What I read and found interesting this month, along with my thoughts on them. 

Podcasts

“If it on the business pages, then it is too late”

Richard Rainwater’s profile on Rainmakers podcast by Rame Adi. Link to podcast episodes with transcript: first episode and second.

Rainmakers, by host Rame Adi, is a new podcast that I have been impressed by. Think of it as the love child of David Senra’s Founders Podcast with Byrne Hobart’s The Diff. This is business history done well. If you love Founders Pod, then you will like this!  I came across the podcast after I first heard about Richard Rainwater in a podcast of Graham Duncan, and then tried to find more about him online. Richard Rainwater was widely considered to be an astute investor, and also an equally impressive backer of investor / managers (Duncan references him in the podcast in the latter context). Rainwater is who is profiled in the first two episodes of the podcast. These are excellent, and well researched episodes. Recommended.

Rainwater: “My objective is to capitalize on major one time transformation in an industry or company….Most of the time, the critical information that enables me to identify these significant changes is found not on the business pages of the newspaper but on the front page. (In fact, if  industry changes are highlighted on the business pages, it is usually too late for my kind of investing).”

…

Rame Adi: Rainwater’s network was the most important part of his investing success. He focused so much on being in deals and would notoriously be in hundreds of calls throughout the day seeing what ideas people had for him to pursue. He would also go out to New York all the time for the Basses when he started in the 70s and would travel throughout the country to meet with any manager or banker that can give him a lead on an idea. As his image in the financial community grew he did not need to travel but instead would have investors constantly call him or visit his office. He did not treat his office as some sort of secret place where he works on his investments, he was very open. Almost too open.

His secretaries would line up meetings throughout the day and empty conference rooms on his floor would be treated as a doctor’s office with multiple investors waiting per conference waiting to make their pitch to him. In the 80s and 90s there seemed to be no barrier into actually getting a meeting with Richard Rainwater. Many of the people that did deals with him when he went off on his own all got jobs by sending letters to his office. Ken Hersh describes this moment very clearly when he sent his own letter asking Rainwater for a job where Rainwater would cold call him back around a week later asking to meet with him. Having this open office of sorts allowed Rainwater to see deals of all kinds while meeting experts in various fields should he actually seek their expertise. Without this constant flow of information I don’t think Rainwater would have made a lot of the deals he ended up doing.

“You are advertising to a moving parade, not a standing army.”

David Senra on the Dialectic Podcast w Jackson Dahl

This is easily one of the top podcast episodes I read this year. So much to unpack here, like a suitcase that you were struggling to close after purchasing too many books during a trip. Weeks after I originally read it and posted about it, I revisited it for writing this post, and it still felt fresh. A lot of the episode’s resonance to me has to do with David Senra himself. He is fascinating to me, and I daresay a lot of us, because of how he has pared his life down to utter simplicity, built around what he truly enjoys doing. That is, read one or more great biographies of a figure, and talk about it for a (riveting) episode a week. The equation is 40 yrs of a working life, 40 hrs of reading about it, and 40mins of his episode, as he described it once.

The same week this episode dropped, there was a David Senra episode with Tim Ferriss as well. Though on the whole I preferred this one (Dialectic). Got a lot more insights here, I felt. Some of these insights: 

– Senra is one of the biggest listeners of his podcast, including past episodes. It is the equivalent of athletes watching their game tape.

– “You are not advertising to a standing army. You are advertising to a moving parade” – David Ogilvy. Senra thinks we all don’t repeat enough. The audience is changing. People forget. Republish your old stuff, he says. Repetition doesn’t spoil the prayer.

– When you have an outlier thought, say it. Not everyone will like it, but the few who do will love it deeply.

– You need to sit with content longer. He says “I’m anti-redlining information fast or listening to podcasts on 3x speed. The point is you need to sit with it longer….You can rush through sex, but that’s not the point. Your goal when you’re going to make love is probably not, “Let’s see if I can get this over within two minutes.” That’s not the point.”

– Do a business based around an activity you like doing for its own sake; in Senra’s case it was reading. If you don’t then you will give it up when you get richer, or will get bored with it. If so, you lose the power of compounding that comes with sticking to it over a long period of time.

