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Friends,

If you’re a fan of standup, you’ve probably come across the phrase “a comedian’s comedian.” It’s a phrase used to describe a comic a degree or two outside of the mainstream but blessed with a rare gift that may be best appreciated by those with a deep understanding of the craft. They may not be the person who fills the biggest arenas or spins off an eponymous sitcom, but they have a finely filigreed talent that earns esteem. 

It’s a concept that works across disciplines: you can have a “writer’s writer” who will never make Oprah’s Book Club but crafts sentences that make a Pulitzer winner snap their pencil in half; a filmmaker’s filmmaker that might consider an Oscar nomination a sign of bland failure; or a musician’s musician, experimenting with new sources of sound and melodic structures as contemporaries churn out a parade of pleasant bops. Such designations are a recognition that popular appeal, press interest, and awards are noisy measures to approximate skill; sometimes, it’s a matter of if you know, you know. 

Ho Nam is the venture capitalist’s venture capitalist. Those familiar with his work and that of his firm, Altos Ventures, respect him as among the finest managers of his generation. It is not that he has shunned the limelight per se – he can be found sharing uncommon insights on Twitter, much to the delight of many emerging managers – but that his focus has been and remains on his craft. 

Since Altos’ founding in 1996, Ho and his team have delivered exceptional returns by finding companies that the market missed, venturing into untrendy geographies, and doubling down when “common sense” said to sell. That first principles approach has helped Altos grow assets under management to over $10 billion, driven by early investments in outliers like Roblox, Coupang, Toss, Woowa Brothers, and many others.

While those examples give context to Altos’ success, they don’t fully capture the caliber and depth of Ho Nam’s thinking. I had the pleasure to first connect with Ho a few years ago and consider him one of the wisest, most thoughtful, and most generous investors I’ve met. He has a rare ability to cut through the noise and focus on what matters. 

For these many reasons, I’m so excited to have him join us as the guest for Season 2 of “Letters to a Young Investor.” For those just joining us, this series features a monthly correspondence with me and a legendary venture capitalist covering the craft of investing – spread out over four editions. If you haven’t had a chance to check out Season 1 with Reid Hoffman, you can find it here.

To unlock all of Ho’s insights and wisdom, sign up for our premium newsletter, Generalist+. By doing so, you'll become a sharper investor, better thinker, and the most impressive person in your office :) 

Mario’s letter

Subject: Infinite games
From: Mario Gabriele
To: Ho Nam
Date: Thursday, February 15 2024 at 6:37 PM EDT

Ho, 

I’m so glad to be beginning this correspondence with you. Since we first met a few years ago – thanks to your support for The Generalist’s writing in its early days – I’ve admired your remarkable investing career and the quality of your thinking. 

You have always struck me as both a master and a forever student. Despite your success in building Altos into an exceptional firm – and underwriting legendary outcomes like Coupang, Roblox, and Toss – you remain keen to keep learning. 

One of my favorite non-fiction books is Finite and Infinite Games by James Carse. I’m not sure if you’ve read it (I think you would like it a great deal if you haven’t), but Carse’s fundamental argument is that life is divided into two types of games. “Finite games” exist to be won; “infinite games” are designed simply to keep playing. I think lifelong praxes like writing, painting, and company-building fall into the latter category. You can practice them every day until your dying breath and still find more to learn. What I find most exceptional about you is that you have made venture investing into an infinite game – a craft that can be continuously honed. I’m so excited to explore the contours of this with you over the next four letters. 

I wanted to start by zooming in on a core aspect of Altos’ investing strategy: backing “hedgehog” founders. That thesis is a riff on Isaiah Berlin’s essay “The Hedgehog and the Fox,” which divides the world into two types of people: hedgehogs, who are absorbed by one big idea, and foxes, who dance between many. For Berlin, Plato, Proust, and Dostoyevsky are hedgehogs, while Shakespeare, Goethe, and Aristotle are foxes. (In case you haven’t seen it, we discussed this further in a recent edition of “Ask Mario,” our reader Q&A series.)

