Over the past two years, I’ve studied countless investors who’ve had outsize success. One firm I studied was Altos Ventures. It popped up on my radar when I read the S-1 for Roblox and learned the firm had an almost 25% ownership stake when the company IPOed at a $35.5 billion valuation (see my post here). Altos’s stake was worth over $8 billion at IPO, an enormous haul for a single firm. (The Altos ownership stake can be seen on page 172 of the S-1, here. The ownership is under the name of Altos partner Anthony P. Lee, who serves on the Roblox board.)

Today, an interview of Ho Nam, an Altos founding partner, was published. I’ve watched several Ho interviews; this one was deeply personal and highlighted his struggles while building Altos. Ho described how Altos struggled for over fifteen years. The firm raised four funds and hadn’t generated meaningful returns. The partners hadn’t made any money and weren’t seeing eye to eye.

Their struggles led Altos’s three partners to change their strategy. They originally played what Ho calls the VC lotto game. They’d find promising companies early and focus on preparing them to raise the next funding round from a brand-name VC firm at a higher valuation. That strategy imploded when the dot.com bubble burst. The Altos partners realized they were playing a game they weren’t suited to win. They changed their strategy to focus on helping founders build enduring cash flow–positive businesses that didn’t require excessive venture capital funding. They focused on helping the founders create value for customers in a capital-efficient manner, not on hyping them up to later-stage VC firms.

This strategy change worked in a major way for Ho and Altos. The firm has since had several early-stage companies that each has gone on to be worth over $1 billion; a few, over $10 billion. The firm still owns a stake in Roblox, although it’s been distributing shares to LPs since the IPO, likely for liquidity reasons. As of this writing, Roblox has a market cap (valuation) of almost $42 billion. Coupang is another company Altos invested in early, and that company is publicly traded with a market cap of over $40 billion as of this writing.

Here are a few of my takeaways from Ho’s interview:

• Everyone can’t play every game. Figure out what game you can play and win. Play that game, even if it’s not popular at the time. Winning fixes everything, and you’ll look like a genius in the end.
• Struggle is often a prerequisite to outsize success. The painful times force you to evaluate why things aren’t working, hopefully leading to changed behavior. The wisdom gained during struggle leads to better decision-making, which is required for outsize success.
• Companies exist to add value to customers. You add value to customers by solving their problems. Focus on solving the customer’s problem and capital to grow your company is less likely to be an issue.
• The best founders are capital efficient. Constraints force creativity, which leads to better solutions for customers. Raising too much money leads to loose spending, which leads to founders focusing on raising capital from investors, not solving their customers’ problems.
• Control matters a lot for founders. If you’re constantly raising rounds of capital, you're losing control, and your board could fire you.

I enjoyed this interview, which contains nuggets of wisdom for founders and investors to learn from. If you want to watch this section of the interview, you can find it here. You can watch the entire interview here.

Note: Roblox is probably one of Altos’s most capital-efficient portfolio companies. Ho shared on X (formerly Twitter) that Roblox raised only roughly $10 million in funding to get to cash flow positive. All other capital raised was for secondaries (to buy shares from other investors) or to put on the company’s balance sheet.

I began reading a new book that I’d put off reading for a long time: Poor Charlie’s Almanack: The Essential Wit and Wisdom of Charles T. Munger. I bought the 2005 version years ago. It’s a huge book with tons of pictures, so it’s awkward to hold and difficult to read. Stripe Press printed a version without all the pictures in late 2023 that’s the size of a normal book, making it more manageable. I bought the updated version and dug into reading it.

I’m still reading the book, but so far, I like it. A few high-level thoughts:

• Psychology – Robert Hagstrom’s books got me more interested in understanding psychology to understand human decision-making (see this post). Munger writes extensively about psychology and judgment. He reiterates the importance of understanding psychology if you want to do well in life. He shares mental models and stories that make understanding some of the big ideas in psychology easier. His insights on psychology and his views of its importance got me excited to learn more about the topic.
• Education – Munger is critical of higher education institutions, even though he graduated from Harvard Law. He highlights the gaps in how these institutions teach—or don’t teach—certain topics like psychology that make them difficult to apply in everyday life. His big gripe is that they teach these topics in isolation and don’t educate students on how they work in conjunction with other disciplines. They also don’t teach all concepts in a discipline; they selectively choose which ones to cover. He advocates for a multidisciplinary approach to teaching because it better reflects the complexities of the real world. He also advocates for learning all the big ideas in a discipline. He gives the example of how his law classes, such as negotiations, would have been enhanced by psychology concepts. He advocates for people to educate themselves by reading about the big ideas in a discipline such as psychology. The education you can give yourself can be better than what you get at a college or university because it can be multidisciplinary and include all concepts in a discipline.
• Multidisciplinary learning – Munger is a big believer in the idea that understanding lots of different disciplines and how they work together better prepares you to navigate life and, in his case, make better investments. Having mental models from the various disciplines enhances your ability to read situations and make decisions superior to those of others.