– Commitment is freedom: “I think most humans are very scared to commit to something. They want to maintain optionality….You’re not going to distract me, because I know that 99% of the people on the planet cannot focus on a single thing for a long period of time. That’s why 99% will never be great at what they do. It is very important for me to be really great at what I do, if not the best in the world at what I do. As someone who is very freedom-seeking, the most freeing thing is commitment. When you commit, the other stuff drops away and you’re free to run.”

Senra: “You see this with Peter Thiel. He goes and gives talks on the Antichrist and other stuff. What we want from him is to repeat *Zero to One* over and over again. If you only read one book on startups, it’s obviously the book.

There’s this desire… Humans crave novelty: “No, I created great ideas, so now I have to do something new.” No, you have to repeat it over and over again. I’m fascinated with people that do things for a long period of time. I’m not interested in the “start, scale, sell.” Go do that. I’ll just keep dominating for decades.

….

I contemplate what causes things to last and endure for a long period of time. There’s this great line in *Poor Charlie’s Almanack*. Charlie’s son says that he thought his dad thought durability was a first-rate virtue. That’s a fucking powerful idea. Durability is a first-rate virtue. In this modern environment, we fetishize growth at the expense of durability, which is a massive mistake.

If you analyze the people that last a long time—what has Buffett been talking about for 60 years? What has been important to Michael Dell for 40 years? I just did this crazy episode on Elon Musk. You wouldn’t expect it from him; you think he’s running seven companies, obsessed with technology. He repeats the same thing so much that the executives in the meeting can mouth the words before he says it.

So why are you jumping from idea to idea to idea? You have to identify a handful of timeless principles, repeat them, work on them, and make them the center of your work for decades. That’s how greatness is built.”

Excerpts from the podcast that I thought were particularly relevant linked here. 

Are the Humanities less audacious in scope than before?

David Brooks on Conversations with Tyler

One of those really hard to categorise / summarise podcasts. In fact the best writing is one that is hard to summarise (think I heard that from Taleb). Brooks and Cowen cover a wide range of topics but the key themes are the decline of audacious works (novels, paintings, music) in the humanities today (tech is now the sphere where audacity is widely seen), the underweighting of emotions and passions as opposed to reasoning and rationality, the fraying of the civic fabric in USA in recent times and why he thinks this is the rupture phase and will be followed by a repair phase. A wide range of topics and one that is hard to pin down, in the best way possible. Highly recommended.

Brooks: Well, go to the 19th century, to the glory days. Charles Dickens literally changed the imagination of Britain by altering how people saw poverty. George Eliot literally changed the moral life of Britain, because as religion was fading, she presented another moral structure that people could sign on to. These novelists had these huge effects. …We now live in a moment of great public tumult, a moment when our interior lives are directly affected by the trauma of our public lives. If there’s a novel that’s capturing what it’s like to live in this era, I’m not aware of it. I think this would’ve been a great era for a Balzac, for a Tom Wolfe, for that kind of social realist novel. In my view, the audacity is not there. In this column, I don’t know what—

Cowen: Audacity is the scarce factor in your account?

Brooks: I think it’s a scarce factor. I don’t know what you would think of this, but I think back to when I was a teenager in the ’70s, and I look at the movies like Apocalypse Now, The Godfather—they seem big audacious. I listen to the rock songs I was listening to, “Free Bird,” “Stairway to Heaven,” “Bohemian Rhapsody” —they seem just more audacious.One of my heroes is an art critic named Kenneth Clark. He goes through the great high points of Western art. Those high points are defined by audacity. You look at the Renaissance—that was audacious. You look at the Russian novels—that was audacious. I think we’re just not at a moment where that kind of self-confidence—which is very hard to manufacture for one person; it takes a whole group—I just think we’re not at that moment.

Cowen: Building AI is audacious, right? Trump, whatever you think of him—he’s clearly audacious. You wouldn’t say the quality has left our culture, so why has it left the novel?

Brooks: I think it’s left the humanities. I think the humanities have been backfooted, in part because, again, internet, all that stuff, the obvious stuff. ….I think that big ambitiousness is less encouraged now for whatever reason.

Link to excerpts from the podcast episode I found particularly interesting.

