Invest Like The Best
Episode 248 Investing in Operating Systems
Invest Like The Best

Episode 248: Investing in Operating Systems

Invest Like The Best

Episode 248

Investing in Operating Systems

Alex Rampell is a General Partner at Andreessen Horowitz. We cover Alex’s framework for positive selection in investing, why the best investments are often operating systems or systems of record, and Alex’s views on the future of fintech.

This episode is brought to you by:

Tegus. Tegus has built the most extensive primary information platform available for investors. With Tegus, you can learn everything you’d want to know about a company in an on-demand digital platform. Investors share their expert calls, allowing others to instantly access more than 20,000 calls on Affirm, Teladoc, Roblox, or almost any company of interest. All you have to do is log in. Visit tegus.co/patrick to learn more.

Hall Capital Partners. Hall Capital is always looking for exceptional investment talent at any stage and size, so if you are raising capital or looking for a career change in the San Francisco or New York areas, you should check them out at hallcapital.com or e-mail at invest@hallcapital.com. 

[00:03:32] - [First question] - Lean into positive selection and avoid adverse selection

[00:07:48] - Thoughts on growing capital formation in private markets

[00:14:01] - Why it’s useful for investors to think in terms of bonds and call options instead of equity

[00:18:39] - Doing more with less and hunting for operating systems to invest in

[00:28:08] - His views on infrastructure and the presentation layer conundrum

[00:33:32] - The sequencing involved in building an operating system over time

[00:40:11] - Rise of the creator class and the coming tailwind post-cloud technology; the rise of the solopreneur 

[00:43:32] - The pig joke and his thoughts on the FinTech space

[00:47:47] - Big financial services functions that will be embedded in non-financial businesses

[00:51:07] - Deciding which functions and financial services models are most attractive

[00:57:01] - What a shift towards data and FinTech might unlock for the world writ large

[01:02:40] - How to improve payment profits by reducing credit rates

[01:04:12] - The threat that Buy-Now-Pay-Later companies pose to Visa and Mastercard

[01:12:17] - How the struggle between distribution and innovation continues to change

[01:15:04] - The kindest thing that anyone has ever done for him 

Investing in Operating Systems

Introduction

Patrick
Our guest today is Alex Rampell, a general partner at Andreessen Horowitz. Alex has a long history in FinTech, having co-founded six companies in his career, including Affirm and TrialPay. During our conversation, we cover Alex's framework for positive selection in investing, why the best investments are often operating system or systems of record, and Alex's views on the future of FinTech. For those that have listened to our Business Breakdown on Visa with Alex, you know the intellectual horsepower that he brings to every conversation and this conversation is no exception. Please enjoy my great conversation with Alex Rampell.

Lean into Positive Selection

Patrick
So Alex, where the hell to begin this conversation? There's going to be so many avenues we're going to go down. Maybe I'll start with a really simple concept I've seen you put out there. You call it the rules of investing. Rule number one is lean into positive selection and avoid adverse selection. Rule number two is just to see rule number one, so let's zoom in on rule number one. What do you mean by this big overarching idea?

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