Patrick O'Shaughnessy's Blog, page 6
April 7, 2020
Sarah Tavel – Consumer & Marketplace Investing – [Invest Like the Best, EP.168]
My guest this week is Sarah Tavel, a general partner at Benchmark, working alongside past guests Bill Gurley and Chetan Puttagunta. Sarah has a long history as both an investor and as an operator. She was an early product leader at Pinterest before joining Benchmark. Sarah has become one of my go-to resources for topics like networks, consumer technology, and marketplaces among many other topics. I’ve used her framework for how to think about client engagement, company data, and marketplace liquidity and quality over and over again in my business life. I’m so excited to finally have her on the show. Please enjoy our conversation.
This episode is brought to by Koyfin.
Show Notes
1:24 – (First question) – Lessons learned from watching the food delivery space
5:44 – Hip camp and how they are thinking about the space rental sector
5:45 – The a16z Marketplace 100
7:47 – Valuing private companies vs public companies
9:37 – Building marketplaces
14:24 – Tipping a market
14:30 – Bill Gurley Podcast Episode
18:09 – How to incorporate reputation scores into a network
19:55 – Search ranking as a tool for marketplaces
21:00 – Size of marketplaces vs their competitors
22:15 – Niching of marketplaces
22:21 – Chetan Puttagunta Podcast Episode
23:26 – State of the consumer social sector
27:50 – The LinkedIn problem and how she would build a social platform
30:42 – Things that are piquing her interest in the consumer space
32:20 – Lessons learned about scaling while working at Pinterest
38:42 – Pricing and the marketplace
41:25 – Identifying and optimizing a Core Action in a digital business
44:18 – Accruing benefits and mounting losses as part of the product design
47:48 – Her investment in Rekki
52:18 – How should companies gather the best data from their business
56:03 – Lessons to SaaS investing
56:29 – Kindest thing anyone has done for Sarah
57:45 – Most interesting philosophy lesson
58:09 – Creating a Kingdom of Ends
April 2, 2020
Gavin Baker – Investing Through a Bear Market – [Invest Like the Best, EP.167]
My guest today is with past guest Gavin Baker, the founder and CIO of Atreides Management, LP. We discuss investing during a bear market and the major ways in which the COVID19 outbreak has dramatically altered the investment landscape. Please enjoy my second conversation with Gavin Baker.
Show Notes
(1:40) – How he sees the markets right now
(3:06) – How he handles information uncertainty and the
value spreads
(5:53) – Trading in today’s market and the volatility
(9:45) – How the economic activity squares with the amount
of stimulus being pumped into the market
(13:11) – Market
Wizards: Interviews with Top Traders
(13:56) – Asset tests for individual companies in this
environment
(19:09) – This
Time Is Different: Eight Centuries of Financial Folly
(20:45) – His take on software companies during the crisis
(28:57) – Fast pace of change during extreme times of duress
(35:14) – Space as a service
(39:52) – Attention and time inside digital universes and
how investors can take advantage
(46:17) – Why chaos is a ladder
(50:42) – It Was a Very
Good Year: Extraordinary Moments in Stock Market History
March 31, 2020
D.A. Wallach – Investing in Healthcare – [Invest Like the Best, EP.166]
My guest today is D.A. Wallach, one of the more interesting investors I’ve come across. He is the former lead singer of the group Chester French and the former artist-in-residence at Spotify, where he was also an early investor. While he’s also an early investor in companies like SpaceX, his focus the last 5 years has been on early stage health care investing, which is the topic of this conversation. We discuss the entire life sciences and heath care investing ecosystem. This was recorded in the very early days of the Coronavirus outbreak so while we touch on it briefly it isn’t the primary focus, and I intend on returning to more traditional episodes like this one in the coming weeks, meant to be evergreen conversations. Please enjoy my conversation with D.A. Wallach.
