1/ Notes from @mwseibel episode at @InvestLikeBest

It's the BEST episode I have listened to in 2020.

Just read the notes to get a sense why I am saying that, but better yet, just give it a listen to get the whole thing, not just the tidbits.
2/ Seibel is "The man who gets to see the future".

So what does he see?

Today's Founders are braver. They want to attack problems that have deeper and more positive impact on society.
3/ More and more founders are coming from outside the US.

I know it in my bones that talent is far from centralized in any particular region of the world. It's everywhere.

It's inevitable capitalism will find its way to get to them. It may be slow, but inevitable.
4/ Running a successful startup is DIFFICULT. Like really, really difficult.
5/ Trying to predict successful startups is a futile idea, so don't even try.

Look for: teams that can launch an MVP, have momentum, and have a camaraderie.
6/ Founders should be able to explain their idea to laymen. They should definitely know more about what they're building than investors.

Also, co-founders should not hate each other.
7/ Once upon a time, YC also had to start from scratch. It's not just the size of check that increased, it's the YC alumni network that probably adds a lot more value than the check they sign for the startups.
8/ Silicon Valley is built to fund software companies. Sounds like an opportunity for some region to really hone their focus on non-software businesses.

Caveat: Non-software businesses are harder to build than software businesses.
9/ Ask these three questions to realize whether these problems are worth solving

I. How frequent is the problem?
II. How intense is the problem for those experiencing it?
III. Are customers willing to pay to fix it?
10/ Wait, doesn't Airbnb violate all those rules?

Nope.
11/ You may have to "cheat supply" for a two-sided marketplace.
12/ PromisePay: What an amazing business. Definitely rooting for them.
13/ Interesting differences between first-time founders and second-time founders.

@mgirdley, you probably already listened to this, but if not, you will find it interesting.
14/ How difficult is startup?

"Imagine if the first day you went to Yale Law School, the professor told you like only one or two of you are going to become lawyers. You'd be like, "Wait, why am I paying all this? Like, ooh, this is not what I signed up for!"
15/ "folks who can basically get a product up and running in some way, shape, or form, and get a couple of customers, the first 10 customers to love the product and pay for the product, they have far more leverage when trying to convince an investor that this might be a thing."
16/ How do you know whether you have product-market-fit?

It's not a philosophical question. If it's a fit, it will probably scream.
17/ How do you get better at execution?

Find your peers who help you get better at it.

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More from @borrowed_ideas

24 Sep
1/ Thread: Who are your peers?

Bill Ackman was once asked what's the most influential thing Buffett has ever said.

He referred to the following Buffett quote.
2/ "If you want to be successful, look around the room and think about the classmate you most admire and what qualities they have and just decide to adopt those qualities. If you do that, your chances of being successful go up enormously."
3/ Patrick recently asked Michael Seibel how we can get better at execution.

Seibel emphasized the importance of peers/community. Image
Read 10 tweets
23 Sep
1/ Thread: $TCEHY

I have rudimentary understanding on tech in China. @packyM wrote a fascinating piece on $TCEHY which I came across today and wanted to leave my notes here.

It is a riveting read. So feel free to read the actual piece.

notboring.substack.com/p/tencent-the-…
2/ Born in 1971, Pony Ma, the founder of $TCEHY, built a stock market analysis tool while interning at a leading tech company in China.

He sold it for 50k CNY i.e. 3x his annual salary at that time.
3/ After college, he worked for 5 years at a pager company. In 1998, he finally left the company to start Tencent.

It was a bumpy start. During pre-AWS era, server cost was skyrocketing and it was also sued by AOL for copyright issues.
Read 16 tweets
20 Sep
1/ Notes from @rorysutherland episode at @InvestLikeBest

This episode was a reminder of Munger's latticework of mental models, and how much knowledge from other fields can actually be transferable to the world of investing.
2/ "you can double the conversion rate of a call center if you're asking people to choose between three options of subscription, and you simply add the sentence, "Most people choose B."

This reminded me of NZS capital's complexity investing framework.

static1.squarespace.com/static/5ca38f3…
3/ "Apple was the first to wonder about what it felt like while you were doing it. Which is a second-order consideration, which is actually much closer to being customer-centric than asking what functions you can perform for people."

$AAPL
Read 12 tweets
18 Sep
1/ Thread: The role of intangibles in valuation

I feel like a broken record, but @mjmauboussin and Dan Callahan recently published another intriguing piece titled "One Job".

What is "One Job"?

To take advantage of gaps between expectations and fundamentals.

But first a quiz.
2/ Which of the following stocks you want to own?

Stock A: it's profitable for last 15 years. Both sales and net profit CAGR 40%. Dividend initiated in year 3 and grew at 50% CAGR.

Stock B: Negative FCF for last 15 years. Debt grew at 34% CAGR. Cash was 2.5% of sales in yr 0...
3/ ...and it came down to 2.0% in yr 15.

Of course, it's a trick question. Stock A and B are actually the same company. It's $WMT.

If you hated stock B, well, here's a shocker. The stock had 29% CAGR return during this 15-yr period vs 11% for $SPY.
Read 25 tweets
17 Sep
1/5 Thread: Frank Slootman

$SNOW CEO Frank Slootman is an absolute beast!

He joined Data Domain at pre-revenue stage in 2003, grew revenue from zero to $600 mn in 6 years, IPO’ed in 2007 and eventually sold it to Dell for $2.1 Bn.
2/5 He later became CEO of $NOW in 2011 when it had $75 mn revenue.

In 2012, $NOW came to IPO and in just 6 years, revenue grew to ~$1.5 Bn.

$NOW market cap at IPO was ~$2 Bn. When Slootman left, it was ~$20 Bn.
3/5 $SNOW former CEO Bob Muglia raised $450 mn at $3.5 Bn valuation in late 2018. Then Slootman happened.

In less than two years since he joined, $SNOW became one of the most anticipated IPOs of recent times and market cap exceeded $70 Bn yesterday.
Read 5 tweets
14 Sep
1/ Thread: Upside-down markets

@Jesse_Livermore recently wrote an intriguing piece on "upside-down markets. It's essentially a book (94 pages).

What is the upside-down market?

It is when good news works as bad news, and bad news works as good news for the market.
2/ In monetary policy context, if bad news lets central banks lower interest rate and if it is lowered more than the severity of the situation at hand, overall impact on market can be positive.

But rate cuts usually don't outweigh the situation at hand.
3/ Fiscal policy, on the other hand, is the "cheat code".

As long as you are willing to tolerate inflation risk, if you are motivated enough, you can achieve any level of nominal growth you want.
Read 10 tweets

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