Library

My reading, watching, listening, and playing lists

Venture

Judging VC Skill: The Hardest Open Problem in Finance?:

For venture investors, the main alphas are dealflow and judgment. Typically outsiders overweight judgment (“did you know it was going to be big?”) and underweight dealflow (there are lots of companies that everyone thinks will be big, but only Sequoia gets to say so with a check).

Benchmark: Merits of Bottoms Up Investing: For most of my life, I have been a macro rather than micro thinker. Brett provides a great rebuttal to this framework of thinking and it is obvious it works when looking at Benchmark’s performance:

Our job is not to see the future, it’s to see the present very clearly. This alignment shines through clearly across the partnership … Throw that crystal ball out, you can't predict anything. What you can do is recognize when lightning strikes.

Strachery: The Strachery newsletter is the only newsletter I pay for and it is worth 10x what it costs. Ben's visual and descriptive breakdown of today's technology ecosystem is unparalleled.

Power Laws in Venture Capital: By far the best quantitative breakdown of the math behind venture returns. Obviously, it is all theoretical and within the confines of a model, but the numbers are still fun to read through:

You need about 50 companies to have a 95% chance of not losing money, about 1000 to have a 95% chance of at least doubling your money, and about 15,000 to have a 95% chance of at least tripling your money.

Debt is Coming: Everyone read Alex’s post but please make sure if you haven’t. SaaS is the most debt-aligned business model we have seen in a long time, why are founders still giving away equity to fund it?

An Interview with Jonahtan Hsu: Interesting point to ponder:

Sometimes when I’m thinking about macro stuff I find myself wondering, “well, of course it makes sense for interest rates to fall across generations; in the long run, we get better at taking risks.”

Alt VC Math: Mark McGranaghan takes a deep, quantitative dive on alternative VCs, sometimes considered accelerators or micro-VCs.

A(Junior)VC by Jonathan Libov: Jonathan’s piece focuses on how young VC’s don’t have the expansive network to leverage but they can leverage the hidden, fringe networks of the internet.

Lessons from 10,342 Blog Posts on Growth: Start-ups are focusing on the wrong areas of growth. Keeping and growing current users are, arguably, more important than getting new ones when it comes to the marginal effect on the bottom line.

LinkedIn is the New Craigslist: Craigslist experienced a rapid segmentation of their individual categories through specific marketplaces that provided specialized utility. This will happen to LinkedIn. The professional networking site doesn’t attract any blue-collar workers, artistic talent, or developers.

The D2C Revolution: Direct to consumer brands are taking over the retail world. Being able to manage the customer relationship and extract intelligence and value from it is becoming increasingly powerful.

NFX Podcast: Lyft vs. Uber and the Battle for Ridesharing Dominance:Everyone says they are investing in network effect business today and all entrepreneurs claim they are building a platform business. NFX provides a new view on the Uber vs. Lyft oligopoly and how they might coexist in the long-term. They also have the best breakdown of the multiple layers of network effect businesses.

Economics / Finance

ZIRP Explains The World: My world view

Then, for the companies that attracted the money had to spend it. Salaries inflate. Cultures change. Consumers are subsidized. Sure, some technology is created, but overall, nothing operates as it would without that thirsty capital. It changes the economics for competitors that do not welcome in the dollars. The second and third-order effects are difficult to comprehend. Facebook’s advertising revenue has exploded thanks to heavily-funded companies acquiring customers, allowing the platform to resist any financial pressure which could force them to address fundamental platform issues. Uber made rides seem cheaper so we stopped taking public transportation. All this capital completely distorts things at the micro and macro level.

Antifragile Investing: We are all turkeys right now.

Levine's Money Stuff: Every person that reads Money Stuff agrees Money Stuff is the best financial newsletter out there.

Volatility and Flowing with Change: The single best read on volatility and why I am changing my portfolio in 2020 to be more long vol.

"The case for long volatility is a case for simplicity. You don’t need to rely on being right about complicated, nice-sounding predictions, nor about the exact cause of specific future change, just on that the future is going to look different from the present."

