Roger McNamee in the Right Place at the Right Time

The latest episode of Super Investors and the Art of Worldly Wisdom by Jesse Felder had famed tech investor Roger McNamee.

Roger McNamee ran the T.Rowe Price Science Tehcnology Fund during the personal computer revolution and the internet boom. Roger produced market beating compound annual returns during his tenure.

Then Roger started Integral Capital, a late stage VC and public market fund, with John Doer of Kleiner Perkins Caufield & Byers.

In 1999 Roger saw things were getting too frothy. The big clue was when John Doer suggested taking Martha Stewarts’s company public as a tech/internet company.

In anticipation of the tech bust, Roger then started Silverlake Partners, a private equity fund focused on tech companies.

Roger was eventually pushed out of Silverlake by the other partners. This was after he presented an opportunity to buy 18% of Apple. Steve Jobs just returned to the company and made the offer to Roger. This was before the iMac and the iPod.

Roger didn’t know these two items would be a hit. He was betting on Steve Jobs and they were protected by the fact that Apple was trading for less than the cash on its balance sheet.

After being pushed out of Silverlake, Roger started Elevation Partners with Bono. At Elevation Roger made an early investment in FaceBook.

Notes

A couple of things stood out to me in the interview.

Luck

Roger opens up the interview saying he is where he is today mostly because of luck.

Roger’s first day at T.Rowe Price was in 1982 at the start of the 80s bull market.

He took control of the Science & Technology Fund after the 87 market crash.

Roger became friends with some of tech’s biggest heavyweights because he could play and sing over 200+ songs.

He ran into a group of guys unloading music equipment at a tech conference and found out that they were having a jam session. He asked if he could come. He ended up joining and being an integral member because he could sing and play so many songs. The other band members turned out to be top executives at some of the leading tech companies.

Differentiation

When Roger started in tech investing, analysts didn’t go to the conferences. He decided to go to them all. Roger spent over 100 days on the road.

Because he attended all these conferences he became a product guy.

At this time most analystsused only their spreadsheets to come up with earnings estimates. They didn’t assess the products.

Roger came to the conclusion that if the product was great than earnings estiamtes would be too low. If the product was not good than earnings estimates would be too high.

Look for research or a skill set that can differentiate your thought process.

Right Place, Right Time

A lot like luck but with more self control. You chose to follow the opportunity or not.

Roger followed what caught his interest.

He liked what he saw in video games and it lead to an investment in Electronic Arts. Roger bought a pager to help coordinate the best time to talk with his wife. After seeing how helpful it was in his life is interest lead him to invest in the emergin mobile device field.

If something really interests you then you’re probably not the only one. It could be the start of a new trend.

Dangers of Tech

Roger’s whole career and life revovled around technology. He is not a technophobe. So it is really interesting to hear him discuss the dangers of technology today.

Pyschology of Addiction

Large tech companies like Google but primarily the social media companies, e.g. Facebook, are borrowing techniques from the gaming industries to exploit human nature. They are making us addicts. We end up constantly checking our phones and their apps for new messages and updates.

Know All About Us

The large internet platforms, like Google and Facebook, have all our info and probably know more about us than we do ourselves.

They use this data to greatly influence us and increase our use their platform driving further addiction.

They’ll also sell this data and influence to anybody who’ll pay. For example, the last Presidential Election and Russian groups using Facebook to target certain voters.

Filter Bubbles

The alogorithims that drive our social media news feeds create filter bubbles around us.

What we post or click on leads the algorithm to feed us more of this type of content. We end up thinking most people feel or think the same way we do.

Because of our filter bubble, we may end up believing something to be true that is in fact false.

Roger does a much better job explaining all this. The whole interview is a worthwhile listen but especially the end.

Roger makes a great argument for why you shouldn’t let young kids and teens play on social media.