Thread by @BVCFunds

Give this one a listen @altcap @patrick_oshag

Some interesting bits below (apologies for the unstructured train of thought):

Brad Gerstner – Public and Private Investing - [Invest Like the Best, EP.179] open.spotify.com/episode/5vbZZp… #NowPlaying

1/ Investment analysis requires quantitative rigor, but the biggest returns come from a differentiated yet simple qualitative insight applied to a large market opportunity. As the timeline to go public gets pushed out, more economic value is being captured in the private markets.

2/ The era of search democratized the internet and gave rise to super apps. You can't monetize a platform without being discovered; however, the unintended consequence has been commercial intent / discovery has shifted away from search to predictive applications like $FB, $BYTE

3/ RE: the digitization of the enterprise and application infrastructure - we are still a decade away from 50% penetration. ~20% today is from cloud native businesses i.e. those who grew up in the cloud; for many others, they are JUST starting the migration

4/ The impact of AI's application to traditional industries wrt. efficiency / operational gains may be more profound than the introduction of the internet itself. Value creation and capture will accrue to large markets w/ poor customer experience that AI can disrupt

5/ Essentialism and investing. A disproportionate amount of returns will come from a few names - this is the Power Law. Do no over-trade or divide attention so you lack time or capital to focus when the fat pitch comes. This is not good diversification.

amazon.com/Essentialism-D…

6/ Far more money has been lost betting on the end of times, trading out of good ideas compared to making great bets on great companies, and allowing them to compound. Don't get in the way of great companies. Don't cut the flowers and water the weeds.

7/ Chinese e-commerce is less search-centric compared to US. $AMZN relies on search bar. China commerce relies on algorithmic content, contextual data, and ad placement to drive purchases. Began as short-form content to drive engagement, now converting to predictive commerce

8/ How early can we evaluate who will win a vertical? Being TOO early is bad, getting the thematic bet right but choosing the wrong horse is problematic, but you can bet on multiple horses if TAM is large, growing, mgmt is good & competition is rational. Don't need to pick JUST 1

9/ The bigger question is - "Is this a good business model?" Excessive funding can lead to irrational competition, but this can obscure LT profitability. Forget about picking the absolute winner - Develop conviction on what the industry looks like at steady state post shake out

10/ Back to the synergies between public & private investment. Public investing is judgement w/ imperfect information. In a private setting, you often have much more insight into unit economics, trends, operations. To apply those learnings to public models is uniquely valuable

11/ RE: Price / valuation, you have to be disciplined and have a framework, but the biggest mistake investors make is they over-index to their 12-24 month return or price target. Any great growth company will look expensive over a shorter time horizon

12/ The disconnect between value investing and tech businesses is value investing focuses on valuation metrics today, or one to two years out. The best technology businesses generate the majority of their value at minimum five years down the road