Fundamentally, I understand the merits of Altos’ focus. Many of the best founders seem to be maniacally, irrationally focused on one business; to build something truly great, single-minded obsession may be strictly necessary. However, it’s also a strategy that makes me intensely curious. Namely, I’m interested in how you developed this theory and how something that may sound abstract shows up on a day-to-day basis. 

There are dozens of directions to take a conversation like this (and I am interested in everything you might say), but allow me to make it more concrete. When you sit down with a founder, how do you discover they are a hedgehog? What particular traits are you trying to find? Do these take time to show up, or are they blazingly apparent? Are there certain settings – a walk, dinner, or office visit, for example – that seem to elicit more useful information than others? Are there certain questions that you find spur interesting answers? What are the shibboleths that reveal the founder you’re talking to may, in fact, be a fox? 

In the past, you and I have talked about Coupang’s Bom Suk Kim and Roblox’s David Baszucki. Those conversations have given me the impression that both are classic hedgehogs. Would you agree with that assessment? How did you detect that in them? And which other founders, perhaps those readers might be less familiar with, fit the hedgehog category in your view?

Over the years, Altos has found great success backing South Korean startups. Coupang is, of course, an example, but it is far from the only one. The firm has also funded super-app Toss ($2.1 billion valuation), second-hand marketplace Danggeun ($2.7 billion), crypto exchange Dunamu ($17 billion in 2022), car sharing platform SOCAR ($2.5 billion), and food delivery app Woowa Brothers (acquired for $4 billion). I’m basing valuations on publicly available numbers, so apologies if they are outdated. 

First off, this is insane! What a track record! I suspect I am missing some hits from the list, as well. Secondly, it makes me wonder how hedgehog personalities intersect with the characteristics of different cultural identities. Do you find hedgehog founders easier or harder to find in South Korea than in the United States? Is there something in the Korean national consciousness that promotes entrepreneurial characteristics? Are there other countries you think are especially adept at socializing founders? Does your playbook for finding hedgehogs have to change country by country?

Thank you for helping guide me and readers through the infinite game. 

With gratitude,

Mario

Ho’s response

Subject: Infinite games
From: Ho Nam
To: Mario Gabriele
Date: Saturday, March 2 2024 at 11:20 AM PDT

Mario,

It’s funny that you mention the book by Carse because we have given it to many people over the years (I also enjoyed The Infinite Game by Simon Sinek). We often feel as though we aren’t even playing the same game as most people and this is one of the reasons. 

The theory of hedgehogs began to crystallize after I asked Warren Buffett and Charlie Munger a question at the 2003 annual meeting in Omaha. The full question and answer are on YouTube (and in the full video archives here). Buffett said that the key difference between a great manager and an entrepreneur is that the latter had more passion for the business. They loved their business just as Buffett loved Berkshire. By the time someone hits Berkshire’s radar, they know that the person is competent (because it’s a large and successful business). The key question is do they love the business and not just the money because if they don’t love it, there will be no deal. Pretty much all of the founders of companies Berkshire acquired were already independently wealthy but they kept showing up to work anyway. 

That got me to ask what makes someone like Warren Buffett tick? He hasn’t had to work for money since he was 25 years old and yet he keeps tap dancing to work well into his 90s. The same for Sam Walton who was a successful teenage entrepreneur and kept going long after he became the richest person in America. When I wrote the blog post, “Foxes and Hedgehogs in Silicon Valley” in 2006, I specifically had Buffett and Walton in mind as classic hedgehog founders that we looked for. Back then, we still had not met people like David Baszucki (Roblox) or Bom Kim (Coupang) but we had a prepared mind for the type of person we wanted to back and partner with for decades. Such founders become billionaires and they just keep going and going. Their companies are their life’s work. 

It was only recently that I came across this quote by Ralph Waldo Emerson: “Every great institution is the lengthened shadow of a single man. His character determines the character of the organization.”...