Show Notes
1:31 – (First question) – Where is interest in healthcare
started
4:04 – How to categorize health services
5:13 – The product of medicine
6:56 – How medicine is changing in 2020
10:17 – What is enabling innovation in medicine
12:41 – Manufacturing of solutions, gene therapy example
17:16 – Using CRISPR
19:47 – Pros and cons, and the morality of gene intervention
23:44 – How progress is being made in medical breakthroughs
26:51 – What is the business and investment world seeing on
the longevity side
30:15 – What is next in the wearable medical tracking trend
33:04 – The personalization of medical treatments
34:31 – How he thinks about all of this from an investing
standpoint
36:37 – Exiting these companies
39:41 – How he thinks about founders in this space
42:35 – Drug prices
42:46 – The
Paradox of Pricing
46:45 – What will lead to a change in the pricing of drugs
49:05 – The delivery side of healthcare
51:09 – Investments that could improve the delivery side of
healthcare
53:33 – Thoughts on the anti-interventionist line of
thinking in the medical world
57:50 – Lessons from his health portfolio
1:02:33 – Other frontiers that pique his interest, including
gut biome
1:06:46 – His career in music
1:08:20 – Lessons he learned during his time in the music
industry
1:10:19 – Opportunities in the music industry as an investor
1:12:29 – Kindest thing anyone has done for DA
March 25, 2020
Chad Cascarilla – Update on Tail Risk – [Invest Like the Best, EP.165]
My guest today is Chad Cascarilla, here to discuss some of the tail risks in the economy and markets as of March 24th in the midst of the Coronavirus pandemic. Chad was one of the most successful investors during the global financial crisis with a specialty in the banking and finance systems. He now runs Paxos, a trust company which trades and custodies unique products like pax gold, bitcoin, and other tokenized assets including simple pax dollars. I feel it is important to avoid confirmation bias in times like this and not just talk to people are optimistic or long, and while I still believe this is ultimately a positive and optimistic conversation, Chad acknowledges and outlines scenarios that few are talking about yet in the markets.
This episode is brought to by Koyfin.
Show Notes
2:04 – (First question) – Today’s market and the porridge
scenario
7:38 – Risks to the market that people aren’t focused on
10:54 – What lessons from 2008 do we need to heed this time
13:07 – How does he think about inflation on the other side
of this crisis
16:02 – What does a too cold recovery look like
20:35 – Benefits of nationalizing the banks vs pumping
liquidity
24:13 – What does the just right recovery look like
25:24 – Assets that might be ideal to hold in a too hot or
too cold scenario
29:00 – His take on how Bitcoin has performed during this
crisis
31:53 – The US’s inherent strengths compared to the rest of
the global economy
34:50 – Advice for people
38:59 –
Paxos.com
39:48 – What is he monitoring to see which way things shake
out
March 20, 2020
Brent Beshore – Update on Small Business and Private Equity – [Invest Like the Best, EP.164]
My conversation today is with my close friend Brent Beshore. Brent is a private equity investor who owns and interacts with many small businesses, which have been hit especially hard by COVID. We discuss the various impacts that COVID has had and may have on both small business and the private equity investing community. Brent also proposes some policy actions which he think may help those most in need. Please enjoy.
Show Notes
1:13 – (First question) – What Brent sees as the current
landscape for small businesses
3:25 – The real problem for small businesses right now
6:02 – How long can small businesses survive these freezes
9:14 – Ideas to help businesses stay afloat during a global
shutdown
11:01 – The cost of restarting businesses on the other side
of this
13:41 – Policies that could help
14:30 –
government co-paying some business expenses
16:05 –
Suspending payroll taxes
16:17 – The
small business bond
18:00 –
Wider latitude for banks
20:03 – How effective would Brent’s ideas actually be at
lessening the pain
22:41 – A look at how things look in the private equity
complex
25:39 – What are the potential opportunities out there
29:24 – What is a balance sheet product
32:00 – How this is personally impacting Brent
34:20 – How this is personally impacting Patrick
35:45 – Importance of relationships for personal health
March 16, 2020
Dan Rasmussen – Investing Through a Crisis – [Invest Like the Best, EP.163]
My guest this morning is Dan Rasmussen of Verdad Capital. Like
me, Dan and his firm focus on quantitative research. Just a month before the
COVID crisis hit markets, they completely and published a study on investing
during periods of market crisis, which is the topic of this conversation. We
discuss what works and what doesn’t during and after acute periods of panic in
markets. I think you’ll find it extremely informative. Because Dan’s firm and
my own share many beliefs about investing and conduct similar flavors of
research, I try to offer devil’s advocate questions throughout. Please enjoy.
This
episode is brought to by Koyfin.
Show Notes
1:54 – (First question) – What he sees in the markets today
given the atmosphere right now
4:26 – An overview of their study: Crisis
Investing: How to Maximize Return During Market Panics
8:38 – How things get more predictable during crisis
11:15 – The length of these crises and assets they focused
on
12:40 – What happens to bonds and credit during these times
15:50 – Geography of crises
18:14 – How does this impact the philosophy of just index
investing
20:40 – Positioning of value in this market
27:50 – Lessons from other crises
32:21 – Importance of a blended factor approach
35:44 – Role of momentum
38:10 – What else he is paying attention to during this
crisis
March 13, 2020
Bill Gurley and Chetan Puttagunta – An Update on Consumer & Enterprise Venture Capital – [Invest Like the Best, EP.162]
My guests today are Bill Gurley and Chetan Puttagunta, both
partners at benchmark capital. We review the early stage investing world in the
face of coronavirus in a very timely conversation, which is one that will
remain valuable once this crisis is done. We discuss enterprise and consumer,
funding and growth, and the entrepreneurial spirit in the face of a crisis.
