Invest Like the Best

By Patrick O'Shaughnessy

About this podcast   English    United States

Exploring the ideas, methods, and stories of people that will help you better invest your time and money. Learn more and stay-up-to-date at InvestorFieldGuide.com
June 19, 2018
My guests this week are Kyle Samani and Tushar Jain, both managing partners at Multicoin Capital. I’ve taken a bit of a break from crypto because I hadn’t sensed many new angles to explore in this forum, from an investor’s point of view. I felt that while things keep evolving, the major investment theses have been established and explored. Kyle and Tushar are interesting because of their often divergent views. For example, Kyle has been an outspoken supporter of Ethereum relative to bitcoin. This conversation, which is meant for those still curious about crypto, offers lots of new food for thought. We discuss smart contract platforms, network effects, the coming platform wars, and why blockchains may not matter in ten years. Please enjoy my conversation with the partners of Multicoin Capital. Hash Power is presented by Fidelity Investments For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Links Referenced Paths to Tens of Trillions An (Institutional) Investor’s Take on Cryptoassets On the Network Effects of Store Value If SaaS Products Sell Themselves, Why Do We Need Sales? Money, blockchains, and social scalability Nakamoto Institute Token Economy Multicoin.capital Crypto Cannon              Show Notes 2:11 - (First Question) – What would get the entire cryptocurrencies ecosphere to 5-10 trillion dollars             2:53 – Paths to Tens of Trillions 4:37 – What will be the effective uses for crypto currencies, store value vs utility value             4:38 – An (Institutional) Investor’s Take on Cryptoassets 8:48 – Why they are negative on bitcoin and more positive on Ethereum 10:07 – Where will start to see widespread adaption of the utility value of cryptocurrencies 14:44 – What is the major breakthrough that cryptocurrencies create 21:21 – How do we gain confidence that a utility token will become a sound investment 25:16 – The different type of network effects             25:47 – On the Network Effects of Store Value 31:18 – How do you convince institutional investors to consider the crypto space 34:21 – Factors that they care about when first evaluating a crypto currency 39:21 – How does technological development and marketing factor into their decision when picking a crypto currency             40:31 – If SaaS Products Sell Themselves, Why Do We Need Sales? 41:42 – Where these two men disagree the most right now 44:07 – Why there’s a chance blockchain technology as we know it today could be irrelevant             44:25 – Money, blockchains, and social scalability 47:56 – Most compelling trends in this world today 51:51 – A favorite resource or person people can look into if they want to learn more             52:22 – Nakamoto Institute             52:57 – Token Economy             53:24 – Multicoin.capital             53:30 – Crypto Cannon          54:14 – Kindest thing anyone has done for them   Learn More For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag
June 12, 2018
My guest this week is Michael Reece, the chief data scientist for Neuberger Berman. The topic of our conversation is the use of data in the investment process, to help cultivate what is commonly referred to as an information edge.   I call the episode “Tim Cook’s Dashboard” because of an interesting question that Michael poses: if you armed the best apple analyst in the world with Tim Cook’s private business dashboard, what might that be worth? Effectively Michael’s goal is to recreate the equivalent of a company dashboard for many businesses, helping analysts understand the fundamental health and direction of companies a bit better than the market does, and in so doing create an actionable edge.   This is a daunting task, and you will hear why. It requires both a fundamental understanding of business and of data, statistics, and methods like machine learning. In our own work, we’ve found machine learning to be useless for predicting future stock prices, but extremely useful for other things, like extracting and classifying data.   This conversation can get wonky at times, but as listeners know that is the best kind of conversation, even if it requires a second, slower listen. I hope you enjoy this talk with Michael Reece. Afterwards, I highly recommend you invest the time to read a series of posts called Machine Learning for Humans, which I will link to in the show notes. It helps demystify the buzz words and explain how these new technologies are being used.   For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Books Referenced Crossing the Chasm One Two Three Infinity   Links Referenced Sam Hinkie Podcast Episode   Show Notes 2:44 - (First Question) –  Changes in data science through the lens of Michael’s career 5:17 – The basic overview of using data and machine learning to create an edge 6:58 – How the state of business is more than just a single data point 7:53 – How you know when you’ve pulled a real signal from the noise of data 10:49 – The advantages that data provides 13:01 – Is there still an edge in decaying data 15:34 – Building data that would predict stock prices 19:43 – Prospectors vs miners in data mining 22:18 – Knowing when your prospectors are on to truth 27:09 – Understanding machine learning 30:10 – Defining partition 32:17 – Applying the parameters of selection process to stocks 36:05 – What’s the first step people could take to use data and machine learning to improve their investment process 38:54 – Building a sustainable advantage within data science 41:35 – Predicting the uncapped positive vs what’s seemingly easier, eliminating the negative 43:58 – How do we know to stop using a signal 46:22 – The importance of asking the right question 47:09 – Categories of objective functions that are interesting to measure data against             47:42- Crossing the Chasm 48:37 – Most exciting things he’s found with data 51:17 – What investors, individual or firms, has impressed him most with their use of data 52:17 – Will everyone eventually shift to being data informed or data driven 55:33 – Wall Street’s use of data vs other industries             55:36 – Sam Hinkie Podcast Episode 57:48 – Why everyone should know how to code 58:52 – Kindest thing anyone has done for Michael             59:22 – One Two Three Infinity   Learn More For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag
June 5, 2018
My guest this week is Ash Fontana, a managing partner at venture capital firm Zetta, who invests in companies which build software that uses artificial intelligence methods like machine learning to predict and prescribe outcomes. Ash’s combined experience as a founder, entrepreneur, and investor give him the perfect background to discuss with us one of the hottest topics in business and investing. This conversation is useful for anyone trying to evolve their own way of dealing with data. Of particular interest are the ways that Ash and his team evaluate data sets and how they think about competitive advantage in this new world—where he advocates a new term to replace the concept of moat: loops.  If we can use data to do things better than humans, or if we can supercharge our intuitions with predictive models, we can harness the power of this new technology. What Ash has taught me is that data itself is dumb. But great data sets can represent the fuel for incredible companies. Let’s dive into how that may be. Please enjoy this conversation on how AI is changing business, and how we might profit from that change.   For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Books Referenced The Most Important Thing: Uncommon Sense for The Thoughtful Investor   Links Referenced Jerry Neumann Podcast Episode Ali Hamed Podcast Episode   Show Notes 2:25 - (First Question) – A look at their very specific investment strategy 3:35 – Future of competitive advantage in the SaaS industry 6:45 – How startups and new companies can compete against software giants that are pretty well entrenched in the market 8:38 – How do copies with narrow focuses attract VC money which is looking for massive returns 12:28 – The stages in which AI will be enabled 15:55 – Framework of an AI company 18:49 – Importance of the feedback in the AI company framework 20:56 – Examples of AI companies 23:50 – Why companies that are AI from the start will have a significant advantage in the space 26:21 – How do companies change their thinking about compiling useful data 32:18 – Regulation of AI 35:03 – Preventing other companies from leap frogging you in the AI space 37:57 – Some of his favorite AI companies 40:43 – How much has he seen in the finance world             41:07 – Jerry Neumann Podcast Episode 43:10 – Why the focus on B2B AI companies 45:34 – Major components of the enterprise stack that he focuses on for AI 49:30 – What impact will all of this AI have the daily lives of people 51:38 – Biggest problems that he is excited to see AI tacklet 53:04 – How do you value the intangible asset of an AI model 57:13 – How Ash thinks about getting other investors into firms they seeded 1::00:27 – Other investors that Ash really respects             1:01:15 – The Most Important Thing: Uncommon Sense for The Thoughtful Investor             1:03:29 – Ali Hamed Podcast Episode 1:04:04 – Where would Ash invest outside of AI 1:07:11 – More about his family nut business 1:11:18 – Favorite macadamia nut story 1:12:05 – Kindest thing anyone has done for Ash   Learn More For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag
May 29, 2018
