Lessons from Ho Nam

Ho Nam, the co-founder and managing director of Altos Ventures, is a highly respected figure in the venture capital world, known for his unique, long-term investment philosophy that diverges from the traditional Silicon Valley model. Drawing inspiration from figures like Warren Buffett, Nam has cultivated a patient, founder-centric approach that has led to remarkable successes with companies like Roblox and Coupang.

On Investment Philosophy and Strategy

On long-term partnership: "We want to invest in that next generation. I think that's one of the things we observe with some really enduring franchises, where they are no longer thinking about the business as a GP. They're really thinking about it as an LP. They become both LP and GP." [1]
On the folly of market timing: "People who try to time it get it wrong. They invest when things get hot. They pull back when things look bleak (i.e. buy high and sell low, even though they were trying to do the exact opposite thing)." [2]
On avoiding the 'greater fool' theory: "Trying to take advantage of the greater fool, means, by definition, that you are a fool." [2]
On the illusion of permanent capital: "I've thought a lot about ‘permanent’ capital and have come to the conclusion that there is no such thing as permanent capital. As long as humans are running things, so much can change." [3]
On the importance of differentiation: "You could strive to be better or strive to be the best, but also you could strive to be different. The differentiation—something that's uniquely authentic to who you are, and a unique voice in the world—that has a chance to be heard." [3]
On value investing in venture capital: "What do you get when you combine Berkshire Hathaway's approach with early-stage venture capital? Altos Ventures." [4]
On the nature of great businesses: "It's hard to fall in love with a crappy business." [2]
On patience and conviction: "If something is not obvious or compelling, then I do not need take action. If it's obvious, then almost by definition it's easy." [3]
On the real source of investment opportunities: "When it comes to investing, at the end, it's human nature and the colossal stupidity that can result that provide the greatest opportunities for patient value investors that have staying power." [3]
On the 'Hedgehog' concept: "The hedgehog is really this boring creature, not very good at fundraising, does not networking, he doesn't even like VCs, doesn't want to meet anybody. They're just too busy doing their own thing, nose to the ground, right? That's kind of the hedgehog personality." [5]

On Founders and Entrepreneurs

On founder control: "We wanted the founders to be able to control their own destiny, and the only way we could help them control their own destiny is by helping them get to a point where they didn't need any more funding." [6]
On backing the right people: "We'd rather bet on the devil we know versus the devil we don't... we'll kind of learn together rather than bringing somebody else in and say 'Oh you've done it before you show us how it's done.'" [6]
On identifying true passion: "We have found over time that the most enduring and successful companies are the ones created out of a founder's deep personal conviction around solving a very specific problem." [2]
On the best kind of entrepreneurs: "We like this really bootstraps, scrappy, capital-envisioned entrepreneurs. We don't like burning a lot of money." [1]
On founders who dislike VCs: When a colleague mentioned a founder didn't like VCs, Nam's reaction was: "Great. They're going to love you guys...Yeah, exactly. Our kind of entrepreneur." [1]
On the character of a founder: "Charming people tend to turn me off...There are plenty of people that I would genuinely enjoy getting to know better and win or lose, I will value certain relationships." [3]
On a founder's life's work: "These exceptional entrepreneurs that make their company their life's work." [6]
On the problem with professional management: "No matter how great the professional CEOs, it's not their life's work at the end of the day and they will retire or transition out sooner than the best founders." [3]
On the importance of founder conviction: "Even if a company is doing really well, if I do not have confidence in the CEO, I tend to worry a lot because things might fall apart." [2]
On the evolution of a founder's mission: "I've also seen companies grow their aspirations and missions to something far bigger than they had imagined in the beginning." [2]