A Long Chat With Peter Bernstein: There are dozens of gems in this long interview with one of the greatest investors and thinkers of the 20th century. My personal favorite in relation to the post I wrote on abnormal distributions:

“Gottfried von Leibniz told the scientist Jacob Bernoulli that nature does work in patterns, but “only for the most part.” The other part — the unpredictable part — tends to be where things matter the most. That’s where the action often is”

The Everything Bubble: A great quick reference guide to the largest bubbles in history.

Private Equity’s Minsky Moment:

Private equity is undergoing what the great theorist Hyman Minsky pointed out is the Ponzi stage of the credit cycle in capitalist financial systems. This is the final stage before a blow-up. As Minsky observed, a period of placidity starts with firms borrowing money but being able to cover their borrowing with cash flow. Eventually, there’s more risk-taking until there’s a speculative frenzy, and firms can’t cover their debts with cash flow. They keep rolling over loans, and just hope that their assets keep going up in value so that they can sell assets to cover loans if necessary. To give an analogy, in 2006, when people in Las Vegas were flipping homes with no income, assuming that home values always went up, that was the Ponzi stage.

History

2019: The Year Revolt Went Global: My favorite read of 2019. Why is much of the world revolting? It is a question we still can’t answer with a common theme:

"Any attempt to sort out the consequences of the 2019 upheavals will soon bump into the inadequacy of our thinking on the subject. Consequences must refer to initial conditions: and these varied wildly. Algeria was ruled by a corrupt dictatorship. France, on the other hand, is one of the oldest democracies in the world. In the last two decades, the sectarian cliques that run Lebanon have destroyed a once-thriving economy, increased poverty, and blighted the infrastructure. In the “30 years” that sparked the Chileans’ indignation, however, their country became the wealthiest in Latin America, with the lowest poverty rate. Levels of acceptable violence also diverged broadly: the death of a single bystander shocked Hong Kong, but hundreds have been killed in Iraq. Given such an untidy tangle of starting-points, it may be futile to search for common landing-places."

Peter Thiel’s Wriston Lecture: One of the best 2019 reads.

Five Lessons From History: The usual awesome long-form essay from Morgan at Collab Fund. A personal favorite takeaway:

What kind of person makes their way to the top of a successful company, or a big country?

Someone who is determined, optimistic, doesn’t take “no” for an answer, and is relentlessly confident in their own abilities.

What kind of person is likely to go overboard, bite off more than they can chew, and discount risks that are blindingly obvious to others?

Someone who is determined, optimistic, doesn’t take “no” for an answer, and is relentlessly confident in their own abilities.

A Brief History of The Corporation: Ribbonfarm (which is quickly becoming my all time favorite blog) has an extensive overview of the corporation. This walkthrough aligns nicely with their “Markets are Eating the World” piece in regards to how the corporate construct is beginning to fade away as transactions are becoming further frictionless.

Other (Culture, Geography, etc.)

Convexity of Expertise: Another Byrne Hobart piece that I read through a few times. His work is incredibly full of ideas and takes a while to fully appreciate. A great quote:

“Start by having arbitrary strong opinions. Expect them to be wrong. But they’ll keep things interesting. Strong opinions, weakly held, are a cheap call option on information.”

The Advantage of Being a Little Underemployed: My two favorite quotes from this piece:

“The first step is realizing that taking time in the middle of your day to do stuff that doesn’t look like work is the most important part of your work day.

“You waste years by not being able to waste hours”

What the Hell is Going On? One of the best long-form essays this year. It provides a great overview of the three verticals of the greatest disruption in today's world. Institutional education is falling apart at the seams because of the proliferation of free or incredibly affordable resources on the internet. Media and commerce is experiencing an erosion of trust due to the non-disclosure of political tones of different outlets along with the frictionless nature of switching brands. Politics is now just a land grab for attention.

Status as a Service: Eugene'e manifesto of social capital is a must read for understanding today's social networks and their psychological and economical effect.