Private Company Focus
We believe that the true determinant of value is not in earnings, but instead in strong unit economics, operational efficiency and strong existing or potential free cash flow, and the way management manages or plans to manage those free cash flows (whether the company is profitable or not). Establishing smooth earnings for the sake of pleasing short term investors is not something we believe in, and thus we favor the incentives and rewards given to strong private enterprises with long term visions. Being able to manage cash flow, reinvestments, and/or dividends with the goal of achieving long term returns is what we look for.
Long Term Investment Horizon
The core of our business is to participate in leading early stage ventures with a long term focus, and preferably those that are tech enabled. We recognize that short term fluctuations in value and pricing are meaningless, and we believe that being active investors means solving short-to-medium term problems in order to have significant value creation in the long run. Monetization is not determined by time, but instead determined when the time is right. We will monetize if there is a truly compelling reason to do so, otherwise our investment horizon is forever. As Warren Buffett says “someone is sitting in the shade today because someone planted a tree a long time ago.”
We recognize that it is nearly impossible to achieve a perfectly uncorrelated portfolio of assets; however with that said, we aim to achieve a level of strong un-correlation amongst our investments. As our portfolio expands, there is a constant assessment of the portfolio’s correlation. We believe that having uncorrelated assets protects us from black swan events and even adds a layer of antifragility to our portfolio.
Diversification is important to the extent that we can maintain strong focus on each of our portfolio companies. We do not diversify for the sake of diversification, but instead we select companies based on their fundamental values and with the understanding that they may contribute to the entire portfolio’s correlation and diversification in a positive way.