My guest this week is remarkable. He now applies his talents on Wall Street, searching for smaller cap companies trading at huge discounts in an effort to compound wealth for his investors. He is classically trained, having earned his graduate degree from Colombia, a school known for producing value investors. But his method also reflects what he learned across more than a decade of active duty in the U.S. military. Mike Zapata served us all as a Navy SEAL in the aftermath of 9/11 and ultimately as a member of the SEAL’s “Development Group,” commonly known as SEAL team 6. I think everyone listening strives for excellence in what they do. This week we get to hear from someone who has pursued excellence on our behalf. I’ll let him explain the meaning of his firm’s name, Sententia, but for now suffice to say we are lucky to have quiet professionals like Mike. If you are interested in supporting the families of soldiers who fought with Mike and lost their lives, I encourage you to check out the Tip of the Spear foundation and make a donation along with me, small or large. Please enjoy my conversation with Mike Zapata. For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Books Referenced The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel Fearless: The Undaunted Courage and Ultimate Sacrifice of Navy SEAL Team SIX Operator Adam Brown Boyd: The Fighter Pilot Who Changed the Art of War   Show Notes 2:23   2:23 – (First Question) – A quick overview of Mike’s career leading up to his time at Columbia 3:43 – What led him down the path of value investing at Columbia              3:51 – The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel 5:57 – The focus and goal of the firm 7:12 – Where the name of the firm, Sententia comes from 8:04 – His experience in the Basic Underwater Demolition/SEAL (BUD/S) program and lessons learned from it 13:14 – How much grit is innate vs can be learned 14:59 – What the actual job was in BUD/S 17:33 – Difference between the broader SEAL community and being part of the more exclusive development group 19:03 – The team dynamic within the SEALS 20:26 – Fearless: The Undaunted Courage and Ultimate Sacrifice of Navy SEAL Team SIX Operator Adam Brown 21:18 – The sacrifice that SEALs make with the story of Adam Brown as an example 24:35 – Waiting for darkness before deployment 27:23 – How do you know when to violate your best practices for a risk 29:26 – A look at three pictures in his office and why they are meaningful 31:36 – Lessons that would be useful to other people             33:10 – Boyd: The Fighter Pilot Who Changed the Art of War 33:17 – How is Mike’s skillset applied to the investing world 39:24 – Factors that would be seen as good alignment in businesses 40:18 – How the view the profiles of other investors in these small businesses 41:46 – Examples of “smoke and fire”, markers of an attractive investment 43:42 – Other investors that he has learned the most from and what those lessons were 44:54 – Importance of balance sheets in value investing 47:33 – Is value investment oversaturated 50:28 – Market blind spots that are attractive to Mike 52:03 – What point in Mike’s career has he felt the most alive 53:14 – Any other lessons Mike would want to share 55:12 – Kindest thing anyone has done for Mike   Learn More For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag
May 22, 2018
I came across this week’s guest thanks to the overlap of three passions of mine: data informed investing, value creation, and basketball.  Sam Hinkie worked for more than a decade in the NBA with the Houston Rockets, and then most recently as the President and GM of the Philadelphia 76ers. He helped launch basketball's analytics movement when he joined the Houston Rockets in 2005, and is known for unique trade structuring and a keen focus on acquiring undervalued players. Today, he is also an investor and advisor to a limited number of young companies in which he feels his experience can improve outcomes.  At one point in our conversation, Sam mentions that he tracked success via future financial outcomes, so I did some research and found many interesting stats about the 76ers surrounding Sam’s tenure. When he took over the franchise, it was 24th in ESPN’s franchise rankings, and today it is 4th. This is the result of an impressive crop of young talent—players like All-Star Joel Embiid and Ben Simmons—which resulted in large part from unconventional decisions Sam and his team made.  While I’m sure these estimates are imperfect, Forbes estimated the 76ers value at around $418M when Sam took over and $1.2B a few months ago. NBA teams in general have grown in value, so a lot of that appreciation is obviously “beta,” but given that the 76ers had the top percentage growth number more recently of any team, some of it is “alpha,” too. While we can’t parse the exact amount, it seems his unique approach to building a team clearly created some large amount of current franchise equity value. And it looks like the dividends from those decisions will compound for many years to come.  While basketball was where Sam plied his talents in the past, his approach is more elemental. It is about finding great people, using data, and structuring decisions that create the possibility of huge returns, be they financial or otherwise. I don’t know what Sam will do next, be it investing in companies, running one, or taking over another team, but I know it will be fun to watch.  Please enjoy this unique episode with Sam Hinkie.  