"Frederik Gieschen wrote a piece called ""The Reading Obsession."" In it, he talks about how much investors LOVE to talk about how Warren Buffett just reads all day. The point he makes, instead, is that networking, building friendships, and traveling all played as important a role in Buffett's success as his reading."

"The act of ""working"" in knowledge is a fundamental aspect of being human. What has changed, instead, is the volume and mediums of information. The industrial revolution (among other things) helped drive an explosion in literacy rates around the world."

"Reading enables you to build a ""prepared mind."""

"“In the fields of observation chance favors only the prepared mind.”"

"""The prepared mind, in a sense, is reacting to a different aspect of where opportunities come from. Preconditions. If you look at the great things that have happened in venture, there's a set of preconditions, a little bit like adaptation. Like people don't just start with a wing. It wasn't like all the sudden, insects could fly. There were preconditions, there little stubs that came off of amphibians, or fish, of course, we all came from fish, but if they didn't have a little stub, it wouldn't then compound towards the wings, so there's these preconditions. And so having a mobile phone penetration at 20% with GPS as a precondition for Uber, for Instagram."""

"Reading is the process by which we build a prepared mind. If you haven't done the work to understand the concepts, you're much less prepared in every conversation you go into."

"we had Packy McCormick as our guest speaker. He talked about a similar evolution in his writing, where for a long time he felt the pressure to write each week. Eventually, he came to the conclusion that writing something good was more important than writing something each week."

"""I write because I don't know what I think until I read what I say."" (Flannery O'Connor)"

"one of my favorite experiences while talking, is talking about something that I've likely thought about a fair bit (see above: reading = prepared mind), but probably haven't ever really articulated. But then being forced to talk about it with someone, or to write out my perspective knowing that someone will read it... it's like I'm bringing that idea to life."

"Roam has created an interface that users resonate with. It becomes their default “thinking” interface. That leads to more meaningful usage that is creating [[relationships]] right in the process of thinking."

"Co-founder Conor White-Sullivan has compared Roam to Excel as both are products with “a low floor and a high ceiling.”"

"In Roam we’re working with graphs instead of worksheets. Graphs are the collection of pages and bullets across a specific account. Roam takes the concept of referenceable pieces of data and applies it to each bullet point, or block. Roam is letting you take each and every thought you have and assign it a unique identifier (e.g. a block reference). This turns unstructured data (random ideas in a text string) into structured data."

"it was built with a much grander vision of allowing users not just to read each other’s public notes but also to remix them."

"Cunningham’s Law: “The best way to get the right answer on the Internet is not to ask a question; it’s to post the wrong answer.”"

"The vision for Roam isn’t limited to organizing your information. The grand vision is to organize all information."

"One functional problem with organizing the world’s information is the ingestion point. Google search can only access what people have put on a website and made public."

"The internet is a collection of links; websites, subdomains, images, files, video, audio."

"The people who are going to solve those — the scientists — they have half-formed ideas in their head, they try to communicate those over the web. But a lot of the state of knowledge of the human race at the moment is on databases, often sitting in their computers, and actually, currently not shared."

"In 2019, Johnny Boufarhat founded Hopin, a virtual events platform, in what may be the most well-timed founding ever."

"the company's valuation went from $2B to $7.7B. The company also reached $100M+ of revenue, serving 100K+ organizations running 15K+ events per month!"

"And then, wouldn't you know it, COVID restrictions started to lift, people could travel again, and Hopin's usefulness dropped from 15K events per month to 158."

"the company's flagship virtual events product was being sold to RingCentral for $15 million in cash with $35 million in potential performance-based earn outs."

"Just about everyone working in startups has had some version of this experience: ""this doesn't make sense, does it?"""

"Crypto mania. Billion-dollar valuations for pre-revenue companies. Investors branding themselves as ""micro mobility investors."""

"Investors are very much in the business of ""dreaming the dream,"" but too often we have investors that assume the dream is supposed to be a fever dream."

"Instead, the reality is that human behavior changes very little, and when it does it happens very slowly"

"More often than not, you can see these changes coming in the future. You may not appreciate the gravity of the future, but you can see trends like cellular bandwidth speeds acting as a clear catalyst."

"During COVID, when investors whipped themselves into a frenzy, they would have done well to step back and think ""is this change based in something that feels real? Something that can stick around?"""

"""As the market changed, investors wanted to see evidence of dollars over user traction, making it difficult for [companies] to raise money. The investing mania that ended early last year has added to the pile of startups that are now shutting down as fundraising prospects dwindle. What we have right now is a perfect storm resulting in more than usual shutdowns."""

"Too much capital can cause a myriad of problems. For one, too much capital is typically driven by too many investors."

"Matthew Wansley and Samuel Weinstein published a paper entitled ""Venture Predation,"" where they coined the phrase ""venture predators,"" though they used it to refer to startups, not VCs."

"The idea they explored is the ability for venture-backed companies to leverage venture dollars to engage in predatory pricing. They can charge exorbitantly (even unsustainably) low prices in pursuit of market share."

"""Venture capital enables the perpetuation of unsustainable models in favor of eventual scale. This isn’t necessarily a bad thing. The runway to experiment has been critical for any number of businesses. But any good thing taken to excess can become problematic. The same is true with capital."""

"""Critically, for VCs and founders, a predator does not need to recoup its losses for the strategy to succeed. The VCs and founders just need to create the impression that recoupment is possible, so they can sell their shares at an attractive price to later investors who anticipate years of monopoly pricing."""

"One of the most un-dealt with ramifications of a 13-year bull market is the institutionalized belief in ""the greater fool."" People can make money, not because a business is sound, but because there is always someone else down the line who will buy you out. And that was true for 10+ years!"

