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Invest Like the Best

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
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Nov 14, 2017

My guest this week is unique. As you will hear early and often, he is programmed to go his own way, to, as he says, go one way when everyone else is going another. His name is Dhani Jones, a name I knew as a Notre Dame football fan, because he won a championship with our arch-rivals, the University of Michigan, in the late 90’s. Dhani went on to a long and successful career in the NFL, but even more interesting has been his many pursuits in business and investing outside of football. Like my conversation with Tim Urban, I’ll remember this conversation as a reminder to use a first principles mindset. Dhani seems to have this fresh mindset baked into his character, and as you’ll hear this has led to many a great adventure. Please enjoy my conversation with athlete, businessman, investor, philanthropist, movie buff, and bowtie wearer, Dhani Jones.

                                              

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

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

1:30 - (First Question) –  A introduction into Dhani Jones and everything he’s done

5:35 – How did Dhani change throughout his football career

9:55 – The power of your mind in every aspect of life

10:34 – Most memorable experience in the NFL

13:10 – Making the transition from the NFL to the business world

18:20 – Looking at Bowtie Cause

22:40 – The role of creative agencies in Dhani’s ventures and why story telling is so important for him

26:48 – Looking at some of the TV stuff that Dhani has done, particularly around travel

28:21 – Dhani’s favorite movie

30:35 – Back to the joy of travel and “Dhani Tackles the Globe.”

36:54 – How does Dhani think about risk

38:56 – Some of the other sports and activities Dhani did while filming his show

41:45 – The psychological benefit of travel in your personal and business life

44:41 – Looking into the business part of Dhani’s career

51:19 – How to expand diversity in the financial world

54:56 – Kindest thing anyone has done for Dhani

 

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

Nov 7, 2017

This episode is a continuation of the Hash Power series. It is the first of what we will call a Hash Power single—a series of conversations each with a single guest on a specific topic. In this case my guest is Chris Burniske, and the topic is cryptoasset valuation. This conversation is loaded with information, I think you are going to love it.

Chris recently released book called Cryptoassets, which is a must read for those interested in this field. Chris was at one point the only tradintional buy side analyst covering bitcoin, and is now a partner at a new crypto firm called Placeholder. Chris has developed new frameworks for evaluating and valuing cryptocurrencies, marrying techniques and ways of thinking for several different asset classes to assess the newest asset class. Chris prefers the term cryptoassets because as you’ll hear, several of these tokens aren’t really currencies at all. We discuss the differences between cryptocurrencies, cryptocommodities, and cryptotokens. We begin our conversation with a deep dive into the equation of exchange, which Chris has been using as a starting point for understanding utility value. 

You can see all crypto related conversations at investorfieldguide.com/Hashpower. Please enjoy this conversation with Chris Burniske.

Hash Power is presented by Fidelity Investments

 

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

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

Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

 

Links Referenced

Hash Power Podcast Documentary

Nic Carter (twitter)

Cryptoasset Valuations (Medium)

 

Show Notes

4:58 - (First Question) – Chris’s overall method for evaluating cryptocurrencies

            5:14– Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

6:47 – The equation exchange

11:19 – Bonding

12:35 – How bonding may represent a more efficient way of representing consensus over proof of work

14:29 – Why the amount being bonded and held should be taken out of the float

16:58 – Using bitcoin as an example to figure out remittances in the PQ side

18:31 – Looking at the velocity of various crypto-assets

21:04 – Chris’s impression of the different way of categorizing various crypto assets

24:37 – Explaining Auger as an example of a cryptotoken

25:38 – How could these networks be impacted by not having any censorship

27:57 – Exploring the gap between expectation vs reality in the value of crypto currency

30:43 – Other ways of valuing these crypto assets

            30:50 – Hash Power Podcast Documentary

33:32 – Explaining the idea of billion dollar a day onchain transactions

36:05 – How to measure the value of the underlying network

            36:37 – Nic Carter (twitter)

37:13 – What are the variables that matter when investing in cryptocurrency on a long-term horizon

39:24 – Determining when it’s better for a network to be centralized vs decentralized

42:03 – Networks that Chris is most excited about

44:06 – Understanding the consumption side of the steam marketplace

46:01 – Deep dive into the Aragon network

47:27 – How does Chris evaluate existential risk of networks

51:09 – Could these assets really ever go to zero?

54:07 – Is there a scenario in which velocity gets so high that it negatively effects the price

56:10 – What are the unknowns of cryptocurrency that Chris is most interested in

            56:24 – Cryptoasset Valuations (Medium)

 

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

Oct 31, 2017

My guest this week is Brad Katsuyama, the founder of the IEX exchange and protagonist of Michael Lewis’s famous book Flash Boys, which chronicled the role of high frequency trading in markets.

This conversation was yet another reminder of how complicated markets can be, and that very few participants know all aspects of the process well. Brad and I get deep into the history behind his company, and the ways in which markets and exchanges have evolved, better or worse. 

One of my favorite parts of this conversation was our exploration of entrepreneurship. Brad’s whole story is one that entrepreneurs will appreciate, and is full of lessons for those aspiring to start their own business.

Please enjoy my conversation with Brad Katsuyama

 

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

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

Flash Boys: A Wall Street Revolt

 

Show Notes

2:10 – (First Question) Brad’s original discovery of a latency problem in trading stocks

12:51 – how the business model of the NASDAQ and exchanges and how it may surprise people 

14:16 – The edge that exchanges are now monetizing 

16:46 – How Brad went from finding a solution to his current firm 

20:18 – Types of high frequency traders that there are 

24:33 – The formation of IEX 

27:56 – Funding IEX

30:48 – What happens to the initial funding

32:30 – Describe what IEX is as it was sold to early buy side investors 

34:31 – Explaining the concept of a speedbump 

38:18 – Pitching companies so they will be listed on their index 

40:37 – Explains maker-taker fees 

44:47 – The sources of revenue for IEX vs traditional exchanges 

46:53 – Most memorable meeting Brad has had in establishing IEX 

49:39 – How did he do this with young kids?

52:38 – Has the pool of potential profits that high-frequency trading firms can earn gone down

53:53 – What has Brad most excited about the future in terms of helping the buyside

55:17 – What was it like to see Brad’s venture get turned into a best-selling book. (Flash Boys: A Wall Street Revolt)

59:00 – Biggest thing that Brad has learned

1:00:56 – What would Brad do if he couldn’t work in the investing world.

1:02:25 - Kindest thing anyone has done for Brad       

 

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

Oct 24, 2017

This week’s episode is part of an experiment and so requires a longer than normal introduction.

I’ve come to view this podcast as a learning tool, a means to understand a new topic in a short window of time. One of those areas is venture capital and startups—an area that one year ago was completely foreign to me. I think the best way to learn is aggressive immersion in a topic along with some consequences, what we often call some skin in the game. Accordingly, this is a conversation with the founder of a startup in which I am an investor.

I say this in full disclosure because I believe in being very transparent with you, but also obviously want this business to do well. Part of the reason I invested was because I thought I could affect the outcome of the business personally, in part by exposing the model and ideas to you all. I deeply respect your opinions and collective breadth of knowledge, and welcome thoughts you have on this topic. 

The founder is Brett Maloley and his company is called Ladder. Ladder represents an overlap of many topics we’ve explore together over the last year. We’ve talked about venture capital, health and wellbeing, the difficultly of fundraising and power law outcomes in startups. We also spent an entire episode, with Alex Moazed, talking about the business model that Ladder is pursing: what Alex calls platform business model and what my favorite technology writer Ben Thompson calls the Aggregator model.

Alex wrote the book Modern Monopolies about this model, which describes how companies like Uber, Airbnb, and others serve clients. Platform companies sit at the intersection between consumers and producers in a given category, helping make life easier, cheaper, and/or better for consumers and more profitable and flexible for producers. But the value creation itself is about the facilitating the exchange of value more efficiently than it is about actually creating the underlying product. Airbnb, for example, doesn’t own real estate (the value in this case), but they unlock the potential of real estate owned by others.  Same for Uber which, so far, doesn’t own cars.

As Alex explained to me in our discussion, a key sign of a market which might benefit from a platform company is some form of latent, untapped supply. Which brings me back to Ladder. The company is being built to unlock latent potential in fitness and potentially other types of coaching. Personal trainers are typically on the job [or; "at work'] 11 horus a day, of which four on average are downtime. That is the untapped supply. Ladder will allow two key things: much cheaper access to a real fitness coach for consumers who don’t want to spend hundreds of dollars a month in the current format, and a way for trainers with lots of free time to both get new customers and to better engage with their existing customers. Think of it almost like Opentable—which started as a way for restaurants to better manage their reservations, but turned into a liquid market for consumers to make reservations. 

The reason this is so interesting, I think, is the enormous size of the commercial fitness industry and the fact that it hasn’t changed for a long time. I love people who have an almost bizarre level of knowledge in a niche field, and Brett certainly fits that bill. He grew up with the industry, his mentors and relatives having literally build the commercial fitness industry, what we think of today as gyms and personal training. He knows how this legacy model works and ticks, the flaws and benefits of different business models, and why the future might be different, with a much larger percent of the population using a fitness coach, and maybe other types of coaches, in categories like nutrition and health. 

To see the app in action and get paired with a coach, Brett kindly set up a promo code of sorts like you often hear on other podcasts. If you search for “ladder coach” in the app store, download the app, and then use the promo code ILTB (as in, invest like the best) you’ll get 50% off the service forever. I don’t get any cut of that at all. Brett and his team are data heads, and their main goal early in this company’s life is to generate data on the relationships between consumers and their new coaches to figure out what works best for both groups to constantly improve the service, so the early adopters among you get a permanent discount. 

