Invest Like the Best with Patrick O'Shaughnessy

Rishi Ganti, investor in esoteric assets, discusses his core idea of avoiding markets and investing in things without a market. He explores examples of esoteric assets like charter school financing. The podcast also highlights the vastness of the world's asset base and Rishi's inspiring answer about the kindest thing anyone has done for him.

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 – 1930Frank 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 ReferencedDeployment AgeOswald Spangler About Men; Corporate Man Howard Mark’s 2x2 matrix of superior investment resultsMichael E. Porter - How Competitive Forces Shape Strategy DJ Teece: Profiting from Technological InnovationPorter’s Five Forces Show Notes3:27 – (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 Age4:26 - Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages9:28 – 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 Spangler11:09 – About Men; Corporate Man18:06 - Networks of Power: Electrification in the Western Society, 1880 – 193020:40 - What lessons should venture capitalists make from these deployment age cycles25:27 - Risk, Uncertainty, and Profit26:50 – Howard Mark’s 2x2 matrix of superior investment results32:56 – Nassim Taleb: Powerlaw42:31 – 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 Innovation1:02:57 – Understanding complimentary assets1:05:06 - Porter’s Five Forces1:09:24 - 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?1:26:03 – Kindest thing anyone has ever done for Jerry Learn MoreFor comprehensive show notes on this episode go to http://investorfieldguide.com/jerryFor 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 

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.

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/nortonFor 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 Notes2:40 – (First question) – A look at the history of ketchup5:16 – The milestones of ketchup’s history in the US10:26 – What were the early days like to compete in a market where the leaders have such a stronghold on the consumer14:41 – Effective ways to negotiate14:57 – Getting to Yes: Negotiating Agreement Without Giving In16:32 – How may stages were there in the early products19:04 – A look at kaizen and what it means to Scott20:38 – Scandinavian business principles that they bring to the company23:40 – As the company has grown, has Scott seen downsides to the stakeholder model especially when competing against larger companies that use the shareholder model28:19 – How did they use outside capital in getting started31:07 – 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 People33:58 – How do you create trust and show the benefits of your product in sales37:48 – How culture started for the company, how it’s shifted since then and what competitive advantage the right culture creates41:47 – Some of the best outcomes are the result of mindset and culture43:28 – What new frontiers is Scott and the company looking at today51:41 – The power of giving and how it will bring large returns, especially when you don’t expect them as part of the giving53:04 – 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 time1:02:49 – Best advice for someone in their early 20’s Learn MoreFor 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/bookclubFollow Patrick on twitter at @patrick_oshag

Andy Rachleff, CEO of Wealthfront and co-founder of Benchmark Capital, shares insights on venture capital investing and entrepreneurship. He discusses the value hypothesis, growth hypothesis, and the mission of Wealthfront. The conversation also covers strategies for business success, product evolution, and the shift towards active management in investments.

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 MindsForce Rank (App) Founder of Estimize Explains How He Plans To Disrupt The World Of Wall Street Research Show Notes2:45 – (First question) – A look at Leigh’s early career and how he got started in investing3:13 – Revenge of the Humans: How Discretionary Managers Can Crush Systematics8:04 – What happened when things stopped working towards the end of 2007.9:35 – The proper dimensions to separate any sort of potential Alpha edge11:15 – The traits that help a fund perform well11:42 – The Undoing Project: A Friendship That Changed Our Minds14:05 – Force Rank (App)14:49 – How the scientific process plays into Leigh’s research strategies19:18 – Explain what Estimize is and what it does20:55 – How people are compensated for the estimates23:33 – The scale of how many estimates they get per company24:57 – Why you need to be part of this informational arms race if you hope to survive28:30 – What happens if everyone buys Estimize data and the Alpha built into it goes away31:04 – What has been the evolution in these hedge fund platform type companies35:00 – If Leigh was designing a firm from scratch, what would it look like37:25 – Understanding Numerai and crowdsourcing in funds41:41 – What is an example of interesting data set that Leigh as come across45:38 – 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 Crash58:16 – 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 rates1:07:50 – What is Leigh most excited about the future1:13:15 – 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 MoreFor comprehensive show notes on this episode go to http://investorfieldguide.com/drogenFor 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  

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

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

My guest this week is David Salem. David was the founding president and CIO for The Investment Fund for Foundations, which served 800 endowed charities under David’s 18-year tenure. He's now the CIO of the Windhorse Group, which focuses on long-term, value oriented investing. This conversation wanders into and explores many different areas of investing and life. The theme is how to think about asset allocation and investing holistically--from first principles--but we talk a lot about motivation, incentives, human behavior, and the fear of missing out as key variables in money management. We discuss the history of the Yale and Harvard endowment models and how their success has affected the asset management world for better or worse. I had never heard such an interesting take on two very important institutions. I also can't stop thinking about David’s "Mt. Everest" question, which we explore early in our conversation. I'd love to hear your answers to that question, so email me or message me with your thoughts.   For comprehensive show notes on this episode go to http://investorfieldguide.com/salem 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

My guest today is Michael Mauboussin, who is the head of global financial strategies at Credit Suisse and is on my short list of must read writers on all things investing. If you read his entire catalogue, Howard Marks's memos, and Buffett's shareholder letters, you be sitting pretty. Michael was also a big reason for the early success of this show appearing as my second guest and now my 37th. He and his team have been prolific in the last six months, publishing several long research reports on the most interesting aspects of the investing landscape. In this conversation, we talk about business moats, industry analysis, and how to combine man and machine when building an investment strategy and portfolio. As I tell Michael at the end, you won't be able to listen to this episode at two times speed, because we go deep quickly. For comprehensive show notes on this episode go to http://investorfieldguide.com/michael 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