For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Books Referenced Empire of the Summer Moon: Quanah Parker and the Rise and Fall of the Comanches, the Most Powerful Indian Tribe in American History Selfish Reasons to Have More Kids: Why Being a Great Parent is Less Work and More Fun Than You Think   Links Referenced International Justice Mission   Show Notes 3:24 – (First Question) Advantages of having a long view and how to structurally harness one 6:08 – Using technology to foster an innovative culture             6:18– Empire of the Summer Moon: Quanah Parker and the Rise and Fall of the Comanches, the Most Powerful Indian Tribe in American History 10:16 – Favorite example of applied innovation from Sam’s career 11:34 - Most fun aspect of doing data analytics early on the Houston Rockets 13:38 - Is there anything more important than courage in asymmetric outcomes 14:29 – How does Sam know when to let the art of decision making finish where the data started 16:29 - Pros and cons of a contrarian mindset 17:26 – Where he wanted to apply his knowledge in sports when first getting out of school and how his thinking is best applied in the current sports landscape 21:39 – How does he think about trying to find the equivalent of mispriced assets in the NBA 23:12 – Where tradition can be an impediment to innovation 25:07 – What did the team and workflow of the team look like in the front office 27:03 -  The measure of truth in a sports complex 29:10 – What were the early factors coming out of the data that helped to shape NBA teams 30:42 – Best tactics for hiring 33:59 – Process of recruiting spectacular people 35:39 – Thoughts on fostering a good marriage 37:57 – Picking your kids traits in your spouse             38:02 – Selfish Reasons to Have More Kids: Why Being a Great Parent is Less Work and More Fun Than You Think 40:45 – What kind of markers does he look for when evaluating long term investment ideas 42:44 – His interest in machine learning 45:55 – What’s more exciting, the actual advances in machine learning or the applications that can be imagined as a result             47:15– International Justice Mission 48:11 – How he got started teaching negotiations and some of the points he makes in that class 49:16 – Effective techniques for negotiating 50:03 – Is negotiating contentious, do you need empathy 50:41 – A Rorschach test of Sam based on his reading of Lessons of History (book) 53:01 – Biggest risk Sam took in his career 54:37 – Biggest risks Sam took while with the 76ers 58:09 – Do people undervalue asymmetric outcomes in the NBA 1:00:11 – The players Sam has enjoyed watching over the years 1:02:45 – Why Robert Caro is a favorite author of his 1:04:30 – Kindest thing anyone has done for Sam   Learn More For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag
May 15, 2018
My guest this week is a bundle of curiosity, and that is one of the nicest things I could say about someone. For several years, Tren Griffin has been writing a weekly blog post that highlights things he has learned from various investors, businesspeople, musicians, comedians, and more. Lately, he has also been tackling individual businesses, and broad topics like scaling, competitive forces, and product market fit. Tren’s full time job is serving as a director at Microsoft. He’s also worked with or for several well know businesspeople and investors like Craig McCaw, and written several books including one on lessons for entrepreneurs, one on Charlie Munger, and another on negotiation.   We discuss value creation vs. value capture, alpha in investing, sales, hip hop, and why he’d teach high school students about convexity through a drunk driving analogy. I could have talked to Tren for much longer than I did, but sadly, we both had flights to catch.  If you take anything away from this, I hope its just how much fun it is to just be curious about business, and how you can learn a tremendous amount if you just keep reading about the things that interest you and talking to others. Please enjoy my conversation with Tren Griffin. For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Show Notes 2:26 – (First question) –  key levers of the universal business model 4:26 – How do you know when you’ve achieved real value creation 6:24 – Importance of value capture and how they enhance value creation              6:31 – Zero to One: Notes on Startups, or How to Build the Future 9:08 – Price power 10:28 – Are discussions of moats more useful to businesses than to investors 13:12 -  What Tren learned during his early years working with Craig McCaw             16:28 – The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success 16:36 – The skill of capital allocation 18:37 – How would Buffett and Munger bet on tech if they were starting out today and their philosophy of betting against change 21:57 – How Tren became so fascinated with Charlie and what he’s learned from him             22:32 – The Alchemy of Finance             23:17 – Damn Right: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger             23:19 – Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger 25:21 – Most memorable moment or lesson from Charlie 28:19 – There are more