I’m glad I got around to reading this book. I’ve made lots of highlights and notes already. I’m looking forward to finishing it.

If you’re interested in the book, you can learn more about it and download a free PDF copy at Stripe Press here.

Last year, I added Amazon affiliate links to my blog and podcast for books I shared (see here). Affiliate programs are commission programs. For every person I refer to Amazon who purchases the item I recommended, I get a commission on the sale. These programs didn’t interest me initially. For books, the effort exceeds the reward. Affiliates earn roughly $0.50 on a book sale. But then I realized the true value is in the data. Amazon’s affiliate program is robust, and I can track which books people click on and which books they purchase. I was very interested in the data, so I signed up for the program and started using affiliate links in mid-June 2024.

I have roughly six months of data. Here are the high-level stats:

• Items purchased: 14
• Total revenue generated (for Amazon): $226.05
• Average revenue per item (for Amazon): $16.14
• Total affiliate earnings (for me): $6.17
• Average earnings per purchase (for me): $0.44

I earned about $1 a month from affiliate commissions. My time to implement and execute this was worth more than $6, lol.

But I dug into the data and had some interesting insights:

• No book had more than one affiliate purchase.
• The books purchased were mostly about investors who became entrepreneurs when they founded investment firms: Jim Simons, Ed Thorpe, etc. This was interesting and unexpected.
• I had three international sales in Germany and the United Kingdom. I didn’t expect to have international reach.
• The majority of purchases were of Kindle or audiobook versions. I’m a physical-book person, so this surprised me.

Absent this affiliate experiment, I wouldn’t have known any of these things. So, from an insights perspective, the experiment was valuable. The sample size is small, of course, so I can’t draw definitive conclusions, but it’s still helpful.

So, what’s the verdict on my Amazon affiliate experiment? I’m glad I did the experiment because of the data it provides. I won’t get rich off affiliate commissions on book sales, but the insights are valuable. Now that I’ve got this, stopping the experiment doesn’t make sense. I’ll keep adding the affiliate links to content I share about books.

Current Project: Reading books about entrepreneurs and sharing what I learned from them

Mission: Create a library of wisdom from notable entrepreneurs that current entrepreneurs can leverage to increase their chances of success

Cumulative metrics (since 4/1/24):

• Total books read: 45
• Total book digests created: 15
• Total blog posts published: 280
• Total audio recordings published: 103

This week’s metrics:

• Books read: 1
• Book digests created: 0
• Blog posts published: 7
• Audio recordings published: 0

What I completed this week (link to last week’s commitments):

• Read T. Rowe Price: The Man, the Company, and the Investment Philosophy by Cornelius Bond
• Created a repository for growth ideas and added several ideas

What I’ll do next week:

• Read a biography, autobiography, or framework book
• Pick two types of output and associated user problems and create an approach and workflow to solve each problem
• Get feedback on the problem, vision, and mission statements from two seasoned entrepreneurs
• Create a concise hypothesis statement  
• Share the draft taxonomy with two people
• Continue linking blog posts about the same book
• Continue updating descriptions for blog posts about the same book

Asks:

• None

Week two hundred fifty was another week of learning. Looking forward to next week!

Current Project: Reading books about entrepreneurs and sharing what I learned from them

Mission: Create a library of wisdom from notable entrepreneurs that current entrepreneurs can leverage to increase their chances of success

What I struggled with:

• There were lots of macro distractions this week (snow in Atlanta, wildfires in California, etc.). I can’t control or impact any of these kinds of things, so I want to do a better job of tuning them out next week.

What I learned:

• No material learnings related to this project this week. This is concerning. I should be learning something every week (if not every day).

Those are my struggles and learnings from the week!

Last month, I set a goal for the Christmas holiday (see here). The goal was to write a blog post series on a book I’d read. I’ll get straight to it. I failed. There’s no real excuse. There’s no one to blame. I just didn’t check this box. I view every failure as a learning opportunity, so I looked for the lessons in this one.

I summarize each book by creating a digest, which I use to create a blog post series. I can’t create a quality blog post series without the digest. Creating the digest was the big obstacle to hitting this writing goal. It’s a manual process that requires multiple blocks of concentrated time totaling more than ten hours. I somehow forgot this when I set the goal. Reading is different—I can pick up a book and read a few pages if I have five extra minutes. I can’t do that with writing.

