What We’re Reading
Here are a few good articles the Collaborative Fund team came across this week.
Clarity
This is true no matter how you invest:
I learn while I think when I write it out. Some of the things I think I think, I find don’t make any sense when I start tying to write them down and explain them to people. You ought to be able to explain why you’re taking the job you’re taking, why you’re making the investment you’re making, or whatever it may be. And if it can’t stand applying pencil to paper, you’d better think it through some more. – Warren Buffett
Attention spans
This is largely accurate:
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Public investors have short time horizons but also short attention spans. If you miss your quarterly earnings expectations, you’ll get some irate phone calls, but if you let them go to voicemail there’s a good chance, they’ll probably forget to call again. If you succeed in distracting from disappointing short-term results by explaining that you have a long-term plan, they’ll never remember to hold you to that plan.
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Private investors have longer time horizons but also pay attention. They don’t necessarily care about quarterly earnings, but if you fail to execute on the long-term plan, they’ll eventually fire you.
Missions
A great piece on the evolution of Kickstarter:
Over the next few months, the two cofounders had a series of long conversations and email threads about the future of Kickstarter. They both agreed that they had achieved the goals they initially set out to accomplish. The next stage of the company’s life should be about furthering the mission. They also agreed that they weren’t interested in continuing to exist for financial reasons; money had never been a huge motivation in the first place. Instead, they felt that the company should exist for two reasons: It should continue to innovate and build products that improved the lives of artists, and they should lead a new movement of corporate governance.
Evolution
The future of venture capital:
Crowdfunding and new software platforms are commoditizing the primary activities of a venture fund (sourcing, fundraising, assisting companies). In the first roughly 70 years of the business, firms have set themselves apart with access to capital and/or proprietary access to deals. As these advantages erode, funds that do not adapt will slowly die out.
Patience
Some wisdom from Howard Marks:
To be a successful investor, you have to have a philosophy and process you believe in and can stick to, even under pressure. Since no approach will allow you to profit from all types of opportunities or in all environments, you have to be willing to not participate in everything that goes up, only the things that fit your approach. To be a disciplined investor, you have to be able to stand by and watch as other people make money in things you passed on.
Disruption
Professor Scott Galloway talks about how Amazon is disrupting retail: