New Paths (#21)

Plus some reading and podcasts worth your time.

I loved this graphic by Tim Urban. Looking back, it’s easy to see the “coulda woulda shouldas” of our lives. The many times a small decision put us on a new track. It’s fascinating, even paralyzing, to visualize the future the same way. To consider how many paths lie hidden in the fog - only one to be revealed and lived. It made me think of the twists and turns in my own life and what’s ahead.

I thought I knew my path. My Dad is an entrepreneur and I really wanted to follow in his footsteps. I wanted to make him proud and the way to do that, I thought, was to make it big in business.

As a teenager I had read Peter Lynch’s One Up on Wall Street and a book about Warren Buffett. The drama and puzzles of the financial markets already seemed a lot more interesting than actually running a company (let alone being run by one as an employee).

You see, I wasn’t that enterprising kid hustling up mini businesses after school. I was mostly reading and daydreaming and playing video games. In fact, math was my weakness in school. Sports too. Both because I was lanky and bespectacled and somewhat lacking in hand-eye coordination. And because I just didn’t have that innate competitiveness. I didn’t care much for beating the other team. I did better dreaming up adventures as the dungeon master in RPGs.

But it had to be business.

So I fired off some letters to Frankfurt’s investment banks in the hopes of learning how to become the next Warren Buffett. I heard back from a Goldman Sachs analyst who explained the path to me: attend one of a select group of colleges, join a bank as an analyst, then switch to the buyside. And I did. In college I suffered through what Germans call “Business Administration,” a mix of classes such as finance, accounting, management, marketing etc.

Being surrounded by other future finance bros the path now became clear. Analyst, then portfolio manager. Eventually your own firm. I was going to tap dance to work, analyzing companies and doing deals. Oh how much fun it would be to read 10-Ks and invest money all day. So simple. So naïve. So completely off base.

Here’s what actually happened. I spent two years as an analyst at Macquarie in New York, cranking through acquisitions of companies and portfolios of financial assets. I learned a lot. Most importantly that I hated spending my days building excel models and putting together presentations. When the bank pushed me to switch seats with a Sydney-based analyst for a while, I panicked and hit the eject button. I was newly married and it was a bit rocky already. I had no interest in moving to Australia and putting more strain on my relationship. I left to join a family office because private equity looked too much like banking 2.0, spreadsheet after spreadsheet.

Finally, the buyside! The family office belonged to a wealthy older gentleman who had made a fortune investing in small caps, turnarounds, PIPE deals. A gifted self-made financier. Alas, he was retiring. I spent the next couple of years multi-tasking between investing and helping out with family office issues such as implementing creative tax structures, insuring art collections, and moving cars between properties.

After that I worked at another family office, then at an institutional consulting firm (analyzing private funds for institutional allocators), and finally, briefly, at a hedge fund.

Part of me held on to a vision of success and happiness based on succeeding as a detail-oriented analyst and hyper-competitive investor. Something that I clearly wasn’t. I have a lot of respect for people who excel at this kind of work but for me, as they say, it was not a good fit. In my heart I wanted to be a writer. I wanted to be creative, to daydream, to engage with smart people and learn about big ideas.

But I had become the monkey with a fistful of salt, or in my case income and status. I had trapped myself and was unwilling to let go of a broken career path. And I had to learn this painful lesson over and over (and over) again.


Last year I was let go from my job and moved back to Germany. I felt defeated. I had absolutely no idea what to do next.

It took me a while to realize how many possible “life paths” I was still looking at. What to do for work, where to live, how to find a new tribe. Even how to have another go at having my own family. Starting with a blank sheet of paper was dizzying: the ultimate paradox of choice. Infinite options I would have to forgo. What if I made the wrong choice? What if I screwed it all up again - but this time in my 30’s? For a few months I felt absolutely paralyzed.

It took many Spaziergänge (long strolls in nature), conversations, meditation, reading, and journaling to come to terms with a new idea: don’t worry about picking the right path, the perfect path. It doesn’t exist. As long as you’re true to yourself and pursuing goals that are meaningful, you’re on the right track. It’s okay for a new path to be rocky and intimidating, as long as you’re moving forward regardless. It’s okay to experience setbacks and make mistakes, as long as you keep trying.

If you’re pursuing a worthwhile goal, every twist and turn can be an adventure, a challenge. It’s all part of the journey and it starts with letting go of the salt.


Reading

If you’re looking for a detailed account of how the dotcom bubble developed, check out the book dotcon.

If you’re looking to understand how Silicon Valley truly came to be, check out this long presentation (video and slide deck) on the Secret Military History of Silicon Valley

Bireme Capital on the speculative pyramid: the transcenders, the contenders, the pretenders and pump-and-dumpers. “Today’s pump-and-dumps are far more collegial. Very few people are duped. Instead, traders on Robinhood, Reddit and Twitter coalesce around a stock. The stock serves as a Schelling point for an informed and cooperative Ponzi scheme -- a Ponzi game, or a Ponzi party, if you will.”

Voss Capital on value stocks: MBIN, COOP, AOUT, RMNI. “Most stocks are Veblen goods, but that is nothing new.”

Goehring & Rozencwajg on commodities: “Given recent data from key oil consumers such as China and India, we believe we may be on the verge of a demand boom that could take total consumption well past the prior high.”

If you enjoy company case studies, take a look at this detailed write-up of Coca-Cola in when Buffett invested in 1988, acquiring what he called a “royalty on sips.”

This was a great interview with Patrick Collison on innovation, the speed of progress, role of government. “Tenet is a movie about time moving backwards and forwards simultaneously… as a result of its policies, California is the Tenet of states.”

Deep dive on George Soros: “Soros is the best loss taker I have ever seen.”

A taxonomy of moats:


Podcasts

William Bernstein on religion and money. "The more compelling a narrative is, the more corrosive it is to our cognitive, analytical" ability." Highly compelling narratives: “effortless success” and “end of the world” (from medieval millennial sects to goldbugs, bitcoin hodlers).

Super interesting conversation with Ben Horowitz on building enduring cultures (examples include the Samurai, prison gangs, Haitian slave revolution). “You can't just say 'do the right thing.’”

Wide-ranging conversation with Marc Andreessen about culture, media, OODA loops, CEO risk aversion, and appetite suppressants.

If you’re interested in hairy small cap special situations, check out YAVB podcast with Jacob Rubin on Eros STX.

John Hempton on how he manages his short book during a retail mania and shorting everything in the Neil Woodford fund complex when it fell apart.

A meandering and personal conversation with Herb Kelleher of Southwest Airlines, recorded shortly before his death.


Disclaimer

This is not a recommendation to buy, hold or sell any securities or other financial instruments and does not constitute an investment recommendation or investment advice. I’m merely highlighting people and companies worth learning about. I write purely for entertainment purposes. Always do your own research and consult your investment advisor. I may at any time transact in any of the securities mentioned.