The venture arrogance score

Josh Kopelman, First Round Capital, on Uncapped Podcast w Jack Altman

First Round Capital is one of the, if not the leading seed fund(s) in USA. Josh Kopelman who cofounded it just over two decades ago, makes an appearance on the Uncapped Podcast. There isn’t anything dramatically new here barring of course the venture arrogance score concept that Josh introduced. That, and a short passage on how they have a role of a non-investing partner, Brett Burson, who manages the firm, was interesting. They think of investing (or not investing) decisions as one of the key products that gets shipped by the fund, Brett’s role is to help improve decision-making as well as help create platforms and run initiatives that aid in the form being better able to serve the founders.

Josh: “ I’ve created something which I don’t think I’ve shared publicly. Let’s call it the venture arrogance score. All right. So you take a fund, say that fund is a $7 billion fund. Then you look and say, so you need two numbers to understand any fund’s business model. First is how large is the fund? 7 billion. The next is what percent of a company do you think they’ll own on exit? And so like, are they going to own 30% like they did 20 years ago? Or are they going to own 8% or 10%? And like today it’s trending to 10%.

So if you have a $7 billion fund and you’re going to own 10% of the companies that you’re in on average, you just figure out, okay, for each turn of the fund, that’s $70 billion, right? Like the founders need to create $70 billion worth of value in your basket for your 10% to be worth 7 billion. So if you want to, now, if you’re still aspiring for a 4x gross 3x net, which is sort of what like the venture long-term aspirational goal was, you’re now saying, okay, so for each turn of the fund, that’s $70 billion, so call that $280 billion. And here’s where the arrogance scale comes in.

Because say you raise that fund every three years, you know, that’s roughly $90 billion a year of exit value that you hope to extract out of the market. And how much is exiting total? Well, like the last decade was the best decade ever. Yeah. $1.9 trillion total of US venture. And that includes pharma and everything, like semiconductors. So that’s an average of $180 billion a year. 

So it’s like, you need to catch half (50% of $180b = $90b).  By the way, to my knowledge, there hasn’t been a venture fund that has ever repeatedly caught over 10%. So you’re saying that you and your fund in this hyper- competitive environment with 10,000 funds and 20,000 plus check writers, you are going to capture half of all venture value created every year for the three-year period in your fund just to generate that. 

The venture arrogance is trying to figure out what percent of total value created by all founders anywhere in the United States you have to capture for your fund model to be successful.”

Link to excerpts from the podcast episode I found particularly interesting.

Don’t give a job offer to a great candidate on a friday!

Nakul Mandan, Audacious Ventures on the IO Podcast w Tyler Hogge and Sterling Snow

Good episode with specific actionable input on how to run a high quality hiring process by Nakul Mandan of Audacious which gives talent a seat at the high table. He says: recognise that if you are after a great candidate, there will be a lot of competition for them – you have to be continuously selling your co, and inspiring them emotionally, not just logically. There should be high clarity on the job role (use the Mission – Outcome – Competencies framework). Make sure you have a decent pipeline (at least 10 good candidates says Nakul), and have a sharp intentional vetting process. Finally remember to close with urgency, and never give an offer on a friday.

Nakul: “Once you are ready to make the offer, that last 72 hours is key. That’s when they are. So I’ll give you a tactical example. So if I like a candidate, even when we are recruiting at Audacious and I will never let a Friday happen where they’re going into the weekend, they don’t know where they exactly stand. Why? Because weekends is the time when a candidate is talking to their mentors, their plus ones, whoever matters to them in their decision. Or they’re just mulling it over, right? So if you’re letting the weekend happen when some other offer is on their mind or something else, then you’re wasting that time. And whoever wins the weekend, if you’re especially trying to close in closing mode, you should just be all over that weekend. The more time they’re spending on you, the less time they’re spending on something else. Now that’s a competitive, let’s say it’s a competitive situation. Then what you do is you get three of your own supporters, text the person, right? And respectfully text the person and keep the excitement high. So you don’t take two. But if it’s a competitive offer and there are three offers, whoever wins that time, no matter what the candidate says, whoever wins the mind share, whoever wins the weekend, wins the candidate.”

Link to excerpts from the podcast episode I found particularly interesting.

Other podcasts I enjoyed

Dwarkesh Patel on the Uncapped Pod with Jack Altman explains why AI is not particularly useful to him, nor anyone who needs the job to be 100% perfect. The fundamental issue he says why AI is not better than a human is that the human is continuously learning on the job while the AI’s learning is limited to a finite time frame (typically in session, and after that it loses context). AGI he says is still some time away, at least a decade.