Now this will be obvious, but nothing about what I do personally is investment advice—it should not be mimicked. Like my investment in bitcoin, this investment represents a small part of my portfolio, and as always I think the majority of anyone’s portfolio should be balanced and well-priced. I do not expect that I have any skill at selecting startups, as probably very few people do. But I know that having some skin in the game means you learn differently: more efficiently, and faster. I hope you enjoy this collective experiment, which is largely the result of what I’ve learned from past guests and from all of your support which helps me meet those great people in the first place. Let’s dive in to my conversation with the founder of Ladder, Brett Maloley, who starts by describing how he got his start in the fitness world.

 

For comprehensive show notes on this episode go to http://investorfieldguide.com/ladder

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

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

5:25 – (First question) – Brett describes his history in the fitness industry

10:04 – Realized he could fix the commercial fitness industry by changing it

12:46 – Explain how Ladder works

14:14 – What does the ratio of digital to in-person coaching need to be in order to be effective coaching

17:12 – Explaining the platform business model as a whole and how to scale these types of business

22:15 – Origin of health clubs

24:01 – Current state of the health fitness space through some key stats

26:44 – What happened where gyms were able to start charging a lot less for memberships

30:20 – How Ladder is going to attract customers in the beginning

36:10 – How to drive engagement

37:46 – The opportunity for coaches on the platform

40:28 – How will ladder ensure the quality of coaches on the platform remains high

42:41 – Exploring the value of the data

45:32 – How will Ladder work with gyms in the scope of how a new business can take advantage of existing businesses

48:58 – Comparing Ladder to crossfit and what is not sustainable about 

53:14 – Difference between a franchise model vs a license model

55:12 – Strategy for building an audience

59:56 – Competitors to this business

1:03:39 – Brett’s thoughts on brand broadly speaking and how he’s worked to shape Ladder’s brand

1:05:00 – Best individual experience of the platform so far 

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

Oct 17, 2017

This week’s conversation is about artificial intelligence and interplanetary travel. Its about content creation, thinking from first principles, and death progress units. Its about brain machine interfaces and why it is crucial that you be a chef and not a cook. 

My guest is Tim Urban, along with his business partner Andrew Finn. Tim is the most entertaining writer I’ve come across in years, who explains complicated and interesting topics to his millions of dedicated readers on the website “Wait, But Why.” As an example, Tim’s last post on Elon Musk’s neurlink venture is 40,000 words long, roughly the length of a short book. It explains almost all of human progress and our potential future using drawings and cartoons. Its impossible to stop reading.

While this conversation is wildly entertaining, it is also chock full of metaphors and lessons that will be useful to anyone doing creative work or building a company. I hope this leaves you as energized as it left me. I called this episode Grand Theft Life because that is the name that Tim and Andrew give to their worldview, which I think will change the way you behave, too. Please enjoy my conversation with Tim Urban.

 

For comprehensive show notes on this episode go to http://investorfieldguide.com/urban

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

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

Superintelligence: Paths, Dangers, Strategies

 

Links Referenced

The Cook and the Chef: Musk’s Secret Sauce

Wait But Why

Neuralink and the Brain’s Magical Future

Wait But Hi

YouTube Channel  Kurzgesagt – In a Nutshell

 

Show Notes

1:50 – (First question) –  Explaining his concept of planets 1, 2, 3 and 4 and understanding the human colossus

5:46 – Tim’s favorite idea of the human knowledge compounding

7:52 – Die Progress Units (DPU)

9:45 – Different stages of AI and the positives and negatives of each stage

14;04 – What happens when AI gains breadth and general intelligence

16:23 – The idea of a cook vs a chef and how Tim had the chance to interview Elon Musk

17:48 – Why you should reason from first principles instead of reasoning by analogies

25:19 – Why it’s possible to turn a cook into a chef

30:08 – Why being a chef is the safer route in a world with AI and what Tim has changed in himself as to why.

31:22 – Looking at the discovery process

            34:39 – Superintelligence: Paths, Dangers, Strategies\

40:01 – Being the person who creates the metaphor vs being the people who simply using them

            43:41 – YouTube Channel  Kurzgesagt – In a Nutshell

44:54 – Most fun that Tim has had researching a topic

46:08 – Musk model for attaining your goals

53:43 – Why not caring what people think is one of the world’s best superpowers, grand theft life

56:50 – Neuralink – what is it and how did Tim come to research it

1:02:38 – Elon Musk’s concerns about AI

1:14:28 – What then if the Neuralink concept works out

1:18:02 – Kindest thing anyone has done for Tim

 

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

Oct 10, 2017

In episodes one and two of Hash Power, we explored blockchain technology and cryptocurrency investing. In this episode, we discuss the current and potential future states of the crypto world. We cover new forms of cooperation, regulation, security and storage, and why blockchains allow systems to evolve at such a rapid pace. 

Be sure to listen until the end, where we close with some advice about conducting ourselves in a new world where creativity reigns and repetitive jobs disappear—a trend that may only accelerate thanks to blockchain technology and cryptocurrencies.

Hash Power is presented by Fidelity Investments

 

For comprehensive show notes on this episode go to http://investorfieldguide.com/hashpower

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

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

0:05 – Intro to episode 3 and what to expect 

4:00 - Olaf Carlson-Wee, founder of Polychain, on how the funding and investing in cryptocurrencies could easily get out of hand 

5:00 – How people are creating holding companies to fund cryptocurrencies protocols 

6:45 – Decentralized Autonomous Organization (DAO) and how they will replace the aforementioned holding companies 

8:32 – Could fully decentralized organizations replace other more traditional organizational structures, even outside of crypto currency 

9:59 – How can DAO’s impact everyday lives 

12:39 – Why your skills and accomplishments will become more important than who you are or where you are from

            15:38 – Ready Player One: A Novel 

16:09 - Naval Ravikant, CEO of Angellist, on the way humans cooperate and build new entities 

17:51 – When people will demand oversight and regulation over crypto currency 

20:42 - Peter Van Valkenburg, Director of Research at Coincenter on the current state of regulation 

26:06 - Jameson Lopp on security needed to protect your cryptocurrency

            26:22 - Glacierprotocol.org 

27:51 - Ari Paul, co-founder of Blocktower, on how nail polish is used to protect their crypto wallet 

30:03 – Juan Benet explains the Filecoin Protocol 

35:52 - Muneeb Ali, co-founder of Blockstack, on how his team is plans to provide basic tools that will allow the broader developer community to build apps that the cryptocurrency population will use. 

38:01 - Comparing blockstack to the analogy of creating a city 

40:17 – How the blockstack token fits into everything 

43:15 – Fred Ehrsam, co-founder of Coinbase, on forking in blockchains 

47:52 – Naval Ravikant on how the idea of work will change in the future, and how that change helped to produce the idea of a blockchain in the first place. 

49:31 – Why curiosity should govern what you do in life

53:22 - Naval’s framework for making money

 

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

Oct 3, 2017

In episode 1 of Hash Power, we explored blockchains as a technology—how they work, why tokens (also known as cryptocurrencies) are an integral part of any blockchain, and how these new networks might change the world. In episode two, we spend time with the leading investors in the field. Like any frenzied asset class, there are countless cryptocurrency hedge funds popping up everywhere. But founders from three of the original firms—Polychain, Metastable, and Blocktower Capital—are our primary guides this week.

As I speak, the total market cap of cryptocurrencies is $136B. There are hundreds of tokens currently available, but bitcoin and Ethereum represent 75% of the total market cap. $136B sounds like a big number, but its tiny relative to any other asset class—and I use that term with hesitation. To put it in perspective, that’s exactly the same size as the market cap of IBM. But IBM had more than $10B of earnings in 2016. Tokens have none. As you will hear, valuing tokens is a very hard exercise.

In such a nascent world, we are seeing investing strategies take hold. Olaf Carlson-Wee, Josh Seims, and Ari Paul walk us through different takes on cryptocurrency investing, be it early stage, long term buy and hold, or more hedge fund style strategies.

Hash Power is presented by Fidelity Investments

For comprehensive show notes on this episode go to http://investorfieldguide.com/hashpower

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

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

Fat Protocols (Joel Monegro)

 

Show Notes

0:05 – Recap of part 1 and introduction to part 2 of Hash Power

2:58 – Ari Paul, CIO of Blocktower explains how he got involved in cryptocurrencies

5:23 – Why do we need bitcoin

7:23 – Polychain Capital founder Olaf Carlson-Wee on why the value of tokens accrue

9:23 – How main stream money is getting into this space

12:26- Useful comparisons when talking about ICOs when compared to IPOs

15:01 - Naval Ravikant, CEO of Angellist, is asked to explain the protocols of cryptocurrencies to platform businesses like Uber or Airbnb

17:43 – Naval’s interest in investing in cryptocurrencies

18:42 – Why average folks should avoid it before they dive thoroughly into the topic

20:25 – what are the most compelling counter arguments to using cryptocurrencies

23:07 - Olaf Carlson Wee on the lifecycle of a token

24:02 – SAFT note, Simple Agreement for Future Tokens

25:31 – What is the earliest stage that edge is most present for investors in cryptocurrency protocols

28:12 – How do you mitigate the volatility that is present in blockchain

31:18 - Jeremiah Lowin, a risk and statistics expert, who runs risk management for a large private family office, talks about why he no longer owns cryptocurrencies

 34:19 - Jordan Cooper, a venture capital investor, is optimistic about blockchains in general, but thinks there may be some overvaluations in current currencies

37:02 – How Jordan would value a single cryptocurrency

42:10 – Fat Protocols (Joel Monegro)

43:52 - Josh Seims, of Metastable, the value investor in blockchain?

51:15 - Ari Paul on the equivalent of listed stocks in the crypto currency world

52:33 – Understanding the concept of a coin in blockchain and how people are getting access to them

55:07 – The fairground analogy to understand cryptocurrencies

57:57 – What lessons from traditional markets can you apply to investing in cryptocurrencies

1:02:48 – Where do family offices stand when it comes to jumping into this space

1:06:51 – Ari is asked to discuss some of the alternative cryptocurrencies outside of Bitcoin and Ethereum. He starts with Ripple

1:10:27 – What would help firms or traders create edge in investing in cryptocurrencies

 

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

Sep 26, 2017

Welcome to the first episode of Hash Power, an audio documentary that explores the world of blockchain and cryptocurrencies with leaders in the field like Naval Ravikant, Olaf Carlson-Wee, Fred Ehrsam, & Ari Paul. Hash Power is meant to be an introduction, but really, it is an invitation to explore this emerging world on your own. 

