My Personal Guide to Tech Investing

Who this Guide is For:

This is my first attempt at a very long post. The topic warrants it and I also can use a place to put all these themes, learnings, thoughts I’ve compiled over the years. My personal goal is to be as comprehensive as possible and while it’s mainly for me, I do hope that it can be a source of inspiration for you whether you’re a person that works in tech or invests in it, or both.

My Personal Guide to Tech Investing will always be a work-in-progress and I’ll keep adding it to in perpetuity. I’ll also add a table of connects / anchors as it grows in size, so feel free to navigate it — there’s no sequential order to these topics. In fact, I’ll try to link topics that may be connected. A latticework is what I’m attempting here, as Charlie Munger would say.

With that said, let’s begin.

What This Guide is:

  • First and foremost, this guide is nothing original from directly from me. I think that I’m better at compiling information and figuring out which pieces and from whom to listen to. So it’ll be coming from the people I read most often and that I think are best to speak on the topic.
  • This is a guide about tech investing, which spans anything software, information technology-related or hardware even.
  • While it is a guide to tech investing, its primarily contents are not necessarily on tech, or on investment topics per se. I’ve (always) found multidisciplinary applications to be much more fun and also frankly, much more applicable. So this guide will include my thoughts on relevant subjects spanning psychology to architecture.
  • Lastly, this guide is an essay for me, primarily. I don’t attempt to convince anyone of anything. This is simply a very long blog post about all the topics that I’ve come across as relevant for tech investing.
  • I’d also like to keep this in mind, as Ben Thompson says: “This point cannot be emphasized enough: the Internet is the single most disruptive force of our lifetimes because it does not evolve existing ways of doing things, but completely smashes the assumptions underlying them — assumptions we often didn’t even realize existed.”

What This Guide is Not:

  • While we might talk about company metrics and key performance indicators, this is a not a guide for one to value a company or value the prospects of business initiatives.

Networks

TBD

“Engines”

TBD

Platforms

TBD

Probabilities

Aggregators

Ben Thompson’s perspective

Value Capture

TBD

Entropy

Runways

Customer Retention

TBD

Recurring / Subscription Model

TBD

Zero-Sum Games

Li-Lu’s perspective

Contraction Thinking

Secrets (Peter Thiel)

longest running companies

Hurdle Rates

Mark Leonard (Constellation Software)

Vertical Markets

TBD

Horizontal Markets

TBD

paradoxal thinking

holistic viewing

preparation by doing nothing

systems engineering

human engineering

user centred design

Bundling

TBD

tailwinds and headwinds

Stack Integratedness

TBD

barriers to entry

Tail Risks

Collaborative Fund

Verdad Capital

Redundancy in Design

TBD

Survival of the Fittest

Surviving Bankrupties

Fly Wheels

TBD

Graphs

Chicken or the Egg Problems

TBD

Switching Costs

Levels of Friction in Design

Jobs-To-Be-Done (JTBD)

Open versus Closed Systems

Affordances

phase transition

Clearances

Confirmations

Aspirational Design

Franchises

Buffett says:

An economic franchise arises from a product or service that:

(1) is needed or desired (i.e. loved),
(2) is thought by its customers to have no close substitute,
(3) is not subject to price regulation.

The existence of all three conditions will be demonstrated by a company’s ability to regularly price its product or service aggressively and thereby to earn high rates of return on capital. Moreover, franchises can tolerate mismanagement. Inept managers may diminish a franchise’s profitability, but they cannot inflict mortal damage.

Margin of Safety

Analogy versus First Principles

Groves versus Solo-plant

The Invisible Hand

Influence

Reciprocity

Functional Analysis

biomimicry

anti fragile

Task Analysis

Diversification

Medium is the Message

Constrained Design

Gestalt Theory

Lolapalozzas

Behaviours from Incentives

Compounding in Technology Companies

Diminishing Returns

Pre-selling

Gross Margins

meta games

Surprises in Design

Service Design

Cycles of Innovation

Book: The Fourth Turning

Intersections

Software-Enabled Businesses versus Software Businesses

Software is eating the world.

Capital-Light Compounders

Outsider Capital Allocation

Betting on “the jockey”

Virality

Complexity

Red-Queen Effect

Inverting

Alchemy

Unforced Errors

permanent capital

Tent pole films and Power laws

social proof

novelty

local and global max

infrasturture/ bridges / channels

murphy’s law

fractals

second order thinking

Niches

“Perennial” Sellers/Offerings

Load Bearing

permanent desires

Defense-In-Depth

Industry-Focus