The Tim Ferriss Show: Investing Wisdom from Marc Andreessen, Peter Thiel, Reid Hoffman, Chris Sacca, and Others

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These are the best lessons Tim has come across related to investing from the many people he’s interviewed.

Intro
  • Related: Check out these podcast notes from Tim’s episode with Ray Dalio (Forbes called him the Steve Jobs of investing)
  • Note- it’s important to distinguish between personal finances and hedge/venture funds. It will differ how you invest each of these.
Tim uses a barbell investing strategy
  • What are low risk investments? – treasury bills, cash
  • What about high risk? – startups, cryptocurrency
  • Using the barbell strategy, the vast majority is invested conservatively (low cost index funds using things like Wealthfront, Vanguard etc.)
  • A small percentage is invested in highly speculative, but potentially high return, startups 
    • There’s a 20-50% chance these investments will go to zero (at least 3/5 startups fail). You’re investing money you can afford to lose.
    • You should not do this unless you have an informational advantage (Tim has lived in Silicon Valley for 17 years, he’s come to gather quite a bit of startup knowledge), an analytical advantage, or a behavioral/emotional advantage
Marc Andreessen
  • One of the founding fathers of modern web, co-founder of venture capital firm Andreessen Horowitz
  • How does Marc think about advising a company that’s struggling? Should they stay the course or pivot?
    • The “fail fast” mentality is completely out of hand
    • Succeeding should be the goal, not failing
    • There’s no right answer here, very situation dependent
  • How does a good partner meeting go? How do investment decisions get made?
    • Investments are a commitment of both money and time, many people forget about the time
    • You have to realize you can’t invest in any competitors of current companies you may have invested in
    • Marc thinks of it not as good vs. bad investments, but good vs. great investments. “Good is the enemy of great.”
    • Each of his general partners has full allowance to pull the trigger on a deal, without a vote or consensus. They trust their enthusiasm.
    • However, they look for reasons the general partner with the investment idea might be wrong, even if it’s a really good idea. If they defend their case well, then it’s a go.
  • Look for flaws in your logic. Ask – “How do I know I’m right? just like Ray Dalio does
Chris Sacca
  • Billionaire founder of one of most successful venture capital funds in history (Lower Case Capital), early stage investor in Twitter, Uber, Kickstarter
  • Total Immersion Theory
    • Great way to learn to swim, see here
  • What advice was Chris given originally that helped him approach early stage investing in an intelligent way?
    • “Only get involved in deals where you know you can personally impact the outcome”
    • Start with something that’s already great, that you can make more awesome. Don’t start with something shitty that you think you can make great.
    • Your default answer should be “no”
    • Give yourself a chance to get rich, you have to make sure the entry price is low enough and the upsides are huge (Facebook, Uber)
    • Be proud of every deal
  • What red flags does he look for with founders?
    • He only invests in things that are already live, and in production with users
    • What turns Chris off – If in the pitch, the founder is trying to convince themselves. There has to be no doubt in the founders’ mind they’ll succeed. 
  • What books/resources that have helped Chris become a better investor?
    • Chris doesn’t have any sort of business degree
    • You have to have empathy. Ask – Can I see the world through that persons’ lens? “You have to put yourself in the shoes of the person you’re building a product for.”
    • He’s constantly looking for opportunities for himself and his founders to broaden their scope of the world, so they can build something on a more emotionally informed basis
Reid Hoffman
  • “The Oracle of Silcon Valley”
  • Early investor in Facebook, Uber, Airbnb, Twitter
  • Advice to a college graduate to better develop strategic ability and thinking?
    • Most people think they’re better at strategy than they are
    • Have deep self-awareness
    • Consider what your competitors are doing
    • Gaming is a very good way to develop these things
    • Read military strategy books – The Art of War by Sun Tzu
    • Consider how would your strategy change if the rules changed?
  • What has Uber done well and could they have executed more effectively?
    • Done well – quickly deploying their product so it’s clear a bunch of people are benefiting from it
    • Negative – the company is very combative, they need to do a better job of approaching, say taxi’s, not as competitors but rather as promoting innovation
Peter Thiel
  • Co-founder of Paypal, Founder of Clarium Capital and Palantir Technologies, investor in more than 100 startups
  • Tips for investing
    • Don’t treat companies as lottery tickets
    • Be concentrated, have high levels of conviction in a company before investing
  • How has Peter’s study of philosophy helped him in business?
    • It’s helped him to question the status quo – “What do people agree merely by convention, and what is the truth?”
    • Always ask, is this true?
    • Great interview question – “Tell me something that you think is true that very few people agree with you on”
  • What does the future of education look like?
    • Peter hates the word “education,” he prefers “learning”
    • Really ask yourself why you’re going to college – Is it because it’s a four year party? Is it a consumption decision? An investment decision? Or to really learn something useful?
    • In the future, there will be less of a one size fits all approach. People will need to learn more useful skills like engineering and computer science
  • Peter’s daily habits and routines
    • Every day he tries to learn from smart people
  • What one thing would he like to improve about himself?
    • When Peter was younger, he was very competitive
    • When you’re very competitive you become really good at what you’re competing with people on, but at the neglect of other things, so he’s been working on this
  • Check out Peter’s book Zero to One: Notes on Startups, or How to Build the Future
Seth Godin
  • Seth’s blog,  Founder of Yoyodyne and Squidoo, bestselling author (All Marketers are Liars, Purple Cow and more)
  • Are there any examples of opportunities Seth was offered that he’s glad he turned down?
    • TV invites
    • He turned down Bill Gross’ very large offer for the head of marketing position for a company he was building
    • Money is a story. “Once you have enough for beans and rice and taking care of your family, money is a story.”
    • Once you have enough money, you have to decide how much more money you need, and what you’ll trade for it
  • What does Seth believe that other people might think is crazy?
    • People are plastic and flexible, in the sense that they’re able to grow

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