In the coming weeks, we will cover the technology, the power of decentralization, bitcoin, Ethereum, ICOs, cryptography and hashing. We will spend time with the leading active hedge fund managers in the field, and with outside investors who are both optimistic and skeptical. Episode one covers the big picture, and answers the question: what is blockchain and why might it significantly affect our world?

If you enjoy what follows, you’ll still be very early in understanding this field. Most don’t. So help me spread it like wildfire, because the more people that understand blockchain, the better its impact might become. Please enjoy episode one, and stay tuned next week for episode 2, which explores investing in cryptocurrencies.

Hash Power is presented by Fidelity Investments

 

For comprehensive show notes on this episode go to http://investorfieldguide.com/hashpower

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

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 Sovereign Individual: Mastering the Transition to the Information Age

Nostalgia for the Absolute

 

Links Referenced

Bitcoin: A Peer-to-Peer Electronic Cash System

Reddit User jav_rddt

SHA-256 Calculator

The BitCoin Model for Crowdfunding

Fat Protocols

#cryptotwitter

 

Show Notes

0:05 – Introduction

  

CHAPTER 1 – Understanding the Concept of Blockchain (3:25)

4:30 – Jeremiah Lowin explains how blockchain is like a database

            5:14 – Bitcoin: A Peer-to-Peer Electronic Cash System

5:46 – Owning a digital asset

7:14 – Naval Ravikant, CEO of Angelist on how blockchains can help to create personal networks and organize humans

11:01 – How blockchains represent a way to coordinate global activity through tokens

13:33 – New coins popping up around data storage and utility needs like solar panels

14:57 – Permission vs permissionless networks

16:37 – Protocols and the introduction of scarcity

18:13 – Keeping track of scarcity and the introduction of tokens

18:49 – Societal structures and how blockchains will change them again

            18:51 – The Sovereign Individual: Mastering the Transition to the Information Age

21:55 – The role of blockchains in the informational age and the rise of more individual sovereignty

23:29 - Fred Ehrsam, co-founder of Coinbase, on the increasing shift to digital worlds led by incentive structures

 

CHAPTER 2 – Blockchain Technology (27:48)

            29:09 - Reddit User jav_rddt

            30:43 - SHA-256 Calculator

31:53 - Charlie Noyes, Pantera Capital, explains how SHA-256 was developed and what make its so special

35:48 – How miners create new blocks and the incentives to do so

40:22 – The nonce field

43:48 – The incentives that exist for miners and the arms race to build more powerful systems to mine

45:20 – The development of mining pools

46:54 – Ethereum, the “spiritual successor” to bitcoin

48:36 – How the Ether network is an ecosystem in which other tokens can sit

50:51 - Naval Ravikant on alternative coins or tokens

            50:50 - The BitCoin Model for Crowdfunding

51:37 – How the protocol creators are the ones getting wealthy

            52:35 – Fat Protocols

53:22 – Blockchain as an experiment in distributed government

54:47 – How cryptocurrency is more than just technology, it’s a movement

            54:50 – Nostalgia for the Absolute

            57:27 - #cryptotwitter

1:00:58 - Peter Jubber, of Fidelity, on how huge institutions, like theirs, are getting into the cryptocurrency game

1:4:01 –The notion of cooperation in an open source project or protocol

1:05:21- Olaf Carlson-Wee, first employee at Coinbase and the founder of Polychain, on the early excitement for cryptocurrency

1:06:56– Closing thoughts from Patrick

            Looking to work in this space - hashpowerdeveloper@gmail.com

 

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

Sep 19, 2017

My guest this week is David Tisch, who was instrumental in building and fostering venture capital investing in New York City. If you liked my conversation with Jerry Neumann--who, incidentally, introduced me to David--you are going to love this one. 

David was a co-founder at tech stars, New York's answer to Silicon Valley’s famous tech incubator Y Combinator. He now runs the Box Group, a prominent seed stage venture capital firm, which has looked at thousands of startups and invested in more than 200. 

We explore tech investing outside of Silicon Valley, the tech accelerator model, the evolution of early stage investing, and why the best companies may start coming out of non-traditional venture hubs. 

David does a great job of explaining how things have changed for technology startups and why certain strategies--especially those for acquiring customers--won't work nearly as well in the future. 

I learned a lot during this hour, and I think you will too. Please enjoy. 

 

For comprehensive show notes on this episode go to http://investorfieldguide.com/tisch

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

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

2:16 – (First question) – Looking at David’s motivation and role in building up the venture capital tech investment scene in New York

6:14 – What David did to further the mission of fostering tech startups in New York, namely his work with TechStars

10:11 – What is Y Combinator and how does that differ from Tech Stars

13:02 – What is the procedure for getting into a startup incubator  

17:08 – Most memorable applications

19:12 – What is the boot camp/incubator experience like

20:34 – What should future incubators be focused on to help develop the right ideas

23:46 – What aspects of the business should a start up be focused on in the beginning

26:46 – What got David interested in investing

28:47 – The challenges of launching new tech today and the colonization of identity

32:04 – Exploring David’s investing strategy

35:45 – Finding the consumer facing companies that can scale and provide a return for venture capitalists

38:03 – The problem of scaling up for start ups

39:20 – What business models does David prefer when making venture investments

40:53 – What’s important to look at when investing in other sectors, starting with Fintech

44:41 – Where does David think we are in the venture capital cycle

49:37 – How much does the exit strategy play into the initial seed investment

50:18 – David’s thinking on the portfolio of companies when picking an investment

52:48 – David’s biggest sin of omission

53:56 – Common personality traits among potential founders

55:24 – Is storytelling relevant for startups focused on the enterprise side of the business

56:07 – David’s story to convince founders to work with him

57:51 – biggest mistakes that David has seen

1:01:47 – What does it mean for our health that are time has become completely consumed by technology

1:03:58 – What trend has David most excited looking forward

1:06:44 – Kindest thing anyone has done for David

 

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

Sep 12, 2017

The investment strategy discussed in this week's episode is diametrically opposed to my own value tendencies, but it still one that has done exceptionally well.  

My guest is David Gardner, co-founder of the Motley Fool. He is unique in that he is both a pure investor--a true stock junkie--and an entrepreneur. His energy is remarkable. His positive vibes are something to behold. You'll hear it over audio, but it's ever more palpable in person. 

Our conversation is about finding companies which are breaking rules in the right way and reshaping industries. David's goal is to find these companies early in and hold them forever. 

If you love investing, you are going to love this regardless of your prior beliefs. Please enjoy my conversation with David Gardner on rule breakers.

For comprehensive show notes on this episode go to http://investorfieldguide.com/gardner

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

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 Innovator's Dilemma: When New Technologies Cause Great Firms to Fail (Management of Innovation and Change)

The New Penguin Dictionary of Modern Quotations

Moneyball: The Art of Winning an Unfair Game

The Motley Fool Investment Guide: How The Fool Beats Wall Street's Wise Men And How You Can Too

The Wisdom of Crowds

The Motley Fools Rule Breakers Rule Makers : The Foolish Guide To Picking Stocks

 

Links Referenced

Totally Absorbed

FANG stocks

Henry Cloud (author)

“I had a lover’s quarrel with the world” by Robert Frost

As You Like it (Shakespeare)

Invest Like the Best episod with Morgan Housel

Don't Be a Dip: The 1 Thing You Need to Know About Buying on Dips

Board Game Agricola

Boardgamegeek.com

 

Show Notes

2:03 – (First question) – Among the experiments that David has run in his podcast, which one has he enjoyed the most

3:42 – A deep dive into the rule breaker mentality that David uses

            4:39 -  The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail (Management of Innovation and Change)

3:52 -  How his model may mimic venture capital early stage investing

7:22 – What helps you to not sell a rule breaker amid big drawdowns.

            7:33 – Totally Absorbed

            8:32 – FANG stocks

12:25 – List of criteria in picking rule breaker stocks…starting with top dogs and first movers

19:34 – Second criteria…visionary leadership and the traits David looks for in a leader

            22:02 – Henry Cloud (author)

            22:58 – “I had a lover’s quarrel with the world” by Robert Frost

24:07 – Smart backing as part of that second criteria

26:16 – Third criteria – competitive advantage and moats

30:50 – Looking at the development of the Motley Fool brand and business

            32:47 – The New Penguin Dictionary of Modern Quotations

32:49 – As You Like it (Shakespeare)

39:29 – Looking at David’s writing and how it has evolved over the years

            40:36 – Moneyball: The Art of Winning an Unfair Game

            41:31 – The Motley Fool Investment Guide: How The Fool Beats Wall Street's Wise Men And How You Can Too

            42:43 – Invest Like the Best episod with Morgan Housel

            42:45 – The Wisdom of Crowds

43:33 – Back to criteria, the fourth one, price momentum

            45:47 – Don't Be a Dip: The 1 Thing You Need to Know About Buying on Dips

50:03 – Last criteria, something being overvalued and weigh that against the idea of whether a product or service is important based on whether people would miss it

            52:10 – The Motley Fools Rule Breakers Rule Makers : The Foolish Guide To Picking Stocks

1:01:21 – Looking at David’s process for finding a stock and analyzing it

1:07:38 – The importance of taking these criteria in concert and how you can see the power of overvaluation

1:10:39 - Board Game Agricola

1:10:54 – Boardgamegeek.com

1:14:38 – Kindest thing anyone has done for David

 

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

Sep 7, 2017

My guest this week is Meb Faber, who started a podcast similar to this one right before mine and was a big reason I was open to the idea in the first place. Meb is a quantitative researcher whose firm Cambria has been behind many interesting investment strategies that break the Wall Street mold. We talk investing factors, dividends, angel investing, podcasts and more. This was a fun catch up with a close friend in the industry who has been in a leader in using data to explore the best active strategies in a variety of asset classes. Please enjoy our conversation, which begins with a factor draft.

