What does a New York VC do With Money?

P: How comfortable are you talking about money in general?

Ihar: That's definitely part of my job so i have to be comfortable with that 

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Do people often ask you for some money advice and I'm not talking only about like work-related. Do friends often come to you or some people who find out that you are a venture capitalist?

Interestingly, probably not not as much right so I don't think that uh most people are not probably comfortable or don't want to ask about in general…money, since when they know that I'm a venture capitalist they typically ask more about advice on startups or venture investing and so on.

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Are you always eager to share your wisdom with them? 

Well I'm not sure it's wisdom but I'm happy to help and share my thoughts and opinions that's for sure.

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How long have you been working in this industry?

Probably 10-11 years by now.

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And how did you come to this? Were you always this smart with money?

I actually came to startup investing because I didn't know what to do with money, so I was working at Google at the time and they will pay pretty well and you know you could just keep the Google stock from money perspectives…but also it was interesting to try to do something else and just you know keep it in stock of Google and one of the interesting opportunities that I found was all the startups, actually that was the time when we already heard of course about success of Facebook, success of Google which I already worked at and other companies i don't remember which ones just became big by 2011-2012, Uber I think just became a thing at that time. 

So nobody had heard about AirBnb or Pinterest or companies like that, but I was like okay so it's possible to back some of these companies early, earlier than the stock market so why not? Why shouldn't I try and then I've heard some of companies starting and Pandora was one of my first investments since the cut as well so in that time this company looks interesting so let's try working with them as opposed to just keep money in stocks of course part of it was not just about managing money part of it was to be part of the ecosystem as well, and helping people and helping companies. 

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Okay, so you were not just looking for like higher returns…It seems that it's easier to invest in the stock market than pick the right startup because the success rate is very small there and it’s more difficult

Definitely, you need to be very patient, this is just a completely different thing to do angel investing. Of course you can be investing in startup assistance by investing in funds right in venture funds, and of course a lot of people do that. I invested in some funds myself, of course people invested in my fund. And that makes it just a simpler decision. You figure out which fund manager is doing the right things and invest in their decision making. 

But otherwise investing in a startup in companies and it's it's tough and that's why a lot of uh a lot of like common knowledge advice is don't invest more than five percent or ten percent of your money into startups because what if you lose all of it? But, on the other hand, if you really know what you're doing then it's a different game.

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True, do you remember your first investment? And not in terms of companies but like you know when you were like okay what should be the first stock I'm gonna buy?

Stock…I actually don't remember that very well i think that uh Google obviously was the first talk because I just got it for working at Google and that was probably the very first stock that I had and one of the first stocks that I actually bought and made a conscious decision to buy, it was probably Nvidia at least and it also was the longest held. I think that I bought Nvidia at like twenty dollars sometime in 2010 and 2011 and I held some of it until now so yeah. And I wish I bought, like, Apple or something back then which I didn’t, he-he.

Okay we are always smart you know when we think about the decisions that we haven't made. The reason I'm asking is because I feel like all investors have this. When they just started investing they bet a lot on this first company, I remember my first company that I bought I was like i'm gonna be a millionaire tomorrow, it's gonna just skyrocket it didn't happen though. But when you said you held it was the longest health in your portfolio Nvidia have you sold it recently?

Well I've sold some of it of course right so especially recently, I actually just bought some Nvidia today because it went down again and I still believe in the company, but of course it’s a little bit different…ball game right now because it's already a big company, I still believe it can go higher but you know.

I also don't really believe in buying and holding no matter what right so one of the things that I believe in is proper sizing right so if you suddenly have a very-very successful stock and when it used to be five percent of your portfolio but now it's 95 percent of your portfolio, I would sell. Of course I would sell it way before that I would probably start selling when it's like 10-20% of my portfolio.

When you said that if people feel risky and want to try with the investing in startups and also when you say about now the proportion of different assets in your portfolio, what helps you manage your assets in general? Like how do you how do you manage your money? Do you use some apps or anything for this?

Good question, so basically, I mostly have buckets of classes of investments and then I use different apps for that. For example, I have stocks, I have startups that I personally hold, I have crypto, I have some other non-traditional like debt investments and so on. And for each of them there are separate apps and in order to hold it all together I have my own custom Airtable where I just calculate all of this and like all the relationships and so on. But within all of them I just have to go to a specific app like, for example, for crypto it's mostly Coinbase, for stocks it's mostly CharlesSchwab.com, like that.

Do you have Gainy?

Yeah I definitely have Gainy. I use it as an interesting tool for seeing what I’m missing in the market, because actually I look for all the news about the stock market pretty much every day and I use different news channels like Seeking Alpha, CNBC and so on, and Gainy has a very interesting additional angle to providing information about the stocks that I like.   

I didn't expect you to say yes definitely it wasn't part of an ad or anything. I was just wondering like what are you, the user cases and what how could you use it for your needs…Okay um thanks for this, a lot of apps um so basically what i understood you have an Airtable right? So sometimes you have to go there and manually type in some numbers to calculate, to budget?

I wish there was an easy way to automate it but for now it's a lot of some manual work pretty much, yeah.

