Some thoughts

Dear Reader,

the last time I have written a post on this blog was well before I had to write my master thesis. It was impossible to blog anything because I had to finish my thesis (deadline 1st of July) and after 1 week vacation, I began to work in my start up which currently takes off.

We opened new offices in Berlin and New York City. We visit and get visits from C-level executives of fortune 500 companies - which is pretty awesome if I imagine that I sat on these uncomfortable wood chairs in lectures a view month ago and now I sit on these ultra comfortable leather chairs if we negotiate with customers in their offices. My company has not so comfortable chairs as we manage ourself as a LEAN startup - lean is bold and in capital letters, because we are super lean on our CapEx :-)

I remember lying on my girlfriends bed in 2011 reading Warren Buffett quotes and a particular quote resonated strongly with my deep self: "I am a better investor because I am a businessman, and a better businessman because I am an investor." (Later I noticed its the motto of my personal hero Mohnish Pabrai, too. At some point in my live I will write him a hand written letter, that I would like to work for him for 0 costs. I am very interested in his answer! ;-)

At that time I had a hard time to understand businesses and business decisions - what do the balance sheet, income and cash flow statement & footnote numbers mean? what happened between 2 reporting year so that these numbers are so different? That was the point that I wanted to become a businessman - not the money, not the prestige, the discovery how a company works in praxis. (In my company I work on other topics I am highly interested too - its not investing and maybe part of a later post! :)

Vice versa, as an investor I always guess how cash is used in consequence of a business decisions and explain it to my partners what the decision means from a cash flow perspective. What are fixed & variable costs? do the costs scale on per unit basis? does the customer utility increases on scale? do we have break points, critical mass, path dependence?  Or I take annual reports of a customer and try to understand what problems my customer has and where I can recommend our products and services.

Being an investor gives an advantage on information acquisition, processing and abstract modelling, whereas being a businessman gives an advantage on interpreting information in the context of a concrete business and what impact the information has on the business (value drivers).

Last but not least, in my personal opinion, being a value investor is like being a cat with bad eyes. Most of the time the cat relaxes in his chair enjoying life, reading and gathering wisdom. All the time mouses show up but most of them are just to far away and cannot be assessed if the mouse is ill and causes an indigestion. Further more many mouses are hunted by other cats, so even if the cat with bad eye moves the other cats prevent an easy catch and feast. On some occasions a fat mouse, not hunted by other cats is in the hunting ground (circle of competence) of the cat. Than the cat is focused, uses his paws to catch the mouse and have a feast. The lesson is only to hunt if it is likely to catch a fat mouse and have no predators around so that the feast is secured. The default action is inaction!


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