 

For comprehensive show notes on this episode go to http://investorfieldguide.com/meb

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

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

Dr. Tatiana's Sex Advice to All Creation: The Definitive Guide to the Evolutionary Biology of Sex

 

Links Referenced

Update on the Valuation Metric Horserace: 2011-2015

Jason Calacanis on Meb Faber Show

Brent BeShore episode of Invest Like the Best

Team Ritholtz episode of Invest Like the Best

 

Show Notes

1:55 – (First question) – Drafting quant factors

            4:10 – Update on the Valuation Metric Horserace: 2011-2015

10:25 – Most interesting thing Meb’s learned over the past year       

            14:05 – Jason Calacanis on Meb Faber Show

            14:49 – Brent BeShore episode of Invest Like the Best

16:10 – What is Meb’s process for investing in private companies

18:35 – What part of the fintech landscape would Meb be most excited about

26:50 – What has been working well on the business front for Meb

30:34 – Looking at investor behavior and changing fee structures

35:54 – What has Meb enjoyed most about doing a podcast

            36:26 – Team Ritholtz episode of Invest Like the Best

40:55 – A list of guests that meb would like to have on

            41:27 – Dr. Tatiana's Sex Advice to All Creation: The Definitive Guide to the Evolutionary Biology of Sex

43:19 – If Meb couldn’t work in this business, what would he do

45:02 – Same question for Patrick

47:28 – Kindest thing anyone has done for Meb

  

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

Aug 29, 2017

My guests this week don't need to be introduced. In celebration of the one year anniversary of invest like the best, I asked Josh Brown, Mike Batnick, and Barry Ritholtz to join me for a hour, during which I spent more time laughing than asking questions.

I chose this team because they are the pioneers of mold breaking honesty and personality in our industry. They all figured out that just being themselves yields incredible results. This is a strategy that everyone should try, but very few do. Honesty and transparency require vulnerability, which is hard for most of us. I still struggle with it. But the evidence is in. The Ritholtz team has grown as fast as almost any RIA. Listen to this and tell me you wouldn't want to spend your career working with people this friendly, funny and open. Hell, I want to give them some money just so I have an excuse to drop by more often. 

Thanks to everyone who has listened in the past year. We are past 1.25mm listens, and growing fast. You own this thing as much as I do, because the size helps me penetrate deeper and get the best people, which begets more listeners. This podcast is one hell of a discovery machine, and the first year was our warm up. We have a ton of new angles, formats, and events coming in year two. Stay tuned. But first, time to laugh in celebration of year one. Please enjoy my conversation with team Ritholtz

For comprehensive show notes on this episode go to http://investorfieldguide.com/ritholtz

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

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

Barry @ritholtz on twitter

a16z Podcast

Scott Galloway and Aswath Damodaran on Bitcoin vs Gold

Latest 'These Are the Goods' post

 

Show Notes

2:35 – (First question) – What stock best represents you 

5:09 – How was this team assembled at Ritholtz 

8:50 – Why larger asset management firms are slow to pivot on new technology 

10:00 – The humor of Barry @ritholtz on twitter 

11:48 – What technology channels are working best

13:08 – What would happen in a Ritholtz stock picking contest

15:19 – How do you keep investors from wanting to move money into or out of buzzworthy trades

20:23 – Pricing out the news and the value premium

23:41 – Why people want complexity and activity in their portfolios

29:51 – People always want to be a part of the next frontier, example bitcoin

            31:08 – a16z Podcast

33:13 – Exploring research in action and living the investments

39:35 – Biggest argument against bitcoin could be the underlying utility and what will make it successful

45:13 – The Hindenburg Omen

            46:34 - Scott Galloway and Aswath Damodaran on Bitcoin vs Gold

47:38 – How the relationship with clients has evolved

49:50 – Mike’s new book project that he is working on

51:41 – Why the Mark Twain chapter is the most interesting in his book thus far

53:32 – How a business should balance sales and marketing

58:09 – Who would they draft to the Ritholtz team

            58:22 – Latest These Are the Goods post

1:05:18 – Kindest thing anyone has done

 

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

Aug 22, 2017

My guest this week is Pat Dorsey, who was the longtime director of equity research at Morningstar, where he specialized in economic moats: sources of sustained competitive advantage that allow a few companies to deliver huge returns over time. Several years ago he left Morningstar to form his own asset management firm, Dorsey asset management, and build a portfolio of companies with wide moats like those he studied at Morningstar. And while moats are critical, equally important is how companies allocate the capital generated--or made possible--by the existence of the moat.  

A special thank you to Brian Bares who introduced me to Pat, and to Will Thorndike--an earlier guest on the show. In the vast majority of conversations you hear on this show, I'm meeting the guest for the first time. I mention this to encourage you to connect me with anyone whose story or way of looking at the world might resonate. Always feel free to contact me with ideas.  

Pat and I begin our discussion with the key differences between the sell side and the buy side, and then discuss all aspects of moats and capital allocation. 

 

For comprehensive show notes on this episode go to http://investorfieldguide.com/dorsey

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

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

2:23 – (First question) – Transition from the sell side to the buy side and the biggest surprise 

3:40 – What is a moat 

5:16 – What part of the stock market universe has a moat 

6:57 – Pat’s framework for identifying moat, starting with intangibles 

8:32 – The power of brands 

9:44 – what chance does an upstart have to come in and usurp a well-established brand   

12:24 – Switching costs as part of the framework for identifying a moat 

14:55 – The third component of identifying a moat, network effects, and what businesses should do to effectively build one 

17:29 – Last component, cost advantages/economies of scale 

19:29 – How do you analyze these four components into an investing framework that can be built into an actual strategy 

21:13 – How does Pat think about this from a mis-pricing standpoint 

23:37  – How does Pat incorporate current price of a company in consideration for future returns when pricing a moat 

25:39 – How should a company with a moat operate to protect that characteristic, especially when it comes to their capital allocation 

26:51 – Which characteristic of a moat does Pat find most intriguing 

30:35 – What makes for good and smart capital allocation 

35:58 – What is Pat’s process for identifying the best investment opportunities 

38:38 – What are good economics when looking at a company 

41:03 – If Pat could take any business, but have to swap leadership, what would he choose. 

44:13 – Back to his process of finding investment opportunities 

46:05 – Kindest thing anyone has ever done for Pat

 

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

Aug 15, 2017

My guests this week are both veterans of the podcast, Jason Zweig and Morgan Housel. They are two of the best in the world at making the complicated simple, and in that spirit, I’ll keep this introduction short. Morgan shifted from public markets to the private markets a year ago when he joined the Collaborative Fund, so we begin with what he has learned about venture capital in his first year on the job.

 

For comprehensive show notes on this episode go to http://investorfieldguide.com/writers

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

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 Devil's Financial Dictionary

Modern Monopolies: What It Takes to Dominate the 21st Century Economy

Thinking, Fast and Slow

Shoe Dog: A Memoir by the Creator of Nike

Life and Fate

 

Online References

A Rediscovered Masterpiece by Benjamin Graham

Rishi Ganti podcast

Small Companies Are Gone, But Should they Be Forgotten (Zweig Column)

 

Show Notes

1:43 – (First question) – Morgan on why he got disenchanted with the investment industry and shifted to venture capital

4:05 – Jason’s thoughts about investing in the private markets

            5:19 - A Rediscovered Masterpiece by Benjamin Graham

7:57 – Morgan’s thoughts on how private market investments differ from public market investments

10:24 – Exploring valuations of businesses and what they say about broader trends in the market

13:21 – How much does Jason think about individual companies when exploring the overall market trends

            18:41 – The Devil's Financial Dictionary

19:28 –What does it take to be a successful founder

23:40 – How does Jason look at activities that are work related vs just for pleasure

25:33 – If Jason had to start a business, what would he do

27:22 – What business would Morgan start

29:18 – Problems with the financial planning industry

30:56 -  The role of stress in personal and business development

            31:04 – Modern Monopolies: What It Takes to Dominate the 21st Century Economy

38:17 – Are there signs that let you know when to cut and run vs when to keep slogging along with something

            42:02 – Thinking, Fast and Slow

            44:03 – Shoe Dog: A Memoir by the Creator of Nike

44:20 – Principals to approach learning

50:10 – The idea of keeping your identity small in a world where social media encourages one-upmanship

53:56 – Last significant thing Morgan changed his mind about

55:23 – Why Morgan chooses passive investing with stocks, but as a VC, essentially is a stock picker in private markets

            1:00:44 – Rishi Ganti podcast

1:02:14 – What major thing did Jason change his mind about

            1:02:30 – Small Companies Are Gone, But Should they Be Forgotten (Zweig Column)

1:06:33 – What was the most interesting idea Jason and Morgan have been tackling and what data helped to spark that interest

            1:09:32 – Life and Fate

Aug 8, 2017

This week's conversation is about performance. More specifically, it is about the ins and outs of steady progress and growth. My guest is Brad Stulberg who coauthored the book Peak Performance, which combines research from many fields into a description of how athletes, creatives and others continue to push boundaries in their respective crafts.

As someone who is intermittently lazy, the growth equation framework that Brad and I explore has impacted me often since I first read the book several months ago. I hope you enjoy this conversation, which isn't about investing, but which is, at its heart, still about the power of compounding. 

 

Books Referenced

Outliers: The Story of Success

Peak: Secrets from the New Science of Expertise

 

Online References

Jool Health

 

Show Notes

1:32 – (First question) – How Vick Stretcher influenced the book, Peak Performance

4:32 – Looking at some of the preliminary research at the science of purpose

7:58 – The idea of a growth equation and the components that can lead to success

11:47 – How the introduction of stress can help in all sorts of creative and entrepreneurial pursuits.

