Notes from 30/9–7/10
Everything Is Private Equity Now
1. A few things make PE different from other kinds of investing. First is the leverage. Acquisitions are typically financed with a lot of debt that ends up being owed by the acquired company. That means the PE firm and its investors can put in a comparatively small amount of cash, magnifying gains if they sell at a profit.
2. Second, it’s a hands-on investment. PE firms overhaul how a business is managed. Over the years, firms say they’ve shifted from brute-force cost-cutting and layoffs to McKinsey-style operational consulting and reorganization, with the aim of leaving companies better off than they found them. “When you grow businesses, you typically need more people,” said Blackstone Group Inc.’s Stephen Schwarzman at the Bloomberg Global Business Forum in September. Still, the business model has put PE at the forefront of the financialization of the economy — any business it touches is under pressure to realize value for far-flung investors. Quickly.
3. Finally, the fees are huge. Conventional money managers are lucky if they can get investors to pay them 1% of their assets a year. The traditional PE structure is “2 and 20” — a 2% annual fee, plus 20% of profits above a certain level. The 20 part, known as carried interest, is especially lucrative because it gets favorable tax treatment. — J.K.
But.. fraud?
Because private company shares aren’t being constantly bought and sold, you can’t look up their price by typing in a stock ticker. So private funds have some flexibility in valuing their holdings.
The internal rate of return is calculated from the time the investor money comes in. The shorter the period the investor capital is put to work, the higher the annualized rate of return.
With the US and China, Two Types of Capitalism Are Competing With Each Other
Capitalism’s mastery of the world has been achieved, however, with two different types of capitalism: the liberal meritocratic capitalism that has developed incrementally in the West over the past two hundred years, and the state-led political, or authoritarian, capitalism that is exemplified by China but also exists in other parts of Asia (Singapore, Vietnam, Burma) and parts of Europe and Africa (Russia and the Caucasian countries, Central Asia, Ethiopia, Algeria, Rwanda).
The economic rebalancing of the world is not only geographical; it is also political. China’s economic success undermines the West’s claim that there is a necessary link between capitalism and liberal democracy. Indeed, this claim is being undermined in the West itself by populist and plutocratic challenges to liberal democracy. The rebalancing of the world brings the Asian experience to the forefront of thinking regarding economic development. Asia’s economic success will make its model more attractive to others and may inform our views about economic development and growth, in a fashion not dissimilar to that in which the B ritish experience and Adam Smith, who drew on that experience, influenced our thinking during the past two centuries.
Blockchain
Crypto May Be the Future of Humanitarian Aid
Several organizations are using cryptocurrency to channel aid into Venezuela. Payment company Airtm started Airdrop Venezuela with the goal of sending $10 in cryptocurrency to 100,000 Venezuelan citizens via their app
This technology is in the earliest stages, especially in the humanitarian field. But it is helping people get around the economic restrictions authoritarian regimes use to control their citizens.
Career
How to prepare for a technical interview — tips and tricks to help you perform your best
Types
- Whiteboarding
- Code challenge (computer science questions or algorithms)
- ask clarifying questions
2. Hardcoded> Dumb > Better > Even better. Make small iterative code improvements
3. Talk out loud, say everything you’re thinking
4. Stay in the logical flow
5. Show what you know
- Code challenge (reasonable coding problem)
- Take home project
LifeOptimisation
What do executives do, anyway?
To paraphrase the book, the job of an executive is: to define and enforce culture and values for their whole organization, and to ratify good decisions.
Not to decide. Not to break ties. Not to set strategy. Not to be the expert on every, or any topic. Just to sit in the room while the right people make good decisions in alignment with their values. And if they do, to endorse it. And if they don’t, to send them back to try again.
One of the book’s claims, which I found shocking at first, was that in a large organization, executives don’t set strategy. Not even the CEO sets strategy. Why? Because it’s an illusion to believe you can enforce a strategy.
Product
Newbie PM’s Guide to the Product Requirements Document
- Objective of the feature
- Goals of the feature
- (optional) Important notes
- Assumptions
- User Requirements ie. features/user stories
- User workflow using draw.io
- Use Cases
- User actions — system requirements and wireframes for each Use Case
Platformit — Part Seven — Platform Longevity Growth
The Passive Layer is all about centralized coordination. Transactional layer with a primary objective to aggregate a known set of resources (assets, people, data, etc.) to facilitate a core interaction (Investment opportunity) between two or more parties toward achieving mutual objectives. The focus is on a single job to be done.
The Active layer is about consensus cooperation. This layer requires a more in-depth understanding of the context. The active layer embraces the scalable learning mindset: growing by exchanging knowledge, assets, data, etc. and by allowing a higher level of interactions and stronger relationships towards supporting multiple objectives. The primary aim is to shape a new context.
The Interactive layer is explorative and based on emergent collaboration, with an endeavor towards unlocking hidden potentials via shared vision. A network of sequential jobs to be done, toward enriching the totality of our experiences, with a primary objective to empower new creation.
