Investment Lessons From Howard Lindzon
I love reading Howard Lindzon’s blog. I subscribe to the raw RSS feed to bring the text right to my email, so I never miss a post. It is almost always straight and the point, with Howard’s biases shining through. Truth be told, I ignore about half of Howard’s posts, but that’s to be expected with a character like him — oftentimes, I have no idea what he’s writing about. Perhaps, neither does he. ;-)
Today’s post from Howard was a bit more reflective than usual. The holidays can do that, and his post today also made me reflect today. You can read Howard’s post here. There are a number of strange parallels (over a shorter time horizon) between my journey with writing online and Howard’s. He’s been doing it for much longer. I started this blog officially on July 1, 2012. My first post was about the power of the Uber “brand.” It was a good post, but I really should’ve found a way to invest in the company vs writing that post!
Howard started blogging by finding Brad Feld, who used to link to Fred Wilson, who then both went on to co-invest together for a long time; he also started experimenting with newer mediums like YouTube (and I tried with him and podcasting while I was at Swell — maybe we’ll try again). Howard also throws two awesome annual events, and it’s something I look forward to going to. Everyone who goes says the same thing — Howard makes it happens.
You should read the post yourself, but I wanted to pick up on the 10 lessons he shares at the end and track back to how his lessons (which are excellent) have impacted me in an eerily similar way — these are Howard’s bullet points with my thoughts added in italics:
1/ Everyone should be an investor.
There were a few triggers which fired that pushed me toward investing. One, I wanted to work directly in VC, but that opportunity never presented itself, so frustration built. Two, I knew I had to build a track record before I could have a shot for others to even hope to believe me. And three, I lost a sizable advisory grant to a startup I really helped in the 11th month, and it was jarring enough to make me realize earning shares by investing versus advising would be a much better (and in this regard, safer) path to preserving that equity.
2/ Anyone can learn to speak the language of the markets. Obviously reading is the key, but writing remains undervalued.
I am wholly not from the world in which I currently play in. I don’t have a tech background, or a financial background, or a product background, or a real BD background. I’m lucky that Fred’s blog over the years, Chris Dixon’s blog, and all interviews by folks like Keith Rabois and Shervin Pishevar are free and available. I’ve read and watched them all, some at least 2-3 times. I didn’t know how to speak with the language I currently used, I picked it up through a combination of observation, triangulation, and a dash of mimicry.
3/ The game is rigged, but it doesn’t matter. It may be rigged in general, but it’s not rigged against you specifically. So stop hating the players and learn to play the game.
The basic lesson here for me is that many people I’ll encounter simply won’t buy or believe what I’m selling, often for issues I don’t have control over. It’s not worth complaining about. You just live to fight another day.
4/ Your greatest assets are you and your social network. Invest in yourself and your network. One of the oldest races is the ‘Tour De France’. The ‘peloton’ is a french word originally meaning ‘platoon’. A well developed peloton helps reduce ‘drag’ or as I like to say, speeds you up by as much as 40 percent.
I sort of did this over the last few years, but it wasn’t intentional — I had no choice. Initially, I just wanted to cut in directly. Those doors didn’t open, so I kind of ended up doing this without really understanding the point Howard is making today.
5/ Investing does not have to be a career…it can be a lifestyle. You should invest for profit but there is joy to be had. I started Stocktoberfest in 2011 to push this idea of ‘Investing for Profit and Joy’ forward. This year over 400 people attended on Coronado.
The takeaway here for me is that there are 101 ways to play the game. Everyone may think their way is better, but it’s not true. This point here is one I want to spend more time on in 2016.
6/ Ignore the news. ‘Markets in Turmoil‘ are opportunities. If it bleeds, it leads. The rest of the world talks about failure and pain endlessly. I focus on what is working. Everything’s amazing and nobody’s happy (so funny and true).
Luckily in early-stage investing, very little “current news” matters to the business. Conversely, anytime tech news hits the public blogs, it’s often too late to act on. That’s why information networks, social relationships, and proximity (in terms of physical location and/or depth of relationship) are paramount to success here.
7/ Investing is as much behavioral as financial. The numbers make for pretty charts, but fear and greed are what drive the markets. If you understand people, you have an advantage.
This is a tricky one because every investor is judged by universally-accepted metrics like multiples, DPI, etc., yet what drives an investor to make a decision and have the access to make it are very hard to measure. And, going back to point #5, there’s more than one way to do it well.
8/ Always have a system. I don’t care if your system is investing in the $SPY (S&P 500). I started this blog as part of my system to keep myself honest and then starting StockTwits to find my peloton. Figure out your system and hold yourself to it.
The hard part about this is it takes a while to develop a system. After three years of seed investing, only now for the second time do I feel like I have clear sectors with specific things I’m looking for. Maybe that won’t happen again for another three years. This past summer, I lamented to a friend that I lost my radar and didn’t feel great about the decisions I was making; now, today, I somehow have clarity and a system. Let’s hope it lasts for longer!
9/ Trust in people. As an angel investor my success has not come from discovering the best idea and the biggest markets, but by backing the right people. I have no problem following my gut into an investment on a person I’ve met and taken the measure of.
Yes. Sometimes diligence takes 2-3 weeks, even at seed. Other times, a friend of yours is starting a company, gives you a call, and you hop in your car and go see them ASAP to make sure they know you’re the first check in and will help do anything to set their train cars on the right tracks.
10/ Too Small to Fail. In October 2008, I blogged about the idea and I live by it today. I won’t be the wealthiest person on the planet but it has made investing and my life much more profitable and joyous. I love how Seth Godin picked up on the idea and furthered it.
Tougher times in the market don’t bother me. I was built for it. I am too small to matter. I started my funds small partly because I didn’t feel comfortable managing so much money before being able to prove I can generate returns, but also because the market responded in a similar fashion. For each of the three funds I’ve raised, I’ve tried to go out for X and fallen slightly short of the target. I just keep going because I love investing. At some point, as the seeds of yesterday start to take root and grow, I’ll be ready to make a more interesting move.
Howard describes the act of writing online for him as being the central part of the journey he’s been on. For the last few years for me, I’d have to say the same thing. I don’t have the experience to dispense advice like Howard does, but I can say that writing here has been the single most important, the single most critical component being able to simply have the chance to do what I do. When I started writing online, I did not set out to become an investor; I did not think I’d still be writing here, years later; I did not think I’d not only get to meet people like Howard the other folks listed here, but I’d get to really know them and at times work with them; I did not know whether people would care what I’d have to say and whether they’d even come back.
Turns out, I didn’t really care, so I just kept doing writing, and the act of writing frequently here (and on Twitter) — like Howard points out so eloquently — ends up having a huge impact on the direction you go. Maybe in seven years, I’ll write a post to commemorate the 10-year mark, as well. I hope I stick with it until then, and I hope you do, too.