- Investing is one area of life that can provide huge asymmetrical returns over the years if done well.
- Different people have different investing principles , in this post I would like to provide some of my key high level principles in investing.
- My goal is not to preserve my wealth , but instead to multiply it as fast as I can, while taking the least risk possible. This is easier said than done. It requires one to patiently wait for only the best opportunities which means saying no to many good opportunities.
- #1: I only invest in companies that I think can at-least 10x in 10 years
- Big tech companies are often safe bets , however , it would be difficult for a company with a market-cap of 1 Trillion to 10x to 10 trillion in 10 years , than for a company of 50B market cap to 500B. There are exceptions to this rule though, as there are exceptions to most rules.
- #2: I look for the inevitable trends that will play out over the next 10-20 years and find the best of the best companies in each category
- Electric vehicles , autonomous driving , renewable energy : Tesla
- Digital Health and Genomics : Crispr therapeutics , Invitae , Teladoc , Pacific Biosciences
- Online shopping : Shopify , Sea Limited
- Digital payments : Square , Paypal , Stripe
- SaaS : Twilio , Zoom
- Online streaming : Roku
- Gaming : Unity , Roblox
- Social Media : Instagram(Facebook), Snapchat
- #3: I look for founder led companies , and not for the typical CEO. Founders usually have equity in the business instead of a fixed salary , they are incentivized to think long term bets instead of making decisions that are good for the short term but terrible long term. Founders have more skin in the game , and have a level of obsession that is unmatchable by a typical CEO. There are exceptions to this rule as well.
- #4: I look for companies that are growing at a rate of at-least 30% year over year , with growing revenue year over year and growing profit margins.
- #5 : I look for founders that have exceptional drive and ambition , backed up by incredible execution. Think Elon Musk of Tesla, Tobi Lutke of Shopify , Patrick Collison of Stripe. The size of the fishbowl determines how large the fish will get , and in this case the fishbowl is the ambition of the CEO and the team.
- #6: Is the product so amazing that it’s ten times better than the next best product out there ? Think Apple iPhones , Tesla cars , Amazon 2 day delivery and easy returns. Or, does the product make my life so much easier than any other product for that use case ? Think Zoom calls , Venmo and CashApp payments, Teladoc virtual doctor appointments
- #7: Does this company have a monopoly on it’s market ? Think Apple ,Amazon , Tesla , Zoom
- #1: I only invest in companies that I think can at-least 10x in 10 years
