5 books that every venture investor should read (and reread)

1. The Information Diet: A Case for Conscious Comsumption

We are a product of affirmation bubbles. We seek, create and fight to retain them. When we read something that agrees with us we feel good. We fall into an information diet that comforts and numbs us, just like we love to gorge on carbs and sugar. The wrong foods lead to obesity. The wrong information sources leads to a cow like existence. The easiest thing to sell is carbs and sugar. Media works the same.

2. First A Dream

This is the story of Jim Clayton, the Founder of Clayton Homes. He reported nearly 30 consecutive years of increased profit, and retired as CEO after 43 years in 1999. He also acquired a small bank in 1993 and transformed it into an $800 million regional powerhouse before merging it with BB&T in 2000. It’s a great story accessible regardless of one’s knowledge of the industry.

This book will teach you how to identify a real entrepreneur. They’re weird. And I’m scared of them – in the best possible way. Once you’ve worked with a few, the contrast between a top bucket employee and a real entrepreneur is stark. Beware the tourist.

3. The Big Short: Inside the Doomsday Machine

This book is a warning. It’s really hard to get good contextual information about a subject, particularly while its happening. You have to dig. The press will constantly print anecedotes that affirm their house view. When you realise you don’t have the best information you will play differently. You may choose to play more defence.

4. Fooling Some of the People All of the Time, A Long Short Story

In 2002, David Einhorn of Greenlight Capital, gave a speech at a charity investment conference. He was asked to share his best investment idea, so he did. He described his reasons why Greenlight had sold short the shares of Allied Capital, a leader in the private finance industry. Greenlight bet that the stock would decline because the company’s business was in trouble and its accounting was corrupt. Einhorn’s speech was so compelling that the next day, when the NYSE opened for trading, Allied’s shares remained closed. So many investors wanted to sell or short the stock that the NYSE could not balance all the sell orders to open Allied’s trading in an orderly fashion.

The book follows what happens next. Page by page, it delves deep into how hard it is to develop a non-obvious insight that has a high potential of being right.

5. Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist

Read it so you can talk shop. People love talking shop.

PS. Got a book you’d recommend?
It would be great if you could share it in the comments.

blog comments powered by Disqus