Would a 30 Year Old Warren Buffett be Studying Silicon Valley Tech Companies?
IAN CASSEL SEPTEMBER 1, 2016 BLOG, INTELLIGENT FANATICS 0 COMMENTS
Kevin Martelli, who is part of the MicroCapClub community, has given me permission to republish a memo he wrote 18 months ago which I thought to be very thought provoking and applicable to microcap investing. Enjoy.
The following pages are a collection of interesting facts and considerations on various topics related to entrepreneurship, start-ups and innovation. I have tried to summarize this in 20 pages after reading a significant amount of material on these fascinating subjects. There are probably no original thoughts in this memo, nevertheless some of the considerations provided may sound a bit provocative, but this was done to stimulate the reader’s thinking about these interesting topics (and to keep the memo short).
Overall I think studying how great entrepreneurs operate and how top venture capitalists select their investments is useful to become a better investor also in mature businesses (after all every mature business has once been a start-up and many of its traits and characteristics were set at the beginning).
Finally according to Ray Kurzweil’s Law of Accelerating Returns of human history, the amount of technological changes that occurred between 1750 and 2015, will probably take place in the next 20 years or so (since progress occurs at an ever faster rate in more advanced societies)1. This implies that technological innovation will become increasingly important for investors, regardless of their investment approach.
Key questions I have been trying to address:
Why, from an investment and business perspective, is it important to understand (i) what is happening in Silicon Valley today and (ii) which are the main drivers that over the last 50 years have led to Silicon Valley’s unquestionable dominance (vs. other parts of the world) in generating new tech businesses and innovations?
What are the key traits and characteristics of great entrepreneurs over the last couple centuries?
How do top venture capitalists select the start-ups to bet on?
Would Warren Buffett be studying Silicon Valley “tech companies”, if he was 30 years old today?
With specific reference to tech-related innovations and the start-up world discussed in this memo, which are the important questions that an investor should be asking himself/herself today?