Ali Hamed - Building an Investment Firm - [Invest Like the Best, EP.362]
My guest today is Ali Hamed. Ali was first on Invest Like the Best six years ago. He was 26 at the time and four years into building his investing firm, CoVenture. Both then and now, Ali is an example of what’s possible when you think creatively. Six years later, CoVenture now manages two-and-a-half billion dollars, and Ali continues to find alpha in esoteric places.
We talk about YouTube catalogs, creative opportunities in real estate, and how venture investing helps them get better at credit. We also talk about his lessons from building an investment firm and what it’s been like to work with Michael Ovitz. Please enjoy this great conversation with Ali Hamed.
Listen to Ali host a Business Breakdowns on Spotter
Listen to Founders Podcast
For the full show notes, transcript, and links to mentioned content, check out the episode page here.
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Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes.
Past guests include Tobi Lutke, Kevin Systrom, Mike Krieger, John Collison, Kat Cole, Marc Andreessen, Matthew Ball, Bill Gurley, Anu Hariharan, Ben Thompson, and many more.
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Follow us on Twitter: @patrick_oshag | @JoinColossus
Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com).
Show Notes:
(00:00:00) Welcome to Invest Like the Best
(00:03:11) First Question - The Journey of Building an Investment Firm
(00:15:08) The Influence of Time and Scale on Asset Classes
(00:22:39) The Power and Potential of YouTube's Asset Class
(00:27:33) The Future of Real Estate and Housing Supply
(00:30:15) The Challenges of Investing in Platform Economies
(00:36:44) The Pitfalls of Capital Formation in Asset Management
(00:45:17) The Evolution of Venture Portfolio
(00:51:14) The Approach to AI and Other Emerging Technologies
(00:54:42) The Mispricing in Private Credit
(00:58:46) Building the People Side of the Business
(01:04:21) The Challenges and Opportunities in Valuation
(01:19:40) The Impact of Michael Ovitz on CoVenture
(01:23:11) The Kindest Thing Anyone Has Ever Done For Him
Amazon Aggregators: Buying Third-Party Sellers - [Business Breakdowns, EP. 35]
I’m Jesse Pujji and this is Business Breakdowns. Today we are doing a different kind of breakdown. We are covering an entire category, Amazon Aggregators. These are the companies that are buying up hundreds of Amazon’s third-party sellers. The concept of Amazon Aggregators is relatively new, tracing back to 2018 with the founding of Thrasio, but the ecosystem is already huge and growing. Most recent numbers peg it at around $300bn dollars in revenue and growing faster than Amazon itself. These aggregators have unique moats and high-quality entrepreneurs.
To help break down the marketplace and business of acquiring Amazon storefronts, I’m joined by Ali Hamed, a partner of CoVenture, who is also a popular guest on Invest Like the Best. In our conversation, we discuss the three superpowers Amazon sellers have, why there’s only $8bn in funding for a market doing $50bn in EBITDA, and we go into detail on how Amazon Aggregators are structured and operate. Please enjoy this unique breakdown on Amazon Aggregators.
For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.
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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.
Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.
Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss
Show Notes
[00:03:23] - [First question] - What is an Amazon aggregator, and who sells through Amazon?
[00:05:26] - The scale and size of the aggregator market in general
[00:06:43] - The history of third-party sellers and the utility they offer Amazon
[00:08:20] - When they started inviting third parties to join their network and their market share
[00:09:47] - Amazon’s 40% take-rate and overview of the economic structure
[00:10:24] - How many individual storefronts exist and what they look like
[00:13:19] - Who is starting Amazon stores and an overview of a seller writ large
[00:14:43] - The initial insight that led to incorporating third-party aggregators
[00:21:17] - How many aggregators exist in the space today
[00:24:41] - Why vertical integration isn’t such a primary focus for aggregators
[00:26:53] - Ways aggregators find businesses and how they tend to acquire them
[00:31:29] - What the top 10 aggregators look like and their acquisition frequency
[00:32:25] - The common value add aggregators deliver post-acquisition
[00:36:47] - Deal pipelines and other sales and marketing functions
[00:40:22] - Interesting things in the space given how unique of a marketplace it is
[00:43:57] - New innovations and secondary ecosystems emerging as a result of aggregators
[00:45:13] - How an aggregator should think about Amazon and risks to their business
[00:48:29] - Why Amazon won’t use their data and customer ownership to own the market
[00:50:10] - Macro and system risks that would threaten the success of this business model
[00:52:35] - What keeps Amazon up at night and potential worries about aggregators
[00:53:54] - Reasons why they would pass on an acquisition opportunity
[00:55:32] - Contributing factors to explosive growth that exceeded expectations
[00:58:10] - Biggest takeaways for builders and investors from 3rd party aggregators
[01:01:04] - Where to learn more about Amazon’s third-party aggregators
Ali Hamed – An Update on Private Credit - [Invest Like the Best, EP.172]
My guest today is popular past guest Ali Hamed, who joins us for an update on private credit. We discuss what has happened so far, what parts of the market are frozen, and where opportunities may lie. We also talk about how the world has shifted digitally since the beginning of the COVID pandemic. Please enjoy my conversation with my friend Ali Hamed.
This episode is brought to by Koyfin.
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
Show Notes
(1:41) – (First question) – World of private credit in the pandemic age
(4:50) – Bag of uncertainty
(6:27) – Important levers in private credit
(9:15) – Scary scenarios and systemic risks in this world
(13:21) – General trends in the credit data
(15:30) – Are investors factoring government response properly
(17:02) – Defining advanced rates
(20:18) – Focus on quality vs rate of return now
(22:26) – Pockets of opportunity as uncertainty declines
(26:06) – Online ecommerce platforms, like the YouTube economy
(29:40) – Non advertising driven ecommerce platforms
(31:54) – How venture capital is responding
(38:19) – How junior debt could be am opportunity
(40:17) – Trends he’s thinking about; redefining small businesses
(43:07) – Ali Hamed Podcast Episode
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
CoVenture Credit - Esoteric Credit with Ail Hamed, Brian Harwitt, and Marc Porzecanski - [Invest Like the Best, EP.108]
My guests this week are Ali Hamed, Brian Harwitt and Marc Porzecanski who work together at CoVenture Credit. When I first had Ali on as a podcast guest, we discussed the many aspects of what his firm does, ranging from venture, to crypto, to credit. We glossed over the lending side of the business, but having since learned a lot from them on the topic, I was excited to get the chance to talk with members of their credit team for today’s longer exploration of esoteric high yield lending.
I am always proselytizing the value of investor education, s this week we have a podcast first. The CoVenture team has prepared a long series of posts that correspond to our conversation and go even deeper into the topic of credit investing. You can find them in the shownotes at investorfieldguide.com/credit
This is entirely differently from any conversation I’ve shared before, so I hope you learn as much as I did. Please enjoy my discussion with team CoVenture Credit.
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
Show Notes
1:42 - (First Question) – The formation of their unique credit business
7:09 – Their advantage in seeing both the equity and credit side of their investments
10:23 – Looking at the Returnly deal as an example
14:07 – How they view these deals and are able to sustain them as long-term investments
18:09 – Their interest in payroll deduction lending
20:08 – Finding unique types of default risk
21:31 – What stands out in a platform that makes CoVenture want to take a deeper look
26:43 – Most interesting types of problem they have come across that they have yet to do a deal in
31:35 – What is going to change to make for more thoughtful underwriting of subprime lending
35:51 – Major structures of asset backed lending
39:49 – Whether the home serves as an interesting playground for credit opportunities and whether people will own anything again
42:44 – Mark’s experience working at a huge firm vs his experience at CoVenture
44:31 – How does the current credit cycle impact their view
47:04 – Lending against bitcoin
50:06 – Who is interested in these loans against bitcoin
50:57 – How to set interest rates against a weird asset like this
53:00 – What are the key determents of success in this business
1:02:27 – Kindest thing anyone has team for the team
1:03:52 – How to treat people that you pass on
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
Ali Hamed – Creative Investing - [Invest Like the Best, EP.71]
I have a special request this week: share this episode with every curious person in your life.
The conversation, with a 26-year old investor named Ali Hamed, serves as an example of what’s possible when you think creatively.
Ali views the world with a fresh set of eyes, and has already become an expert at identifying new investment opportunities where others have not. As the second prodigy 26 year old in as many weeks on the podcast, these young guns are making me feel like an ancient 32 year old.
We talk a lot about “alpha” in our world, earning returns better than the market. But the key word in that last sentence isn’t alpha, it’s earning. Hopefully you, like me, will use this conversation as a reminder of what it takes to earn differentiated returns. It’s not just the hard work, but also the mindset. We explore many examples of how to create new investment opportunities, from rolling up Instagram accounts, to financing perishable fruit like watermelons, to heavy machinery software.
Please enjoy this special conversation with Ali Hamed. Follow him and his partners. And then go figure out how to earn success yourself in whatever it is you do by helping other people solve problems with empathy.
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
The Big Short: Inside the Doomsday Machine
Links Referenced
Sheel Tyle Podcast
Seed Investing is a B2C Business, While Growth Stage investing is a B2B Business
Ira Judelson podcast
Free Content and Digital Media Are Increasing Socio-Economic Disparity
Show Notes
2:24 - (First Question) Ali’s investment philosophy
3:33 – History of Coventure and its unique structure
6:30 – The story of how Coventure was seeded
12:29 – What makes cost of capital such an interesting topic for Ali
14:13 – Exploring fee structures and the expectations for return in the current environment
17:02 – The current state of the VC world
21:42 – Ali’s investment process on the VC side
25:32 – What other requirements are there for Ali to make a VC investment
28:00 – Understanding the difference between judgement and empathy in founders
28:20 – The Big Short: Inside the Doomsday Machine
29:47 – Dealing with LP’s
32:47 – Sheel Tyle Podcast
33:39 – At one point did Ali feel the most personally at risk in his career
37:55 – Why did they get involved in cryptocurrency
43:30 – What excites Ali most about crypto
46:09 – Lending as an alternative way to invest in businesses
48:09 – An overview of their lending business
50:21 – How does deal flow and sourcing work in these arrangements
52:54 – How much encroachment will Ali face from competitors
54:28 – Exploring the idea of valuing and buying digital accounts
59:36 – How Ali thinks about marketing for his own firm and the ones he invests in
1:00:06 – Seed Investing is a B2C Business, While Growth Stage investing is a B2B Business
1:03:59 – Longer term aspirations for Ali and industries that he would avoid
1:04:25 – Ira Judelson podcast
1:08:05 – Ali’s view on the potential negative impact of free content
1:08:19 - Free Content and Digital Media Are Increasing Socio-Economic Disparity
1:12:48 – Kindest thing anyone has done for Ali
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