Invest Like the Best with Patrick O'Shaughnessy

Latest Episodes:

[REPLAY] Sam Hinkie – Data, Decisions, and Basketball - [Invest Like the Best, EP.88] Jun 04, 2019

Show notes

I came across this week’s guest thanks to the overlap of three passions of mine: data informed investing, value creation, and basketball. Sam Hinkie worked for more than a decade in the NBA with the Houston Rockets, and then most recently as the President and GM of the Philadelphia 76ers. He helped launch basketball's analytics movement when he joined the Houston Rockets in 2005, and is known for unique trade structuring and a keen focus on acquiring undervalued players. Today, he is also an investor and advisor to a limited number of young companies in which he feels his experience can improve outcomes.

Please enjoy this unique episode with Sam Hinkie.

Show Notes

3:24 – (First Question) Advantages of having a long view and how to structurally harness one

6:08 – Using technology to foster an innovative culture

6:18– Empire of the Summer Moon: Quanah Parker and the Rise and Fall of the Comanches, the Most Powerful Indian Tribe in American History

10:16 – Favorite example of applied innovation from Sam’s career

11:34 - Most fun aspect of doing data analytics early on the Houston Rockets

13:38 - Is there anything more important than courage in asymmetric outcomes

14:29 – How does Sam know when to let the art of decision making finish where the data started

16:29 - Pros and cons of a contrarian mindset

17:26 – Where he wanted to apply his knowledge in sports when first getting out of school and how his thinking is best applied in the current sports landscape

21:39 – How does he think about trying to find the equivalent of mispriced assets in the NBA

23:12 – Where tradition can be an impediment to innovation

25:07 – What did the team and workflow of the team look like in the front office

27:03 - The measure of truth in a sports complex

29:10 – What were the early factors coming out of the data that helped to shape NBA teams

30:42 – Best tactics for hiring

33:59 – Process of recruiting spectacular people

35:39 – Thoughts on fostering a good marriage

37:57 – Picking your kids traits in your spouse

38:02 – Selfish Reasons to Have More Kids: Why Being a Great Parent is Less Work and More Fun Than You Think

40:45 – What kind of markers does he look for when evaluating long term investment ideas

42:44 – His interest in machine learning

45:55 – What’s more exciting, the actual advances in machine learning or the applications that can be imagined as a result

47:15– International Justice Mission

48:11 – How he got started teaching negotiations and some of the points he makes in that class

49:16 – Effective techniques for negotiating

50:03 – Is negotiating contentious, do you need empathy

50:41 – A Rorschach test of Sam based on his reading of Lessons of History (book)

53:01 – Biggest risk Sam took in his career

54:37 – Biggest risks Sam took while with the 76ers

58:09 – Do people undervalue asymmetric outcomes in the NBA 1:00:11 – The players Sam has enjoyed watching over the years

1:02:45 – Why Robert Caro is a favorite author of his

1:04:30 – Kindest thing anyone has done for Sam

David Epstein – Wide or Deep? - [Invest Like the Best, EP.133] May 28, 2019

Show notes

My guest this week is David Epstein. David is a writer and researcher extraordinaire and the author of two great books. His second, Range, is out today and I highly recommend it. We discuss the pros and cons of both the generalist and specialist mindsets in detail and go down many interesting trails along the way. Please enjoy our conversation.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:12 - (First Question) – What he uncovered in “The Sports Gene: Inside the Science of Extraordinary Athletic Performance” that led him to his latest book

2:38 – Debate with Malcolm Gladwell (YouTube)

4:12 – What did the public pay most attention to and what did they gloss over

7:56 – How his views on nature vs nurture shifted during the process of writing The Sports Gene

10:05 – Blending practice with your nature

13:04 – His process of reading 10 journal articles a day as part of his research

19:06 – Exploring his new book “Range: Why Generalists Triumph in a Specialized World”, and his idea of Martian tennis

23:03 – Idea of the cult of the head start and how we set up our own feedback loops

28:58 – What does his research say about the nations education system

30:42 – The Flynn Effect chapter

33:54 – Hacks for learning

37:52 – The concept of struggle and harnessing the power of it

46:31 – Personality changes and how to drive those changes in a positive way

52:00 – Using the outside perspective in businesses for more productive outcomes and how it applied to Nintendo

52:59 – Josh Wolfe Podcast Episode

1:04:45 – Other examples of using withered technologies, 3M

1:09:00 – The arc of his work and how it has evolved

1:13:54 – Taking a different view on problems

1:17:52 – Ending Medical Reversal: Improving Outcomes, Saving Lives

1:18:04– Anyway to change these bad trends with new strategies

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Priya Parker – The Art of Gathering - [Invest Like the Best, EP.132] May 21, 2019

Show notes

This week I’m hosting an investor retreat and so thought it fitting to release this conversation with Priya Parker on the art of gathering.

