Mike Kueber's Blog

May 15, 2010

Outliers and The Tipping Point, books by Malcolm Gladwell

Filed under: Book reviews — Mike Kueber @ 5:08 pm


Outliers is the most interesting book that I’ve read in a long time.  Published in 2008, it contains a lot of common-sense insights, and those insights are generally consistent with my world view.  The following is a summary of those insights: 

  • Introduction: The Roseto Mystery.  The exceptional health of the residents of isolated Roseto, PA (heart disease was almost unheard of) is not due to diet, exercise, genes, or location.  Rather it is due to “the particular egalitarian ethos of the community, which discouraged the wealthy from flaunting their success and helped the unsuccessful obscure their failures.”  What a great place.
  • Chapter One: The Matthew Effect.  The exceptional success of hockey players born in January, February, and March is due to the early age grouping (at nine or ten) of young hockey players.  “If you make a decision about who is good and who is not good at an early stage, if you separate the talented from the not talented, and if you provide the talented with a superior experience, then you’re going to end up giving a huge advantage to that small group of people born closest to the cutoff date.”  In professional hockey, 40% of the players were born in first quarter of the year (January, February, or March), 30% in second quarter, 20% in third quarter, and 10% in fourth quarter.  “Skewed age distribution exists wherever three things happen: selection, streaming, and differentiated experience.”  “Success is a result of what sociologists call ‘accumulated advantage.'”  I wonder why there is no discussion of the Matthew Effect on selection for Gifted and Talented programs in elementary school.  Perhaps the advantages of physical maturity are greater than mental maturity, or accumulated advantages are more effective with physical skills as opposed to mental skills.
  • Chapter Two: The 10,000 Hour Rule.  “The striking thing… couldn’t find any ‘naturals’… who floated effortlessly to the top while practicing a fraction of the time their peers did.  Nor could they find ‘grinds’ who worked harder than everybody else, yet just didn’t have what it takes to break the top ranks.  Their research suggests that once a musician has enough ability to get into a top music school, the thing that distinguishes one performer from another is how hard he or she works.  That’s it.”  Ten thousand hours of effort/practice is what it takes.  However, in addition to 10,000 hours of practice, Outliers often receive unusual opportunities to perform exceptionally beneficial practice.  Furthermore, they may have been born in an opportune time.  E.g., fourteen of the wealthiest persons in history were born in the U.S. between 1831 and 1840, which was perfect timing for perhaps the greatest economic transformation in history.  Being born in the mid-1950s was perfect timing for the computer transformation – Gates (1955), Paul Allen (1953), Steve Ballmer (1956), Jobs (1955), Schmidt (1955), and Job (1954).
  • Chapter Three: The Trouble with Geniuses, Part 1.  “The relationship between success and IQ works only up to a point.  Once someone has reached an IQ of somewhere around 120, having additional IQ points doesn’t seem to translate into any measurable real-world advantage.”  For support, the author makes what I believe are two incorrect inferences:
  1. The author’s first incorrect inference is a common-sense suggestion that NBA basketball players must be at least 6’ tall and that height helps up to perhaps 6’6”, but at that point becomes unimportant.  “Michael Jordan, the greatest player ever, was six six after all.”  This inference neatly fits the thesis of Chapter Three, but does it stand up to analysis?  I suggest that height does not cease being beneficial at 6’6”, and this can be proven by calculating the percentage of 6’6” males that reach the NBA and comparing that against the percentage of 6’9”, 6’11”, or 7’2” that reach the NBA.  I suspect that it is always better to be taller; the best player in the NBA happened to be 6’6” because there are so many of them compared to the number of taller players.  A comparable sports analogy would be boxing.  Although size seems to help only up to a point in boxing – e.g., Ali is generally considered the greatest ever even though there were larger fighters – I suggest that the pool of larger fighters is so small that the best of the larger fighters are likely to be significantly less talented.  In both the NBA and boxing, however, taller (LeBron James) and bigger (Lennox Lewis, Klitschko) are eventually taking over.  Furthermore, boxing has a classification that specifically attempts to remove the factor of size – best pound-for-pound fighter – and that man is Manny Pacquiao at 120 pounds.  If there was such a thing in basketball, there would be a lot of six footers on the list and Michael Jordan would not.
  2. The author’s second incorrect inference concerns a Michigan Law School study that concluded that minority students with lesser statistical qualifications for admittance were just as successful after law school as were non-minority students with greater statistical qualifications for admittance.  Based on my experience at the University of Texas Law School, I question whether the study is drawing the correct conclusion.  I suggest that the minority students have other socio-economic advantages that favorably influence their later success – e.g., they tend to come from affluent, successful families (with the practical intelligence described in Chapter Four), and then following graduation they benefit from various forms of affirmative action.
  • Chapter Four: The Trouble with Geniuses, Part 2.  In my opinion, Chapter Four is the most significant.  It describes practical intelligence, as distinguished from IQ.  “Practical intelligence includes things like ‘knowing what to say to whom, knowing when to say it, and knowing how to say it for maximum effect.’  It is procedural….  It’s practical in nature: that is, it’s not knowledge for its own sake.”  Where does practical intelligence come from – unlike analytical intelligence, which comes at least in part from your genes, practical intelligence seems to come from your families.  “When we talk of the advantages of class,” we are not talking only of money and schooling, “but also because – and perhaps this is even more critical, the sense of entitlement that he has been taught is an attitude perfectly suiting to succeeding in the modern world.”  The term that I have used in the past, “The squeaky wheel gets the grease.”  In contrast, individuals from lower classes offer little resistance to 2nd-class treatment and are typically easily discouraged.
  • Chapter Five: The Three Lessons of Joe Flom.  This chapter elaborates on the previous discussion in Chapter Two re: the timing involved in becoming an outlier.  The three lessons from Joe: (1) The Importance of Being Jewish; (2) Demographic Luck; and (3) The Garment Industry and Meaningful Work.  Joe became a legendary lawyer in NYC because (a) Jewish lawyers were being shunted into a line of work that latter became lucrative, (b) Joe was born in a “demographic trough” and thus benefited from better schools and more opportunity, and (c) his parents were blessed with satisfying, meaningful work (autonomous, complex, and a connection between effort and reward).
  • Chapter Six: Harlan County.  This chapter merely introduces the question of whether traditions and attitudes (cultural legacies) play a significant role in determining success.  Harlan County was a remote area in Kentucky where two families had been feuding for decades, plagued by a “culture of honor.”  “Cultural legacies are powerful forces.  They have deep roots and log lives.  They persist, generation after generation, virtually intact, even as the economic and social and demographic conditions that spawned them have vanished, and they play such a large role in directing attitudes and behavior that we cannot make sense of our world without them.”  Groups with “culture of honor” include Southerners and Sicilians.
  • Chapter Seven: The Ethnic Theory of Plane Crashes.  The longest chapter in the book, but relatively simple.  The insight: (a) most commercial planes crashes can be avoided if the piloting team (captain, co-pilot, flight engineer, and ground controller) are fully communicating, and (b) some cultures (especially Asian) discourage full communication from co-pilots and flight engineers because of their attitudes of deference and respect towards captains and air controllers who are arrogant and bossy.  The chapter describes a related concept called “Power Distance Index” – i.e., high-power distance means that power resides far away and lower-level people are afraid to make decisions.  Americans tend to have low-power distance and are not reluctant to make decisions.
  • Chapter Eight: Rice Paddies and Math Tests.  Historically, Asian life has been based on the growing of rice, which is satisfying, meaningful work (autonomous, complex, and a strong connection between effort and reward).  Like being a garment worker in NYC, this rice-growing lifestyle was conducive to producing hard-working kids with practical intelligence.  The connection with math is that growing rice involves a lot of mathematical analysis.
  • Chapter Nine: Marita’s Bargain.  This chapter re-emphasizes the work-ethic theme by describing an elementary school in NYC that requires hard work from its poor, minority-based population.  The only insight that I gleaned from the chapter is that studies have shown that poor kids lose more academic skills over the summer break than do rich kids, so the NYC combats this fact by having a severely-shortened summer break.
  • Epilogue: A Jamaican Story.  The book concludes with the author’s description of his ancestors in Jamaica and the effect of their light skin color on their achievement.  He concedes that the family’s success story might not have happened if his black great, great-grandmother had not been attractive to a white plantation owner, who then gave the family its light skin color.

