What We’re Reading
Here are a few good articles the Collaborative Fund team came across this week.
Longevity
This is a staggering statistic:
The last time Australia was in recession, Mikhail Gorbachev led the Soviet Union and Donald Trump had filed for Chapter 11 only once. Barring unforeseen catastrophe, late next year Australia will pass the Netherlands’ modern record of 26 years of consecutive growth.
Before you pull the trigger
Elad Gil has 20 questions startups need to answer before raising money, including:
Are there alternative sources of funding you have not considered? (Venture Debt, employees helping to cover costs, having customers pay you for development, etc).
What do your investors or potential investors want? What are their motivations and why are they getting involved?
Why are you raising money? It is for vanity purposes or does your business really need it?
No one’s sitting still
Passive investing is exploding in popularity. But Pension Partners says it’s actually a misnomer. Answer “yes” to any of these questions and you can’t call yourself a passive investor:
- Do you own a higher percentage of stocks in your portfolio than bonds?
- Does your house make up the largest component of your net worth?
- Do you ever rebalance or sell/change the holdings in your portfolio?
- Do you dollar-cost average, reinvest interest/dividends, or engage in tax loss harvesting?
- Do you own any individual stocks/bonds/real estate?
- Do you own only bonds issued and stocks domiciled in your home country?
- Do you invest in lifecycle or target date funds that change the mix of stocks/bonds over time?
- Do you own anything other than cap-weighted index products?
- Do you hold a large amount of cash for emergencies, for when the market “finally” pulls back, or to “sleep at night?”
- Do you exclude private equity, preferred stock, MLPs, commodities, collectibles, and other more esoteric asset classes from your portfolio?
Connecting the world
Nicholas Negroponte says access to the Internet is a human right:
“And Internet access is such a fundamental part of learning that by extension it is almost certainly a human right and within a very short period of time it will be particularly because of those who don’t have schools, those who have to do their learning on their own. And for them Internet access is access to other people. It’s not so much the knowledge. It’s not the Wikipedia but it’s the connection to others, particularly kids to other kids – peer to peer learning. So yes, Internet access will be a human right. At the moment it’s edging up to it and probably not everybody agrees but they will shortly.”
Changing the world in 140 characters
Keith Rabois of Khosla Ventures discusses Twitter:
Q: Why are you bullish on Twitter?
A: Twitter has more influence on society than any other social product. Ultimately, this ability to change the world, change the law, change the government will create real value.
Despite Facebook, Instagram, Snapchat and other platforms, it is only Twitter that has the opportunity to be the future’s “paper of record.” It also eliminates the power of gatekeepers to news, opinion which is dramatically changing the world already.
Under wraps
The Vanity Fair article on the rise and fall of Theranos is fascinating:
Holmes subsequently raised $6 million in funding, the first of almost $700 million that would follow. Money often comes with strings attached in Silicon Valley, but even by its byzantine terms, Holmes’s were unusual. She took the money on the condition that she would not divulge to investors how her technology actually worked, and that she had final say and control over every aspect of her company. This surreptitiousness scared off some investors. When Google Ventures, which focuses more than 40 percent of its investments on medical technology, tried to perform due diligence on Theranos to weigh an investment, Theranos never responded. Eventually, Google Ventures sent a venture capitalist to a Theranos Walgreens Wellness Center to take the revolutionary pinprick blood test. As the V.C. sat in a chair and had several large vials of blood drawn from his arm, far more than a pinprick, it became apparent that something was amiss with Theranos’s promise.
The principles
This isn’t new, but if you haven’t read Ray Dalio of Bridgewater’s Principles, it’s a gem. If you have, read it again. There’s so much good information:
Don’t confuse problems with causes.
“I can’t get enough sleep” is not a problem, it is a cause of some problem. What exactly is that problem? To avoid confusing the problem with its causes, try to identify the suboptimal outcome, e.g., “I am performing badly in my job because I am tired.”
The extra mile
This is an amazing story about “the most exclusive restaurant in America.”
He worked through the items on display. Lily tuber, cattail stems, milkweed, bull thistle. By watching deer in the woods, he had discovered that the inner barks of certain trees have a salty taste. While chopping wood, he found that a particular lichen takes on an oniony flavor for three weeks a year. He made a cooked powder from it. “You’re gonna love it!” Baehrel relies heavily on starch and stock made from rutabagas. He uses wild-violet stems as a thickener. He inoculates fallen logs with mushroom spores. He’ll spend seven hours gathering three-quarters of a pound of clover—enough to fill a steamer trunk. “I do it at night, with a headlamp,” he said.
Have a good weekend.