I’ve been interested in the topic of community and gathering for some time and along with the book The Art of Community, Priya’s book on the art of gathering is by far the best I’ve read. It is both conceptually interesting and extremely practical. In the book there is literally a table for how big a gathering space should be per person, sorted by the type of vibe you are after.

We had a time constraint but I could have talked to Priya for much longer. I hope you enjoy our conversation as much as I did, and that it inspires you to do something new and different with friends, family, or colleagues.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:23 - (First Question) – Overview on what she does as a conflict resolution facilitator

1:38 – The Art of Gathering: How We Meet and Why It Matters

4:45 – Lessons about structuring a gathering from her early very difficult work and the idea of sustained dialogue

7:43 – First event she facilitated

9:38 – Importance of a good opening for any gathering

12:30 – Identifying a good purpose for a gathering

15:06 – Why being specific on rules/code of conduct leads to more success

18:54 – Do rules help facilitate more creativity in groups

21:22 – Segregating a good from bad purpose

24:34 – Identity and good/bad gatherings

26:50 – Purpose and the guest list for a gathering

31:03 – Community building is line drawing

32:27 – Dreams from My Father: A Story of Race and Inheritance

34:29 – Importance of well crafted invitations

35:17 – Making the middle of gatherings interesting

39:21 – Exploring risk at gatherings

41:28 – Patterns of Transformation

41:43 – The hero’s journey

46:54 – Making a meaningful transition out of these gatherings

52:39 – Kindest thing anyone has done for Priya

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

[REPLAY] Tim Urban - Grand Theft Life - [Invest Like the Best, EP.59] May 14, 2019

Show notes

This week’s conversation is about artificial intelligence and interplanetary travel. Its about content creation, thinking from first principles, and death progress units. Its about brain machine interfaces and why it is crucial that you be a chef and not a cook.

My guest is Tim Urban, along with his business partner Andrew Finn. Tim is the most entertaining writer I’ve come across in years, who explains complicated and interesting topics to his millions of dedicated readers on the website “Wait, But Why.” As an example, Tim’s last post on Elon Musk’s neurlink venture is 40,000 words long, roughly the length of a short book. It explains almost all of human progress and our potential future using drawings and cartoons. Its impossible to stop reading.

While this conversation is wildly entertaining, it is also chock full of metaphors and lessons that will be useful to anyone doing creative work or building a company. I hope this leaves you as energized as it left me. I called this episode Grand Theft Life because that is the name that Tim and Andrew give to their worldview, which I think will change the way you behave, too. Please enjoy my conversation with Tim Urban.

For comprehensive show notes on this episode go to http://investorfieldguide.com/urban

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Books Referenced

Superintelligence: Paths, Dangers, Strategies

Links Referenced

The Cook and the Chef: Musk’s Secret Sauce

Wait But Why

Neuralink and the Brain’s Magical Future

Wait But Hi

YouTube Channel Kurzgesagt – In a Nutshell

Show Notes

1:50 – (First question) – Explaining his concept of planets 1, 2, 3 and 4 and understanding the human colossus

5:46 – Tim’s favorite idea of the human knowledge compounding

7:52 – Die Progress Units (DPU)

9:45 – Different stages of AI and the positives and negatives of each stage

14;04 – What happens when AI gains breadth and general intelligence

16:23 – The idea of a cook vs a chef and how Tim had the chance to interview Elon Musk

17:48 – Why you should reason from first principles instead of reasoning by analogies

25:19 – Why it’s possible to turn a cook into a chef

30:08 – Why being a chef is the safer route in a world with AI and what Tim has changed in himself as to why.

31:22 – Looking at the discovery process

34:39 – Superintelligence: Paths, Dangers, Strategies\

40:01 – Being the person who creates the metaphor vs being the people who simply using them

43:41 – YouTube Channel Kurzgesagt – In a Nutshell

44:54 – Most fun that Tim has had researching a topic

46:08 – Musk model for attaining your goals

53:43 – Why not caring what people think is one of the world’s best superpowers, grand theft life

56:50 – Neuralink – what is it and how did Tim come to research it

1:02:38 – Elon Musk’s concerns about AI

1:14:28 – What then if the Neuralink concept works out

1:18:02 – Kindest thing anyone has done for Tim

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Stephanie Cohen – The Evolution of M&A and Corporate Strategy - [Invest Like the Best, EP.131] May 07, 2019

Show notes

My guest this week is Stephanie Cohen, who is the chief strategy officer for Goldman Sachs and a member of their management committee. Prior to her current role, she spent the majority of her career in the investment banking and M&A divisions at Goldman.

