Business
(0:47) Introduction-Matt Oguz is a growth stage investor in technology and life science companies. His investment portfolio includes names like Lyft, Lemonade, Ripple, carbon circle stock folio, he's known for being a thought leader in quantitative investment methods in venture capital, and private equity. Matt is the founding partner at venture science. When science was established in 2013, and is headquartered in Palo Alto, California. This company has pioneered the data-driven quantitative approach to venture capital, cloud infrastructure, networking, security, gaming, VR and drone technology, which are just a few innovations in venture science investment. Aside from all these, Matt is also the Chief Investment Officer for the iris family office. The family office invests in multiple asset classes and takes direct positions in those classes. The family office deploys a quantitative investment strategy once again and is unconstrained in terms of stage or sector. Matt is outspoken about his approach and shares his valuable thoughts as a columnist on TechCrunch. Matt is a person of multiple talents with his profession revolving around analytics, behavior, economics, Decision Sciences, and AI. And Matt is obviously a successful investor, entrepreneur, decision theorist, and writer. The interview-(2:22)Can you walk us through your journey? Like how, you know, how did it all happen? How, how did you get to this point, being an immigrant? What kind of challenges did you face? Something about your backstory?(3:01) I have been a student here for 25 years. I originally came here as an exchange student, and then ended up getting my master's degree. I got my MBA while focusing on my decision theory studies.People called the study of decision-making "Decision Sciences" and it was considered a legitimate academic discipline. It's essentially the discipline of trying to make better decisions and using models, theories, and math. Over time, everyone learns a lot, and I've learned that America has many opportunities for entrepreneurship and investing. I also believe that America is the best place to do whatever you want. With hard work and a bit of luck, good things happen. (5:08)Generally, we make decisions on, you know, just random things based on our experience, we are very impulsive about decision making. So how do you see the world differently, how do you even figure it out? What are the factors that you need to consider before you can make a decision?(5:53) To be considered a meaningful decision, it must involve something with value at stake. That could mean money, but it can also meantime.Decisions you make every day may affect your personal life, the people around you, your business, or your bank account. Such as a decision to buy a house. When you're buying a home, there are some tangible attributes (size, number of rooms, etc.), but in the end, it's the intangible things about a home that are most important but ultimately you buy a house because it's like your grandmother's. You want to make this decision from a personal perspective, based on what's important to you. In business, the best entrepreneurs evaluate both the stakes and probability of success.If you have a positive expected value from a risky investment, it's smart to take the risk. If you don't, stay away.(15:30)So I'm guessing that you took all this information that you have and sort of applied it to venture capital and came up with a model to figure out how to optimally deploy your capital. Is that correct?(15:43) The first thing that I did was create a selection model. In this model, I defined the different attributes for each company that I wanted to examine. The attributes were chosen consistently so that their parameters could be adjusted in the future without major problems.For a business, there's something you need to know in order to evaluate it. We use a multi-criteria approach to making investment decisions.To make a good decision, you must take into account the multiple factors involved. Some of those factors are easy to quantify. Others are qualitative. But there is a method for quantifying all factors, so you can fairly judge founders and teams. You trust your gut feeling, rather than relying on a number of factors, is often a recipe for failure. After we examine 4045 factors with our multi-factor analysis, we then make financial models that take into account a lot of variables. To decide how much capital to spend on an investment, we also analyze these variables mathematically. There are many tools available for measuring risk. Midroll- 19:34(20:30)And so, after going through this exercise, after evaluating, you know, probably dozens and dozens of startups, what are some of the top factors that you have determined that contribute to the success of a startup?(20:44) For seed investors, the most important factor is the state of the product, i.e. whether it's already working or still in development.When the product is already built, it's easier to receive feedback and make changes. I mean, think about Uber and Lyft as an example. It probably doesn't take much programming to match a rider with a driver.The thing is that startups should focus on core products first and foremost. Only when the core product is ready, one should start developing additional stuff. To pick a market, you must first decide your profit strategy. Do you want to have a small amount of big transactions or a large amount of small transactions?(23:52)And now you've been part of some really, you know, household names, left and lemonade and ripple. Some of these companies have gone on for an IPO. So can you tell us your experience of you know, most people, most people who are looking to invest, they're always looking for these big names before they become big, right? Because before they became household names, how do you spot these opportunities?(24:24) I’ve written an article on TechCrunch where I talked about how Uber and Lyft are in a duopoly situation, like Coke and Pepsi. Lyft and Uber offer identical services, with the same drivers driving in the same cars. Lyft gave us a better bang for the buck. I was interested in investing in a company called Lemonade because it was disrupting the insurance industry. We acquired shares in a secondary transaction through my connections. My involvement with Lemonade was greater than my involvement with Lyft.Dan Ariely is actually an advisor to the company. He's also well-known for decision theory, which could explain why Lemonade handles its claims in a unique way.And while it does have a smaller market cap than others, such as Snowflake or Airbnb, I think its ability to disrupt an age-old industry is remarkable.(27:43)You also invested in Ripple. And so crypto and AI, where do you see these technologies are going especially now, you know when digitization of everything has been rapidly accelerated by blockchain and cryptocurrencies?(28:00) I don't know if Bitcoin will become mainstream, but I'm a big believer in blockchain technology as a general concept.I saw three different types of technology that I thought would be important today, but blockchain kind of took a back seat to some of the other ones. In fact, artificial intelligence and game theory are both ideas that have been around for a long time.But quantum computing is brand new, and if we had quantum computers then they would be able to crack cryptographic hashing codes in a much shorter time. It's like an arch-enemy of blockchain in that regard. Quantum computers are only useful when solving optimization problems, and these are especially useful if you want to tackle problems of drug development or vaccine development. I think that quantum computing will make calculations faster. But there's a lot of work to do.However, while these moon shots are happening, there's still opportunities in business disruption.(32:40)You know, we are obviously going through humongous changes as a species, you know, economically, how public health wise, what are some of the long term effects of this pandemic and the socially distant economy that we are finding ourselves in? How is the tech startup scene or investment scene going to change? Or what are the long-term effects on the business itself?(33:04) During the recent crisis, governments around the world infused a lot of cash into their economies. Since the money supply has increased greatly, the long-term effect of that increase will hopefully have a positive impact on the global economy.There are two main kinds of investing: one is the realm of public equities, and the other is the realm of private companies. If you can invest in private companies before they go public, you'll get a bigger upsideIn the US, publicly traded companies are the number one investment product. The Federal Reserve and other economic regulators should be very careful about macroeconomic forces such as monetary factors. Fortunately, in recent times we have not been hit by inflation, because there has been an oversupply of goods. I think that other than the serious issue that so many people have tragically died and been sick, the economic toll is significant. The governments of the world have increased their national money supplies, so hopefully, that will restore some infrastructure. The most important thing is to get past this phase in which our antiviral medication to attack COVID is more effective than the vaccinations, hopefully making the world a better place. Infrastructure in America is old and needs updating, but that all takes money. I'm a big advocate of clean and well-maintained airports. I think we should keep those in good shape.(37:37)Are you seeing any new types of products, new types of services and business models changing because of what is happening out there?(37:45) Because we're in an age when everybody has internet access, everybody's connected. Imagine if the same thing had happened throughout history! Actually, it did happen, right? Throughout history, there was no internet, so people couldn't evolve and adapt.But now people can meet new people and do business online. A retailer won't have to worry about foot traffic once they're selling their wares on the web.If you're a barber, you can't digitize it. But I've watched videos on how to cut your own hair and how to cut your kid's hair. Some of these videos have been watched a million times and they earned quite a bit of money.The internet was already revolutionizing the economy, but the recent epidemic has really boosted e-commerce. Now anyone can put a video on YouTube or write an article and get attention from millions of people. And this allows businesses to profit.It's encouraging that you can make a digital product, like a game or an ebook, and sell it on your website or elsewhere.(39:53)And now, if people want to reach out to you to connect with you, how can they do that?(40:14) You can contact me via LinkedIn. I use the platform constantly and I communicate frequently with other users. All you have to do is drop me a quick note about your project or business and I will be happy to help you.Resources:LinkedIn: https://www.linkedin.com/in/mattoguz/ ツ CONNECT WITH ME ツ Leave a comment on this video and it'll get a response. Or you can connect with me on different social platforms too:• LinkedIn: https://www.linkedin.com/in/manujaggarwal/ • Facebook: https://www.facebook.com/manujagro/ • Website: https://manujaggarwal.com/ See acast.com/privacy for privacy and opt-out information.