Napoleon reportedly once said: “Show me a family of readers, and I will show you the people who move the world.” Despite the pull to watch the recent feature length film to this quote’s namesake, reading is arguably one of the fastest ways to scale our knowledge and leverage experience from many others.
Last year I read over 50 books, largely non-fiction business. I wanted to share my top five books of 2023, with a lens on informing a fintech strategy, for entrepreneurs and investors.
Sebastian Mallaby: Powerlaw: Venture Capital And The Making Of The New Future
Mallaby and I spoke about his new book The Power Law. For me, highlighted in the title, it was an important reminder of the dynamics in startups, and the transformative potential of a small number of companies (and venture capitalists) that bring both outsized impact and financial returns.
In his book, Mallaby also highlighted the importance of building a venture capital moat. VC firms need to be deeply embedded in established networks while also differentiating themselves. This could involve focusing on new geographies, sectors, or unique market connections. For example, developing a specialized network in fintech or tapping into emerging markets can provide unique investment opportunities and insights.
We also discussed startup approaches to sustainable growth – a topic readers of this column will know is close to my heart. While blitzscaling can be effective for certain types of companies, it may not be suitable for all, particularly in fintech where sustainable, long-term growth is often more valuable than rapid expansion. One of the reasons I laud Camels.
Chris Miller: Chip War: The Fight for the World’s Most Critical Technology
Chip War chronicles the rise of semiconductors around the world, and offers a unique window into the current dynamics unfolding in artificial intelligence and other sectors today. Semiconductors may very well be our generation’s oil.
The book highlights the vulnerabilities of global supply chains, perhaps more evident today – covid’s wake – than ever before. For cars to be manufactured in Michigan requires components from around the world. A small cheap set of chips could delay production for years.
Regulation too, much like in fintech, has an important impact in how ecosystems unfold. Today, reshoring and strategic chip supply stock is driving humongous capital investment.
Michael Lewis: Going Infinite: The Rise and Fall of a New Tycoon
Lewis tells the story of Sam Bankman-Fried, the CEO of FTX, once the largest US crypto exchange. The story of SBF is also the story of the meteoric rise of his company FTX, within the broader crypto asset bubble.
The most important lesson it teaches fintech investors and entrepreneurs is the importance of governance. Startups in general require some level of governance (full disclosure: I am a venture capitalist and often take Board seats), but financial services as an industry is special. Fintech startups are entrusted not with our photos, or our mattresses or our exercise devices, but our money, our savings, our livellihoods and our dreams.
While traditional financial services are well regulated, crypto rose largely outside that. Venture capitalists in FTX invested, often with little or no diligence, piling on the FOMO stories.
Mallaby similarly stressed the importance of governance in startups, noting broader cases like WeWork and Uber.
Ray Dalio: Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail
In a thought-provoking discussion with Ray Dalio, founder of Bridgewater Associates, we explored the macroeconomic backdrop affecting venture capital and financial services.
Notably, we discussed the evolving role of reserve currencies. Dalio predicts a significant shift in the role of current reserve currencies, like the US dollar, over the next decade, rooted in declining USD demand, and geopolitical risk. This will present new fintech opportunities for flexible real-time cross-border transfers and payments, accounting and treasury management for instance.
Dalio also stressed the importance of diversification in investment strategies to manage risk and uncertainty. He advocates for creating balanced investment portfolios – a philosophy which aligns with the strategies I discussed in “Out-Innovate,” where building both horizontal and vertical stacks in startups, particularly in emerging markets.
David Rubenstein: How to Invest: Masters on the Craft
I enjoyed my conversation with Rubenstein, because it wasn’t just learning from him, an iconic investor in his own right, but also the over dozen leading investors across all asset classes he interviewed for his book.
One important lesson for startups and venture capitalists is the importance of being contrarian (and ultimately right). For venture capitalists, this means exploring untapped markets or unconventional ideas rather than following the latest trends. Following the crowd may of course also be right, but won’t generate unique returns.
Being contrarian relies on having a wide and diverse network. This helps spot opportunities, and developing emerging market trends. Being contrarian also requires cultivating a muscle of learning, reading and exploring diverse topics which at first may not seem connected.
—-
Channeling my inner Rubenstein on the importance of learning: which books have I missed or should I read for 2024?