13:39 – The ratio between physical and mental as an impact on this formula

14:56 – Just manageable challenges and the role that they play in the growth equation

18:06 – The idea of just manageable challenges through the example of an athlete

22:19 – Favorite example of a crazy feat of physical performance, stress on older athletes operating at high levels

23:30 – Thoughts about outside influences like mentors/coaches and how they help high performance individuals advance

25:51 – Describe catabolic and anabolic states and why anabolic is so important

29:13 – How the relationship of catabolic and anabolic states also helps the mind

30:47 – How does the idea of practice play into the growth equation

32:49 – Exploring the nuances of practice and why you don’t go all out

            32:56 – Outliers: The Story of Success

33:00 - Peak: Secrets from the New Science of Expertise

34:24 – The idea of designing of a day

42:06 – What role can environment play on us

43:40 – How far is it healthy to run

46:25 – How does ego play into all of this

48:06 – The idea of camaraderie and study of Air Force Cadets highlighting this

49:28 – Fatigue and why it is believed to happen in the mind and not the body

54:00 – Most memorable day

55:43 - Method for finding purpose

            56:29 – Jool Health

58:26 – Kindest thing anyone has ever done for Brad

 

Learn More

For more comprehensive show notes on this episode go to http://investorfieldguide.com/brad

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

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

 

Aug 1, 2017

Several weeks ago my conversation with Leigh Drogen on quant investing proved timely and popular--because everyone in asset management is facing the rise of big data, and the use of data science in investing strategies. Because of the rise of quants, many are asking themselves how to survive and thrive in a changing industry. In short, how can traditional managers compete with quants?

This second conversation with Leigh was set up to answer many of the questions posed in the first one. If quants are taking over, what should other investors do about it?

Leigh proposes a method by which old school asset managers can restructure their thinking and their process to compete with and even beat purely quantitative competitors. The method involves pulling the best from both worlds and combining them into a hybrid structure. But it will be impossible without a wholesale change in mindset, which is where we begin. Please enjoy round two with Leigh Drogen.

 

Links Referenced

Revenge of the Humans Part II: A New Blueprint For Discretionary Management

 

Show Notes

2:14 – (First question) –  What role will ego and mindset play for traditional hedge funds looking to transition into quantitative investing strategies

4:21 – Describes the traditional process that hedge funds use to make investment decisions and how the internal politics can hamper it

6:08 – What value has portfolio managers played at hedge funds traditionally as the quarterback of a fund

9:57 – A look at what Leigh has seen as he sits with teams

12:20 – A look at places that have tried to simply add quant to their firm’s strategies without “tearing it down to the studs” and properly integrating them into the process

15:00 – Leigh is asked to define the basics of a good investment firm’s strategies

16:57 – Strategies for writing down core beliefs, whether it’s for yourself or your firm

17:49 – Exploring the second step, finding a differentiating view and how to succeed with it.

21:43 – The importance of force ranking and structuring the unstructured

26:14 – Building factor models

29:42 – How the portfolio manager position should have less room for subjectivity than at the analyst level

33:44 – Is anyone integrating this kind of high level data at the portfolio manager level into the decision making the way Leigh describes

35:07 – What blind spots are created by systematizing their processes

36:18 – Why much of this applies more to shorter and structured periods

38:23 – Shifting to portfolio constructions and what Leigh would do to create the right mix

43:39 – Shifting to management structures in these firms starting with the role of the CIO

45:24 – Looking at the different quant roles that exist in a firm and what they should be responsible for; data engineers, data analysts, pure quants, and quantitative engineer

48:20 – If you are an undergrad or grad student right now interested in asset management, what are the roles you should be thinking about targeting

49:25 – Why communication skills are still so important, no matter what role you are in

50:25 – With all of the tools and skills that Leigh has at his disposal at Estimize, why not institute an active strategy

52:01 – What has Leigh observed in the dispersion of skill in the Estimized data set

53:47 – What is the relationship between specialization and accuracy among funds

55:29 – The pros and cons of the generalist

56:56 – A look at Leigh’s background into War Theory and what lessons that he still draws on today

1:00:19 – How the field of study around war and battle relates to the investing world

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

For complete shownotes, go to InvestorFieldGuide.com/leigh

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

Jul 25, 2017

My guest this week is a version of me—a funnier, cooler version who has a PhD and served as an active duty marine. Lots of you will already be familiar with Wes Gray, and those of you who are not are in for a treat. Wes is the founder of Alpha Architect, a firm which manages quantitative equity strategies for clients using factors like value and momentum. He also advocates for a more concentrated, pure approach to factor investing, which listeners know is music to my ears.

While we share a lot of the same views on markets and investing, you will still find this refreshing. The conversation was easy to structure--I just took all the questions clients and prospective investors always ask of me and my firm, and turned them on Wes. These range from very specific questions on quant investing to big existential ones.  I listened to this on a long drive home and laughed out loud in the car at least 5 times. You are going to love it all.

I close this introduction by offering you an opportunity which is not for the faint of heart. On September 16th, I will be joining Wes and his crew on a 28-mile trek called “March for the Fallen” which is a small but important way of honoring those who have given their lives in service of our country. Wes and I invite you to join as well. If you are interested, check out the post on Wes’s site with all the details. I will link to it in the shownotes at investorfieldguide.com/wes. If you are still interested, then email me with the subject heading “March for the Fallen.” I told you Wes is a much cooler version of me, and true to form he will be doing the hike with a 40-pound rucksack. I will be doing the version without a rucksack. Either way, it will be a day of comradery and remembrance that we won’t soon forget. Join us.

 

Books Referenced

The Devil Dogs at Belleau Wood: U.S. Marines in World War I

Thinking, Fast and Slow

 

Online References

The Limits of Arbitrage

 

Show Notes

3:07 – (First question) – Exploring the mindset that is ingrained into Marines

            3:16 – The Devil Dogs at Belleau Wood: U.S. Marines in World War I

5:27 – Most memorable experience growing up in the mountains of Colorado

6:29 – What experiences in the military have transferred to what Wes sees in the public markets

            6:48 – Thinking, Fast and Slow

7:51 – Wes’s first foray into stocks

10:51 – What was the transition into the quantitative investing space

12:29 – How Wes would describe quantitative investing and what the landscape looks like today

17:10 – What is the nature of the strategies Wes uses, like high-frequency and market-making, and what makes them stand out in those

20:57 – What about the human capital arms race in this space and how different firms are attracting the top talent

23:21 – What the approach is for Wes and what his research suggests is the best predictor of performance in stocks

25:36 – Wes’s approach to portfolio construction

33:19 – What is the thinking behind the number of and the size of names in the QVAL ETF

35:19 – Over a 20-year horizon, does Wes pick value or momentum

36:20 – Why the data suggests momentum is the better pick

37:36 – Why price-to-book sucks relative to other value factors

39:55 – What things worry Wes about the future of this strategy

44:39 – How does Wes think about research and what to explore next.

50:05 – Who would Wes have manage his money since he thinks Vanguard is not the best choice

57:01 – Exploring his firm Alpha Architect, how it started and has evolved since launch

            57:39 – The Limits of Arbitrage

1:02:36 – talk about the profile of the right investor

1:08:15 – How the influx of people to passive investments are impacting the overall market, especially for active investment strategies

1:13:13 – Wes’s most memorable day of his career both in the military and as an investor

1:17:19– Kindest thing anyone has ever done for Wes

 

 

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

Jul 18, 2017

My guest this week is Rishi Ganti, who invests in what he calls esoteric assets. I'm not sure what to do other than laugh in amazement at his professional credentials -- PhD in economics, CFA, CPA, lawyer, speaks six languages, and so on. The best part is he isn't lording those over anyone and in fact casts some shade on the whole idea of credentials in our conversation. He just did it all because he's a learning fiend.

Rishi's core idea about markets is this: avoid markets at all costs. As he explains off the bat, the minute there are multiple buyers for anything, prices get efficient very quickly and there opportunity to find alpha shrinks. Instead he searches for what esoteric assets: things without a market, orphaned assets that require high human capital and human touch. We explore several interesting examples, from charter school financing to

A stark realization I had during he episode is how big the worlds asset base is. Almost all of our attention goes to the most highly refined ones: stocks and bonds. But there is a whole other world out there.

The closing sections, on what Rishi would do if not investing, and his answer for the kindest thing anyone has done for him were among the best answers I've heard.

 

Show Notes

3:30 – (First question) – Rishi’s broad take on markets and whether or not he really likes them

5:30 – Defining esoteric markets

8:31 – Looking at the mountain of assets that are most impacted or made most efficient by markets and how Rishi describes each level of that pyramid

12:28 – Looking at an esoteric asset at the early part of Rishi’s career

16:23 – Why is there little competition in these types of investment opportunities

23:06 – How they created a market and turned an esoteric asset into a return opportunity, starting with the charter school funding example

31:54 – Looking at how this is done internationally

38:55 – What they consider a platform

41:08 – How they are able to provide their service and skirt the government, legally

44:18 – A simplified explanation of what Orthogon does

50:30 – What are the main reasons people don’t want to go down this road since it seems like an obvious choice

59:00 – Looking at the most memorable experiences in esoteric investing

1:01:10 – What value has Rishi found in his extensive education, credentials, and certifications

1:07:31 – Another topic that Rishi finds interesting and he’d want to lecture on if he could other than investing.

1:09:48 – What is the right formula and types of goals you should consider in planning your life

1:14:39 – Kindest thing anyone has done for Rishi

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

Jul 11, 2017

I am drawn to a group of investors that I call practitioner philosophers. These are people who have gotten their hands dirty in their respective fields, but despite being doers, they still often sit back and ponder the big questions in business and life.

