Jason Zweig and Morgan Housel - Business vs. Investing

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com.

**SPEAKER_3** (0:59)
Patrick O'Shaughnessy is a principal and portfolio manager at O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (1:21)
My guests this week are both veterans of the podcast, Jason Zweig and Morgan Housel. They are two of the best in the world at making the complicated simple. And in that spirit, I'll keep this introduction short.
Morgan shifted from public markets to private markets a year ago when he joined the Collaborative Fund. So we begin with what he has learned about venture capital in his first year on the job.

**Morgan Housel** (1:43)
I got kind of disenchanted with a lot of the investment industry just because it was so heavily focused on markets and not business.
And I viewed venture capital as the closest as you could get to the actual businesses and actually the farthest away that you could get from markets. I viewed it as just like the purest form of making an investment in a direct business where you are getting your hands dirty and you are really seeing day to day kind of the daily knife fight that Bretton B. Shore talks about of how dirty and ugly and difficult it is to run a business, which is why I got interested in investing in the first place when I was a teenager. It wasn't markets, it wasn't the stock market, it was business that I really liked. And my career kind of gravitated towards markets as I think a lot of ours has. But I wanted to get back closer to businesses. And I really thought a year ago Patrick that I was going to have to learn a completely new skill. Like I was being so far removed from the markets business that I had spent my career in that I was going into a completely different field. And I think what has shocked me the most over the last year is how wrong that was.
If you make a Venn diagram with VC on one hand and public markets on the other, the overlap is way larger than I thought it would be. And there are of course differences, some huge differences between the two.
But the overlap has been so much more substantial than I thought. And a lot of the really key drivers of public markets investing transfer not only a little bit, but I would say perfectly into venture investing. And I think no matter the stage or size investment you are making, no matter the industry, there is some element of change that drives competition. And there is some element of stability that drives compounding. That's the kind of like the two elements that make any investment. And VC investors versus public investors just weight those two differently. But it's just a different cut of the same meat.
So things around long-term thinking or business modes or compounding or the impact of fees or the needs and the desires and the psychology of LPs is really all the same. And that's been I think encouraging to me because I really felt like I was taking a big leap of faith in the middle of my career to do something totally new. And I realized pretty quickly, but I'm still reminded almost on a daily basis of how we're all doing the same thing. We weight variables differently, but we're all doing the same thing.

**Patrick O'Shaughnessy** (4:05)
One of the funny things about venture capital is how tiny a sliver of the assets that are being invested it represents relative to the attention that it gets. And I think, of course, that's because of some of the most exciting stories in any given market are almost always happening at the venture stage because it's where there's the most growth and kind of excitement, I guess you would say.