Rajeev Samant on the Blume Podcast with host Karthik Reddy. I am biased of course, but I loved this episode. The alcohol category is one of the hardest ones to build / launch in India and in that respect what Rajeev Samant was able to do was nothing short of outstanding. He in fact had to write out the policy paper under which led to the issue of a license to manufacture wine. The entire story of how he left Oracle to come back to India and settle on wine making as his profession was a riveting read.

Joe Leimandt, the founder of Trilogy Software, came on Colossus’ Invest Like The Best podcast to talk about Alpha School, the AI-led reimagined school he has founded. Fascinating episode, and there is an accompanying article as well that covers similar ground. I shared this with a friend who has run and sold a K12 school and he seemed sceptical but there is lots of buzz about it on the interwebs, and overall I got the feeling that the hype seems somewhat legit. If you want to explore further check out this review of Alpha School.

Peter Lacaillade, SCS Financial on Colossus Invest Like The Best. Fascinating glimpse into how an elite GP looks at venture capital and other alternative asset management segments, such as Search Funds and Bootstrapped Growth Equity. I found the Search Fund segment fascinating. I see the Search Fund sector today as akin to how venture capital was in the ‘70s / 80s. The equivalents of Don Valentine and Sequoia for the Search Funds are emerging, and in the coming decade, I think it will occupy similar mindspace to what early stage venture is enjoying. Link to excerpts I found interesting.

I have really enjoyed reading the How I Write podcast transcripts. The ones featuring Jimmy Soni, who is writing a book on Kobe Bryant, and this one where Dan Wang talks about his book ‘Breakneck’ on USA v China, were both enjoyable. (Excerpts from the Dan Wang podcast episode transcript I found interesting here)

Articles

Why don’t all restaurants invest in training waitstaff?

Aligning Business Models to Markets by Kevin Kwok. 

This is one of Kevin’s older pieces broadly around the theme of how industry structure shapes business model approaches. He illustrates this through two examples. The first is from the restaurant industry, where he describes restaurant conglomerate Union Square Hospitality Group (USHG), which practices a service-heavy approach, supporting it by investing heavily in service training. Kwok, asks why other restaurants don’t do it, and draws out that USHG can afford the higher than usual service costs as it can offer its staff the luxury of being able to move within the different restaurant brands in its portfolio, and thus try and ensure that they can retain the trained staff within their group. The reduced churn helps in lowering overall costs, and getting better human capital leading to improved service, and better business. The second example he cites is of the gaming industry where always-on internet connectivity has shaped the gaming business model first towards subscriptions / recurring payments, and then towards a freemium model where the game is free to play, and is monetised via in app purchases.

“Danny Meyer and the Union Square Hospitality Group are a good example of how we often discuss the first order cause of things, without understanding the structural systems shaping them. People reading Setting the Table often talk about being more customer focused. But they don’t understand that it’s not about trying harder. It’s about setting up a their business model to align with prioritizing customer service. And identifying spaces where that can happen. Similarly, I recently read a question by Jack Altman on advice. My personal view on advice is that most people suffer from the same first order mistake. They say what they did that worked. But they don’t elaborate on the underlying structural features of their situation that would need to be true for their advice to be applicable in a new situation. But we often see people say advice isn’t useful, because nobody is discussing these structural alignments. It’s like watching someone try to uproot a plant to the desert–without paying attention to what soil, sun, and watering conditions it thrived in. And then be shocked it died.”

Container theory 

Container Theory: Behaviour is a Liquid, by Chris Sparks

Create supportive conditions that help you do more of what you want to do (laying out the morning running gear out at night) and less of what you want to avoid (remove sugar from the house).  These conditions are containers that help shape our behaviour. Eventually as we do these desired actions more (or reduce undesired actions) these actions become part of our identity itself. Eventually we don’t need these enabling conditions or containers to express our identity. Being a runner or being metabolically healthy becomes core to our identity itself.

“… years of working closely with top performers shattered this myth. The compounding advantage isn’t discipline—it’s the intentional cultivation of conditions that support excellence.

This morning, I had a great workout. Last night, I laid out workout clothes and was accountable for meeting a friend at the gym who happens to take his workouts very seriously. It is probably a good idea to recreate those conditions.

