 One of my favorite books from last year was Angel: How to Invest in Technology Startups--Timeless Advice from an Angel Investor Who Turned $100,000 into $100,000,000 by Jason Calacanis. It was actionable, no-nonsense, and really informative. I loved the crisp and clear framework and suggestions; the reader can agree with them or not, but at least it's practical and direct.
I just started getting my feet wet in angel investing last year, and I plan on spending the next 6 months doing a deep dive into it as a personal experiment for myself to see if I like the process and the work (Jason's motto in the book is "do the work"). Below are my main takeaways and notes on the book. (One telltale sign I liked a book is when my notes Google Doc is 15+ pages long, as it is for this book.)
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 Over the last few months, I've been reading through Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger, and today I finally finished it. It represents a pretty full collection of all of Munger's public lectures and most influential publications, a true compendium of practical wisdom.
It was nice to read this big, heavy, long book over an extended period of time because I got to develop a pretty good grasp of Charlie's way of thinking, seeing the same examples and patterns repeated across the talks and drawing my own connections. It's amazing how passionate he is about improving education and providing people with much better mental models and checklists to avoid disaster and cognitive failure. Below are my personal biggest takeaways and notes. Intro Multidisciplinary Mental models 1 portrait of Charles munger Parents encouraged reading and gave books as gifts for holidays Liked Cicero Cicero, on a life well spent Pride in a job well done Self improvement so long as breath lasts Daily learning something Always return borrowed car with full tank of gas Educating kids at dinner table Morality tale and downward spiral tale Admit mistakes and learn from them immediately Do the job right the first time. Don't make excuses when screw up. Just fix it. Kids had jobs Taught kids to be skeptical and contrarian Always reading Couch message in anecdote and deliver in group setting to not single out Buying books for whole family Ritual and tradition, buying kids suits Desire to understand exactly what makes things happen Intense focus Figure out what ur best at and keep pounding away at it Ch 2 munger approach to life, learning, decision making Multiple mental models Business as an ecosystem; everything related Willingness to change mind Not buying or selling often Big money is in the waiting not in the buying or selling If can only invest 20 times in life, u will think much harder and load up on what believe in Focus on what to avoid first Think in 2 approaches: rational interests at play and subconscious psychological factors Circles of competence Margin of safety like backup system in engineering Checklist before doing deal Honesty best policy Ch 3 mungerisms: Charlie unscripted Profit more from always remembering the obvious than from grasping the esoteric Focus investing Low diversification Wait for the fat pitch Something not worth doing is not worth doing well Reliability is extremely important First step to success in anything is becoming interested in it Have wide mental models array and use them all Jump jurisdictional boundaries Avoid ideology Need to use all mental models as a checklist Use advertising for Pavlovian conditioning To persuade, appeal to interests not reason Nonegalitarianism: focus on your best people instead of just fairness 1 reward and punishment super response tendency Granny's rule: eat your carrots before dessert; do unpleasant tasks before rewarding yourself 2 liking/loving tendency 3 disliking/hating tendency 4 doubt avoidance tendency 5 inconsistency avoidance tendency 6 curiosity tendency 7 kantian fairness tendency 8 envy/jealousy tendency 9 reciprocation tendency 10 influence from mere association tendency Always tell us the bad news promptly. The good news can wait. 11 pain avoiding psychological denial 12 excessive self regard tendency 13 overoptimism tendency 14 deprival super reaction 15 social proof tendency 16 contrast misreaction 17 stress influence 18 availability misweighing 19 use it or lose it tendency 20 drug misinfluence 21 Senescence misinfluence 22 authority misinfluence 23 twaddle tendency 24 reason respecting 25 lollapalooza tendency  I hadn't read a business book in a while, so when Ryan Holiday recommended The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success by William Thorndike, I decided to check it out.
It was a quick, enjoyable read. It reminded me of The Millionaire Next Door, which I read in 2011. It's interesting how some of the best CEOs (by performance against peers) have a lot in common, and these common behaviors are NOT well known (or common) outside their group. Their contrarianism helped them succeed, and they shied away fame on purpose. My biggest takeaways:
Preface Better performance than peers Jack welch not best Ceo Context matters Capital allocation and business operations top jobs Conventional CEOs rarely beat their peers What counts is per share value growth not overall Cash flow matters more than reported earnings Decentralized organizations keep entrepreneurial energy up and costs down In acquisitions, patience is a virtue as well as boldness Value investing Share buybacks Independent thinking, not advisors or consultants or Wall Street Nondescript locations Frugal Humble Devoted to families Quiet Not famous or charismatic Did not write books Outperformed peers by 20X Intro Positive deviants First time CEOs New to their industry Old fashioned values Iconoclasts Low or no dividends Thinking more like investors than managers When ur own stock cheap buy it yourself When expensive use it to buy other companies Greedy when others fearful Mastery is different from innovation Simplicity of focus Optimize long term value per share Trying to shrink share bases through repurchases Growth doesn't go with maximizing share value Key is cash flow 1 perpetual motion machine for returns: Tom Murphy (capital cities broadcasting) Opportunistically buying companies Don't diversify into unrelated businesses Don't build up fancy hq No former broadcast experience Removed limos and perks and did layoffs at acquisitions Flat organization Local managers with power Long periods of inactivity with periodic big acquisitions Eschew diversification No investment bankers No delegating investing or buying decisions Sourcing deals from direct contact with sellers Self deprecating style Pricing discipline Manager autonomy my 2 Henry singleton and teledyne No dividends Decentralized operations No Wall Street discussions Math and chess background Focused on cash flow not reported earnings Investor relations or guidance poor use of time No conferences Board consists of owners Tender offers 3 turnaround, bill Anders, general dynamics Engineering degree Should only be in business where can be number 1 or 2 Rational Asset sales 4 value creation, John Malone, tci Tax minimization focus Simple rule to buy companies only if price no more than 5X; no projections 5 widow, Katherine graham, Washington post Dividends tax inefficient because double taxed Lots of acquisitions and diversification Brought on Buffett as mentor to board when he was unknown 6 public lbo, bill sturitz, ralston purina Grassroots experience Leverage to boost returns Spin offs 7 optimizing the family firm, dick smith, general cinemas Diversifying acquisitions 8 investor as CEO, Buffett Switch in philosophy from net capital value investing to brand names Cigar butts to franchises Decide which businesses best to get rid of If in chronically leaking boat, devote energy to changing vessels than patching leaks Investment concentration Long holding periods Hire well, manage little Blank calendar No computer Reading 5 newspapers Detailed annual reports 9 radical rationality Introversion Humility Patience for right opportunity Long term perspective Epilogue Outsider's checklist Allocation process Ceo led Start by determining hurdle rate Calculate expected return for all internal and external projects Calculate return for stock repurchase Focus on after tax returns Calculate conservative cash and debt levels and stay within them Consider decentralized org model Retain capital in business if confident can maintain return above hurdle rate If do not have high return projects consider paying dividend but hard to reverse and tax inefficient Ok to sell business when prices high. Ok to close bad businesses without required return. |
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