How to create your own personal investment thesis

Howard Gray -

The term ‘investment thesis’ is a now a fairly common sight on the internet, particularly in the world of venture capital.

These investment theses tend to update every few years, often at a similar cadence to companies undertaking a rebrand (after all, a new investment thesis is itself a rebrand of sorts). [1]

Previously, a firm’s investment thesis tended to be held more privately.

But as the internet continues to open up all kinds of industries, and differentiation for all sorts of companies (including investors) is both harder and more important than ever, the open source investment thesis is far more common.

Besides, as many investors themselves will tell you: ideas are worth nothing; execution is everything.

VCs deploy financial capital  into their investment (and increasingly human capital too – this article on a16z is a good example), and the investments are largely in keeping with the thesis they’ve set out.

That’s the point of a thesis; it’s a premise to be proved [2].

What’s less common though is a personal investment thesis – a summary of where an individual is looking to investment their time, energy and resources over a period of time (perhaps 2-3 years)

A personal investment thesis may not be focused on financial investments or business ventures.

In fact it may not mention them at all.

It could include creative pursuits, areas of learning, new entertainment forms.

As Chris Dixon said [3]:

What the smartest people do on the weekend is what everyone else will do during the week in ten years.

Of course, our individual interests, passions, whims and fancies may shift more quickly than those of an established business that is investing tens of millions of dollars and is responsible for many peoples’ careers, and so a little caution should be exercised.

But the personal investment thesis is really interesting for a bunch of reasons:

  • It’s a simple, portable vessel to support critical thinking about yourself, your environment, and the wider world
  • It’s a great way to more neatly pin down some of the trends and ideas that are sticking with you in such a restless, rapidly moving world
  • It’s an effective method to demonstrate to prospective employers, partners and other parties where you came from, where you are, and where you want to go
  • It adds a layer of accountability – to yourself and the people who read it
  • By having tens, hundreds, thousands (millions?) times more investment theses out in the open, there’s so more opportunity for unexpected inspiration, creation and collaboration

 

What does the personal investment thesis look like?

Here’s my outline of the format of a 1-2 page personal investment thesis:

  • Introduction
  • Where I came from (my previous thesis or most recent career chapter – could be singular or multiple)
  • What I learned from this; what worked, and where and why it has needed to evolve
  • How this new thesis came to be
  • Why I’m betting on this
  • What success looks like
  • What I need for it be true (people, resources, trends etc)

 

Here’s the introduction to the recent 3rd investment thesis from Union Square Ventures:

The commitment to a thesis is part of the fiber of USV–a shared set of ideas creates a framework that allows us to operate with focus and work on what matters most to our team. But what that thesis is has evolved over time and will continue to evolve. It reflects both a changing world as well as the shifting interests of our partnership. 

Taking inspiration from USV, the introduction section of a personal investment thesis may sound something like this:

The commitment to a thesis is part of who I am. It’s a set of ideas from diverse and inspirational sources that creates a framework to allow me to focus, work on and enjoy what matters most to me.

I know my investment thesis will continue to evolve over time. It reflects both a changing world as well as my shifting interests. 

You can of course add as much extra colour to this as you like, but it’s not a bad starting point.

I’m currently drafting my own investment thesis (although my first formal attempt at doing so, it’s probably my fourth in all), and I’ll share my take on the various elements in a few follow up posts.

For now I’d love to hear your take on the personal investment thesis, and where you’re channeling your time and energy for next year and beyond.

 

[1] This is one thesis I haven’t proved.

[2] Yes, this article is a thesis.

[3] Fittingly he is indeed a venture capitalist.