My guest this week is one such practitioner philosopher, NYC based venture capitalist Jerry Neumann. I came across Jerry's essays a year ago, and he is on a very short list of writers whose work I read without fail and almost always more than once.

You can think about this conversation on business, investing, and venture capital as a big funnel. We start very broad, discussing where we may be in a large 70-year economic cycle. We then break down the so-called power law which seems to govern venture capital returns and business outcomes. Then we get even more specific, discussing Jerry's process for evaluating early stage companies, and the particulars of what might make a good venture capitalist. I say "might" because as Jerry explains often, nothing is certain, and luck may always play a huge role.

I just loved this conversation. It is the type that without the podcast as an excuse would be a very odd and intense one if I were just meeting someone for the first time. You'll find no small talk or even medium talk here. This is a meaty discussion with one of the smartest and most straightforward people I've come across.

 

Books Referenced

Carlotta’s Perez - Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages

Thomas Hughes – Networks of Power: Electrification in the Western Society, 1880 – 1930

Frank Knight – Risk, Uncertainty, and Profit

Jeffrey West - Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies

 

Links Referenced

Deployment Age

Oswald Spangler

About Men; Corporate Man

Howard Mark’s 2x2 matrix of superior investment results

Michael E. Porter - How Competitive Forces Shape Strategy

DJ Teece: Profiting from Technological Innovation

Porter’s Five Forces

 

Show Notes

3:27 – (First question) – Start with Jerry’s essay the Deployment Age and a look at what it means for where we sit today (looking forward as investors)?

            3:40 - Deployment Age

            4:26 - Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages

9:28 – What time in history can you compare our current deployment age to and what does that say about the next 10, 20, and 30 years?

            9:40 – Oswald Spangler

            11:09 – About Men; Corporate Man

15:36 - How have your views evolved over time and how do you square the 1950s-time period for venture capitalists?

            18:06 - Networks of Power: Electrification in the Western Society, 1880 – 1930

20:40 -  What lessons should venture capitalists make from these deployment age cycles

            25:27 - Risk, Uncertainty, and Profit

24:10 – Exploring how powerlaws govern returns for venture capital

            26:50 – Howard Mark’s 2x2 matrix of superior investment results

32:19 – Providing context and understanding to Alpha within Powerlaws.

32:56 – Nassim Taleb: Powerlaw

39:18 - Portfolio concentration and scaling

            42:31 – Venture Follow-on and the Kelly Criterion (Jerry's Blog)

44:34 - How have you have actually done this, Jerry? What is your process like and your focuses?

54:00 – Are there any circumstances where it is wise for friends and family to make venture investments?

59:20 - What is this idea of who profits from innovations?

            56:12 - DJ Teece: Profiting from Technological Innovation

1:02:57 – Understanding complimentary assets

            1:05:06 - Porter’s Five Forces

1:09:24  - Are Augmented and Virtual Reality interesting areas for venture capital and why?

1:15:28– What makes a successful venture capitalist? What makes you special?

1:23:43 – What is the most memorable day in your career in venture?

1:26:03 – Kindest thing anyone has ever done for Jerry

 

Learn More

For comprehensive show notes on this episode go to http://investorfieldguide.com/jerry

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

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

 

Jul 5, 2017

A future guest just told me, every band has a song about being in a band, so today I give you my version. I won’t do this often, and only do it this week in case listenership drops due to the holiday—I didn’t want any guest to have a smaller than normal audience. I have now been doing this for almost one year, and have learned a tremendous amount. Since the whole idea behind the show is to learn in public, I am going to share a few of the lessons I’ve learned with you today. I’ll shape it as a top ten list, which ends with a fun story about my recent dinner with Warren Buffett. You’ll notice that many of these are just good business and life lessons applied to something specific: a podcast. I hope you can pull the essence of one or more of these and change how you do things, especially if you create any sort of content as part of your job.