We discuss lessons learned from her career in M&A and the many initiatives she now leads at the firm. I really enjoyed her perspective on how a big, established firm like Goldman can balance innovation with improving existing businesses. Please enjoy our conversation.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:15 - (First Question) – Motives on both sides for doing M&A

3:26 – Most difficult deal she worked on

4:50 – Biggest value add she brought from her seat on the Fiat deal

5:59 – Biggest changes since she started to today

8:31 – Smartest ways for companies who want to be acquired to be prepared

10:14 – Best M&A banker she’s seen

11:13 – What should businesses looking to make an acquisition be thinking about

15:16 – What does a strategy from her perspective mean

17:16 – Tension between innovation and change

19:46 – Difference between bottom-up and top-down components of strategy

22:15 – Exploration vs exploitation

26:28 – Submission process within accelerate

29:37 – Next step after you see a good idea

31:05 – Her take on FinTech and Industrials and their collision

35:15 – Lessons from elite early stage investors

37:21 – The origins of the LAUNCH program

40:06 – Important pieces beyond just the capital

42:42 – How they market to women starting business

44:56 – Lessons that she has learned about narrative and communications

47:07 – How she handles developing talent internally

49:28 – Managing her time

59:28 – Biggest concerns about OKR’s?

52:09 – Kindest thing anyone has done for Stephanie

53:07 – Kids in the area of competing

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

[REPLAY] Will Thorndike - How Skilled Capital Allocators Compound Capital - [Invest Like the Best, EP.36] Apr 30, 2019

Show notes

This week’s guest is Will Thorndike, an author and investor whose book The Outsiders is an all-time favorite of mine. Our conversation is in two parts. First, we dive deep into the lessons of his 8-year research project studying CEOs who were master capital allocators. These CEOs include Henry Singleton, John Malone, Tom Murphy, Katherine Graham, and Warren Buffett. We discuss how these CEOs tended to be contrarians on topics like dividends, buybacks, acquisitions, and the use of debt. As we go through each of the tools in the capital allocators toolkit, you’ll hear several useful lessons for running or evaluating a business.

In the second part, we cover Will’s career in private equity. Will founded and continues to run Housatonic Partners, investing in buyouts, recaps, and search funds. Will has been one of the most active search fund investors for decades, and given how much time I’ve spent in past episodes on the searchers or operators in the micro-cap, permanent equity space, it was great to get the perspective of an experienced LP. As always, we also take time to survey the dangers and opportunities in today’s private equity market.

For comprehensive show notes on this episode go to http://investorfieldguide.com/thorndike

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Josh Wolfe – The Tech Imperative - [Invest Like the Best, EP.130] Apr 23, 2019

Show notes

My guest this week is Josh Wolfe, co-founder and managing partner at Lux Capital. I had Josh on the podcast last year which was one of the most popular episodes in the shows history. This is a continuation of our ongoing conversation about investing in the frontiers of technology. My favorite thing about Josh and the way that he invests is the mosaic that he and his team at Lux are constantly building to understand the world and where new companies may fit in. We cover a crazy variety of topics from business model innovation, roles of a CEO, the military, the death of privacy, and arrows of human progress. Please enjoy round two with Josh Wolfe.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:22 - (First Question) –Ability to tackle massive scale problems

4:05 – Key roles of leaders and his checklist for evaluating them

5:55 – Common traits among founders that make them incredible storytellers and leaders

10:22 – The concept of ill-liquidity

14:53 – Thoughts on the types of companies going public

16:41 – Most innovative business models

19:14 - Advice for LP’s

23:51 – Common devil

24:01 – The True Believer: Thoughts on the Nature of Mass Movements

25:09 – Big internal debates at his firm, starting with price discipline

28:45 – The value debate internally

33:34 – CRISPR from an investment standpoint

36:50 – Edge cases they are looking at

46:52 – How they target ideas in a single concept

50:01 – The Coast of Utopia: Voyage, Shipwreck, Salvage

51:04 – New theses that they chase

56:31 – Recent adventure with special operations guys

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] Apr 16, 2019

Show notes

My guest this week is Katherine Collins, who is the head of sustainable investing at Putnam Investments, a portfolio manager on two of Putnam’s sustainable investing funds, and the author of the book The Nature of Investing: Resilient Investment Strategies through Biomimicry.

