“As time goes on, I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes.”
— John Maynard Keynes (quoted in the book Concentrated Investing)
While low-cost index funds are a great thing, there is an opportunity to consistently perform better. Especially if investing in private companies in addition to public stocks.
Swedish video games group Embracer will sell the Gearbox Studios to Take Two Interactive for ca $460 million. Together with the sale of Saber Interactive to its founder and a significant cost savings program, this hopefully will allow Embracer to reduce its debt burden so much that it’s no longer the main focus for the company, lenders and investors.
Debt is a useful tool, but when things get tough for a company it has a tendency to become the main focus in a way that equity doesn’t.
Index Ventures has published a book called Scaling Through Chaos based on their 20+ years of experience of investing in technology startups.
“We haven’t written Scaling Through Chaos to make the journey easy for you. No one could do that. But what we can do is systematically break down twenty years’ worth of data and insights into how the world’s fastest growing and most successful startups have scaled the mountain, taking the kernel of a crazy idea and turning it into a highly impactful company.”
Ville Vesterinen has written a very good post called How to build a trillion-dollar company. Interesting reflections on technology, the U.S. (compared to Europe), the importance of founders, persistence, and the need for being unique. Go read the article.
I enjoyed Google’s Startup Day Stockholm 2024 today. Firstly I found myself nodding in agreement to most things Instabee founder Alexis Priftis’ said about startups and venture capital. Including his skepticism of venture capital and investors (after himself having raised significant amounts of money). His skepticism also included many other things, to be fair.
The VC panel I was on together with Rebecka (Inventure), Magnus (byFounders) and William (Northzone) I think resulted in an interesting discussion for the audience (it was at least fun to talk to a room filled with smart entrepreneurs). Some things I mentioned:
Tomorrow (Wednesday 19 March 2024) I’ll join the VC panel at Google’s Startup Day Stockholm 2024. Looks like there will be a lot of people and it should be a good discussion (especially as the rest of the panel is Rebecka Löthman Rydå, Magnus Hambleton and William Jilltoft. It will be moderated by Joseph Michael.)
If you will be there, please say hi! Especially if you are building something great and are fundraising!
While the chart is not updated for the last couple of years, its point is clear: In technology it is very difficult to remain number one for a long time.
It also explains the old saying: Nobody ever got fired for buying IBM.
Clear and concise writing when a company is describing its business and strategy is something I like to read, because it is both quite rare and quite difficult to do. I didn’t expect to find that in the annual report of Games Workshop (makers of Warhammer and other miniature figures), but I did.
The describes what they are trying to do clearly: “Our ambitions remain clear: to make the best fantasy miniatures in the world, to engage and inspire our customers, and to sell our products globally at a profit. We intend to do this forever. Our decisions are focused on long-term success, not short-term gains.”
That paragraph is followed by multiple paragraphs that describes how Games Workshop tries to do that across areas such as quality, intellectual property strategy, how they are customer-focused, the focus on a global market, which distribution channels are used, the need of generating cash to be able to invest in the future, and how to build a strong team.
It is a good read to find inspiration from for both internal and external communication.
Leo Polovets, a general partner at Susa Ventures, has written a short note on liquidation preferences. It’s a good read.
The Compound interviews Larry Cunningham (professor, author of business books and director of e.g. Constellation Software and Markel Group). Good discussion on governance, Berkshire Hathaway and stock buybacks and many related things.