  1. (1:35) Conversation is my new favorite way to learn. I love books, and always will, but conversations are even more efficient and engaging. Talking with people who know their field deeply is the most fun thing in the world, and it is an underused method of learning. Lectures are too one-sided. Books often don’t flow the direction you want them to. Conversations are alive and interactive. I have been doing this very publicly on the podcast, but I’ve also been doing it more in private after realizing how powerful it can be. If you can commit to having conversations with new people where you tell them as little about yourself as possible, you’ll be off to a good start. I don’t mean that talking about yourself is bad—not at all--only that in each conversation, the time you spend talking about you is time that you aren’t learning something new. The less your ego gets involved, the more you will learn—and I should know because I used to have a big ego. This means asking dumb questions, sometimes more than once. It means probing on the simplest parts of a person’s field or knowledge. As everyone knows, it is fun to explain something you love to people that don’t know as much about the topic in question, but are eager to learn. So it logically follows that you should want to be the less knowledgeable person in most conversations. If everyone took this tact, things would be a mess, but I wouldn’t worry too much about that! One side effect of learning to ask good and interesting questions is that you realize how rarely anyone asks you good or interesting questions. An example of why it pays to remove ego: A month ago I didn’t even know what a cryptocurrency token was. Now I can have a fairly in-depth conversation on the topic because I made small incremental improvement improvements across ten different conversations. In each of those, I was the moron, trying to get up to speed. The more times you are willing to be the idiot, the faster you will learn. It is a pretty cool formula: ten times the idiot, one time the (relative) expert. They should teach you how to have a good conversation in elementary school.
  2. (3:31) Preparation and careful listening are everything. The best editing for the podcast is done before the conversation starts and during the conversation itself. Most of the episodes you hear are very lightly edited, if at all. A majority aren’t touched. The ones that I have edited a bit were my fault: I didn’t prepare well enough to be nimble and attentive in the conversation. What I’ve found is that the role of the person asking the questions is to create and sustain momentum. I have this visual of a rush of water running down a maze of tubes which have hatches that open and close. If the water hits a closed hatch, everything stops. My job is to anticipate by listening very carefully and get ahead of the water to open doors to keep the momentum going. The clues to what each person loves most are usually buried in another answer. I’ve gotten much better at picking up on those cues. One example: every time someone says “we can talk about that later,” it means “I want to talk about it now and if you ask me, I’ll give a great answer.” The way I prepare for this ahead of time is to read everything I possibly can and try to be able to discuss it as if I were answering my own questions. This way, I can sense when there is a deviation between how I’d answer my own question and how they do. That deviation is often the door to something very interesting: an opinion or idea not already discussed by the guest in some other medium. An example: Scott Norton mentioned in passing that he’d read up on the history of ketchup as part of his early research, so I asked him to tell me that history and it was one of my favorite answers. I moved it to the front of the podcast.
  3. (5:07) Finding the next guest is all about the quality of other guests and the quality of my questions. The first few guests on the show were people I knew well, or well enough to invite onto a non-existent platform to chat about investing. But in the majority of the conversations, I was meeting the person for the first time-- 39 of the 47 guests to be precise. That means that almost all of these wonderful conversations started because someone else introduced me to the guest and their ideas. They introduce me because they either 1) liked being a guest themselves or 2) like listening to the show. At the end of each episode, I ask the guest who I should talk to next, which allows the conversation to thread from person to person organically. But it isn’t just the guests, it is all of you. I am grateful to everyone who devotes their time to listening to this show and for all the thrilling and often random connections it has created in the investing world. One tiny example: Brian Bares of Bares Capital Management emailed me offering to connect me with Will Thorndike. Will is the author of one of my favorite books, and was near the top of my wish list. But I had no connection to him whatsoever, and then one just appeared. Brian has also connected me with another guest who you’ll hear from soon. Because of Brian’s kind outreach, I know more today. This has happened many times. If you are listening, and know someone fascinating, please send them my way. Sidebar: If you are someone whose job it is to book podcast guests, please stop emailing me (not that you are listening, anyhow). The network effect is what drives this shows success, I just happen to sit at the central node in this particular network. The more listeners, the more connections, the more connections, the more great conversations you’ll hear. It is a virtuous cycle. So please, send me guest ideas, send me topic ideas—things you want to understand but don’t. Send me anything, I read it all. I’ll do my very best to keep the quality up, and then depend on you.
  4. (7:01) Give your audience credit. There have been a few conversations—the recent one with Michael Mauboussin comes to mind—that have been pretty complicated. But these episodes often generate the most positive feedback. The accepted rules for content are that simple and short are good, but I’ve found the exact opposite. There is a strong positive correlation between the length of an episode and the number of listeners, and between the complexity or newness of the ideas explored and the number of listeners. I get emails from people all the time, and they are often a lot smarter than me. I’ve had countless coffees and lunches all over the country with listeners who have written incredibly thoughtful emails which help me understand fields like private equity and venture capital at a much deeper level. Because I push myself to the very limit of my brain’s abilities, I have been lucky to attract a ridiculously interested, smart, and kind audience. They say you get the investors you deserve, but its clear you also get the listeners you deserve. The biggest compliment I am paid is by the army of smart people who just give me their time. I think the real rule for content should be: just operate at your own level—don’t try to move simpler or more generic. The beauty of the internet is the power of the niche—find one and own it.
  5. (8:15) Avoid colonized topics. I have a lot to say about smart beta strategies, but it is a topic that has been so thoroughly picked over by the investing community that it is no fun anymore. It is a very good rule that if I’m bored of some topic, everyone else will be too. Instead, I search for aspects of the investing world that I don’t know much about, because if I don’t know, it’s a decent indicator that some chunk of the audience won’t know. I think this lesson is key. It is so easy to explore the same stuff as everyone else, because it’s less work. But as many guests have pointed out: the key to their personal success was that they wrote the playbook instead of reading someone else’s. If the playbook is already out there, look for a different question to explore.
  6. (8:59) Consider the user experience. An upcoming guest observed that most bank customers aren’t customers at all, but suppliers. They give banks the capital they need to do business, and are therefore treated like suppliers, not customers. I think it’d be easy to view podcast guests as suppliers—in this case suppliers of content—so I am very careful to remind myself that the opposite is true. The guests are my customer just as much as you are. I try to make the experience of coming on the show easy and fun, before, during, and after taping. I am careful to provide lots of feedback to each guest once the episode launches. I like Airbnb founder Brian Chesky’s notion of an 11-star experience. He suggests any business go through the thought experiment of explaining what an 1 through 11 star experiences would be for the product or service. When you do this, star levels 7 through 11 are ridiculous, but it helps you calibrate and re-orients you to your customer. I like to think I provide a 4-5 star experience now, but in the coming weeks I’ll sketch out what an 11-star experience might be and see how I can make it better. In fact, this is something I’d love to discuss with you: how to make both the guests and the listeners’ experience better. I’ll explain how to be a part of that conversation at the end of this episode.
  7. (10:16) Find great partners. The show sounds so clean because of my excellent producer Mathew Passy. If you want to start a podcast, he is your guy. He has already started working with others that I know and my plan is to fill his entire schedule. He is one example of a key partner. The show also works because I don’t have to spend much time on finding guests. This is because of the great network, but a few nodes in that network stand out. Khe Hy, Jeff Gramm, Brent Beshore, Morgan Housel, Josh Brown, and Ted Seides, among others, have been instrumental in introducing to some of the best guests on the show and for that I am deeply grateful. People often ask how I have time to do this show, but the secret is it doesn’t take that much time! This is only possible because of the great partners I’ve found in the last year. The person whose voice or face is attached to something always gets way too much of the credit. Partners drive everything, and I’m thankful to have such great ones.
  8. (11:11) A generalist mindset can be a huge advantage. It is easy to pay homage to Charlie Munger’s latticework of mental models, but when you live it, you see why he is right. Knowing the key drivers and major ideas in a variety of fields is a huge source of leverage. It is difficult to study broadly and deeply, but the two aren’t mutually exclusive. I could talk to you about quantitative equity strategies until you pass out, but a key to the podcast’s success is that I can usually fake it in other fields like history, psychology, science, philosophy, travel, books, food, economics, mythology, sports and so on. Having these in one’s repertoire is like having a set of keys to getting the best out of other people. Different keys unlock different people. I think that a lot of being a good investor is asking good questions. If you know a little about many different fields, it makes that task much easier, and increases the odds that you’ll get the goods from whomever you at talking to. If these seems too daunting, I’ve found food, travel, and sports to be the most widely accepted keys.
  9. (12:17) Amplify what works. The most downloaded guest on the podcast so far is Brent Beshore. He has been on three times, and you can bet he will be on again. The second most downloaded is Michael Mauboussin, also a repeat guest. Andy Rachleff told me that one of his best business lessons is that you learn far more from success than from failure, and that you should use success as a compass. Drive hard in the direction of what works rather than trying to shore up weaknesses. If something is working, more of that thing, or a better version is likely to work too. A better version of a failure is likely still going to fail. A lesson within this lesson: this is all even more true for unexpected Brent is now a close friend, but I didn’t expect him to be the most popular episode. This has been a recurrent theme in my conversations on venture capital: it is usually the thing you didn’t expect which yields the biggest payoff. When something is expected or obvious to you, it is expected and obvious to others. That means competition. If Brent had been on 10 other podcasts before mine, the results would have been very different. Instead, Brent my eyes (and about 100 thousand other sets of eyes) to a fascinating new area of investing.
  10. (13:29) Don’t expect anything in return. People always ask me what my goal is with the podcast. The answer is simple: none. I don’t expect to get anything out of this other than the conversations themselves. The means and the end are the same. This is so important to me. When the process itself is the goal, magical things happen. When I have a guest on the show, it is like buying a call option. Actually its better, because I’m not even paying for the option: instead the option is “purchased” through a conversation: it is free, and highly enjoyable. The beautiful thing about call options is that the potential upside is enormous and the downside is limited, or in this case close to zero. Investors everywhere hunt for asymmetric outcomes: low downside, huge upside. And that is exactly what I’ve found this podcast to be. The second-best compliment I get is from guests who often tell me that the podcast generated a bizarre amount of inbound feedback, or even opportunities that they never expected. I don’t expect anything in particular to happen, but now I know that crazy things just will Its hard to escape the most obvious example—so let me tell this story in closing. The entire podcast began because of a rule of mine: when I read an interesting book, I email the author and ask them to lunch. I emailed Jeff Gramm after I read Dear Chairman, we got lunch, and we hit it off. We hatched a plan to record a conversation, and that was the beginning of the podcast. Very simple. 6 weeks later, the same strategy paid off again, and I met and recorded an episode with Ted Seides on hedge funds. We give Ted endless grief for his losing bet with Buffett, but I have learned so much from him about all corners of the investing world. He quickly became a friend and confidant. Ted also happens to be friends with the best investor of all time—something I didn’t know when I first met him. Fast forward to this past week. Ted, Brent Beshore and I flew to Omaha to have dinner with Warren Buffett—street value of almost $3 million dollars, my dad reminded me. I’ll get back to Warren in a second, but first a key observation here: not in a million years would I have thought a podcast would turn into a three-hour private dinner with Warren Buffett. If I had had the temerity to set that as a goal, it would have probably been impossible. If I’d been angling to get a private dinner with him, it most likely would never have happened—because everyone hates that guy. I think that because I am never angling for anything, the outcomes are far more interesting and improbable than if I was trying to achieve some specific goal. Another thing: the best thing about the dinner wasn’t that it was with Warren, but that it was with Brent and Ted, who have become such close friends. And the chance to meet Todd Combs, who was fantastic. Back to Warren. He is incredible. Kind, sharp, funny as hell, and relaxed. Early on he said to us “do you know what it says on Wilt Chamberlain’s tombstone? It says, finally I sleep alone.” We spent the first hour talking about college football. He could be a football color commentator. The amount of facts and dates and people he was throwing at me was staggering, and I know a lot about college football. I went to Notre Dame, and he had 5 Notre Dame specific stories that were some of the best I’d ever heard. He told me he once got through to an ND captain by calling his dorm room. He’d heard that the player was a big Buffett fan, and when he called the kid was awestruck. The reason for his call was an offer: two stock picks in exchange for Notre Dame’s playbook for the upcoming game against Nebraska. I don’t idolize people, and I never will, because idols are just people like anyone else. What was most refreshing about this dinner was realizing that Warren is just a person too—an exceptional one, but still a normal person. One that wants to shoot the breeze, tell stories, tell jokes, and learn about you. Knowing that even the greatest investor of all time is just a person is so reassuring. It makes anything seem possible. I’ll keep most of the details of the dinner to myself, but suffice it to say it was something I’ll never forget. But, and this may be more important, it was something I never expected. If you can find some way to give back to other people which they enjoy, and do so without any expectation of a return, you’ll be so happy, and great things will result. It has worked for me and I’m sure it will work for you.

So those are ten of many observations and lessons learned so far, and here is a bonus: there is room for a lot more. In the coming year, I plan on experimenting with lots of ways of bringing this community together, digitally or in person. If you are interested in being more involved in the podcast in general, stop by investorfieldguide.com/frontier to learn more and get involved.

Thank you for listening, and have a happy fourth of July.

 

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

Jun 27, 2017

If you told me a year ago that I’d be learning critical life and business lessons from the founder of a ketchup company, and that thirty to fifty thousand people would listen to our conversation, well, I’d have told you that’s impossible. But the fact that it is true proves many of the points laid out by this week’s guest Scott Norton, co-founder of Sir Kensington’s which was recently acquired by Uni-Lever. Sir Kensington’s, which makes “condiments with character” is no ordinary Ketchup company, and Scott is no ordinary founder.

We talk about the most elemental aspects of business: product, relationships, sales, marketing, and culture. I love that we can do so through the lens of such a seemingly simple product, something that we use all the time with our families at a BBQ. Scott’s observations on culture, the importance of relationships in sales, and competitive edge are all memorable. But above all, I’ll remember his line: seek to learn that which cannot be taught. And I will continually return to the mental image of the Temple of Poseidon.

Oh, and as a bonus we also talk about biking around Asia, which like all of Scott’s stories comes complete with thought provoking lessons.

Enjoy this unique conversation with one of the most interesting people I’ve met on this journey. We begin with the history of ketchup.

 

For comprehensive show notes on this episode go to http://investorfieldguide.com/norton

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

They Call Me Supermensch: A Backstage Pass to the Amazing Worlds of Film, Food, and Rock’n’Roll  (Movie)

 

Books Referenced

Getting to Yes: Negotiating Agreement Without Giving In

How to Win Friends & Influence People

They Call Me Supermensch: A Backstage Pass to the Amazing Worlds of Film, Food, and Rock’n’Roll  (Book)

 

Show Notes

2:40 – (First question) – A look at the history of ketchup

5:16 – The milestones of ketchup’s history in the US

10:26 – What were the early days like to compete in a market where the leaders have such a stronghold on the consumer

13:03 – A ketchup party to survey users

14:41 – Effective ways to negotiate

            14:57 – Getting to Yes: Negotiating Agreement Without Giving In

16:32 – How may stages were there in the early products

19:04 – A look at kaizen and what it means to Scott

20:38 – Scandinavian business principles that they bring to the company

23:40 – As the company has grown, has Scott seen downsides to the stakeholder model especially when competing against larger companies that use the shareholder model

28:19 – How did they use outside capital in getting started

31:07 – What was the most memorable story from the early days of disrupting this legacy industry, especially as it relates to the sales of this product

            33:30 – How to Win Friends & Influence People

33:58 – How do you create trust and show the benefits of your product in sales

37:48 – How culture started for the company, how it’s shifted since then and what competitive advantage the right culture creates

41:47 – Some of the best outcomes are the result of mindset and culture

43:28 – What new frontiers is Scott and the company looking at today

46:53 – How often has Scott had to course correct and continue down the path of the unknown

49:28 – Kindest thing anyone has done for Scott outside of the company

51:41 – The power of giving and how it will bring large returns, especially when you don’t expect them as part of the giving

            53:04 – They Call Me Supermensch: A Backstage Pass to the Amazing Worlds of Film, Food, and Rock’n’Roll  (Book and Movie)

55:37 – Look at Scott’s decision to bike around Asia and what he experienced during that time

1:02:49 – Best advice for someone in their early 20’s

 

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

Jun 20, 2017

My guest this week is Andy Rachleff, who is the CEO of the automated investing platform Wealthfront. Andy was also a co-founder and long-time partner at Benchmark capital--one of the most interesting and successful venture capital firms in the world.

