Pods & Recs: No. 103
Today we have a fantastic episode with the famous short-seller Jim Chanos, an episode on how technology is only going to continue to have a huge impact on society, and an unbelievable episode on possibly the biggest scam in the world right now.
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- ***Must Listen*** Infinite Loops: Jim Chanos — Financial Frauds and Manias: Past, Present, and Future. Chanos is a famous short-seller and currently the president of Kynikos Associates. He starts the episode with how he began his career in finance and was led to short-selling, thoughts on the 2008 crisis and why people didn’t go to jail, and the Mississippi Bubble. Then he explains a lot of fraud boils down to two types: accounting frauds and ponzi finance (something that’s too good to be true but just needs new investors to keep the game going). He says he has some mental models and signs of fraud, including innovation like no other, larger than life CEO, very compliant, hand picked board, and charitable deeds to offset wrong doings. He uses these almost as an initial screen to then dive in and study whether or not it’s a company worth shorting. He also talks a lot about past financial frauds and manias (which he teaches in a course at Yale), the Elizabeth Holmes board and issues at Theranos (32:15), why he thinks people have become caught up in the narrative around Tesla instead of the fundamentals of the company (40:00), and where he has been wrong before with shorts, including AOL from 1996–1998 for accounting reasons (47:30). [February 27, 2020–1 hour, 2 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker
Often fraudsters and fraudulent companies are some of the most charitable companies.
- The ETF Experience: David Kotok — Cumberland Advisors. Kotok is a longtime industry veteran and covers his entire career during the episode. He begins with launching his firm, Cumberland Advisors, in the 1970’s just before the oil shock and energy crisis, which led him to believe everyone was overly pessimistic and they should put a lot of money to work. He then discusses the need to apply different disciplines to investing, including philosophy, why he thinks the traditional index strategies can be improved upon, and how the use of writing and content creation over his career has helped him and his firm. He finishes with current thoughts on the market (he’s long defense and bank stocks in the U.S.). [February 17, 2020–40 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
- What Works on Wall Street: The Factor Archives: Value (EP.11). Another great “factor archive” episode from Jim O’Shaughnessy and Jamie Catherwood. They discuss the history of value investing, why it works, the impact of narratives on stocks and investments leading to boom and bust cycles, and the different metrics used to assess what “value” is, including P/B, EV/EBITDA, and P/E, among others. You can also read their paper on this topic here. [February 24, 2020–35 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
Technology, Podcasts, and Newsletters
- Recode Decode: Peter and Steven Kotler: “The Future Is Faster Than You Think.” Authors Peter Diamandis and Steven Kotler talk about their latest book, The Future Is Faster Than You Think: How Converging Technologies Are Disrupting Business, Industries, and Our Lives. The book’s idea is that exponential technologies (AI, VR/AR, biotechnology, robotics and others) are now working together and going to lead to rapid innovations in all industries. They paint a very positive picture while also addressing potential issues around addiction and loss of data privacy. They go through a bunch of industries and explain the expected changes in each, including retail, media, and energy (the three they expect to see the largest impact in), as well as education, transportation, and healthcare. If you want to see a vision of what the future could possibly look like, you have to listen to this episode. [February 21, 2020–1 hour, 4 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
In 1900, the average American did 58 hours of housework a week; by 2011 they did an average of 1.5 hours of housework a week.
50 years ago, the average number of kids per family across the globe was 6; today it is down to 2.4, and in the U.S. it is 1.76 which is below the replacement level.
- Exponent: Episode 181 — Competing with Spotify and Regulating Acquisitions. This episode can be broken down into two parts: the first 24 minutes is Ben Thompson discussing the layout of his newsletter and podcast, why he is unsure if Substack will work as a newsletter company, and then he gives the best case I’ve heard on why Spotify is acquiring podcasts — their goal is not to have podcasts that only appear on Spotify, but rather it’s to have the best data on listeners and use that to have targeted podcast ads for each listener. The next 31 minutes is about his article from last week on Facebook’s acquisition of Instagram and why it had a very negative impact on competition in the consumer space. He says there really isn’t a new for companies to overtake these monopolies in their current space, and the only way to do so is by doing it in a new paradigm (Apple with the iPhone, Microsoft with the PC). He also interestingly says that although Facebook is getting the most scrutiny from regulators and the FTC, he thinks Google is the company that should be getting the scrutiny instead but isn’t because it’s not as sexy politically. [February 21, 2020–55 minutes] iTunes Podcast | Overcast | Breaker | Website Link
- Off the Chain: Sam Parr, Founder of The Hustle: How He Built The Hustle to $10s of Millions of Revenue. Parr is the founder and CEO of The Hustle, a media newsletter company to help professionals stay up to date on the latest news in business and tech. He explains how and why he started the newsletter, how he reached over 1 million subscribers so quickly, and what he’s learned about the newsletter business with thoughts on both Substack and The Athletic. Then at 58:20 they discuss his podcast (which I highly recommend) called My First Million, which features both episodes with people discussing making their first million and other episodes with Parr and his co-host brainstorming million dollar business ideas, and then he wraps wrap the episode at 1:23:00 with thoughts on bitcoin and cryptocurrencies. [February 25, 2020–1 hour, 42 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
