Howard Marks is one of Wall Street’s wisest investors. He co-Chairs Oaktree Capital Management which has approximately $100 billion in Assets Under Management. He’s also the author of The Most Important Thing: Uncommon Sense for the Thoughtful Investor. With eloquence and deep insight, his book delivers a masterclass in the philosophy and psychology of investing that is relevant to anybody interested in investing, or who is just pondering where their pension might end up! I’ve summarised two of my favorite ‘most important things’ identified in the book including here, the thinking of Marks and Nassim Taleb on the role of luck and randomness in life and business, and in another post the importance of second level thinking, a key skill for any contrarian investor.
Howard Marks is the Chairman and cofounder of Oaktree Capital Management and author of The Most Important Thing: Uncommon Sense for the Thoughtful Investor. According to the book’s sleeve, he is renowned for his insightful assessments of market opportunity and risk. He is sought out by the world’s leading investors, and his client memos brim with astute commentary and time tested fundamental philosophy. On a more personal note he’s one of my investing heroes. A value investor at heart, his broad thinking and eloquent expression is pertinent to anyone with investment and business interests both professional and personal. In The Most Important Thing he lays out, over 20 chapters, the building blocks to successful investing. All are equally important and essential “guideposts” that together create a “solid wall” that keep investors focused on the most important things for successful portfolio management.
I’ve summarised two of my favorite ‘most important things’. In this post, the importance of second level thinking, a key skill for any contrarian investor and in another post, Howard Marks (and Nassim Taleb) on the role of luck and randomness in life and business.
Thinking Fast and Slow is a book about biases of intuition. It’s ideas are so potent that they won it’s author Danuel Kahnemann a Nobel in economics. Kahneman identifies that the human brain works very well most of the time and our judgments are sound. However, it is prone to engage in a number of fallacies and systematic errors that lead to flawed opinions and adverse decision making, otherwise known as cognitive biases. We assume certain things automatically without having thought them through carefully. Kahneman calls these assumptions heuristics and, for entrepreneurs, they can be deadly. An awareness of them is the first step to countering them.
Phil ‘Shoe Dog’ Knight is the founder, former CEO and now Executive Chairman of Nike. In Shoe Dog: A Memoir by the Creator of Nike he tells his story of taking the business from humble origins, through an IPO in 1980 and onto its current $30 billion market capitalisation. To put that in perspective, if you had invested $1,000 at IPO without reinvesting dividends, your investment would be worth $729,575 today, that’s a Compound Annual Growth Rate of just over 20.7% (according to Investopedia and based on December 2015 share price).
Knight tells the story of how, what is still widely regarded to be one of the most innovative companies in the world, started and grew out of the back of a van in the early 1970s. A Stanford graduate, avid reader of the Classics and books about military strategy, and a natural introvert, he captures a wonderful story about what he calls his Crazy Idea and the determination and grit it takes to become successful beyond what he’d ever imagined. He also includes some wonderful accounts of the hustle and sometimes downright dirty tactics that it can take to overcome the odds: “you are remembered for the rules you break” is his mantra throughout the book. I’ve captured the best of the rest of his entrepreneurial wisdom in the quotes from the book below.
What does it take to be a great mentor? Talking at the launch of the Forward Partners mentor network event I shared my thoughts about mentoring entrepreneurs (Forward Partners are a leading London-based early-stage venture capital firm). I talked about the importance of listening and understanding, before giving advice, and suggested some questions that mentors can ask to helpfully open up a mentor conversation.
I started with a quote from Sal Virani’s recently released book Mentor Impact. Based on over 200 mentor interviews and extensive personal experience of working with accelerator programmes across Europe, he launches the book with a quote from one of the best mentors he interviewed (also a founder who had been through an accelerator programme). That person’s advice to other mentors: Continue reading
The startup world loves a buzzword and now we have a new one. Whilst I understand the sentiment behind it, I’m not sure it’s particularly helpful. Posts by Caterina Fake and Adam Draper about the Cockroach caught my positive attention, but on reflection I’m perplexed. A Cockroach is supposedly the name given to startup that makes it through current economic challenges. The origin of the term lies within a Paul Graham post written in October 2008. about why to start a startup in a bad economy. Since then we’ve moved on to the Unicorn phenomenon. Mark Suster has written about why he Fucking Hates Unicorns. I’ll follow up by saying that I’m not a huge fan of the Cockroach. Continue reading
The June 2015 edition of Wired magazine leads with “41 lessons from Uber’s success”. Leading industry commentators shared their opinions, but it was Josh Elman from Greylock Partners that hit it out the park. Reflecting on Uber, his advice is to: “Do one thing really well – then figure out what the second leap is”. You can say what you like about Travis Kalanick, but that’s some of the best startup advice you will ever hear.
The most successful companies did this. Elman cites Facebook’s beginnings as a private social network at colleges, before the company realized that the news feed could help propel the site into a massive multi-billion-user, multi-billion-dollar company. Uber, he says, was the same thing: Continue reading
An inspiring idea and early validation of your business model are just the start of the entrepreneurial journey. When it comes to scaling, there are a thousand and one things that you could do, but you must focus on the one hundred and one things that you can actually do with limited available cash, resources and time. In Tren Griffin’s blog A Dozen Things I’ve Learned from Steve Jobs about Business, he references one of my favourite quotes from the great man, and a second that I’ve not heard before.
I picked up my copy of The 7 Habits of Highly Effective People by Stephen Covey the other day. I remembered that one of Covey’s principles was to begin with the end in mind and I’ve been doing some detailed thinking recently about what my own end is, so to speak. It struck me that there’s some useful lessons in the book about how to grow a business in 2015.
Covey says that beginning with the end in mind is based on the principle that all things are created twice. First a mental creation, then a physical creation. He uses the example of building a house: “you create it in every detail before you ever hammer the first nail in place” he says. Continue reading
Any startup that has successfully raised follow on funding (angel and beyond) is going to find itself with external investors to keep happy and to do this effectively requires some form of governance structure to be put in place. Achieving this is not actually that complicated but if you’ve never set up a startup Board before, or put any kind of governance structure in place, then it probably feels like a daunting task. Continue reading
This post also appears on Medium.
The Lean Startup, by Eric Ries, was first published in 2011 and has since become the bible for startup entrepreneurs around the world. But recently I’ve read a good number of articles that question The Lean Startup. Criticising the lean startup approach is misled though. Why? Because that is all it is, an approach, albeit a very good one. The Lean Startup is not a prescribed formula that guarantees business success. Sadly, “management is complicated”, something that Eric Ries makes very clear in this video where he discusses how the principles and processes explained in The Lean Startup can be used to gain competitive advantage. Continue reading
Did you manage to make it to the acclaimed ‘David Bowie is’ exhibition at the Victoria & Albert Museum in London? Bowie is an incredible talent, combining undeniable song writing ability with outstanding creative flair. He is a true innovator, whose fame has real momentum through constant reinvention. Whilst the days of the Thin White Duke, Ziggy Stardust or Aladdin Sane may be over, Bowie is arguably as well known now as he has ever been.
Whilst exploring the exhibition my mind turned to thinking about what business might be able to learn from him. In a world where pop stars increasingly come and go, David Bowie’s (talent based) fame has endured. This post takes a look at why, and what lessons business can learn. Continue reading