We spend most of our conversation discussing venture capital investing and entrepreneurship. Andy coined the now ubiquitous term “product/market fit,” and has great insight into how investors and entrepreneurs should think about business. In that vein, we discuss both what we refer to as the value hypothesis: building a product or service that customers love, and the growth hypothesis: scaling that product or service to a large market.

We finish our conversation by talking about Andy and his teams mission at Wealthfront, and this conversation is perfectly timed, as Wealthfront just released a new feature that allows investors to buy factor portfolios, similar to Smart Beta ETFs.

Above all, I’ll remember Andy’s advice to “put the gun in the other person’s hand,” a strategy that we explore in the middle of our talk.

 

For comprehensive show notes on this episode go to http://investorfieldguide.com/andy

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 Four Steps to the Epiphany

The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses

Millennial Money: How Young Investors Can Build a Fortune

Diffusion of Innovations

Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers

 

Show Notes

2:36 – (First question) – The partnership setup and how they came to be 5 equal partners

7:57 – Why benchmark would not take on the chairman role in companies they invested in

9:28 – What made John Doerr the greatest capitalist investor ever

11:59 – Looking at the venture process and what made it an attractive investment for Benchmark, using eBay as an example.

18:06 – If you are willing to help other people, without an expectation of return, it can create other opportunities

20:08 – Andy is asked to explain the idea of Product Market Fit, a term that he coined

22:18 – How does one go about finding a Product Market Fit

            23:05 – The Four Steps to the Epiphany

            23:19 – The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses

25:55 – What are the components of the Growth hypothesis

26:51 – Why you can learn more professionally from success vs failure

28:13 – What it’s like to shift from venture capitalist to operator/CEO

30:24 – The rate at which technology gets adopted and what will help Wealthfront

            30:53 – Millennial Money: How Young Investors Can Build a Fortune

            31:26 – Diffusion of Innovations

            31:38 – Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers

32:38 – What does it look like to innovate on top of current platforms

41:07 – Will platforms like Wealthfront help to democratize access to private markets

44:23 – Kindest thing anyone has done for Andy

 

 

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

Jun 13, 2017

I’ve often joked that this show should be called “this is who you are up against,” because I am so often having conversations with brilliant people across the investment landscape who are effectively my competition and yours. This week’s conversation fits that description because it gives you an inside view into how things work among some of Wall Street’s most competitive investment firms. My guest is Leigh Drogen, who has worked as a statistical arbitrage portfolio manager and who founded and now runs Estimize, a data company which works with some of the world’s largest hedge funds.

Our conversation centers on the massive shift from what we call discretionary portfolio management—basically stock picking—to a landscape that is increasingly dominated by quantitative investors of various types. We talk about how any investor might hope to earn alpha, and how doing so is harder and harder.

There are so many great stories in this episode, told by someone with the perfect career experience to know how the system actually works. After many episodes where I’ve been learning on the fly about topics like venture capital, permanent equity, or health, this episode marks a return to my world of quantitative investing. I think you’ll learn a lot, and that you’ll likely finish with an even deeper appreciation of just the type of investors that we are all up against.
 

Books Referenced

Revenge of the Humans: How Discretionary Managers Can Crush Systematics

 

Links Referenced

The Undoing Project: A Friendship That Changed Our Minds

Force Rank (App)

Founder of Estimize Explains How He Plans To Disrupt The World Of Wall Street Research

 

Show Notes

2:45 – (First question) – A look at Leigh’s early career and how he got started in investing

            3:13 – Revenge of the Humans: How Discretionary Managers Can Crush Systematics

5:39 – Leigh is asked to describe the inefficiency in sell-side analysts’ estimate set

8:04 – What happened when things stopped working towards the end of 2007.

9:35 – The proper dimensions to separate any sort of potential Alpha edge

11:15 – The traits that help a fund perform well

            11:42 – The Undoing Project: A Friendship That Changed Our Minds

            14:05 – Force Rank (App)

14:49 – How the scientific process plays into Leigh’s research strategies

19:18 – Explain what Estimize is and what it does

20:55 – How people are compensated for the estimates

23:33 – The scale of how many estimates they get per company

24:57 – Why you need to be part of this informational arms race if you hope to survive

28:30 – What happens if everyone buys Estimize data and the Alpha built into it goes away

31:04 – What has been the evolution in these hedge fund platform type companies

35:00 – If Leigh was designing a firm from scratch, what would it look like

37:25 – Understanding Numerai and crowdsourcing in funds

41:41 – What is an example of interesting data set that Leigh as come across

45:38 – What is the potential for a hybrid model between a quant only with a discretionary picker.

51:35 – How do you know when something is busted or broken?

55:33 – Exploring his most memorable individual day in his career – Flash Crash

58:16 – With all the algorithms and automation, will we continue to see more of these unforeseeable dislocations like the flash crash?

            1:01:00 – Bloomberg article about passive investing rates

1:07:50 – What is Leigh most excited about the future

1:13:15 – Kindest thing anyone has ever done for Leigh

            1:13:41 – Founder of Estimize Explains How He Plans To Disrupt The World Of Wall Street Research

 

Learn More

For comprehensive show notes on this episode go to http://investorfieldguide.com/drogen

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

 

 

Jun 6, 2017

This week’s episode is very unique. It is the first episode devoted to bonds, just not the kind of bonds you are used to. My guest is Ira Judelson, who is the leading bail bondsman in New York City. I met Ira through my friend and former podcast guest Danny Moses, who is also a part of this conversation.

I have always had a passion for understanding how different businesses work. In this case, this week we are exploring a different business, but also a different world. Ira’s story is larger than life. He is as authentic and hard working as they come. In both his book and this conversation, there is a lot about family, loyalty, and hard work—principles which really resonate with me.

You’ll emerge from this hour with an appreciation of hustle and what it takes to get ahead. I can’t stop thinking about our discussion on how sources of power in any career morph through time, a framework that can help anyone think about their work and where to apply effort.

The conversation goes all over the place, but suffice it to say we discuss bond collateral, Dominique Strauss-Kahn, and DMX—and that is but one small fraction.

Please enjoy my conversation with Ira Judelson and Danny Moses.

 

For comprehensive show notes on this episode go to http://investorfieldguide.com/ira

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 Fixer: The Notorious Life of a Front-Page Bail Bondsman

 

Links Referenced

Rao’s Restaurant

 

Show Notes

1:55 – (First question) – The role that Rao’s restaurant has meant to Ira’s business and career

 

6:11 – A look at Ira’s bail bonds business and how that industry works

            6:22 – The Fixer: The Notorious Life of a Front-Page Bail Bondsman

 

8:31 – The story of how a pizzeria was a bad piece of collateral

 

11:10 – How often does Ira deal with bail jumpers

 

12:10 – What is the size of the open liabilities

 

13:14 – How long will the open liabilities last

 

14:55 – Ira’s relationship with his clients and the importance of character in this business

 

17:46 – the amazing story of how Ira got started in this business

 

31:05 – His early years of being a bail bondsman and how important his wife was to his success

 

29:52 – How Ira balances family with this kind of work

 

32:22 – Ira’s ability to be amazingly efficient on the phone when in social settings and a work call comes in

 

33:14 – Ira is the fixer

 

36:40 – Exploring the “Sources of Power” and where the balance for Ira of who he knows vs who he has shifted in this line of work.   

 

38:29 – The importance of intense reliability, consistency and empathy, and why Ira can trust his clients may be considered bad people

 

30:19 – Two cases where Ira got emotionally involved

 

47:26 – Why Ira is not worried about people coming after him

 

48:57 – When a bunch of detainees were wailing to wait an extra day in jail for Ira because his wife was pregnant with their first daughter

 

54:06 – Ira’s relationships with Ja Rule and DMX

 

58:32 – What does Ira enjoy most about the business still

 

1:01:51 – Will Ira ever stop?

 

1:04:02 – What advice would Ira give to someone early in their career just getting started

 

1:08:42 – The importance in having a willingness to fail mixed with the passion for what you are doing

 

1:10:11 – Ira’s health scare and what it taught him about appreciating life

May 30, 2017

This week's conversation was especially fun. I have a long history with my guest, Dave Chilton, but this was the first time we'd met in person. I'd heard stories about him from people I work with for twenty years, so getting to finally spend time with him was a real treat. I'll let him reveal the connection.

This episode will also be fun for listeners in the US, as Dave is one of the best-known people in Canada because of his famous book the wealthy barber and his more recent stint as a dragon on Dragon’s Den, which is Canada's version of shark tank.

I called this episode the human blitzkrieg because of Dave's relentlessly positive style and curiosity. He has dabbled in many parts of the business and investing worlds. He is one of the most successful authors in history, has invested in dozens of interesting businesses, and is a Jedi master in the long-lost art of the phone conversation.

We discuss business, investing, and writing. If you enjoy this conversation and have any aspirations as a writer, I highly recommend you check out the series of videos Dave and his son recently released called the Chilton method, which I will link in the show notes. I have no financial interest in this recommendation, and neither does Dave! He put it together in large part to stop people from calling him for advice. We discuss a few of the hundred plus lessons from his course in this conversation.

As you'll be able to tell early and often, it is hard not to have a good time with Dave.

 

For comprehensive show notes on this episode go to http://investorfieldguide.com/chilton

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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