- The Meb Faber Show: #203 — Sanchal Ranjan — We Give You A Different Lifestyle To Work And Play. Ranjan is the co-founder and CEO of ZiffyHomes, one of the leading real time online platforms for rental accommodation in India. They start with their own journey starting the company, the process of going through Y Combinator, using WhatsApp as a major platform for growth like lots of other companies do in India, and the current state of the market in India and how it differs from the rest of the world. There are a lot of really interesting takeaways on India, how it differs from the U.S., and how it is taking advantage of technology to grow. [February 26, 2020–46 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
- ***Must Listen*** Planet Money: #972: The Crypto Queen. This is an insane story of greed, corruption, and cult-like devotion towards a woman and fake cryptocurrency movement. It is possibly the biggest scam in the world that’s estimated to be in the billions. Dr. Ruja Ignatova, along with possibly the mafia, created an MLM business and applied it to crypto to create a ponzi scheme based on an arbitrary price of their fake cryptocurrency that they increase day after day. After certain members of the company were arrested by the FBI, Dr. Ruja vanished and has not been seen since. If you like this episode, there is a full 8-episode podcast series called The Missing Cryptoqueen about this story and I highly recommend that as well. [February 14, 2020–33 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
- The Daily Stoic: Don’t Be Zero-Sum. It’s a great quick episode to reset your thinking or remind yourself how we should all be living (you can read it here as well and read an article that Holiday says inspired this post here).There are two types of people in the world: zero-sum (I win, you have to lose), and non-zero-sum (we can all win). Most villains in history are zero-sum, and they believed someone else’s loss was their gain. [February 24, 2020–3 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
In the non-zero-sum world, on the other hand, resources are infinite. The love a mother gives to her child (and that the child returns) grows greater, the more each loves. There is and can never be a shortage of love. Compassion is infinite. Integrity is infinite. Faith is infinite. Zero-sum versus non-zero-sum. Which point of view do you believe?
Below are books that podcasts guests suggested on episodes I listened to last week. The descriptions are summaries of what the guest said, not my own opinion.
Jim Chanos (President, Kynikos Associates):
- The Best Way to Rob a Bank is to Own One: How Corporate Executives and Politicians Looted the S&L Industry by William Black — Provided Chanos with a governance model for looking at frauds. The book is the story of the S&L and banking crisis in the late 80’s and early 90’s when thousands of bank executives went to jail. The model’s concept is that fraudsters use the corporation as both a weapon and a shield.
- The Match King: Ivar Kreuger, The Financial Genius Behind a Century of Wall Street Scandals by Frank Portnoy — One of the best business books ever written and Chanos uses the book as reading for the course he teaches at Yale on financial history.
Jim O’Shaughnessy (Chief Investment Officer, O’Shaughnessy Asset Management):
- Prometheus Rising by Robert Wilson — It does an excellent job simplifying the idea that perception is reality. Every human brain has two components: a thinker and a prover. The thinker is the part that creates beliefs and is involved with speculation, and the prover does everything in its power to say that you are right. The takeaway is that we see what we’re looking for.
- Talking to Strangers by Malcolm Gladwell — Really interesting and he brings up that through evolution, we have a default to honesty.
Anthony Pompliano (Co-founder & Partner, Morgan Creek Digital):
- Love Yourself Like Your Life Depends on It by Kamal Ravikant — He says he has had a lot of people on his podcast talk about their books, but he highly recommends people go get this book.
- Relentless: From Good to Great to Unstoppable by Tim Grover — Grover played college basketball and wanted to train NBA players. He became Michael Jordan’s trainer and later became the trainer for Kobe Bryant. He says there are three types of people: 1) Cooler — satisfied to be in the NBA, 2) Closer — tells the coach give me the ball and if I am open, I will take the shot, and 3) Cleaner — the guy is taking the shot to win the game no matter what and no one questions it. The people in the third category realize practice should be harder than the games and that’s what makes them successful in those big moments.
Emmett Shear (CEO, Twitch):
- Order without Design: How Markets Shape Cities by Alain Bertaud — It’s about the tension between transit and housing and how cities work. If you care about how to improve the modern American or global city, it’s worth reading.
- The Art of Community: Seven Principles for Belonging by Charles Vogl — He would recommend it for anyone interested in building a strong community.
Zach Kanter (Founder & CEO, Stedi):
- An Elegant Puzzle: Systems of Engineering Management by Will Larson — His big takeaway from the book is that you really need a team of 6–8 engineers in order to make progress on a very complicated problem within a company.
Austin Rief (Co-Founder, Morning Brew):
- The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company by Bob Iger— Incredible and fascinating book.
- Deep Work: Rules for Focused Success in a Distracted World by Cal Newport— The basic idea is in today’s society, the most valuable skill you can have is the ability to learn things quickly, and the best way to learn things quickly is to get to deep work as fast as possible.