I enjoyed the Outliers so much that I turned to Gladwell’s earlier book, The Tipping Point, hoping it might provide me insights that are useful to my budding investing/business life.  This is what I found:

The Tipping Point

The Tipping Point was published in 2000, eight years before Outliers.  Although The Tipping Point was not, in my opinion, as impressive as Outliers, it was well worth reading.

Gladwell describes The Tipping Point as “the biography of an idea.”  The subtitle of the book is How Little Things Can Make a Big Difference, and Gladwell suggests that things other than the inherent merit of an idea help explain why some ideas succeed famously and others die anonymously?  There is an old saying that “no army has the power of an idea whose time has come,” and although this saying seems to focus on the inherent merit of an idea, Gladwell would suggest that the timing of the idea is just as important.

Gladwell provides three rules for the spreading of an idea (or a fashion trend, or a crime wave, or an epidemic):

  1. The law of the few;
  2. The stickiness factor; and
  3. The power of context.

“The Law of the Few” describes the role of the messenger in the spread of ideas.  Gladwell suggests that ideas are spread, not gradually by a large number of people, but instead quickly by three types of specialized messengers – “connectors” are people who know a large number of people who travel in a variety of social circles; “mavens” are people who are extremely knowledgeable regarding a subject (which makes them exceptionally credible) and who are eager to share this knowledge with others; and finally “salesmen” are people who have the skills to persuade skeptical and resistant individuals. 

“The Stickiness Factor” describes the role of the message in the spread of ideas.  To successfully spread, an idea must be memorable (sticky) and Gladwell suggests that stickiness often requires something other than the inherent quality of the idea.  Unfortunately, Gladwell does not any guidance for creating sticky messages, but instead he merely provided several examples of messages those proved to be sticky.  He concluded by saying:

–        “We all want to believe that the key to making an impact on someone lies with the inherent quality of the idea we present.  But in none of these [examples] did anyone substantially alter the content of what they were saying.  Instead they tipped the message by tinkering, on the margin, with the presentation of their ideas….  The Law of the Few says there are exceptional people out there who are capable of starting epidemics.  All you have to do is find them.  The lesson of stickiness is the same.  There is a simple way to package information that, under the right circumstances, cam make is irresistible.  All you have to do is find it.”

“The Power of Context” has two parts.  Part One centers on the rise and fall of a crime wave in NYC in the 80’s.  Gladwell suggests that this epidemic resulted when the people of NYC essentially gave up on fighting crime and the criminals controlled the streets (and subways).  The crime wave was broken, not by attacking the fundamental causes of crime, but by applying the “Broken Windows” theory.  This theory suggests that crime can be successfully attacked by removing the superficial indicators of crime, such as broken windows and graffiti.  “The impetus to engage in a certain kind of behavior is not coming from a certain kind of person but from a feature of the environment…. The criminal – far from being someone who acts for fundamental, intrinsic reasons and who lives in his own world – is actually someone acutely sensitive to his environment, who is alert to all kinds of cues, and who is prompted to commit crimes based on his perception of the world around him.”

As a component of the Power of Context, Gladwell describes a psychological concept called Fundamental Attribution Error (FAE), “which is a fancy way of saying that when it comes to interpreting other people’s behavior, human beings invariably make the mistake of overestimating the importance of fundamental character traits and underestimating the importance of the situation and context.”   Based on FAE, some studies have argued that peer influence and community influence are more important than family influence in determining how children turn out.  FAE intrigues me as an explanation for the behavior of three friends at USAA who testified against me and in support of my manager/USAA.  I had thought their integrity would force them to testify in favor of me, but in hindsight their typical integrity disappeared in their employment context.

Part Two of the Power of Context describes the magic number of 150.  This is the maximum population of a cohesive organization before it inevitably starts breaking into cliques (e.g., the Hutterites).  The human brain has the capacity of manage a maximum of 150 personal relationships.  Larger groups require hierarchies and rules and regulations.

In conclusion, The Tipping Point was very good; Outliers was great.


  1. I read tipping point and Outliers also. I thought Outliers was much more interesting. I like books that make me think about my pre-conceived ideas and use statistical data to tell the story.

    Like your observation, I was struck with his poor analogy to use the height of potential basketball players to indicate their chances of making the NBA. Here is my analysis on that topic…

    Suppose their are 2.5 million males who turn 18 from the USA each year and there are 150,000 males in the US population. So from Jan 1st 1995 to Jan 1st 2000 there were 12.5 million males born. Also I am estimating about 20 new US born players enter the NBA and stay there at least a season every year. So in 5 years there are 100 US males out of the 12.5 million born that actually become NBA players. This is my breakdown of their height…. or a 1 in 125,000 chance without knowing height.

    less than 6 Feet tall 7 million but only 5 make NBA 1 in 1.4 million chance
    6 feet 6 ft 4in 5 million but only 25 make NBA 1 in 200,000 chance
    6 ft 5in to 6 ft 8 in 420,000 but only 35 make NBA 1 in 12,000 chance
    6 ft 9 in to 7 foot 70,000 but only 25 make NBA 1 in 2800 chance
    over 7 foot tall 10,000 but only 10 make NBA 1 in 1000 chance

    Doing this math, it is clear you have a tremendously better chance of making the NBA as you get to be closer to 7 feet than you do at 6 foot or even 6 foot 4
    inches. As the old saying goes, you can’t coach height. So just because Michael Jordan is deemed the best basketball player ever and is 6 feet 6 inches, being 6 feet 10 inches will give you a much better per capita chance to make the NBA than being 6 foot 6 inches.

    I found the story about the Jewish business people in the garment industry and how they turned out to be good role models for their kids. I think North Dakota farmers in the 50s 60s and 70s also set great examples for their kids. That the kids seemed to be “lucky” to have a great quality of free public education in New York in that era. These kids seemed to see education as an opportunity to make a better life and learned from their parents that hard work paid off. Our culture now too often wants a cookie cutter quick 5 step formula for achieving success with short cuts. It is wise to have a plan, but working hard and working smart tends to allow one to create your own luck.

    Comment by Brent Lee — May 16, 2010 @ 1:44 am | Reply

  2. Brent,

    I, too, like the statistical analysis to prove or disprove common sense, intuition, and conventional wisdom. And I like the numbers that you applied to the analysis of NBA players, except that I suspect you live in the Land of the Giants. I suspect that a lot more than 7 million males under 6’0″. You must not be counting Mexican-Americans, but that opens up a whole new area of ethnic analysis.

    Comment by Mike Kueber — May 16, 2010 @ 4:19 pm | Reply

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  6. […] one of those “specialized messengers” (connectors, mavens, and salesmen) that Malcolm Gladwell wrote about in The Tipping Point.    FYI – plutocrat means government by the wealthy.  It is a subset of […]

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