pockets of Alpha 19:20 – How he thinks about factor investing 31:25 – What are the scalability features that make a business attractive 31:28 – A Dozen Attributes of a Scalable Business 35:37 – Exploring some of the other important levers of businesses, such as subscriptions, customer acquisition cost, and more.             36:20 – Getting to Yes: Negotiating Agreement Without Giving In 37:11 – Wholesale transfer pricing 39:18 – Pros and cons of subscription business models 43:14 – Magic of getting products distributed 44:58 – Best sale Tren’s ever made 46:46 – Most important lesson for young people 49:01 – Any businesses that are piquing Tren’s interest right now 50:16 – Tren’s interest in hip-hop and how it helps him reach more people 53:49 – A look at some interesting quotes from Jim Barksdale 58:22 – Learning by doing             1:00:48 – Seeing like a State: How Certain Schemes to Improve the Human Condition Have Failed 1:01:06 – Period of his career that he felt most alive 1:03:03 – Advice for young people thinking about business and entrepreneurship 1:04:56 – Why are so few people passionate about what they do for a living 1:10:44 – Kindest thing anyone has done for Tren   Learn More For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag  
May 8, 2018
I believe that any investment strategy that will deliver strong returns in the future must evolve. Any strategy should rest on rock solid foundational principles, which change rarely if ever—things like price discipline, or business growth. But the features of the strategy must keep getting better, because the marketplace is incredibly competitive. That evolution is the topic of today’s conversation with Jason Karp. Jason is the founder and CIO of Tourbillon Capital Partners, a multi-billion dollar asset manager based in New York City. We cover a ton of interesting ground. We start with what has happened in public and private markets, discussing the role of quants, passive indexes, and value vs. deep value investing. We compare the relative merits of investing in private equities, and where and how opportunities arise. We then focus in on two interesting private investing trends: the health and wellness sector and the cannabis industry. First, we discuss Hu kitchen and Hu Products, the food business that Jason started with his family several years ago in response to personal health challenges. Second, we discuss his evolved views on Cannabis as an investment space and why it may also represent a massive growth opportunity. You all know I value transparency, so it is important to note that since I recorded the conversation, my family became an investor in Hu Products. It has been a fascinating means to learn about the food, health, and wellness industry which has grown rapidly in recent years. We were customers of Hu in New York City long before I even knew Jason, which made that part of the conversation especially interesting for me. This episode re-enforced my believe in pushing one’s investing strategy to adapt to change market conditions and competitive pressures. If we have any hope of beating Vanguard, we can’t ever rest on our laurels. This was an especially eclectic and fun conversation, I hope you enjoy my chat with Jason Karp. For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Show Notes 3:06 – (First question) –  Jason’s view on private markets vs public markets and how his view has evolved 6:02 – Phase of the private markets where companies can achieve huge size and scale without going public 10:31 – Framework of Jason’s value-based investing strategy 13:47 – Reverse discounted cash flow 16:27 – Are there areas of the market that are easier to predict using Jason’s models 20:29 – Tech dominance the longer they are around             21:01 – Jerry Neumann Podcast Episode 22:08 – How markets have changed over Jason’s career 25:58 – Types of edge that you can have in the market 30:00 – Broad examples of sectors that are high-quality, but momentum is hurting them 31:32 – Backstory of Hu Kitchen 38:33 – Investment research into health and wellness 42:56 – State of acquisitions, particularly in consumer product goods 47:13 – Jason’s research into Cannabis 50:43 – The misperceptions of Cannabis 56:30 – Why cannabis is a more important sector to consider than crypto 57:51 – What are the most important levers to growing a business 1:02:24 – Biggest lessons learned in hiring good people 1:06:10 – Investing lessons 1:09:27 – Kindest thing anyone has done for Jason   Learn More For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag    
May 1, 2018