Please enjoy.
This episode is brought to by Koyfin.
Show Notes
1:44 – (First question) – Landscape for venture capital
ecosystem
6:47 – The experience in 2009 and the entrepreneurs that
tend to rise to the top
8:24 – The relationship between early stage companies and
public investors
10:45 – How this crisis impacts enterprise businesses vs the
broader corporate sector
14:46 – Advice for early stage companies in a period like
this
18:23 – What Chetan was doing during the last downturn and
what he learned during it
20:27 – Early stage vs late stage companies in this
environment
22:57 – On
the Road to Recap
23:00 – Benefits of being small in a period like this
25:22 – How portfolio companies are responding and pivoting
during this period
29:33 – Best practices for remote companies
31:39 – Themes that stand out during this period
34:51 – Closing thoughts
March 12, 2020
Bryan Krug – An Update on Corporate Credit – [Invest Like the Best, EP.161]
My guest in this flash podcast is Bryan Krug of Artisan partners. We discuss what has happened so far in the corporate high yield and investment grade credit markets, and the loan market. We compare today’s environment to the financial crisis and other past crises with lots of nuance that I hope will be helpful to bond and equity investors. Please enjoy.
Show Notes
1:08 – (First question) – An overview of what he covers in
the corporate credit markets
1:52 – How things
have changed in the last couple of weeks
3:56 – Composition
of the high yield market
7:07 – Major sectors
of the high yield market outside of energy
8:39 – How do they
price the risk in securities right now
11:21 – How do they
handicap a great unknown
13:00 – Risk for
broader contagion in the overall credit markets
14:49 – What’s the
downside potential here
16:31 – Potential
for upside
18:33 – How does he
view companies that are drawing down on their entire line of credit
19:44 – An overview
of the loan market
20:42 – What warning
signs equity investors should be watching for in the bond markets
21:57 – What do
credit spreads look like today compared to before this crisis
March 11, 2020
Deep Basin – Oil Price War and Its Implications – [Invest Like the Best, EP.160]
This week, I’ll be recording and immediately releasing a series
of conversations on business and market reactions to the spread of coronavirus.
The conversations will be on oil and gas, corporate credit, and the reaction
within the venture capital community. Today’s conversation is with Matt Smith,
Ian Singer, and Kobi Platt of Deep Basin Capital. We are investors in Deep
Basin, and they were past guests on the podcast. We discuss
the new price war in the oil markets and the impact it might have on equities
and especially on U.S. oil producers. Please enjoy.
This episode is brought to by Koyfin.
Show Notes
1:59 – (First question) – An overview of the global oil
market and demand
3:37 – Supply and demand shocks we’ve seen lately
6:22 – What happened this weekend with Russia and Saudi
Arabia and why the outcome was so shocking
9:45 – The knock-on effects of this activity on equities
14:24 – Impact on US energy production
18:29 – What other industries will feel the effect of
reduced production in the US
20:35 – Defining a price war and how victory is defined
27:53 – Saudi Arabia’s calculus in this energy fight.
31:11 – How does all of this change what factors they use to
analyze companies
35:43 – What it actually looks like within the commodities
markets to trade energy
40:01 – What uncertainty is most intriguing to each of them
43:00 – The long-term interest in investing in the energy
sector
March 10, 2020
Dis-United Nations with Peter Zeihan
My guest this week is Peter Zeihan, the author of a new book, the Disunited Nations. Peter was an extremely popular guest on the show last year and after reading his new book, I knew we had a lot to discuss in round 2. In this conversation, we discuss two ways of ruling the world, the coming American disinterest in global affairs, and which country are poised to do well int eh future. We explore military and non-military technologies, political changes, and up and coming alliances like that between the United States and Mexico. As with last time, peter packs more information into an hour than just about anybody. Please enjoy our conversation.
This episode is brought to you by Koyfin
Show Notes
1:57 – (First question) – What makes for a successful
country
6:02 – Five first-tier countries that are well positioned
7:14 – Ruling the world, US carrot model vs British stick
model
9:39 – How other countries will use these models in the
future
12:59 – The surprising reliance of Iran and Russia on the US
15:24– Key points of his research on the Middle East
18:36 – Advice for how those operating in the US should
think about future business investments
23:05 – The future of manufacturing partnerships with the US
and the focus on Mexico
27:30 – What Coronavirus has taught us about the world
economy
30:01 – What the primaries and election are teaching us
35:09 – What role does Africa play in the future
38:36 – Strong and weak players in Europe and how Brexit has
impacted things
44:41 – The future for nuclear power
46:27 – The outlook for South America
50:42 – The trends and future in military technology
55:03 – Non-military technology that will have a major
impact
58:26 – Skills young people should focus on for the future
1:00:07 – Coronavirus as a dress rehearsal for large scale
disruptions to the world
