Similarities Between Venture Capital and Value Investing

March 25, 2014 / / No Comments

Venture capital and value investing fundamentally differ in one key way: VC = long change; VI = short change.

Otherwise I think venture capital has more in common with value investing than any other kind of investing. For example: Both VC and VI believe in deep fundamental analysis, really understanding the fundamentals of a company and ignoring surrounding noise.

Both VC and VI believe in thinking in terms of “owning the entire company” (or a meaningful chunk of it) vs share price speculation.

Both VC and VI believe in taking long view – there is arbitrage opportunity in investing against short-term traders which equals most of market.

Both VC and VI believe Mr. Market is manic-depressive and should be ignored. Prices only matter on day you buy and day you sell.

Both VC and VI believe in portfolio concentration, in making relatively concentrated bets: “All eggs in one basket and watch that basket”.

Both VC and VI believe in the “prepared mind” — always be learning as much as possible at all times to be prepared for big opportunities.

Finally, both VC and VI believe in the “circle of competence” – know what you know and invest in that, not things outside that.

Source: Tweets – 1,2,3,4,5,6,7,8,9

Responses:

When People Who Don’t Understand Technology Attack New Technology

March 25, 2014 / / No Comments

Today, I said one of those things which ends up being relatively quotable. So here are a few points and elaborations for anyone interested. Warren Buffett is a personal hero of mine. He’s clearly a brilliant investor, business person, philanthropist and humanitarian! Warren is a world-class expert in many areas and in those areas he has forgotten more than I will never know.

But Warren has maintained for decades that he knows nothing about technology and does not seek to know anything about technology. However, that has not stopped him and several other similarly prominent and successful people like him, from opining negatively on Bitcoin. I’m on the record in saying that Bitcoin and more broadly cryptocurrency is one of the most important tech breakthroughs of our time.

https://www.youtube.com/watch?v=ewMYbX47-IE

When people who don’t understand technology attack new technology, it’s fair game to call them on it. People should know what they’re talking about and I seek to educate those that don’t. To that end, I would be happy to spend as much time with Warren as he wants, teaching him all about Bitcoin. My partners @a16z and I will also continue to write and tweet on the topic with a shared goal of mutual understanding and progress.

Source Tweets: 1,2,3,4,5,6,7,8,9

It’s Time to Evolve Beyond Credit Cards

March 23, 2014 / / No Comments

photo credit: Anthrocopy - cc

photo credit: Anthrocopy – cc

A California DMV credit-card breach was confirmed.

In the old days (20 yrs ago) there was massive paranoia that packet sniffing hackers would steal credit card numbers passing over the wire.

As it turns out, the use of credit cards for online payments is insane for a different reason: E-commerce system databases themselves are vulnerable. Credit cards were never built for this. Better systems exist: Paypal, Dwolla, Bitcoin.

The universe is sending us a message: it’s time to evolve.

Corollary: Giving your credit card info to an online merchant in 2014 is the data equivalent of unprotected sex. For the love of God, please stop.

Source: Tweets – 1,2,3,4,5

Responses:

Degrees of Tech Cynicism

March 23, 2014 / / No Comments

Degrees of tech cynicism from crude to nuanced?

  • That can’t possibly work.
  • It’ll work, but normal people will never use it.
  • Normal people will use it, but it’s trivial.
  • It will never replace [legacy].
  • It will replace [legacy], which is why the world is going to hell.
  • Yes, fine, but just wait until [big company] does it.
  • Yes, fine, but just wait until [hypothetical better version that doesn’t actually exist] does it.
  • I can’t believe how much money those kids made from that.
  • It’s a clear and obvious bubble.
  • Whatever, innovation is dead.

Source: Tweets – 1,2,3,4,5,6,7,8,9,10,11

Responses:

Are Chinese Companies Bulletproof?

March 19, 2014 / / No Comments

JP Morgan on China:

“3,398 corporate and enterprise bonds outstanding in China 2013, 22.9% AAA rating, 77.0% AA rating, 0.1% have A+ rating or below… The difference between the average coupon rates of AAA bond and CCC bond is less than 400bps… Shanghai Chaori Solar…is the first default in China’s bond market since the first Chinese corporate bond issuance in 1983.”

So, the $1 trillion question is: Are Chinese companies bulletproof beyond any precedent? Or are the current ratings mostly nonsense?

Source: Tweets – 1,2,3,4

Venice May Elect To Secede From Italy

March 17, 2014 / / No Comments

From the National Post’s recent article – More sovereignty votes: Referendum may see Venice elect to secede from Italy:

“Sunday referendum may see Venice elect to secede from Italy…La Serenissima ‘Most Serene Republic of Venice’ was an independent trading power for 1,000 years before the last leader was deposed by Napoleon in 1797…Campaigners have been inspired by the example of Scotland, which will hold its referendum on independence in September, and Catalonia…Activists say that the latest polling shows that 65% of voters in the region are in favour of cutting ties with Rome… For decades, there has been a deep-seated dissatisfaction in the rich northern regions of Italy with [perceived] inefficient and venal rule from Rome… If it passes, [the region may] start taking steps to withhold taxes, in what would effectively be a unilateral declaration of independence.”

Source: Andreessen’s tweets – 1,2,3,4,5,6

Daily Choices

March 16, 2014 / / 1 Comment

Every day, each one of us has many choices about whether to lift people around us up or tear them down.

For most of us, those choices are local in nature — people we know or meet, interact with face to face, one on one. But for some of us, those choices loom larger, in the social software and systems we design, build, report on, advertise on, fund.

I’m finished with this topic for now. I believe we all need to consider these choices carefully, every day. Respect for everyone who does.

Source: Andreessen’s Tweets – 1,2,3,4

Responses:

Technology Shapes Human Affairs

March 15, 2014 / / No Comments

“We shape our tools and then our tools shape us.”—JM Culkin paraphrasing Marshall McLuhan, 1967.

“It is the medium that shapes and controls the scale and form of human association and action. When our central nervous system is technologically extended to involve us in the whole of mankind and to…incorporate the whole of mankind in us, we necessarily participate, in depth, in the consequences of our every action. The ‘message’ of any medium or technology is the change of scale or pace or pattern that it introduces into human affairs.” – Marshall McLuhan

Source: Andreessen’s Tweets – 1,2,3,4,5

Big Breakthrough Ideas and Courageous Entrepreneurs

March 11, 2014 / / No Comments

Marc Andreessen, Co-Founder & Partner at Andreessen Horowitz, discusses his philosophy on investing in technical founders and the role of technology in today’s startups. Andreessen also addresses the kind of entrepreneurs and ideas his venture capital firm look for: “Big breakthrough ideas often seem nuts the first time you see them.”

Published by the Stanford Graduate School of Business.

https://twitter.com/pmarca/status/443251329452875776