Chris Douvos – A Value Investor Lost in the Valley - [Invest Like the Best, EP.85]

My guest this week is Chris Douvos, a managing partner at Venture Investment Associates, which allocates 1.6B in behalf of investors.  Chris is the first professional allocator I’ve spoken with who focuses specifically on venture capital funds, so I had a ton of questions for him on how to build a portfolio in an asset class known for uncertain, but often enormous, outcomes. We discuss the major recent changes in the asset class and where things might be going. I sought Chris out because while this is an investment style that is full of creativity and hope, I’ve always felt it could use a healthy dose of skepticism and a value investor’s mindset. He delivers in spades as we try to separate the real from the ideal.  We didn’t record it, but Chris’s tour of Palo Alto was one of the most interesting and entertaining hours I’ve spent. He is a student of history and markets, and I look forward to learning more from him in the future.  Please enjoy our conversation   For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Books Referenced Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment   Links Referenced Domino Rally Business Models All About the Benjamins Speak Like the Locals David Salem podcast episode Curveball   Show Notes 2:18 – (First question) – Four factors that Chris thinks are important for future success of venture firms; portfolio concentration; repeatability; being early; size discipline 7:40 – What the venture landscape looks like today from Chris’s viewpoint             8:32 – Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment 14:07 – Is there a glut of startups making it difficult for investors 17:33 – How does Chris think about the investments that are a bit different from what everyone else is investing in in Silicon Valley 19:17 – Why he focuses on college campuses for innovation 20:54 – The role that geography plays in venture 25:06 – The Four M’s; money, momentum, mentorship, entrepreneurial management 27:13 – Chris’s perspective on crypto currency as a threat to venture capital 31:44 – The idea of venture capitalists as service providers to the companies they are investing in 35:15 -  Views on investing in hyper focused VC’s vs those that are generalists and just go after the best opportunities in any sector 39:00 – What hot button areas are of most interest to Chris and why, from an investment standpoint             39:38 – Domino Rally Business Models 42:22 -  What can a public market investor learn from a value venture investor who mostly has to rely on qualitative metrics             43:08 – All About the Benjamins 44:38 – Portfolio construction in the world of venture             46:40 – Speak Like the Locals 48:00 -  What are the characteristics that Chris looks for in managers, as an allocator 53:52 – What type of investors should and should not be in venture 59:15 – What type of allocator would Chris give all of his money to             59:47 – David Salem podcast episode             1:01:06 – Curveball 1:01:40 – Kindest thing anyone has done for Chris   Learn More For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag