I heard someone reference a stat today about reading. Reading an hour or two a day puts you in the top 0.00001% of people. I did some digging and found the interview where this statement originated. It was from Naval Ravikant, an investor and entrepreneur who founded AngelList.

Here’s the full quote from Ravikant:

The reality is very few people actually read and actually finish books . . . . The reality is, I don’t actually read that much compared to what people think. I probably read one to two hours a day. That puts me in the top 0.00001%. I think that alone accounts for any material success that I’ve had in my life and any intelligence that I might have because real people don’t read an hour a day . . . .

He went on to say that establishing a daily reading habit is key.

Assuming that Ravikant’s stat is accurate, it’s interesting to ponder how far ahead of everyone else in society reading for an hour a day puts you when the compounding nature of knowledge is factored in. It’s even more interesting to think about the effect that reading the right books for an hour a day can have on an entrepreneur’s chances of success.

Amazingly, reading books is the superpower that’s accessible to all, but most people don’t take advantage of it.

To hear this section of the interview, take a listen here.

I caught up with a venture capital investor this week. We chatted about 2023 and what venture capital might look like in 2024. He follows the public markets and was glad to see them finish 2023 on a high note. But he wasn’t sure about venture capital in 2024. He noted that while public markets were positive in 2023, especially the last few months, the IPO market was sluggish. And the few technology companies that did go public were bellwethers and didn’t perform well. Public-market investor sentiment about newly listed technology companies wasn’t great in 2023, which turned off venture investors and founders from taking more companies public. Until this shows signs of changing, he isn’t optimistic about the venture capital industry.

I think public-market investors are reassessing how to value technology companies, which is slowing the IPO market. The revenue-multiple approach is resonating less with them because of interest-rate hikes over the last two years. But legacy valuation methods such as price-to-earnings multiples don’t always make sense for technology companies either, given their ability to reinvest in growth. When public-market investors settle on a valuation approach and venture capitalists and founders embrace it, I think we’ll see more IPOs received positively by public-market investors and, in turn, more companies going public.

Who knows when that will happen—but it wouldn’t surprise me if 2024 is the year a new valuation approach is embraced by public market investors, venture capitalists, and founders.

A friend told me about a book he just read and shared a quote from it that stuck with me. It’s from Stanley Marcus, former CEO and chairman of Neiman Marcus:

The road to success is paved with mistakes well handled.

Spot on! It’s impossible to be successful and get everything right on the first try. Mistakes (and the learnings from them) are inevitable and part of the process. What’s important is how mistakes are handled. Handle them well and the probability of success increases. Handle them poorly and it decreases.

Last month, I shared that Warren Buffett and the Haslam family were embroiled in a $1 billion accounting dispute over Berkshire Hathaway’s purchase of Pilot Travel Centers from the Haslam family. A lawsuit had been filed. The trial of the case was scheduled to begin today.

Sunday it was announced that the trial had been canceled because the two sides had come to an agreement (i.e., a settlement was reached). The terms of the settlement haven’t been revealed publicly, but Berkshire may eventually have to disclose settlement specifics in filings with the SEC since it’s a publicly traded company. I’m curious about how they settled this dispute and hope the details are released publicly.

In the end, I suspect neither side wanted their top brass to have to answer questions under oath because their answers would be public record, so they opted to settle at the eleventh hour. That’s not unusual.

This week I caught up with a VC investor. He shared that he’s working on a deal recap deal. The company raised in 2021 at an inflated valuation, hasn’t grown into that valuation, and is running out of cash. The proposed valuation is a material discount from the 2021 valuation, which the investor finds interesting.

I’ve pondered recap deals quite a bit in 2023. A few thoughts:

• An investment being attractive because it’s discounted from an inflated valuation doesn’t make sense to me. A discount on an overpriced item doesn’t guarantee it’s a good buy—just that it’s less overpriced. It’s more logical for an investor to independently determine what the company’s worth given the current (not projected) traction. If the proposed price is less than (or equal to) the investor’s independent valuation, it could be an attractive investment for that investor. If it’s more, not so much.
• It isn’t easy for CEOs who founded companies in the growth-at-all-costs era to adjust their mindset about how they’ll grow. That being so, for an investor, it’s critical to understand whether the CEO has really bought into efficient growth with a focus on eventually generating cash flow or rather still believes in growth at all costs and is waiting for things to “get back to normal.” I’ve found that many CEOs will say they’ve made the adjustment, but their actions tell me they still have the old mindset. I believe that efficient growth is significantly harder than growth at all costs and that significantly fewer CEOs are capable of succeeding at the former.

