation.

So there’s a benefit to that that I didn’t think about. But the downside is that shared value is numbers, not people. And every time people got equated with numbers, it didn’t go well.

Jeff: Okay. Hmm. Yeah, I can think of a couple historical examples.

 No, but I think the real problem is—you think about the big corporations. And I’m not saying that Gilded Age giants, like the Vanderbilts, Standard Oil, JP Morgan, all these companies… they did terrible things, especially with labor relations. But they had a different way of thinking about what a business was. It wasn’t just an engine for growth and return on investment. It was an institution. And all these people loved prestige, so in order to get that prestige, it had to be admired, respected. Today the only thing that matters is market capitalization and return.

Like back in the fifties, corporations built towns—not exploitative towns, but nice places for their workers to live. And gave them pensions. We don’t have pensions anymore, we have 401(k)s. Why? Because it’s a better return on investment.

So I think it’s really a philosophy. The leadership class in business and probably politics don’t think about that stuff anymore.

Jacob: Yeah, they don’t think about this moral compass. I feel like there’s still a holdover from the Carnegie days that they can sense the higher purpose was: I built these amazing institutions, these libraries, these concert halls, these—

Jeff: I think it was also a little bit of “I will live forever.”

Jacob: There was this godlike mentality to it, but they did have an inherent sense that there was—

Jeff: Noblesse oblige.

Jacob: Yes. There we go.

Jeff: That all changed way past Carnegie. It was the seventies, with Harvard Business School. But yeah, I mean, it’s a whole cultural shift, but I’m gonna blame Harvard.

Jacob: That’s fine. They’re easy to blame.

Jeff: For training the baby boom generation who ran all the corporations from the eighties to the 2000s. They taught them that the only thing that matters is corporate profit, and they believed them.

Jacob: Yeah, I think it’s true. Basically, they taught numbers. It’s all about numbers. As soon as you take humanity out of the equation, you can make a lot of money.

Jeff: You really can. You can scam old ladies. There are all kinds of ways to make money if you have no morals.

Jacob: All right. Let’s wrap this thing.

Jeff: Yes, let’s wrap it up.

Jacob: So Jeff, that was Sun Tzu’s Art of War—the unexpectedly relevant ancient book that…

Jeff: Well, you were kind of new to the whole thing, so—

Jacob: Yeah, I mean, I was going at it thinking it was a joke, and thinking it was just for a “red meat eater” mentality. But definitely not. It’s really an art of state. I feel like it’s a book you should read if you don’t like war, because it tells you the ways to find peace, the ways to maintain the things you’ve created.

Jeff: Yeah, the harmony. Yeah. This was a fun conversation, Jacob.

 And then continuing—I’m not sure when—but our next book club-themed episode will be about The Design of Everyday Things by Don Norman. My choice. It is kind of more explicitly business-related, and like you said earlier, kind of hyper-focused on one aspect of business. But it also reveals a lot of interesting things about the way people interact with their world.

Jacob: Yes, but I like that it’s not directly business. That’s what’s so fun about our book club.

Jeff: It’s not a business book.

Jacob: It’s a philosophy book, just like The Art of War is a philosophy book but it can be applied to business. I think that’ll be fun. I’m excited.

Jeff: All right, Jacob.

Jacob: All right.

Jeff: Fun talking with you. We’ll see you all next time.

Jacob: See you.