The same principle applies to not-so-good outcomes. One night, while traveling, I raided the candy in the hotel minibar. Upon reflection, I didn’t eat a full dinner, and the candy was left dangerously close to the bed. I’ll experiment with hiding the snacks in the closet for my next stay.

When shaping your container, act as if you have free will. When you’re taking action, assume you don’t.

Make what I want to do more, easier to do. Make what I want to do less, harder to do.

Instead of pursuing goals directly as a first-order cause, I encourage goals to happen as a second-order infinite game. The results appear magical, but the process resembles gardening more than wizardry. A gardener doesn’t force the plant to grow—they cultivate ideal growing conditions and allow nature to take its course. “

In the age of AI, VCs should focus on access that can’t be automated

Are We Underestimating How AI Will Change Private Markets? by Donald Lee-Brown and Terran Mott

Good piece on how AI is influencing and impact private market investing. TLDR: When everybody has AI, and every analyst is using Harmonic and god knows what else to source on steroids, then alpha moves to ‘access that can’t be automated’, i.e., whatever cannot be parsed and analysed using AI tooling is the read advantage to have.  

This example below of how Bloomberg democratised information, leading to the alpha then moving to being liked, is going to repeat in the early stage VC game too, e.g., If every analyst is going to ping a founder who puts ‘Stealth Mode’ or ‘Building something new’ on his / her Linkedin Profile, then the alpha now is to get the founder to call you before they even start up.

“…after Bloomberg democratized market information, trust mattered more. In a world where other advantages were vanishing, cultivating personal relationships was an enduring way to maintain access to clients. After Bloomberg, he explained that entertainment budgets “actually went up, because dealers realized [that] now I need that customer to want to call me, instead of the other way around. All of a sudden, I need them to call me. Technology definitely drove that … As we got into a Bloomberg-driven world where everybody had all the information, then you were trying to get an edge by spending money to get the client to like you, to trust you.”

…

“As more and more firms adopt these low-cost tools, the ability of these tools to reliably deliver opportunities will get increasingly diluted. At some threshold, their primary contribution will be noise. A founder who receives one or two cold inbounds personalized with AI may reply; a founder who receives hundreds of such messages predicated on the same leading indicators will almost certainly not. This pattern has already played out in enterprise sales and hiring. We think that adoption of automated, infinitely personalized sourcing tools in PE and VC over the next few years will lead to the same pattern. In turn, the ability of a firm or investor to create access that can’t be automated will become critical. Through this lens, firms that have already built this through a strong product or brand stand to increase their dominance.”

Status games

Palantir’s Weirdest Book Recommendation by Mario Gabriel

Good read on the weird book that Palantir includes in the incoming employee book bag – ‘Impro’ by theatre guru Keith Johnstone. Mario Gabriele reviews ‘Impro’ after wondering “Why would a vendor to the military ask its new recruits to study the ponderings of a former associate director of London’s Royal Court Theatre?” At the core of it, he says Impro helps you decode the status games being played in social & corporate settings, incredibly useful for a FDE to navigate the client’s organisation and get to the outcome.

“If there is one thing to take away from Impro, this is it: status transactions occur everywhere, all the time, and are unavoidable. 

While teaching improvisational theater at the Royal Court, Johnstone found his actors struggling to speak naturally. He tried various techniques before landing on his “status transactions.” Actors in a scene were instructed to set their status a bit above or below their scene partner’s. Johnstone asked them to do so as minimally as possible. As he tells it, the impact was immediate: “The scenes became ‘authentic’ and actors seemed marvellously observant. Suddenly we understood that every inflection and movement implies a status, and that no action is due to chance, or really ‘motiveless.’ It was hysterically funny, but at the same time very alarming. All our secret maneuverings were exposed.”

If transactions are so omnipresent, why don’t we notice them more often? In Johnstone’s view, social etiquette “forbids” us from seeing these minor machinations, meaning that we only notice them when in direct conflict.

…

It is not possible to be “status-neutral.” In every interaction, you – and those around you – are either playing high or low status. The inflection of someone’s voice, the volume of their speech, the movement of their hands, and the stories they choose to tell about themselves – all contribute to the status they are playing.”

