Pods & Recs No. 81

Today we have episodes on companies providing liquidity in illiquid markets, venture capitalist Bill Gurley on issues with the IPO process, and Jack Ma on behavioral biases that impact us.

If you missed the last two editions of Pods & Recs, feel free to view them here: 80 and 79.

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Business

• Animal Spirits Podcast: Talk Your Book: Investing in Private Companies with EquityZen. This episode of the “Talk Your Book” series features Phil Haslett, the founder of EquityZen. Equity Zen is a platform connecting shareholders of private companies with accredited investors. With the trend of companies staying private for longer and the recent flurry of IPO’s (or no-IPO’s in the case of WeWork), this is a timely episode. He explains how the company works, how they determine valuations of these private companies which have a lack of public information, and how the volatility of pricing deals fluctuates compared to the public market. You can also hear Haslett on his two appearances on Meb Faber’s podcast here and here. [September 23, 2019–34 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
• Superinvestors and the Art of Worldly Wisdom: #30: Meb Faber On The Future Of Investment Management. Meb Faber is the co-founder and the Chief Investment Officer of Cambria Investment Management, author of multiple books, and host of the podcast The Meb Faber Show. He covers his personal career and what led him to start Cambria, how his study of famed investors ideal portfolios leads to the same long-term return, his Trinity Portfolio (which has a global trend and value tilt and has the majority of his net worth), the importance of global diversification and the idea of home-country bias, a discussion around fees and where the financial advisory industry is heading, and his tail risk fund which can be used to hedge equity exposure. [September 25, 2019–1 hour, 12 minutes] iTunes Podcast | Overcast | Breaker | Website Link
• Invest Like The Best: Bill Gurley — Direct Listing vs. IPO. With the recent flurry of companies going public, the initial stock movement and underpricing has been well publicize. This episode’s guest, Bill Gurley, is a famed venture capitalist and general partner at Benchmark Capital who has recently been a critic of the IPO process. In this episode, he explains why he views the IPO process as arcane and broken, resulting in $171 billion of underpricing/average of 18% underprice and varies by bank. Then, at the 31:30 mark, he dives into why he believes a direct listing, which was recently used by Spotify and Slack, is a better way for companies to go public: it leverages technology that exchanges use everyday and therefore doesn’t result in large underpricing. [September 24, 2019–47 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link

The Rest

• The Dave Chang Show: Jeff Ma: Breaking Biases. This is a great episode with analytics expert Jeff Ma, who is well known for his role playing blackjack in the book Bringing Down The House and the movie 21. In this episode, he and Chang discuss a confluence of biases and how their effects are felt in all facets of our lives. It’s great to get both of their point of views and how biases are felt in opening restaurants, gambling, athletics and investing.[September 26, 2019–1 hour, 26 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
• Capital Allocators: Gary Klein with Paul Sonkin and Paul Johnson — Conducting Pre-Mortem Analysis. This is a fantastic listen to anyone involved in a decision making process: an investor, security analyst, or a front-office executive evaluating talent. It features Gary Klein, who is a cognitive psychologist, and Paul Sonkin and Paul Johnson, both of which are authors of Pitch the Perfect Investment and former professors of finance. All three came together to co-author a paper titled Rendering a Powerful Tool Flaccid: The Misuse of Premortems on Wall Street, which is about conducting Pre-Mortem analysis. Benefits include encouraging cognitive diversity and the wisdom of crowds, help mitigate risks beforehand, and change the culture to one that accepts candor. They also discuss other tactics used in group decision making, including having a devil’s advocate and having a “red team.” [September 23, 2019–49 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link

Throwback Episodes

With the Animal Spirits episode featuring a company that is offering liquidity to an illiquid market, I wanted to share a couple of episodes on companies that are doing the same in niche markets — art and collectible cars.

• The Investors Podcast: TIP240: Investing in Fine Art Like a Stock w/ Scott Lynn. This is another really interesting episode about providing liquidity to an illiquid market. Lynn is the founder of Masterworks, a company that allows investors to purchase a share of a fine piece of art from legendary artists like Monet, Picasso, or Andy Warhol. He begins with a big picture view of the art market: it is roughly $1.7 trillion with 2% turnover per year, and Citigroup recently published a report suggesting you allocate 1.4–4% of your portfolio to art. He goes on to explain how his company registers paintings with the SEC so they can be invest-able, why great artists paintings may be value traps, and how the ultra-rich (especially in China) are moving the market. [April 28, 2019–26 minutes] iTunes Podcast | Spotify | Overcast | Stitcher | Website Link
• This Week In Startups: E920: Rally Rd. Co-Founder & CEO Chris Bruno turns collectible cars into stocks. This is a car enthusiast’s dream: Chris Bruno has created a marketplace that provides investors the ability to invest in classic cars for as little as $50. He states that collectible cars have historically outperformed the stock market and other asset classes (gold and real estate), and they have had a Mustang appreciate 22% in 6 months. He talks about what led him to start the company, how it works for someone to start investing, and what the future of the company is. [April 12, 2019–1 hour, 8 minutes] iTunes Podcast | Spotify | Overcast | Stitcher | Website Link