My guest this week is Chris Douvos, a managing partner at Venture Investment Associates, which allocates 1.6B in behalf of investors.  Chris is the first professional allocator I’ve spoken with who focuses specifically on venture capital funds, so I had a ton of questions for him on how to build a portfolio in an asset class known for uncertain, but often enormous, outcomes. We discuss the major recent changes in the asset class and where things might be going. I sought Chris out because while this is an investment style that is full of creativity and hope, I’ve always felt it could use a healthy dose of skepticism and a value investor’s mindset. He delivers in spades as we try to separate the real from the ideal.  We didn’t record it, but Chris’s tour of Palo Alto was one of the most interesting and entertaining hours I’ve spent. He is a student of history and markets, and I look forward to learning more from him in the future.  Please enjoy our conversation   For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Books Referenced Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment   Links Referenced Domino Rally Business Models All About the Benjamins Speak Like the Locals David Salem podcast episode Curveball   Show Notes 2:18 – (First question) – Four factors that Chris thinks are important for future success of venture firms; portfolio concentration; repeatability; being early; size discipline 7:40 – What the venture landscape looks like today from Chris’s viewpoint             8:32 – Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment 14:07 – Is there a glut of startups making it difficult for investors 17:33 – How does Chris think about the investments that are a bit different from what everyone else is investing in in Silicon Valley 19:17 – Why he focuses on college campuses for innovation 20:54 – The role that geography plays in venture 25:06 – The Four M’s; money, momentum, mentorship, entrepreneurial management 27:13 – Chris’s perspective on crypto currency as a threat to venture capital 31:44 – The idea of venture capitalists as service providers to the companies they are investing in 35:15 -  Views on investing in hyper focused VC’s vs those that are generalists and just go after the best opportunities in any sector 39:00 – What hot button areas are of most interest to Chris and why, from an investment standpoint             39:38 – Domino Rally Business Models 42:22 -  What can a public market investor learn from a value venture investor who mostly has to rely on qualitative metrics             43:08 – All About the Benjamins 44:38 – Portfolio construction in the world of venture             46:40 – Speak Like the Locals 48:00 -  What are the characteristics that Chris looks for in managers, as an allocator 53:52 – What type of investors should and should not be in venture 59:15 – What type of allocator would Chris give all of his money to             59:47 – David Salem podcast episode             1:01:06 – Curveball 1:01:40 – Kindest thing anyone has done for Chris   Learn More For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag
April 24, 2018
My guest today is Arianna Simpson, who has spent her career in an around the world of technology working at startups, Facebook, and now in venture capital as an investor focused on the world of cryptocurrencies. I met Arianna when I hosted a panel at a big investing conference in New York City and she was one of the panelists. On the panel, I found her style to be very straightforward and compelling. It is clear that she loves to learn and that the best manifestation of her style of learning is investing in technology. In our conversation we discuss broad trends in crypto that we haven’t spent much time on before: decentralized versus centralized exchanges, privacy coins, and evaluating a found or early team. We build a framework for learning about this new asset class, discuss the importance of travel, and the value of pushing oneself outside of comfort zones. Hash Power is presented by Fidelity Investments Please enjoy our conversation For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Show Notes 2:12 – (First question) – How to teach someone else to build an investing philosophy around crypto 4:00 – The major risk factors to investing in crypto 6:28 – best practices for mitigating risk 7:39 – What factors to think about when it comes to whether a token will lose all value or not 8:39 -  Taking a pulse of the investment community on crypto 11:36 – How she heard about and became interested in crypto currencies 12:34 – Are people really using crypto currency as a hedge against rampant inflation 13:52 – Investing thesis in the space 14:07 – Arianna’s systems for learning about cryptocurrencies and staying up to date on them 15:19 – Arianna’s take on the issue of increasing transactional through put 16:49 – Layer 1 solutions and making it all scalable on a blockchain 17:56 – her take on the fat protocol thesis 20:32 – Defining utility vs security tokens 21:54 – evaluating different coins 21:02 – Why cross currency swaps are important and how they work 26:17 – What are the chances of a scenario where there’s just one token and everything is built off of that one 28:02 -  Comparing centralized and decentralized exchanges 29:47 – How the traditional investing world is going to regulate transaction involving cryptocurrencies and view security around those transactions 31:54– Impact this will have on capital formation 33:44 – Evaluating teams behind crypto companies 35:48 – The importance of gut when evaluating people 38:47 – How Arianna’s global upbringing impacts her thinking on the technology 39:51 – What countries or regions have had the largest impact on Arianna’s investing philosophy 42:41 – Doing things you’re not qualified for 43:59 – Gender imbalance in crypto and what can be done to shift that 45:28 – Most recent thing that has gotten Arianna excited in the crypto space 46:15 – Explaining Zero X 47:33 – How her views on reading have evolved 48:54 - Kindest thing anyone has done for Arianna Learn More For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag
April 17, 2018
We’ve always found that even in public equities, you learn more once you have a live portfolio. One of the best ways to learn is to put some capital at risk. To learn about the venture capital world, for example, I made an investment in a startup called Ladder, a platform business which connects coaches (fitness trainers to begin with) with consumers who need or want a coach to help them improve their fitness and their health. The idea is by making the entire coaching system more efficient, Ladder can provide consumers with a real person as a coach, but at a fraction of the cost, and provide coaches with both new customers and a much better way of managing their existing businesses.  If you are interested in the businesses backstory, you can listen to episode #60 of the podcast to hear founder Brett Maloley’s story and his vision for Ladder. We are now six months into the launch of the business, with thousands of users and coaches on the platform and run rate revenue past a million dollars. What I was most curious about at this stage, aside from building something useful, was the relationship between a startup and institutional venture capitalists, who are allocating capital from their funds into startups at various stages. For this episode, I asked two VCs to sit down with me and Brett and treat the conversation as they would a normal pitch meeting, so that we, the audience, can get a peek into their world and the types of questions they ask.  The venture capitalists in question are Thatcher Bell, of CoVenture, and Taylor Greene, of Collaborative Fund. Both have experience evaluating new companies, but also have specifically spent time on companies like ladder, which follow the platform or marketplace model.  While we do cover a little bit of background on the company, I’ve edited most of that part out so we can talk about the business model itself. While I don’t spend much time talking in this episode, you will hear me asking Thatcher and Taylor some questions to better understand why they care or don’t care about certain aspects of a business. Lastly, I love the data aspect of all this. The interaction between coaches and customers produces a wealth of data of different types, all of which is analyzed and used to improve each aspect of the process. To help gather more data—about onboarding, working with a coach, and tracking results—Brett and the Ladder team set up a little promo code for listeners, which can be accessed by going to joinladder.com and using the promo code ILTB2 as in Invest Like the Best 2. The first voice that you’ll hear is Thatcher, and the next person asking questions is Taylor. I began by asking Thatcher to give us a bit of background on how he approaches young companies before diving in with questions of his own. For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Show Notes 3:12 – (First Question) –  getting a flywheel business going 4:49 – Brett’s background and how that led to the formation of Ladder 7:58 – Breakdown of the product 9:29 – The sign-up process 10:29 – Key problem for each party of the ladder transaction 12:34 – Diving deeper into the problem of being a health coach 14:29 – How does Ladder differentiate itself from other apps that help people locate a trainer 17:01 – A deeper dive into the consumer using this product 20:28 – The accountability factor being the moat for Ladder 24:12 -  How successful is the product right now in terms of recruiting new customers and trainers 28:38 – Their pre-launch interview and research process 31:49 – Going from hypothesis to product development 35:25 – What should founders think about when doing customer discovery, even after they have a product in the market 39:22 – Optimizing in the early stage of a business 43:24 – The defensive moat of a startup 46:20 – Their take on their ability to corner the coaches in this market 49:57 – Is there a side of the producer/consumer side of the equation that is more important. 55:42 – Getting and giving value to your supply, in this case the coaches 58:22 – How to view different phases of a business 1:00:43 – Growing the supply and demand so that neither side gets aggravated 1:02:28 – Market opportunity for Ladder 1:10:55 – Top 2 or 3 goals that Ladder has over the next 12-18 months 1:13:00 –  Looking at Ladder, what are the strengths and weaknesses as a potential investment 1:20:40 – Pros and cons of a startup seeking institutional VC money 1:25:11 – Reviewing the pitch Learn More For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag

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