3 ms·

I’m not sure it’s a trap so much as arguably irrelevant, if all of the other elements exist.

by Zetice 4y ago

danielmarkbruce 4y ago
Invert that
- Zetice 4y ago
  Then we'd both be wrong.
  - danielmarkbruce 4y ago
    ? I think I might have misunderstood your original point.
    - Zetice 4y ago
      You called it a trap. I said it wasn't a trap, but indeed a valid way to evaluate companies. Knowing the product isn't as important as it seems to be, when you have evidence to demonstrate a number of other key factors such as market size, growth, founder knowledge, etc.
      - danielmarkbruce 4y ago
        Ah, then I understood it. Yeah, it's a trap. As an example - you can't know market size without knowing the product/service in a lot of detail - for example, pulling the IDC report for some segment won't help much because you can't understand if the product can even address all that market, or if it might be able to address more than that market as defined. You can't understand founder knowledge if you don't understand the product/service in detail - anyone who knows more than you will appear highly knowledgable.
        Zetice 4y ago
        You can absolutely know and understand all of those things without understanding the product, mostly by asking the people who do understand the product. Otherwise you're arguing against the concept of delegation, and there are several mountains of counterexamples were you to try.
        danielmarkbruce 4y ago
        >> You can absolutely know and understand all of those things without understanding the product, mostly by asking the people who do understand the product. You can't figure who to trust (even if you don't realize it, it's analogous to Gell-Mann Amnesia), you can't put the pieces together in your head. >> Otherwise you're arguing against the concept of delegation, and there are several mountains of counterexamples were you to try. Delegating works to get work done, not to understand things. There is almost zero history of institutionalizing good investment decision making (Sequoia might be a one generation counter). Guys like Buffett sit in a room all by themselves. Almost every example of investment outperformance through time is a singular brain or very small team. If delegating worked, this wouldn't (and couldn't) be the case.
        Zetice 4y ago
        You can absolutely delegate understanding. If you don't, you are screwed as a leader. In fact, one of the things you have to give up as a leader is being the smartest person in the room. I'll even go so far as to say if you can't understand something through someone else's expertise, you will not get very far in life.
        danielmarkbruce 4y ago
        Nope, history shows the opposite when it comes to investment decision making.
        Zetice 4y ago
        Er, no it doesn't. How much about each of Goldman's investments do you think David M. Solomon knows in depth? They make thousands of deals each year, it would be insane and unsustainable for him to have deep knowledge about each, so he delegates. If you're talking about fundamental analysis, you'd also be wrong, as my copy of A Random Walk Down Wall Street makes pretty clear. "Know a bunch of stuff about a company" is not a good investment strategy, or at least does not keep pace with well diversified index funds.

I’m not sure it’s a trap so much as arguably irrelevant, if all of the other elements exist.

by Zetice 4y ago

I’m not sure it’s a trap so much as arguably irrelevant, if all of the other elements exist.

danielmarkbruce 4y ago

Invert that

Zetice 4y ago
Then we'd both be wrong.
- danielmarkbruce 4y ago
  ? I think I might have misunderstood your original point.
  - Zetice 4y ago
    You called it a trap. I said it wasn't a trap, but indeed a valid way to evaluate companies. Knowing the product isn't as important as it seems to be, when you have evidence to demonstrate a number of other key factors such as market size, growth, founder knowledge, etc.
    - danielmarkbruce 4y ago
      Ah, then I understood it. Yeah, it's a trap. As an example - you can't know market size without knowing the product/service in a lot of detail - for example, pulling the IDC report for some segment won't help much because you can't understand if the product can even address all that market, or if it might be able to address more than that market as defined. You can't understand founder knowledge if you don't understand the product/service in detail - anyone who knows more than you will appear highly knowledgable.
      - Zetice 4y ago
        You can absolutely know and understand all of those things without understanding the product, mostly by asking the people who do understand the product. Otherwise you're arguing against the concept of delegation, and there are several mountains of counterexamples were you to try.
        danielmarkbruce 4y ago
        >> You can absolutely know and understand all of those things without understanding the product, mostly by asking the people who do understand the product. You can't figure who to trust (even if you don't realize it, it's analogous to Gell-Mann Amnesia), you can't put the pieces together in your head. >> Otherwise you're arguing against the concept of delegation, and there are several mountains of counterexamples were you to try. Delegating works to get work done, not to understand things. There is almost zero history of institutionalizing good investment decision making (Sequoia might be a one generation counter). Guys like Buffett sit in a room all by themselves. Almost every example of investment outperformance through time is a singular brain or very small team. If delegating worked, this wouldn't (and couldn't) be the case.
        Zetice 4y ago
        You can absolutely delegate understanding. If you don't, you are screwed as a leader. In fact, one of the things you have to give up as a leader is being the smartest person in the room. I'll even go so far as to say if you can't understand something through someone else's expertise, you will not get very far in life.
        danielmarkbruce 4y ago
        Nope, history shows the opposite when it comes to investment decision making.
        Zetice 4y ago
        Er, no it doesn't. How much about each of Goldman's investments do you think David M. Solomon knows in depth? They make thousands of deals each year, it would be insane and unsustainable for him to have deep knowledge about each, so he delegates. If you're talking about fundamental analysis, you'd also be wrong, as my copy of A Random Walk Down Wall Street makes pretty clear. "Know a bunch of stuff about a company" is not a good investment strategy, or at least does not keep pace with well diversified index funds.