If I want to get back into the habit of creating digests, I need to ensure that I have several blocks of time exceeding ten total hours—or figure out how to use technology for digest creation. I probably won’t consistently have the blocks of time, so I’m aiming for option number two.

The book The Money Masters: Nine Great Investors: Their Winning Strategies and How You Can Apply Them by John Train introduced me to Thomas Rowe Price Jr. (aka T. Rowe Price). I’m familiar with the investment firm bearing his name but not the man himself. I wanted to learn more, so I’m reading T. Rowe Price: The Man, the Company, and the Investment Philosophy by Cornelius Bond.

The book says that Price was one of the first investors to recognize the value of growth investing and adopt it as a strategy. After the Depression began, many people focused on preserving capital, so bonds were popular. In 1934, he recognized that the largest fortunes in the country had been created by owning growing businesses. He developed an investment strategy based on this insight and pitched the investment firm he was working for to test the approach.

With the country still feeling the Great Depression, the firm turned him down. Frustrated and having conviction about his approach, Price quit in 1937 to launch his investment firm, which would become T. Rowe Price Group.

After reading several biographies about famous investors, I’ve noticed that they all came to similar realizations about their investment approaches: investing in growing businesses is the key to outsize returns (Price’s biography details why this works so well). However, how these investors executed their strategies and built their firms varies drastically. Price built a firm that made decisions by committee and was paid by fees from customer accounts. Buffett created a decentralized conglomerate (after he shuttered his investment partnership) and increased his wealth through equity ownership in the conglomerate.

There’s more than one way to capitalize on an insight, as the stories of these investors prove. The most important thing is doing so in a way that aligns with the beliefs of the founder of the investment firm (or the investor, if they’re independent).

This week, an entrepreneur friend gave me feedback on a blog and podcast series I did on a biography. He said the posts resonated with him because of the insights I shared. Connecting the dots between different people and periods was helpful and would be hard for him to do himself. And because the insights derive from the experiences of people who did what he’s attempting to do, but on a massive scale, they’re more valuable because the people’s outcomes make them more credible.

I appreciate my friend giving me his candid feedback. The books I read are available to everyone, so it surprises me when people value the connections I make between ideas in different books. Because I discovered those connections, I assume others have also done so, or could have. But I’m learning that’s not common. I suppose this is because of the effort required to find important ideas in the sea of unstructured text that is books. And because of the dispersed nature of books.

My takeaway is to lean more into sharing the connections between ideas in various books. It’s tremendously valuable to entrepreneurs.

I was chatting with a friend who’s an entrepreneur about AI workflows and learning tools. He told me about a new product from Google. Gemini Advanced just released its deep research feature, an AI research assistant. It uses Google’s Gemini large-language models to research complex topics on the internet and generate a comprehensive report of its findings. Google describes it as an “agentic system that uses Google’s expertise of finding relevant information on the web to direct Gemini’s browsing and research.” My friend told me a story about how he used it to help him learn about a topic. The tool provided him with a thirteen-page report that got him up to speed on the topic quickly.

What I like about this tool is that it gives you a step-by-step plan for how it plans to research the topic before it starts, and you can edit the plan if you need to. The tool then begins researching by searching for phrases, learns from those searches, and then searches for new phrases to learn more. It concludes by compiling everything it learned in a single document, which can be exported in a Google Doc. Google's blog post goes into more detail and includes a demo. The downside is that the tool costs $20 per month. But you can try it for free for 30 days, which is what I’m doing.

Researching things online can be a pain; it’s not something everyone is good at. I’m excited about this tool because it has the potential to help everyone efficiently find the information online that’s helpful to them.

A few days ago, I shared the stats around my reading for 2024 and what I learned from the process. I included the total number of books I read and the number of books by month. A few people have asked me for the list of book titles. I can see the value in this and want to share my reading list in an easy-to-consume way.

In a perfect world, I’d have a list I can update weekly as a dedicated page on the blog after I finish each book. That way people could easily see the current list anytime. I did some digging, and the available tools for this aren’t great. Goodreads has a few widgets that can be added to a blog, but I don’t like them.

I’m going to keep searching to see if I can find a tool that allows me to update and share my reading on my blog. I might ask some developers how involved it would be to build a custom widget. Hopefully, I’ll find a solution to this problem.

In the meantime, I’ll manually share my reading list from last year via a blog post. It’s not ideal, but it checks the box for now. Hopefully, I can get that list published in the next week or so.