A Few Things....Future of Tech Investing, Schopenhauer, Creativity

February 16, 2020

From Dubai.

A. Technology Investing

While researching a few technology companies, I started looking at the open-source distributed teams movement.

It’s a counter-intuitive way to build a valuable company.

Open-source means, your source code is available for everyone to see, download for free and use.

Distributed means, that all your employees are scattered across the globe, making it harder to corral teams.

So how has it created valuable businesses like Red Hat (bought by IBM for ~$40bn), Wordpress (powers 35% of websites), Elastic (~$6bn listed company)…….

Because it turns out that being distributed, allows you to harness talent where it is and gives it the flexibility to deliver it’s best. By being open-source you harness the power of the world’s developers and get millions more people, fixing and using your code (zero cost of distribution).

But it’s definitely not the way Oracle, Microsoft, SAP have been built grown.

While a firm like Benchmark Capital is known for it’s investments in Uber, Zillow, Twitter or DropBox, I’m more fascinated by some of their more recent open-source investments which have focused on the next level of search and databases.

Great discussions on Open Source Investing on recent podcasts: Invest Like The Best and the Ventures Stories. It’s an eye opener on what a tier 1 firm does to shape it’s thesis, build a great partnership, find great companies and support their founders.

All of this thinking on technology made me notice the news around Boris Johnson telling UK Parliament that the UK intends to jettison EU data laws. One of the things that has prevented the construction of more UK / European tech unicorns is data. The US and China have it and EU data laws have made it harder to have here.

For the UK then, Brexit is probably a great opportunity to break with EU data laws that some in the industry believe are holding back innovation. The UK has an opening to create the most benign regulatory environment for tech anywhere outside the US.

B. Aphorisms of Arthur Schopenhauer

I was re-reading a little Schopenhauer and the following quotes really hit home:

What is the meaning of life at all? To what purpose is it played, this farce in which everything that is essential is irrevocably fixed and determined? It is played that a man may come to understand himself, that he may see what it is that he seeks and has sought to be; what he wants, and what, therefore, he is. This is a knowledge which must be imparted to him from without. Life is to man, in other words, to will, what chemical re-agents are to the body: it is only by life that a man reveals what he is, and it is only in so far as he reveals himself that he exists at all. Life is the manifestation of character, of the something that we understand by that word; and it is not in life, but outside of it, and outside time, that character undergoes alteration, as a result of the self-knowledge which life gives. Life is only the mirror into which a man gazes not in order that he may get a reflection of himself, but that he may come to understand himself by that reflection; that he may see what it is that the mirror shows.

Man can be himself only so long as he is alone; and if he does not love solitude, he will not love freedom; for it is only when he is alone that he is really free.

To estimate a man’s condition in regard to happiness, it is necessary to ask, not what things please him, but what things trouble him; and the more trivial these things are in themselves, the happier the man will be. To be irritated by trifles, a man must be well off; for in misfortunes trifles are unfelt.

These reminded me of Nassim Taleb’s Commencement Address in 2016, the key part:

For I have a single definition of success: you look in the mirror every evening, and wonder if you disappoint the person you were at 18, right before the age when people start getting corrupted by life. Let him or her be the only judge; not your reputation, not your wealth, not your standing in the community, not the decorations on your lapel. If you do not feel ashamed, you are successful. All other definitions of success are modern constructions; fragile modern constructions.

What would your 18 year-old self say ?

C. is for Creativity

A good friend sent me this TED Talks podcast on a powerful way to unleash your natural creativity. They took lessons from Einstein, Darwin and Michael Crichton. The core thesis being that you should: “slow-motion multi-task” actively juggling multiple projects and moving between topics as the mood strikes.

This made me think of Adam Grant’s book - Originals and his great TED talk:

My key take aways from both were:

  1. Have lots of ideas - source ideas from many disciplines and have multi-domain exposure to have real diversity.

  2. Curate and Combine - It’s hard to know what scales but you can get luckier by curating well and then combining your ideas.

  3. Experiment and Play More - Leave things uncompleted and open ended. Don’t be in a rush to finish. Play & Delay.

Which ties in with Rory Sutherland’s Alchemy, which makes the point that just because something is irrational doesn’t mean it’s not right. Focus on what works, not what reason can justify. Most rationalization is post-facto.

He makes the case that Alchemy is not only what we do but what we don’t do. Approaching problems rationally is one club in the bag but we should also take into account psycho-logic and understand how people actually behave rather than how we think they should behave.

We need time to disengage, to think, to wander, to play.

A fun story from the book about Henry Ford:

A visitor was walking through the Ford office with Mr. Ford when they passed the office of a senior executive whose feet were up on the desk. The visitor asked why Mr. Ford kept such a man on at such a high expense. Mr. Ford replied that this man had an idea several years ago which saved him $10 million dollars and as he remembered it, his feet were in that exact position.

Another idea: The “Jacks of All Trade” heuristic makes people assume that something that does one thing is better than something which claims to do a lot of things plus that one thing.

Many world-changing products arose from the removal rather than the addition of features. Sony Walkman initially didn’t have a record function because they wanted people to understand exactly what the Walkman was for – they later introduced the record button. Google is Yahoo without all the crap, Twitter is blogging with a maximum text amount.

I see this a lot with how and why people buy things. We like someone who owns a niche.

D. A Few Things Worth Checking Out

1. Peter Thiel was recently interviewed on stage at the Hoover Institute. In this short 35 min talk Peter talks globalization, US-Sino relations, Bernie Sanders, the scourge of political correctness, and why we need to rethink the doctrine of American exceptionalism.

2. Charlie Munger was at the latest Daily Journal meeting sharing more wisdom (action starts at the 15 min mark)

3. Great article on Getting Rich that I shared with my kids.

4. Human’s love a good story. We are an animal built to love a narrative. This short & illuminating article does a good job of highlighting how the story of the Tulip Mania is mostly wrong.

E. Quotes I’m Thinking About:

Therein lies a lesson in life. I think most lives work best when you simply react intelligently to the opportunities and difficulties you encounter, and just take the results as they fall.

Some people think that by master planning, you will solve everything, but what I find is that the master plan gets a life of its own, and people believe it because they previously decided on that then, and they make all kinds of mistakes.

- Charlie Munger, 2013

The impediment to action advances action. What stands in the way, becomes the way.

- Marcus Aurelius