"But I think businesses whose operating model and valuation mechanisms were crafted between 2009 and 2021 all have a fundamental flaw of believing that the institutionalized belief in the greater fool will allow the next investor (the bag holder) to hide a multitude of sins."

"We need a stronger commitment to building businesses of which we would NEVER want to sell a share."

"(1) Get rich slowly, and (2) never sell a share of Berkshire Hathaway. I recognize the need for liquidity, both for founders trying to live their lives, and VCs trying to generate returns for LPs."

"Too many people want to get rich quickly, and to do it by selling to the greater fool. And that is a problem."

"So let's talk about competitive moats, and particularly why, for a big part of the journey, defensibility is for dummies."

"I'm certainly one of those skeptics that worry about how well a company can compete when their underlying technology has the same nuts and bolts as every other product tackling the same problem."

"Evan Armstrong explains the core components of a business: (1) Create stuff, (2) Acquire customer to buy stuff, and (3) Distribute that stuff. He describes the impact that AI will have this way:"

"""The internet broke the third category of distribution, and AI is going to break the first one. Innovations like GPT-3, DALL-E, and other AI tools will dramatically decrease the cost of producing goods with a digital component."""

"So what does that leave? Customer acquisition."

"If your CAC stays high even as you dominate a market you likely don't have a very effective moat."""

"When AI automates content creation costs to zero, the effects will be far-reaching. More and more power will accrue in those companies that have novel acquisition methods that do no rely on any gatekeeper. In previous editions of this column, I’ve argued that “addiction will be the blood sacrifice required of consumers for businesses to win.” These tools will only exacerbate that dynamic"

"Customer acquisition will be a unique and powerful battlefield as companies look to set themselves apart. That's why brand and reach will become more important than ever. In an era of automated creation, you'll need to be even more creative with how you get your stuff in front of people."

"One of the best frameworks I've seen for what you're building is around ""capabilities."""

"""Capabilities (referred to as “powers” by some, including Helmer’s immensely impactful book 7 Powers) are the intangible assets that you have developed as a business that enable you to operate more effectively and earn returns above others in the market. Ultimately these are the engines of your competitive advantage, determining the persistence and scope of your moat."

"Identifying how to build that intangible asset is core to a company’s business model and requires deliberate planning to unlock."""

"The biggest recipe for building a competitive moat in the long-term are the business capabilities that you build early on. And here's an idea that may feel blasphemous in the current VC religion of ""profit, profit, profit,"" but burning cash can actually be an effective capability."

"It was burning money ineffectually."

"The logic goes, ""if I can spend $X (CAC) to acquire a customer that will spend $Y (LTV) then its worth it as long as $X < $Y."""

"Keeping $X low is a function of novel acquisition methods."

"Keeping $Y high is a function of stickiness. Stickiness can come from structural advantages, like long-term contracts, or it can come from optimize customer experience. Customers stick around when you have the best products that continue to improve at high velocity."

"First of all, I think moats are lame. It’s nice, sort of quaint in a vestigial way. If your only defense against invading armies is a moat, you will not last long. What matters is the pace of innovation. That is the fundamental determinant of competitiveness"

"Instead, it's a combination of them being inadequate alone (Elon's point) and the reality that in the earliest days startups ""a priori may be easy to copy or build."""

"Putting your faith into a business and trusting that it will protect itself without a durable competitive advantage is scary, but that is the reality of investing in young innovative businesses."""

"Instead, to Elon's point, a big focus should be on the pace of innovation."

"I would argue that how ""young"" a company is comes largely as a function of how quickly they're changing"

"Microsoft, on the other hand, feels like a company that has evolved dramatically over and over again (granted, they have plenty of their own monopolies). The transition from shipping physical disks to universalizing Windows to the Office suite to Azure, and now while they're old in years, but young in spirit, we get to watch them go through an AI evolution with OpenAI"

"They ship a huge amount of product extendability to ensure customer satisfaction and stickiness (e.g. that $Y stays as high as possible for as long as possible.)"

"When I think about core pillars of the software world, like Salesforce, ServiceNow, or Adobe, they've all extended their product capabilities pretty dramatically."

"Salesforce has long understood that their core value and defensibility is that businesses are inherently customer centric, and the most valuable data at a company is the data related to how they sell to and serve their end customers."

"Data has gravity, and this system of record both commands immense value on its own, but also creates influence on all other systems within an organization."

"Other systems need to play well with Salesforce, because if they don’t, they’re unlikely to be adopted. This makes Salesforce the System of Record. They have leveraged this to build a number of other large businesses in addition to sales — namely marketing cloud, service cloud, commerce cloud."""

"Moats are routinely discussed in a static sense, as if they exist in some form or fashion for most businesses. But the facts simply don't bear this out. Indeed, the facts show that every business, year after a year, decade after decade, has a non-zero percentage chance of extinction. Companies have a high failure rate in their first three to five years. Then the challenges plateau."

"""If you are evaluating a business, the number one question you want to ask yourself is whether the competitive advantage has been made stronger and more durable. That’s more important than the P&L for a given year."""

"Going forward, the very best companies will be those that have nailed a very specific pain point for a very specific type of person. They'll have formed a novel acquisition method for bringing those customers as cheaply as possible, and they'll have the product velocity and quality to keep those customers around for as long as possible."

"A fund is how you generate the most carry with the fewest people, you're just optimizing the mechanism. A firm, on the other hand, is (1) generating exceptional returns, but also (2) building enduring enterprise value."

"Enterprise value has to come from having a compounding advantage."

"If we came across the right person to scale a business in a great investment class, why not? If we could apply our strengths, our network, and our resources to make that business a success, why not?"