I suspect we’ll continue to see recaps in 2024, and as the earlier recaps succeed or fail, investors will start evaluating opportunities more deeply than just looking at discounts from inflated valuations.

Today I was listening to an interesting conversation on YouTube that included several VC investors. It touched on a variety of topics, but one that stuck with me is why, from a talent-availability perspective, now is the best time to start a company. Here are some takeaways:

• The cost of talent is lower internationally than in the U.S. This labor arbitrage isn’t new, but managing international teams is easier than ever now. A company can build an entire team that’s international, which materially reduces expenses and burn.
• AI is helping teams be 20%–30% more productive, which means that small teams are efficient and fast. This could allow small teams to reach hundreds of thousands or millions in revenue.
• Large public tech companies’ headcounts are projected to be flat or negative, which will lead to an abundance of technical talent being available. They were talking about the Silicon Valley area, but there could be a case that this is true in other places too.

I agree that talent availability has changed from what it was three or more years ago. Whether we’re entering the golden era of talent availability is another question. I’m not sure, but time will tell.

If you’re interested in listening to the talent-availability part of this conversation, you can go here.

This is my one-hundred-ninety-seventh weekly reflection. Here are my takeaways from this week:

• Rough start – This year didn’t start off the way I’d planned. I encountered personal and professional setbacks, but I made the best of the hand I was dealt. Expecting week two to be better.

Week one hundred ninety-seven was another week of learning. Looking forward to next week!

The most successful people, especially founders, are lifelong learners. They have a curiosity and thirst for knowledge that’s on another level. This is well known and something people often talk about. Successful people explore and apply new things.

One trait I’ve noticed that’s closely related is their tendency to adopt new tools and methods. Most of these people are focused on something they care deeply about. In the case of founders, it’s solving a problem. And they’re always trying to find a better way to do what they care about. This often leads to an attitude of open-mindedness about trying new tools and ways of doing things. When they find a promising one, they figure out how it can help them do what they care about more efficiently and incorporate it into what they’re doing.

This doesn’t mean they love trying every latest gadget or guru philosophy; it means they’re not set in their ways when it comes to how they do the thing they care about. They’re married to a destination (what they care about) but willing to explore a more efficient path to get there if one presents itself.

A few months back, I shared that 2023 was shaping up to be a lackluster year for initial public offerings (IPOs). The year is officially over and the final tally is in. We ended 2023 with 154 IPOs, a decrease from 2022’s 181 offerings and a dramatic drop from 2021’s 1,035 offerings. Post global financial crisis, 2023 had the second-fewest IPOs. The lowest count was 133 offerings in 2016.

I view IPOs as an indicator of public-market investor sentiment, and I’m curious to see if IPO activity changes materially in 2024.

If you want more annual IPO data, take a look here.

Fred Wilson shared his 2024 predictions yesterday. Wilson is a well-known VC and general partner at Union Square Ventures. Here are a few of his points that I took note of:

• A soft landing is likely given decreasing inflation and interest rate hikes being less likely.
• There’s more innovation in today’s environment than any other time in his forty-year career.
• This year will be the coming-out party for “the new energy stack.”
• The business of venture capital will need to find its new norm. We’re a couple of years into a transition that will take until 2025, at least, to play out.
• Capital markets will likely be robust in 2024.

Wilson is a seasoned investor who’s been through a few cycles and achieved outsize returns. Given his track record, I enjoy reading how he’s thinking about things. His predictions may or may not come to fruition, but they’re interesting perspectives to consider.

I think public markets will set the tone for the year. If public markets are flat or continue to march higher in Q1 2024, we’ll likely see most of Wilson’s predictions become reality. If public markets start to decline in Q1, his predictions are less likely to transpire.