This Week I Learned #12

“Go to bed smarter than when you woke up”
— Charlie Munger


  • Wealthy: Josh Wolfe's, co-founder of Lux Capital, slim mold model on the application of the current startup environment is definitely something to consider and also a great example of creating a latticework of mental models. Long story short: Like brain synapses that see huge spike in growth followed by an arduous decline, many business industries have seen that from internet companies to automobiles. We are currently seeing many lawyers, accountants, finance-folk leave the security of the high-paying and socially upheld careers into startups, angel investing and VC. Most people are not risk-takers and the increasing move signals a perception that such moves are considered low risk (rather than these people actually thinking they are risk-takers). They see people they think they are more qualified than raise crazy money and run VC funds so they jump in. The second level effect of this is real estate companies profiting off of second-rate real estate properties that are considered "hip lofts for startups" when it would be considered a shit hole for a law firm. WeWork is an example of a company that is benefiting off of this ride. It's not new. Regus group had this happen to them during the dot-com period and they soon after saw the pain with startups failing left and right with capital drying up as "perceived risk" rose. Food for thought to consider the second-level impacts of such developments.


  • Wise: Harvard professor Richard Hackman's research on why teams don't work. Team structure. Teams should be under 10, ideally no more than 6. Most research concludes with larger teams being ineffective and nothing getting done. Teams are better off keeping the same members for a long duration of time, maybe 1 different member every 3-4 years, but the problem is that teams never have a chance to settle rather than get too comfortable. To limit "staleness" in creativity each team should have a "deviant" who can continuously challenge the team's thought. The deviant doesn't derail the team but rather enhances their creativity. I see this as why diversity in a team is valuable. Though I believe it's cognitive diversity that is valuable rather than just gender or ethnicity. If everyone is over various genders and ethnicity but all think the same then it's just the same foolish group think scenario. "the best team leaders are like jazz players, improvising constantly as they go along", don't try to lead like Bezos if that isn't who you are.


  • Wealthy: It would be surprising if anyone in the venture world did not know of Chris Sacca and lowercase capital. What I didn't know was that he retired from startup investing last year. I've always enjoyed any podcast Chris came on because I liked his approach to venture investing and his general personna. Despite this liking I had never visited his company website. Turns out it includes some great perspectives on generating leads, why he quit VC etc...His piece on leaving VC spoke about his own self-awareness, the power of following your own 20-year old vision and the ability to run a VC fund the way you want.


  • Wise: "leaders are surrounded by walls, mirrors, and liars". There is an inverse relationship with people in positions of power and higher positions and their level of self-awareness. Self-awareness is essential for the individual's ability to perform and is something that should definitely be trained for all levels in an organization. Introspection is good but people aren't doing it the right way because they are asking themselves "WHY" things happened. Hits well upon the article I wrote about Why vs. What.


  • Wealthy: Quote to ponder on: "Anyone who lives within their means suffers from a lack of imagination" - Oscar Wilde


  • Health: Tattoos. What happens to the ink when it touches your skin? Turns out it gets transmitted into your bloodstream and starts traveling internally throughout your body. One of the findings on cadavers with tattoos was enlarged lymph nodes. These lymph nodes are supposed to help your body fight off infectious diseases and swollen lymph nodes were commonly attributed to sicknesses of all levels from ear infection, strep throat to cancer. Many tattoo inks contain metallic ingredients and these may be the cause for swollen lymph nodes so it may be wise to ask for ink without metallic ingredients for your future tattoos. There hasn't been enough studies done to make anything conclusive but it's definitely an area for investment opportunities. I think Josh Wolfe of Lux capital said it best when the tattoo industry has large asymmetry where it costs $60 to get a tattoo but $6000 to remove it. It's definitely an industry getting more mainstream and investment dollars should be expected there.


  • Wealthy: A rare interview with Lou Simpson, the previous CIO of Geico. Simpson utilizes a basic 3 step framework of evaluating 1) business model, 2) management team and 3) valuation. Neat to see it is the same framework I learned at Mawer. He also brought up the common point of not selling your winners and that being his biggest mistake. Combining this with what Pabrai says, you don't sell your compounders when they get overvalued. Not even when they get highly overvalued. It's when they get so stupidly egregiously overvalued that you sell them. Something to be mindful of to prevent from pulling the trigger early for the winners.

Daniel LeeTWIL