I could barely sleep last night so I decided to head to my desk and do a fun project: How much money would you have today if you had purchased the $AAPL stock instead of buying the Apple Product? I do recognize the bias of picking the company that has generated the more shareholder value in the last decade but this is still fun to think about.
There were some really fun/good replies to this tweet that was referring to how recently funded startups but super expensive chairs. The one reply that stood out to me was a link to this post written by Tren Griffin on Things [He's] Learned From Fred Wilson. #5 on that post talks about how expensive equity capital and the importance of not spending it on expensive toys for your company. He adds another way of looking at this, through a Buffet-ian lens. I have highlighted it below. Overall, the paragraph resembles a similar conclusion, from a personal perspective, I came to a few weeks ago.
Being somebody who's curious in general, likes to tinker, and always wanting to play with the newest things I end up messing around with a lot new software, apps, hardware, and gadgets. In general, I think this is super valuable, especially if you want to make build products/make investments as the earliest stages since a lot of new things starts as toys or not mainstream, by definition. Most of those things are usually just time consuming and cost a marginal amount of money from your personal cashflow except for gadgets.
The latest gadgets *usually* don't end up being the significantly more product than the gadget that they are replacing: the newest iPhone, newest MacBook, Camera, drone, GoPro, wearable, you get the idea.... So instead, what I'm experimenting with is: If I think I would've bought this item before doing this experiment, I'm going to buy the equity into that company instead. If the stock is not publicly traded, I'm going to buy an adjacent/related stock that is. Not just applying this to gadgets but any ancillary spending that's not food & transport. If I do need to make the purchase, I'm going to try and match the spend with an equity purchase. Also, if a spend a LOT of time on the service, that to warrants buying equity in the service. In the two months, I've bought a few shares of AAPL, TWTR, TSM, LULU, JWN, FIT, SQ, ZEN.
The most obvious outcome is that I, likely, own assets that don't depreciate as fast as the goods I would've otherwise. I hope to god that is true because if that isn't true that would really suck.
Also, I've never really traded public equities before this but I think I'll learn some things about the company and how others (public/bigger funds) thinks about these stocks since their motivation is obviously very different from mine. The reason for my purchase was just intent to buy/interact with their goods and its possible that good products/services (I like) ≠ good businesses (the world values). Looking at things retrospectively should also allow me to build a better filter for instances, in the future, that need independent thinking. I may also be able to evaluate what kind of returns some of the toys/services built by public market companies, that I interact with, have. It'll also, over time, let me track what structural changes have happened in the industries they operate in .
Again, the main motivation here isn't extraordinary financial returns because this would be too easy of a way to make money, and anything that is easy has its advantages to competed away as Howard Marks writes here. Additionally, in his words this is a classic example of first order thinking. I do want to use this as a way to spend less, and skim over annual filings to become familiar before deep diving in the future.
Disclaimer: I am not giving you investment advice of any sort. This is just an experiment I am doing for myself.
I love products, tinkering, building communities, and math. Currently, I am working at Opendoor. Before: PolymailApp (YC S16), Arena VC, Bruin Entrepreneurs.
Also making cameos commercials
Views expressed here are my own.