On Building Companies

On capital efficiency: "Constraints force creativity, which leads to better solutions for customers. Raising too much money leads to loose spending, which leads to founders focusing on raising capital from investors, not solving their customers' problems." [7]
On the focus of a business: "Companies exist to add value to customers. You add value to customers by solving their problems." [7]
On the danger of excessive funding: "If the founder keeps running out of money, guess what? The founder is no longer in control. Some big investor comes in and says, 'You know what, I'm going to put in a lot of money, but you're out.'" [8]
On being different, not just better: "Don't focus on being better. Don't fret over differentiation. Think Different. Be different. Transcend boundaries. Stand alone. Walk down a very lonely path." [2]
On the transition from startup to execution: "There is no single moment in time in which a company switches into execution mode. Reset expectations. There are no short cuts to repeatability and predictability. It will take time, iteration and constant tuning." [2]
On the importance of cash flow: "We like companies to get to the self-sustaining phase around the time you get to triple digit millions." [1]
On the reality of startup inefficiency: "Startups are not efficient. In fact, they are so inefficient that their trajectories are often referred to as 'drunken walks.' Big companies are built for executional efficiency. Startups are built for innovation." [2]
On supporting companies beyond capital: "We've learned to be supportive without the money. Not all businesses should take more capital. In fact, the best companies do not need outside money but may still want us around." [3]
On the true measure of success: "Until the cash is in the bank, it's not for real." [5]
On the journey of building a company: "So important to enjoy the journey and surround yourself with good people. It's still lonely quite often, but it does help." [3]

On Life and Learning

On the power of curiosity: "The key to life is to be interested. Stay interested, stay curious." [9]
On the value of a broad education: "The more I work in the real world, the more I realize this training that you have in humanities, philosophy, politics, economics...how critical that is." [3]
On the intersection of disciplines: "Really interesting things happen at the intersection of the sciences and the humanities." [3]
On personal growth through struggle: "Struggle is often a prerequisite to outsize success. The painful times force you to evaluate why things aren't working, hopefully leading to changed behavior." [7]
On learning from mistakes: "The loss of money is never the concern. The betrayals or disappointments in personal relationships are much more memorable than $." [3]
On the importance of relationships: "It starts with individuals, and that we need to build bridges sort of one individual with another individual, and the whole idea that it takes time." [6]
On finding your own game: "Everyone can't play every game. Figure out what game you can play and win. Play that game, even if it's not popular at the time." [7]
On the long view of history: "The past few decades where the entire computing industry or investing world has transformed is a blink in the span of human history." [3]
On the essence of collaboration: "You can't accomplish anything unless you work with other humans, inspire them and are committed to a common mission." [9]
On humility: "I've also realized over time that investing is truly difficult...So maybe it's ‘easy’ only after I have been humbled enough times to know that there are limits to what I can do." [3]

On Altos Ventures' Unique Approach

On their early, contrarian advice: "Our recommendation to the investor was: Don't do it. Let's just stay in touch because when the markets crash, that would be a good time to start." [3]
On their fund structure: "Our funds are 12 years, rather than the typical 10...That is plenty of time. We can part ways as friends at the end." [3]
On their reputation: "We are seen in Silicon Valley as these very stodgy, conservative, pragmatic guys, capital efficient, we don't like burning a lot of money." [1]
On their decision-making process: "In a partnership, you have different partners with different passions, different ideas, and you have this intermixing of different ideas, right? And so we debate it, we talk about it." [5]
On the dot-com bubble's lesson: "We all lived through the dot-com bubble, and we thought we were going to be so successful. We had all these huge gains and it just disintegrated on us...we were all kind of burned by that." [5]
On rejecting the "VC lotto game": "They originally played what Ho calls the VC lotto game. They'd find promising companies early and focus on preparing them to raise the next funding round from a brand-name VC firm at a higher valuation. That strategy imploded when the dot.com bubble burst." [7]
On their shift in strategy: "They changed their strategy to focus on helping founders build enduring cash flow–positive businesses that didn't require excessive venture capital funding." [7]
On the importance of being different: "He very calmly explained what he was doing and why he was going to stick to his knitting...that really got us on the journey of how do we reinvent the venture capital model?" [3]
On their investment in Roblox: Altos Ventures invested hundreds of millions into Roblox from an initial $86.5 million fund, showcasing their conviction and long-term approach. [1]
On the firm's longevity: Altos Ventures has been around for nearly three decades, a testament to their enduring and successful investment strategy. [6]

Learn more:

Lessons from Ho Nam

On Investment Philosophy and Strategy

On Founders and Entrepreneurs

On Building Companies

On Life and Learning

On Altos Ventures' Unique Approach

Written by Antoine Buteau

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