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Invest Like the Best with Patrick O'Shaughnessy
Jerry Neumann – Why Venture is Hard - [Invest Like the Best, EP.134]
Conversations with the best investors and business leaders in the world. We explore their ideas, methods, and stories to help you better invest your time and money. Hear stock market and boardroom insights you can't find anywhere else. If you're a professional investor, CEO, entrepreneur, or business strategist, this is for you. Explore all our episodes and learn more at https://www.colossus.com
Show Notes
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My guest this week is Jerry Neumann. Jerry is one of the most thoughtful early stage investors that I’ve encountered, and his writings at reactionwheel.net are my favorite on this topic. He applies an incredibly structured way of thinking to a notoriously mysterious investment category. This is our second conversation, in which we cover why investing with one’s gut is a bad idea and why some of the popular edges in startups, like network effects, may be picked over. Please enjoy our conversation.
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.
Follow Patrick on Twitter at @patrick_oshag
Show Notes
(First Question) – His take on the venture landscape and the type of investments new VC’s are making vs what they should be making
– Most important implications of excess VC firms
– Misalignment of incentives in the VC space
– What he does differently from angel investors or VC’s
– The notion of risk and the types of risk the people he invests in takes
– Protections that he thinks about when it comes to the ideas he invests in
– Is there an area of expertise that provides an edge for startups
– Network effects are picked over
– IP protection
– One of the two most interesting things for VC’s to go after, brands
– The other most important thing, the value chain
– A current example of a disruptive value chain
– Innovation as the source of profit
– Schumpeter on Strategy
– Efficiency innovation vs value innovation
– Energy and Civilization: A History
– Efficiency investments he’s made
– Investment in Unsupervised and the machine learning landscape
– Investment in Sila
– Investment in Edmit
– investing on gut
– Black boxes and their value in investments
– Metrics about the predictive level of whether people are going to succeed
– What defines good people worth backing
– Advice for LP investors in this space and how they should evaluate VC’s in this space
Learn More
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub
Follow Patrick on twitter at @patrick_oshag
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