Venture Investing 101: Equal’s Required Reading List for New Hires

One of the characteristics we value most highly at Equal Ventures is cognitive diversity. We love the fact that our team comes from such…

One of the characteristics we value most highly at Equal Ventures is cognitive diversity. We love the fact that our team comes from such different backgrounds and experiences and feel that it enables unique insights into the markets and companies we invest in. One of the greatest challenges of bringing together individuals from such different backgrounds is establishing a shared culture that unifies each of these unique backgrounds into a single knowledge system that enables us to make decisions as a team.

With that we establish a standard curriculum for anyone who joins our firm (even interns) to read prior to starting with us. We find that these books help new members of the firm quickly acclimate to our environment with a shared set of frameworks, practices and knowledge. Each of these books has inspired certain elements of how Equal Ventures’ is structured, how we make investment decisions, and how we work with the entrepreneurs we partner with.

We often share these books (and others from our library) with investors and founders we work with, but ultimately felt that sharing the list with the broader community would provide better transparency on us and our firm.

We share a large library of books as a team and engage in a bi-monthly book club together so by no means are these books meant to be an inclusive view of how we operate / invest, but hope that members of our community find them helpful. We’re always looking for more books to extend our knowledge system, so please let us know if you have any additional suggestions.

EQUAL REQUIRED READING

Technology Revolutions and Financial Capital by Carlota Perez

From economist Carlota Perez, this book explores the common stages encountered in five technological revolutions that society has experienced in the past few centuries. Starting with the Industrial Revolution (kicking off in 1771) and ending with the Information & Telecommunications Revolution (kicking off in 1971), the book highlights the common phases each of these paradigms encountered as they became a part of the economy.

Although every revolution has its own nuances and trajectories, we find the common stages presented as a great way to frame where society stands in the adoption of digital technologies. Our belief is that we’re currently in the early stages of the deployment period, and that the transformative businesses of the next decade will come from entrepreneurs who have deep knowledge of industries and how they operate, rather than technologists building the underlying infrastructure.

eBoys by Randall E. Stross

eBoys gives an inside look into the founding and emergence of Benchmark Capital in the late 1990s as one of the premier VC firms. The author, Randall Stross, was provided incredible access to the firm as they established one of the eminent partnerships in Silicon Valley. The book dives deep into how the firm evaluated, debated, and invested in a number of the most notable companies of the .com era. The timing of the book’s publishing just as the .com was starting to crash unfortunately led to part of the story being missed. However we’ve still found this to be one of the best introductions to Venture and how one of the leading firms of the past 25 years was started.

The Benchmark approach to Venture Capital has informed many of the ways we have chosen to structure Equal, from an equal partnership among all GPs (in economics and voting power) to viewing investing as a team activity.

One of the unfortunate aspects of the industry that is evident throughout the book is the lack of diversity at the upper levels of venture. Although there has been some progress made over the past 20 years, there’s still a very long way to go. We find that the book provides a great glimpse of both the time-tested practices that make venture such an intimate investment practice as well as the opportunity to push our industry forward to reflect the importance of broader diversity.

Modern Monopolies by Alex Moazed & Nicholas L. Johnson

Modern Monopolies is one of our favorite resources on platform business models. The book dives into the power of these platforms to develop moats, scale in a non-linear fashion,and create tremendous value for the stakeholders involved. The book also presents a framework for thinking through the different types of platforms, provides case studies on several such platforms, dives into the important levers and drawbacks of certain approaches.

We’ve found this to be a great primer on platform businesses and why our team is so enthusiastic for multi-sided platforms in many of the markets in which we invest.

Measure What Matters by John Doerr

Measure What Matters dives into the OKR framework that John Doerr adapted from Andy Grove (former Intel CEO) and has leveraged at numerous organizations that he has been involved with. The book presents case studies that showcase how OKRs have been used successfully across companies of all stages — with cases ranging from the use of the framework in the early days of Google, to helping Youtube achieve ambitious growth objectives, to usage in the non-profit sector by the Gates Foundation and Bono in his global advocacy campaign.

We find the OKR framework to be one of the most powerful management tools available to allocating resources and achieving product-market fit.and have found this book and its case studies as a helpful primer on the framework. John Doerr makes the approach extremely approachable and shows the power of OKRs across an incredibly diversified set of organizations.

Charlie Munger: The Complete Investor by Tren Griffin

This book dives into the strategies and playbooks leveraged by one of the best investors over the past half-century. Tren Griffin dives into and explores many of Charlie Munger’s most prominent ideas including the latticework of mental models, awareness of cognitive biases that lead to misjudgment, and the types of moats that businesses can build.

This is one of the most digestible books on the Berkshire Hathaway approach to investing and we find that it provides a great introduction to complex topics such as moats, cognitive bias, the importance for continuous learning and how to develop a lattice of mental models. Charlie Munger is arguably the best investor of all-time and while his experience is largely focused on public-market investing, we find the principles of his investing philosophy provide value to investors across any asset class (founders as well).

Measuring the Moat by Michael Mouboussin (Paper)

Continuing on the theme of the importance of developing moats for long-term value creation, this paper presents a framework for determining the strength and size of a company’s moats. The paper analyzes how different market and firm-level factors affect the ability of a business to maintain and grow profit pools over a long period of time.

We’ve found this to be one of the most in-depth and structured analyses on the various market, opportunity, and industry-level factors that must be examined when running diligence on any investment opportunity. An important takeaway from the paper is also how important competitive landscape, industry wiring, and market conditions are in identifying promising opportunities and generating long-term alpha as an investor.