Showing posts with label Peter Thiel. Show all posts
Showing posts with label Peter Thiel. Show all posts

Thursday, January 23, 2020

Links

"We’re more reluctant to sell [stocks we own] than most people. I mean, if we made the right decision going [in], we like to ride that a very long time. And we’ve owned some stocks for decades. But if the competitive advantage disappears, if we really lose faith in the management, if we were wrong in the original analysis — and that happens — we sell. Or if we find something more attractive." --Warren Buffett (2009)

Sit On Your Ass Investment Management (LINK)

My $2 Million Apple Mistake (LINK)

Peter Thiel calls for improving research grant, regulatory processes to enhance scientific innovation (LINK)

Today's issue of the Sinocism newsletter is out from behind the paywall....  Wuhan virus; US-China; Huawei and the UK - by Bill Bishop (LINK)

Four Trends in Consumer Tech (LINK)

Peter Attia interviews Sam Zell [on Tim Ferriss' podcast] (LINK)
Related book: Am I Being Too Subtle?: Straight Talk From a Business Rebel
Freakonomics Radio (podcast): The Opioid Tragedy, Part 2: “It’s Not a Death Sentence” (LINK)

There’s a Perfectly Good Reason to Mass-Produce Snake Venom - by Ed Yong (LINK)

Monday, December 9, 2019

Links

The Lesson to Unlearn - by Paul Graham (LINK)

A Framework for Regulating Competition on the Internet - by Ben Thompson (LINK)

Josh Wolfe and Peter Thiel on a panel at the 2019 Reagan National Defense Forum (video) (LINK)

Repo Blowup Was Fueled by Big Banks and Hedge Funds, BIS Says (LINK)

‘Fake Ebitda’ to Worsen Next Slump, $33 Billion Debt Maven Warns (LINK)

Notes From Sohn London Investment Conference 2019 (LINK)

a16z Podcast: The Stories and Code of Culture Change (LINK)

Masters in Business: Ben Horowitz Discusses Culture and Success (LINK)
Related book: What You Do Is Who You Are: How to Create Your Business Culture
Venture Stories Podcast: Investing in Marketplaces with Sarah Tavel and Nabeel Hyatt (LINK)

Acquired Podcast: TikTok (LINK)

The Evolutionary Breakthrough That Gave Mammals Their Hearing (LINK)

Paul Volcker, the Carter-Reagan Fed chairman who beat inflation, dies at age 92 (LINK)

Remembering Paul Volcker: 2005 Speech at Stanford (LINK)

Book of the day: Keeping At It: The Quest for Sound Money and Good Government - by Paul Volcker

Tuesday, October 29, 2019

Links

Buildings are bad for the climate. Here’s what we can do about it. - by Bill Gates (LINK)

Key Takeaways from the book Genius: The Life and Science of Richard Feynman (LINK)

Key Takeaways from the book Who Is Michael Ovitz? (LINK)

An essay from Matthew Ball on how the Marvel Cinematic Universe came to be the most dominant cultural force Hollywood has ever seen (Part 1, Part 2, Part 3, Part 4)

Q&A with former Facebook security chief Alex Stamos about Mark Zuckerberg's recent comments on free speech and where he went wrong, Facebook's News tab, fact-checking political ads, and more (LINK)

Invest Like the Best Podcast: Chad Cascarilla – The Future of Blockchain and Financial Services (LINK)

Peter Thiel on “The Straussian Moment” (video) (LINK)

Why Don’t We Know How to Protect Our Time? - by Ryan Holiday (LINK)

Monday, August 5, 2019

Links

"The investing public is fascinated and captured by the great financial mind. That fascination derives, in turn, from the scale of the financial operations and the feeling that, with so much money involved, the mental resources behind them cannot be less. Only after the speculative collapse does the truth emerge. What was thought to be unusual acuity turns out to be only a fortuitous and unfortunate association with the assets. Over the long years of history, the result for those who have been thus misjudged (including, invariably, by themselves) has been opprobrium followed by personal disgrace or a retreat into the deeper folds of obscurity. Or it has been exile, suicide, or, in modern times, at least moderately uncomfortable confinement. The rule will often be here reiterated: financial genius is before the fall." --John Kenneth Galbraith (A Short History of Financial Euphoria)

A Story of Courage and Hope from the Life of Charlie Munger (LINK)

Why Aren’t Investors Worried? Ask Howard Marks ($) (LINK)
WSJ: Are you concerned about investors’ enthusiasm for profitless technology companies? 
MR. MARKS: The more enthusiasm there is in the world, the harder it is to live up to people’s expectations and the easier it is to disappoint. When a stock goes from great optimism to the optimism sobering up, it’s very painful for investors. What you really want to know is how much optimism is in the price. If you can buy things where the level of optimism is unjustifiably low, that’s where you make a lot of money.
The hidden costs of unreliable electricity - by Bill Gates (LINK)

Greenhaven Road Capital's Q2 Letter (LINK)

Raoul Pal's takeaways from his two week recession watch series (video) (LINK)

David Skok of Matrix Partners: Driving SaaS Success Using Key Metrics (2016) [H/T @MinionCapital] (LINK)

Why Doctors Should Organize - by Eric Topol (LINK)

The Resilience of Analog - by Peter Osnos (LINK)

Peter Thiel's Religion - by David Perell (LINK)

Sunday, August 4, 2019

Links

Advantage Flywheels - by Max Olson (LINK)

Where Did This ‘Bull Market’ Come From, Anyway? - by Jason Zweig ($) (LINK)

Buffett Steers Clear of Buying Stocks; Berkshire’s Cash Pile Hits a Record (LINK)

Bill Murray and Warren Buffett spotted at Ted and Wally's in downtown Omaha (LINK)

Good for Google, Bad for America - by Peter Thiel (LINK)

The latest Ken Henry blow-up - by John Hempton (LINK)

The Tides Trump the Waves - by Frank K. Martin (LINK)

Focused Compounding Podcast: 103. Ian Cassel and The Power of Capacity Constrained Investing Strategies (LINK)

Techmeme Ride Home Podcast: The State of Amazon With Jason Del Rey (LINK)

The Rank Hypocrisy of Trump’s Ebola Tweets - by Ed Yong (LINK)

Incredible, must-see video: 'The Comet,' a film noir view of 67P (LINK)

Tuesday, July 16, 2019

Links

"The biggest thing, too, is to have something in the way you’re programmed so that you don’t ever do anything where you can lose a lot. I mean, our best ideas have not been better than other people’s best ideas, but we’ve never had a lot of things that pulled us way back. So we never went two steps forward and one step back. We probably went two steps forward and a fraction of a step back. But avoiding the catastrophes is a very important thing, and it will be important in the future." --Warren Buffett (2007)

The Agony of Hope Postponed, by a Value Investor (LINK)

Why 1925? - by Frank K. Martin (LINK)

Bill Nygren Market Commentary | 2Q19 (LINK)

Notes from Peter Thiel’s speech at the National Conservatism conference on July 14, 2019 [H/T @tylercowen] (LINK)

The Long View Podcast: James Montier: ‘How Do I Get Paid for Owning This Asset?’ [H/T Ritholtz] (LINK)

EdSurge On Air Podcast: Sal Khan: Test Prep Is ’the Last Thing We Want to Be’ (LINK)

A great summary of Matthew Walker's key ideas on sleep via excerpts from his podcast chat with Peter Attia (LINK)

Saturday, September 22, 2018

Links

"The number one thing that has made us successful by far is obsessive-compulsive focus on the customer, as opposed to obsession over the competitor." --Jeff Bezos (Source)

All Transcripts From The Tim Ferriss Show (LINK)

Wall Street and the “Vampire Squid”: A Brief History - by Jason Zweig (LINK)

Ray Dalio On The Economy (video) (LINK)
Related book: Big Debt Crises - by Ray Dalio (free PDF HERE)
Bruce Flatt of Brookfield on owning the backbone of the global economy ($) [H/T Linc] (LINK)

3 Investments That May Have Hit Their Peak (LINK)

A Chinese Company Reshaping the World Leaves a Troubled Trail [H/T @WallStCynic] (LINK)

‘Whatever It Takes’ - by Frank K. Martin (LINK)

Amazon and Apple at a Trillion $: A Follow-up on Uncertainty and Catalysts! - by Aswath Damodaran (LINK)

Scott Galloway | Full Video | 2018 Code Commerce (LINK)

Peter Thiel on Trump, Gawker, and Leaving Silicon Valley (video) (LINK)

Yuval Noah Harari in conversation with Terrence McNally at Live Talks Los Angeles (video) (LINK)
Related book: 21 Lessons for the 21st Century
Radiolab Podcast: Infective Heredity (LINK)
Today, a fast moving, sidestepping, gene-swapping free-for-all that would’ve made Darwin’s head spin. 
David Quammen tells us about a shocking way that life can evolve - infective heredity. To figure it all out we go back to the earliest versions of life, and we revisit an earlier version of Radiolab. After reckoning with a scientific icon, we find ourselves in a tangle of genes that sheds new light on peppered moths, drug-resistant bugs, and a key moment in the evolution of life when mammals went a little viral. 

Friday, February 16, 2018

Links

I had a great time in L.A. this week, and enjoyed getting to see Charlie Munger in-person holding court at the Daily Journal Annual Meeting. It appears we are still awaiting a video to be released, but there are some notes HERE (and someone recorded an audio of the meeting HERE). And I agree with my friend Phil that one of the more interesting pieces was also Peter Kaufman's brief remarks that Munger asked him to give. As Phil posted on Twitter: 
My favorite part of the $DJCO meeting yesterday was actually from Peter Kaufman. His "Five Aces" of investment management:
1. Total integrity.
2. Actual, deep fluency in the subject.
3. Fee structure w/two-way fairness.
4. Uncrowded investment space.
5. Long runway.
I think he then also added (roughly) that if you find someone who fits that criteria, give them as much as you can afford to give them. 

***

"There are worse things than having people misunderstand your work. A worse danger is that you will yourself misunderstand your work." - Paul Graham, "Hackers and Painters" (Source)

Making Sense vs. Being Right - by Morgan Housel (LINK)

Tony Hsieh of Zappos on Hiring for Culture (LINK)

Wild, But Not Crazy - by Clifford Asness (LINK)

The end of the low-volatility regime (LINK)

Tech Luminary Peter Thiel Parts Ways With Silicon Valley ($) (LINK)

Jim Chanos on the return of choppy markets, Tesla, and the 'rent-seeking behavior' that's hurting our economy (video) [H/T Josh Brown] (LINK)

This Short Seller Pressed ‘Tweet.’ Then the FBI Showed Up (LINK)

Matt Levine chats with Tyler Cowen (audio/podcast) (LINK)

Exponent Podcast: Episode 141 — The Mailbag Episode (LINK)

These Crickets Can’t Sing Anymore—But They’re Still Trying - by Ed Yong (LINK)

Tuesday, August 2, 2016

Links

Warren Buffett Endorses Hillary Clinton in Omaha (Full Speech) (video) (LINK)

Microcap Activism is a Hard Road to Travel - by Jeff Gramm (LINK)
Related book: Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism
The Activist and Herbalife: Just Maybe Ackman’s Right - by Andrew Ross Sorkin (LINK)

Theranos Makes Case to Laboratory Experts (LINK)

Horizon Asia Opportunity: Q2 2016 Commentary (LINK)

The Brooklyn Investor blog with some scary (and not-so scary) charts (LINK)

Peter Thiel on the Characteristics of Monopoly (LINK)
Related book: Zero to One
Button Salesman Discovers Most of Life on Earth: True Story (LINK)
Related books: 1) I Contain Multitudes: The Microbes Within Us and a Grander View of Life; 2) The Upright Thinkers: The Human Journey from Living in Trees to Understanding the Cosmos
How the DNA Revolution Is Changing Us (LINK)

Thursday, May 26, 2016

Links

Newspapers haven't 'cracked code,' Buffett says (LINK)

Sugar Is So Scarce in Venezuela That Coca-Cola Will Stop Production (video plays) [H/T @rationalwalk] (LINK)

Insurers Seek Big Premium Boosts: Large health plans in some states are seeking to raise rates by 20% or more (LINK)

SEC to Alibaba: “Open (your books) Sesame!” (LINK)

Peter Thiel, Comic Book Hero - by Ben Thompson (LINK)

Video clip of 1967 Reagan-RFK debate (10 mins.) [H/T @BeschlossDC] (LINK)

Meerkats Mysteriously Know to Outgrow Rivals (LINK)

A Shocking Find In a Neanderthal Cave In France (LINK)

Book of the day [H/T @iancassel]: Shoe Dog: A Memoir by the Creator of Nike

Thursday, April 14, 2016

Links

Performance vs. Outcomes (LINK)

Alec Ross: "The Industries of the Future" | Talks at Google (LINK)
Related book: The Industries of the Future
Peter Thiel on China, Tech, Education, and Diversity (video) [H/T Will] (LINK)

Bill Gates on CNBC (article and videos) (LINK)

Reimagine Retail: A Conversation with Kathleen McLaughlin and Walter Isaacson (video) (LINK)

Documents Undercut U.S. Case for Taking Mortgage Giant Fannie Mae’s Profits [H/T Linc] (LINK)

Facebook, Phones, and Phonebooks - by Ben Thompson (LINK)

Regulators propose banning Theranos founder for at least two years [H/T Matt] (LINK)

Chip, Implanted in Brain, Helps Paralyzed Man Regain Control of Hand (LINK)

Monday, November 30, 2015

Links

A LETTER TO MY UNBORN GRANDCHILDREN - by Jason Zweig (LINK)

Will there ever be another Charlie Munger? (LINK)
Related book: Charlie Munger: The Complete Investor
Sanjay Bakshi: The Multiplication Rule (LINK)

Bill Gates launches multi-billion dollar clean energy fund (video) [H/T Will] (LINK)

The New Atomic Age We Need - by Peter Thiel (LINK)

Talks at Google: Pedro Domingos discusses his book The Master Algorithm (video) (LINK)

Investing quote of the day, via Howard Marks in The Most Important Thing (longer excerpt HERE), and similar to the quote I posted this weekend:
Skepticism is what it takes to look behind a balance sheet, the latest miracle of financial engineering or the can’t-miss story. . . . Only a skeptic can separate the things that sound good and are from the things that sound good and aren’t. The best investors I know exemplify this trait. It’s an absolute necessity. 

Wednesday, November 4, 2015

Links

Latticework of Mental Models: Twaddle Tendency (LINK)

Charlie Munger: Valeant Isn’t Enron or American Express [H/T Linc] (LINK)

Buffett's BYD Vs. Musk's Tesla: Electric Vehicle Race Still Undecided [H/T Linc] (LINK)
Related book: The Great Race: The Global Quest for the Car of the Future
Baupost Is Said to Decline 3.8% in September on Energy, Biotech [H/T Will] (LINK)

DealBook Conference 2015 videos:
Stanley Druckenmiller 
Carl Icahn 
Peter Thiel and Chris Sacca  (Related book: Zero to One)
Reed Hastings (Netflix) 
Max Levchin (Affirm)
James Gorman (Morgan Stanley) 
Gary Cohn (Goldman Sachs) 
Muhtar Kent (Coca-Cola) 
Ginni Rometty (IBM) 
Nico Sell (cybersecurity) 
John Carlin (cybersecurity) 
Al Gore
What makes a historical arsonist? A conversation with Dan Carlin. (podcast) (LINK)

El Niño Paints the World's Driest Place with Color (LINK)

TED Talk - Patrícia Medici: The coolest animal you know nothing about ... and how we can save it (LINK)
Although the tapir is one of the world's largest land mammals, the lives of these solitary, nocturnal creatures have remained a mystery. Known as "the living fossil," the very same tapir that roams the forests and grasslands of South America today arrived on the evolutionary scene more than 5 million years ago. Today, threats from poachers, deforestation and pollution, especially in quickly industrializing Brazil, threaten this longevity. In this insightful talk, conservation biologist, tapir expert and TED Fellow Patrícia Medici shares her work with these amazing animals and challenges us with a question: Do we want to be responsible for their extinction?

Thursday, April 2, 2015

Links

For those interested, Matt and I at Boyles were included in the latest issue of Value Investor Confidential, a subscription newsletter that allows one to sign up for a 2 Week Free Trial to test the service. 

Jason Zweig reposts an old Ben Graham speech masterpiece (LINK)

Buffett: No stock market bubble, but few bargains (video) (LINK)

Farnam Street: Ray Dalio: Open-Mindedness And The Power of Not Knowing (LINK)
Related book: Learn or Die [This book was also released on Audible a couple of days ago.]
Howard Marks on Bloomberg TV, discussing the topic of his last memo (video) [H/T ValueWalk] (LINK)

Value Investing Podcast: Guy Spier on The Education of a Value Investor (LINK)

Tyler Cowen talks to Peter Thiel (video) (LINK)
Related book: Zero to One
Hayman Capital Targets Shire in Next Pharma Battle (LINK)

Bruce Berkowitz: Years after the global financial crisis, William Isaac and Senator Bob Kerrey address questions surrounding Fannie and Freddie's Conservatorship. (LINK)

The April issue of the Mutual Fund Observer (LINK)

Research paper: The mortality of companies (LINK)
The firm is a fundamental economic unit of contemporary human societies. Studies on the general quantitative and statistical character of firms have produced mixed results regarding their lifespans and mortality. We examine a comprehensive database of more than 25 000 publicly traded North American companies, from 1950 to 2009, to derive the statistics of firm lifespans. Based on detailed survival analysis, we show that the mortality of publicly traded companies manifests an approximately constant hazard rate over long periods of observation. This regularity indicates that mortality rates are independent of a company's age. We show that the typical half-life of a publicly traded company is about a decade, regardless of business sector. Our results shed new light on the dynamics of births and deaths of publicly traded companies and identify some of the necessary ingredients of a general theory of firms.
Can you win at anything if you practise hard enough? [H/T @tferriss] (LINK)
Related book: Bounce: Mozart, Federer, Picasso, Beckham, and the Science of Success
The Healing Power of Your Own Medical Records (LINK)

The latest Nature Podcast (LINK)

I Followed My Stolen iPhone Across The World, Became A Celebrity In China, And Found A Friend For Life [H/T Bill Bishop] (LINK)

I'm continuing to enjoy the book Sapiens: A Brief History of Humankind. While I had linked to this last month, I had forgotten to watch it, and now that I'm into the book I thought I'd link again to: Edge #437 - Yuval Noah Harari and Daniel Kahneman: A Conversation
DANIEL KAHNEMAN: Before asking you what are the questions you are asking yourself, I want to say that I've now read your book Sapiens twice and in that book you do something that I found pretty extraordinary. You cover the history of mankind. It seems to be like an invitation for people to dismiss it as superficial, so I read it, and I read it again, because in fact, I found so many ideas that were enriching. I want to talk about just one or two of them as examples. 
Your chapter on science is one of my favorites and so is the title of that chapter, "The Discovery of Ignorance". It presents the idea that science began when people discovered that there was ignorance, and that they could do something about it, that this was really the beginning of science. I love that phrase. 
And in fact, I loved that phrase so much that I went and looked it up. Because I thought, where did he get it? My search of the phrase showed that all the references were to you. And there are many other things like that in the book.

Monday, October 27, 2014

Links

James Montier: Shareholder Value Maximization: The World's Dumbest Idea? [Montier starts in the video around 5:30] (LINK)

The Apollo Asia Fund's Q3 report (LINK)

Hussman Weekly Market Comment: Fast, Furious and Prone to Failure (LINK)

Jason Zweig: So You Think You’re a Risk-Taker? (LINK)

Bill Ackman and His Hedge Fund, Betting Big [H/T Will] (LINK)

Jim Koch: The Steve Jobs of Beer (LINK)

Jared Diamond talks with The Guardian (LINK)
Related books, HERE.
On the Obsessive Focus of Bill Gates (LINK)
One trait that differentiated [Gates and Allen] was focus. Allen’s mind would flit between many ideas and passions, but Gates was a serial obsessor. 
“Where I was curious to study everything in sight, Bill would focus on one task at a time with total discipline,” said Allen. “You could see it when he programmed. He would sit with a marker clenched in his mouth, tapping his feet and rocking; impervious to distraction.”
.....
Related book: The Innovators
Related previous post: Bill Gates quote from Charlie Rose interview (or, how the world's best companies are built by fanatics)
a16z Podcast: The (Definite) Optimism of Peter Thiel (LINK)
What is Silicon Valley’s greatest reigning monopoly? How did PayPal manage to emerge from the dotcom implosion? Can you build a great tech company and keep it private forever? And how did Elon Musk manage to wreck an uninsured, million-dollar car with Peter Thiel in the passenger seat speeding on the way to a VC meeting? Marc Andreessen and Thiel discuss all of it in a wide-ranging conversation that toggles off the topics in Thiel’s new book “Zero to One.”
Munger Gives $65 Million to U.C. Santa Barbara [H/T Daniel] (LINK)
Charles Munger, the vice chairman at Berkshire Hathaway Inc. (BRK/A), is giving $65 million to the University of California at Santa Barbara for a housing facility where visiting scientists can gather to discuss physics. 
Construction of the three-story residence is expected to be done in two years, the university said in a statement. The gift by Munger, the long-time business partner of Warren Buffett, is the largest single donation in the school’s history, according to the statement. 
“Once you see what a combination of calculus and Newton’s laws will do and the things you can work out, you get an awesome appreciation for the power of getting things in science right,” Munger, 90, said in the statement. “I don’t think you get a feeling for the power of science — not with the same strength — anywhere else than you do in physics.”
What Will Set Warren Buffett’s Company Apart When He’s Gone? (LINK)
Related book: Berkshire Beyond Buffett
Buffett’s Model Not Challenged by IBM Loss (video) [H/T Will] (LINK)
Oct. 21 (Bloomberg) -- Lawrence Cunningham, author of “Berkshire Beyond Buffett,” talks with Betty Liu about how the value lost in IBM impacts the effectiveness of Warren Buffett’s investment plans. He speaks on “In The Loop.”
Talks at Google: John Mihaljevic, "The Manual of Ideas: How to Find the Best Investment Ideas" (video) (LINK)
Related book: The Manual of Ideas: The Proven Framework for Finding the Best Value Investments
Steve Keen: Time for a Copernican Revolution in Economics (LINK)
Related book: Debunking Economics

Thursday, October 23, 2014

The biggest secret in venture capital...

From Peter Thiel via Zero to One:
The biggest secret in venture capital is that the best investment in a successful fund equals or outperforms the entire rest of the fund combined. 
This implies two very strange rules for VCs. First, only invest in companies that have the potential to return the value of the entire fund. This is a scary rule, because it eliminates the vast majority of possible investments. (Even quite successful companies usually succeed on a more humble scale.) This leads to rule number two: because rule number one is so restrictive, there can't be any other rules. 

Monday, October 20, 2014

Peter Thiel on network effects

From Zero to One:
Network effects can be powerful, but you'll never reap them unless your product is valuable to its very first users when the network is necessarily small....Paradoxically, then, network effects businesses must start with especially small markets. Facebook started with just Harvard students--Mark Zuckerberg's first product was designed to get all his classmates signed up, not to attract all people of Earth. This is why successful network businesses rarely get started by MBA-types: the initial markets are so small that they often don't even appear to be business opportunities at all. 

Monday, October 6, 2014

Links

Bill Gates: Ebola, Beyond the Headlines (LINK)

FRMO Corporation Annual Meeting of Shareholders Transcript [H/T ValueWalk] (LINK)

Peter Thiel Speech At Stanford (video) [H/T ValueWalk] (LINK)
Related book: Zero to One
Jason Zweig: Look Who’s ‘Trading’ Commodities (LINK)
In the government’s bid to crack down on risky trading, charities and other nonprofit organizations may become collateral damage. That is causing alarm in the nonprofit world and should be a concern for donors.
Black Wednesday - a documentary about the crash of the pound sterling in 1992 (video) [H/T Cook & Bynum] (LINK)

Barron's interviews Bill Gross (LINK)

Barry Ritholtz interviews Jack Schwager (LINK)
Related books, HERE
Marc Andreessen on the latest a16z podcast (LINK) [He also recommended 2 books on this podcast: Doing Capitalism in the Innovation Economy which he called maybe the best book on the theory of venture capital; and Startup Rising: The Entrepreneurial Revolution Remaking the Middle East.]

PHILOSOPHICAL ECONOMICS: Free Banking on a Bitcoin Standard–The State Prepares its Death Blow (LINK)

Brian Arthur is coming out with a new book at the end of the month: Complexity and the Economy

Hussman Weekly Market Comment: Dancing Without a Floor (LINK)
A final note: There is a danger in ignoring the concerns of value-conscious investors as a bubble proceeds. The danger is that the longer these concerns are “proven wrong” by further advances, the more severely they are likely to be proven correct by an even deeper loss over the completion of the cycle. Roger Babson offers a useful lesson in that regard. Babson, whose first rule of investing was to “keep speculation and investments separate,” is known not only for founding Babson College in Massachusetts, but also for a speech at the National Business Conference on September 5, 1929, at the peak of the market, saying “sooner or later a crash is coming, and it may be terrific.”
The back-story, however, is that Babson’s presentation began as follows: “I’m about to repeat what I said at this time last year, and the year before…” The fact is that Babson had been “proven wrong” by an advance that had taken stocks relentlessly higher during the preceding years. Over the next 10 weeks, all of those market gains would be erased. From the low of the 1929 plunge, the stock market would then lose an additional 75% of its value by its eventual bottom in 1932 because of add-on policy errors that resulted in the Great Depression. As a side note, those policy errors were not that banks were allowed to fail, but that policy makers allowed them to fail in a disorganized way, forcing loans to be called in rather than taking banks into receivership and restructuring existing debt. It's a distinction our own policy makers still haven't learned, and simply obscured and papered over in the 2008-2009 crisis through distortionary monetary policy, bailouts, and FASB accounting changes. As a consequence, the debt overhang is still very much intact, as the Center for Economic Policy Research recently warned in its 16th annual Geneva Report. But that's now a problem for another day.

Friday, October 3, 2014

Peter Thiel on proprietary technology

Proprietary technology is the most substantive advantage a company can have because it makes your product difficult or impossible to replicate. [e.g. Google's search algorithms] 
...As a good rule of thumb, proprietary technology must be at least 10 times better than its closest substitute in some important dimension to lead to a real monopolistic advantage. Anything less than an order of magnitude better will probably be perceived as a marginal improvement and will be hard to sell, especially in an already crowded market. [e.g. Amazon offered at least 10 times as many books as any other bookstore.] 
The clearest way to make a 10x improvement is to invent something completely new. If you build something valuable where there was nothing before, the increase in value is theoretically infinite. 
...Or you can radically improve an existing solution: once you're 10x better, you escape competition. [e.g. PayPal made buying and selling on eBay at least 10 times better.] 
...You can also make a 10x improvement through superior integrated design. [e.g. iPad vs. all the previous versions of the tablet]