Good books are akin to “soda cans left in a hot car”

How I Read by Henrik Karlsson

I discovered Henrik Karlsson recently, via David Perell’s How I Write podcast, where Henrik made an appearance. I haven’t read a lot of Henrik’s work (my fave thus far is his piece on the childhoods of exceptional people) but I find it interesting enough to suggest you should check his blog Escaping Flatland out. His new piece on how he systematically searches for books to read is fascinating. He puts in a lot of work to locate the 300 or so books he starts, and the 50 he ends up finishing. This essay is about that. It ends with an arresting metaphor for good books. See below.

“Good books are compressed thoughts. They are like soda cans left in a hot car: when you open them, the content explodes from their container, spraying and spraying—pouring out much more than it seems reasonable a little can like that could possibly contain. In seven hours, I can read a book of thoughts that someone spent two years thinking. There are few ways of spending seven hours that can compete with that.”

Other articles I enjoyed

Radhika Agarwal, founder of a soon to launch skin health brand, has been writing a newsletter at the intersection of skin health and science called 1 am skincare club. I like her honesty, reflected in this piece about her struggles with acne, and the nerdiness as in this piece around popular acne treatment brand Accutane and why you should be very careful about taking it. This one where she reviews the recent WTF episode on Beauty was one I enjoyed deeply, given it saved me 3+ hrs of watching the episode, but also because it served up insights such as “Interestingly, I now see a lot of affluent urban Indians pushing for buying local – be it moving to Gully Labs or Comet for shoes, Mokobara for luggage, or Samsara for gin. We’re perhaps in a unique phase where ‘Made in India’ is becoming cool for western-exposed affluent Indians, but international is still aspirational for middle India.” Full disclosure: As an investor in her soon to launch startup, I have ‘skin in the game’ (sorry if you pun snobs think it too obvious!) and conflict, but this is an excellent newsletter to check out.

Notes on shadowing a hospitalist. Excellent article detailing observations from following a hospitalist (In India this would be an internist, it seems). This is from an anon blog, with lots of good posts such as this one on audience growth and content and this one on high income work. Hard to easily classify but one of several anon blogs like Applied Divinity Studies, Psmith’s reviews, and the not so anon Slate Star Codex / Astral Codex Ten that cover tech and tech-adjacent topics through a rationalist / tech thinking / silicon valley lens.

The World in Which We Live Now by Nassim Nicholas Taleb. A glimpse into how Taleb is thinking about the world. The observations about immigration are perceptive. The quote “Every Western political party that won office on an anti-immigration platform has ended its term with more immigrants than before.” is telling.

AI Will Not Make You Rich by Jerry Neumann. Provocative piece arguing that much of the value from AI will be spread thin across different industries, and will not be captured by startups. In this regard, the author compares AI and investing in it to the introduction of containers — where no firm was able to monetize the tech. This is contrasted with Information & Communication Tech where a lot of startups were able to capture value and monetize the IP.

The Jensen Huang Playbook by Mario Gabriele in The Generalist (paywalled). Fun read, though nothing new as such to Jensen watchers. And, again, a lot of the playbook is unique to Jensen / NVidia and is hard to replicate in another place. Still, I found it a good read, and Jensen Huang’s philosophy of focusing on the essence of the Industry (the core constraint point that sets everyone’s cadence) and going after zero-billion markets (nascent / early markets) stood out from this piece. Since this post by Mario Gabriele is paywalled, pointing folks to David Senra’s podcast on Jensen Huang (free to access incl transcript) which broadly covers these concepts. Excerpts I found interesting from David Senra’s are linked here.

Dom Cooke wrote a compelling profile of Thomas Peterffy, founder of $100b-valued Interactive Brokers, and also the world’s 23rd richest man. He built a handheld computing device (before the iPad) so his traders could have an information advantage on the trading pits. He also created his own options pricing model before Black-Scholes model. This profile appeared in Colossus Review, part of the Colossus podcast network. Colossus (across the podcasts, and the Review) is my most consumed media property, and crazily, much of it is free.

Other articles I enjoyed included this review of B2B sales guru John McMahon’s ‘The Qualified Sales Leader’ and Alysha Lobo’s writing in her TechnicAly Speaking substack, especially the two essays on Indian Tier 2 cities Hubli, Belgaum, and their emergence as manufacturing / industrial minihubs.