As I continue to unwind from investment banking, I have been enjoying reading a lot again. I have already worked my way through more books in the past six months than I did during the the three years of working at Credit Suisse. At the same time, I have been back to writing more, too. My writings have mostly been investment memos at work, but I am beginning to consider posting on my blog again as well. Overall, I am feeling more reinvigorated than ever before.
At the same time, it feels like our little tech sector corner of the universe is reaching a turning point. It seems like the pendulum that has been swinging within the industry from fear to greed since 2005, with only a slight bump in 2008/2009 (remember this Sequoia RIP good times presentation?!), is entering the final stretch of its decade long swing. That said, I have felt this way since 2012, so who knows, perhaps it will continue for another three years. But one thing is for sure, many things that have proved profitable in technology investing and start-ups over the past decade have, I believe, led many people to think that making money in this business is easy. This notion has had a number of effects locally, namely it has: (i) created a bumper crop of Micro VCs, (ii) pushed non-traditional late-stage investors to stretch for deals outside of their wheelhouse of expertise, (iii) driven prices to exuberant levels and (iv) caused an influx of recent college / MBA graduates into Silicon Valley when just 10 years ago this same cohort of human capital would have been heading to Wall Street.
How this all evolves as the pendulum’s motion turns is unclear. But with a renewed focus on fundamentals and valuation, I am more optimistic than ever that those investors (VC / PE and public markets) who are committed to the industry and asset class will have numerous opportunities for investment success as the current ebullient environment turns more rationale. (Yes, I’m looking at you committed tech investors who have pulled back in the past year+ who will once again emerge on the scene after the tourists are gone.)
All of this finally brings me to the title of this post: As you wait your turn to sort through the changing technology tide, why not read this post from Howard Marks who reminds us that as a successful fund manager, you need to be above average, and to do so is to be different, which for nearly countless reasons isn’t easy.