Investing in Mavericks
In business, every industry does things a certain way. These “industry conventions” are determined by the leaders of that industry. For new businesses to survive, and more importantly, to thrive and eventually lead, they must avoid following these pre-existing conventions, or be doomed to a future of mediocrity.
To prosper, innovative companies must change the game entirely and create new ways of doing things. Companies who approach their industries in a completely new way are what I call Mavericks. Mavericks, if successful, can gain massive scale, size and efficiencies, and in the process create enormous value for its customers, employees, shareholders, and the world at large. Mavericks are companies that have the potential to become the greatest companies of our time.
Netflix was a Maverick. Netflix changed everything. And in doing so, became ultra-successful.
A good example is Netflix. Before Netflix, there was Blockbuster. Blockbuster controlled the movie rental market. Renting a movie was a pain:
First you had to locate and go to a store near you
Then you had to find a movie…I don’t know about you, but this always seems to take so much time!
Then you had to hope it was in stock
Then you could only rent it for a handful of days
Then you had to physically return to the store again, to return the movie
And if you were late, or if they were closed, you had to pay late fees!
Netflix solved these problems:
No physical locations (mail order DVDs in the beginning, and now Streaming)
Movie Queue (during the DVD days) and now personalized recommendations
On-demand: Movies are always in stock
No rental time periods
No late fees!
The best Mavericks are the ones that gain sufficient scale, efficiency, and influence so as to change how their industry functions. Netflix became so successful, that Blockbuster wasn’t able to compete and is now bankrupt. Today, several other companies are following Netflix’s path and are starting to offer streaming services.
Mavericks that succeed do so because they are able to adapt to changing business environments and more importantly, to changing customer needs. Companies that lose their leadership positions tend to focus only on incremental improvements. Such companies focus on optimizations: on cost reductions, product upgrades, short term stock price movements etc and less on the dynamic changes in customer needs. This creates blind spots. This may be due to myopia, or perhaps inertia or misaligned organizational incentives. This inability of established companies and industries to evolve creates the opportunity for Mavericks.
Investing in Mavericks is akin to Venture Capital investing, but in the Public Markets. Investing in Mavericks is therefore high-risk, high-reward.
That said, not many Mavericks survive. Some die quickly. Some after many years of competing. Investing in Mavericks is akin to Venture Capital investing, but in the Public Markets. Investing in Mavericks is therefore high-risk, high-reward. Ironically, it is this uncertainty of outcomes that creates the lucrative opportunity.
Hypothesis: Investing in Mavericks can generate great returns.
Here, I hope to share my investments in Mavericks. I hope to share my thinking, track these investments over time, and learn from my mistakes (I’m sure there will be plenty!). In doing so, I hope to prove or disprove my hypothesis.
Subscribe…to come along for the ride!
This approach really comes down to envisioning what the world MAY be like in the future, and investing in companies who can make that proposition a reality.
To reiterate, when investing in Mavericks, we are looking for small companies poised to become massively successful over time. Think, Amazon or Netflix in the early 2000s. Think companies that have the potential to 10X in 10 years or less. This approach really comes down to envisioning what the world MAY be like in the future, and investing in companies who can make that proposition a reality. We want these companies to be run by visionary leaders, and we will aim to own these stocks for very, very long periods of time, perhaps even forever.
This approach is difficult, and will result in many failed individual investments (just like Venture Capitalists experience) but I also believe this investing approach can be quite lucrative, if executed well and patiently. As a result, we won’t know how well we’re doing, at least until a few years from now.
With that said, here are a few Mavericks I own. I’ll be discussing these (and others) in future articles. In alphabetical order:
Baozun (Ticker: BZUN)
Purchased for $44.84 on Aug 21 2019
Etsy (Ticker: ETSY)
Purchased for $42.71 on Nov 25 2019
Eventbrite (Ticker: EB)
Purchased for $20.6 on Apr 4 2019, and for $16.53 on May 2 2019
MongoDB (Ticker: MDB)
Purchased for $164.49 on Aug 20 2019
Teledoc Health (Ticker: TDOC)
Purchased for $59.08 on Jun 13 2019, for $71.35 on Aug 1 2019, and for $70.97 on Sep 13 2019
Trade Desk (Ticker: TTD)
Purchased for $190.65 on Oct 3 2019
You can follow their performance on the Scorecard here.
Related Articles:
Investment Return Expectations for Investing in Mavericks
The Three Stages of a Maverick: Stage 1 The Disruptors
Questions:
1. Is this the second side of the barbell (skilled yolo bets)?
2. How is this in relations to the taxonomy of https://twitter.com/vgr/status/1277262959828283392 ?