Our conversation is on the ins and outs of ESG and impact investing, a young but increasingly common topic in the investing world. This is challenging ground for me as a quant, because the data available is so new and limited—so Katherine’s perspective was very helpful as we continue to learn. Given the importance of this topic, I’m also searching for more guests with both positive and negative views on the role of ESG in an investing framework, and welcome suggestions for future guests. Please enjoy my conversation with Katherine Collins.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:29 - (First Question) –Mechanical vs human judgement processes

4:21 – ESG, and the non-utility portion of it.

7:11 – Data behind the objective function that is different from returns

12:34 – What are the most interesting data sets

16:04 – How does she determine what factors to target

19:31 – Why do we know that diversity of experience/opinion/background is good for a company

21:30 – The social vertical and how it plays into her investing system and better returns

25:51 – Corporate Sustainability: First Evidence on Materiality

27:00 – Environmental factors and the issues that jump to mind

29:48 – Importance of signing the UNPRI and is it just box checking

32:33 – Data for companies on the solution oriented companies

34:53 – Why doesn’t the market recognize the Alpha

36:17 – LP interest in ESG investing

38:25 – How other groups of investors approach ESG

40:03 – Best practices at business making an impact in ESG

44:01 – Unique or interesting tactics in environmental

46:33 – Who is the biggest opponent or position in opposition of ESG

47:37 – Most interesting edge

48:20 – Playbook for business managers thinking about social for the first time

49:59 – Measurements vs principles/values

51:21 – Advice to quants trying to use ESG in how they gather data

53:04 – Most memorable encounter with a company through the lens of ESG

53:53 – Where to learn more about ESG

54:50 – How much role regulation plays in the future of business sustainability

56:30 – Any more lessons from her research into natural systems

57:05 – Kindest thing anyone has done for her

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] Apr 09, 2019

Show notes

My guest this week Geoffrey Batt and the topic of our conversation is how to earn transformational returns in very hard markets. In his case, that means Iraqi equities which we cover in detail. He now runs a large pool of capital in Iraqi stocks through his firm Euphrates, but the journey was arduous to say the least. This is one of my favorite boots on the ground contrarian investments stories thus far on the podcast. I hope you enjoy the story and the lessons that Geoff has to offer.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:15 - (First Question) – What does it take to earn transformational returns

4:43 – How he deals with LPs, especially given the volatility of the market he invests in

10:26 – Why LPs have to think about the other investors in a fund

1:17 – How Geoffrey got interested in the Iraqi market

16:15 – Factors he was considering when exploring Iraq

16:53 – Harvey Sawikin Podcast Episode

19:20 – Visiting companies in Iraq

22:30 – Most memorable meeting with a company on his first trip

27:18 – Size and nature of Iraqi market when he first got interested

30:44 – A specific allocator in Iraq

34:37 – Does price reflect the work over there

37:51 - What does he perceive as his role in the changes to Iraq’s equity market

40:12 - How do Iraqi equities look today compared to when he started and is the opportunity still interesting

44:14 – How businesses perceive him now that the market has opened up more

47:28 – Scale of potential return and where it comes from

49:51 – Advice for younger aspiring investors exploring frontier markets

52:16 – Kindest thing anyone has done for Geoffrey

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Brian Singerman – Investing in the Best Founders - [Invest Like the Best, EP.127] Apr 02, 2019

Show notes

My guest this week is Brian Singerman, a partner at the venture capital firm Founders Fund. Founder’s Fund is widely considered one of the top VC firms and its partners are known to have diverse investment strategies.

Brian invests across industries and focuses on backing exceptional founders. You’ll hear right off the bat that he cares about moat, market, and strong execution. I love his point that the only way to become a good investor is to do a lot of investing. He describes himself an investor who uses his gut a lot, which took me a while to get used to in our conversation. But I have to say that at the end of this episode I felt refreshed and generally excited to keep putting in reps in my own way, both in the podcast and the quant research settings. I hope you enjoy.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notesd

1:28 - (First Question) – What Brian looks for when evaluating companies

2:38 – What a moat looks like in investing

3:11 – Most memorable initial moat

4:17 – How he evaluates a potential market

5:28 – Attributes they look for in founders

6:24 – Most significant technological changes and how they have impacted his investment strategy

8:57 – The sourcing of his deals

13:00 – Qualities he likes at various stages of deal sourcing