Okay now you're giving startup ideas, a startup idea from a venture capitalist, create something to make it easier…well I'm sure there should be some solutions for this, maybe not that easy…

I’ve seen the list of the companies that you invested in like PandaDoc, Instagram people ai how do you um and regarding also your stock portfolio how do you pick industries where to invest in do you have any preferences or you want to go along the trend like for example now it's the energy trend

So, trends are usually somewhat short-lived for me, so I definitely prefer to look at longer-term trends, energy seems to be a very short-term trend right longer-term trends are more important like for example software as a whole is a long-term trend right so it's like yeah why it's better to invest in software companies like Salesforce is a big one, Microsoft or Google as opposed to just hardware companies like Cisco right? So that's a very big trend, of course there are smaller ones AI is a trend, there is a trend around remote work like this kind of trends are much more long-term as opposed to shorter term trends about energy, I don't feel it will sustain for like three-five years from now,

You mentioned remote work, I can't help but mention that I'm in WeWork, do you still believe it has future as a company?

 It definitely has future as a company. It's way more difficult to say it has future as a stock, I don't own any WeWork stock, and it's pretty much a real estate company, almost like a real estate trust, almost. So you invest in it if you believe that the WeWork team has [done] a good job of managing real estate, they have, and a good job of acquiring new real estate and you also believe in the underlying trends in real estate. It's tough, because it's not as differentiated from other real estate as we want sometimes.

I think that remote work the way I think of it is much more like underlying key companies like Zoom for example. And, by the way, Zoom might not be forever somebody might disrupt Zoom, but for now Zoom is very important for remote work.

I wonder when…Google Meet it's free and also has a lot of functionality and quite good quality, I wonder when they are going to roll out something similar?

It’s tough to say.

Maybe as a former Google worker maybe you got some insights. By the way do you still hold Google?

Yeah yeah of course, Google's one of the top companies I believe in, and they have…of course it's kind of a stable stock now, it's not this very speculative stock of 10 years ago, but it still has amazing growth rate year after year and they have a lot of cash cows that nobody can take away pretty much. So I think out of big tech Google's probably the best stock to own, I personally think.

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When you explain this kind of stocks and your approach, I hear a lot of fundamental measures that you've mentioned like cash cows right the trends the perspective of the company are you more of like fundamental analysis investor do you ever make any impulse buys like Tesla?

 I'm less of a fundamental investor, I'm a fundamental investor on the startup side where it's much more important what kind of valuation there is. But on the on the stock side it's very difficult to see the underlying, whether the stock is too expensive or too cheap compared to its peers, because it's always like…the price is by the demand and supply right so and what i think is the most important is the stock will go up if it has high growth the underlying company has high growth, if the revenues and profits keep growing then the stock has to grow to even maintain the same multiple. But, on the other hand, if the company’s stock just doesn't have yet all the demand that it will have because, for example, you believe that they will launch something very very important very crucial later and more people will want to buy it that's another reason to buy a stock right? It's much less important for me personally whether it's like discounted cash flow and other very clearly numeric fundamentals make sense. I typically buy not a large number of stocks but only of companies that I believe will be more important and more significant later. 

So that's why I don't like holding companies that I believe are in kind of decline or in a stable situation. Even companies that are obviously very stable like Coca-Cola and P&G I'm sure they will be there.

Like dividend companies?

Yeah i don't really like holding them because… I mean, I hold some dividend ETFs just for income. But for growth… I mean most of my porftfolio is growth and I prefer buying companies that I believe are going to grow a lot. And this includes both big tech, because I still believe Google will grow and smaller tech companies like Snowflake or much smaller companies like Octa.

Do you do any trading by chance? What's your general attitude towards trading versus some passive investing?

I do some trading I think that better to do passive investing and trading is something like a kind of a participation in your own… it's control over your own destiny in a way, right? It's like okay, if you believe this stock is too high then you should sell it, if it's too low you should buy it but you are fully in control of what you are doing.

But you should also be careful and I went through this some time ago to not spend too much time on trading because sometimes even if you're making good decisions it takes away from other life. But I think the worst is when you spend a lot of time trading and you end up having worse portfolio results than if you do passive investment. So one of the angles that I typically think is a is a right approach is basically taking one hour every week to spend on your portfolio and that's pretty much it. Or maybe even less, maybe one hour two weeks. It's like, okay, which companies are doing well? Which are not doing well? Which ones have a really high representation of your portfolio and which are low?

And that's pretty much it. And I definitely wouldn't recommend options.

I have recently started trading options I think it's a lot of fun, very stressful, not my type of investment. But I just wanted to try it for the sake of experience. We have a question. 

What do you think about growth stocks when would it be the time to invest in them again? Is it safe to invest in them after such a huge drop?

So, first of all, I'm not the right person to tell anybody what's safe and what's not safe right. I think that it's very very critical that everybody makes their own thoughts and decisions on this market. I also think that time in the market beats timing the market. It's a very old adage and a lot of people say it.

Basically, as long as you are not investing your last money, and you are not investing your pension money or something like that. I think investing in the stock market is good but it might go down again, but as long as you have income, if you actually have a job or some other kind of income that's outside of the stock market, then it's good to be invested in the stock market. And if it goes down, keep buying. I personally do this, I keep buying more. But if it's going up then you didn't lose it.

 I was talking about Nvidia today and I was looking at their stock and it’s interesting, in 2018, not so long ago, in three months it lost 50%. It was not a one-day drop, it was a very steady drop over three months. At the end of this drop a lot of people are thinking, “oh so bad that I didn't sell it earlier.”

 But what happened after the drop is that it went up 10x. So people who didn't sell it at any point ended up being much richer than those people who sold it and stayed in cash or in other stocks. So from this perspective I'm now pretty much fully invested in the stock market, including growth stocks. I’m just not invested in the most speculative stocks that were all the rage last year. Those I don't have, I'm mostly focused on stocks of more real…

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So no GameStop for you?

No, no GameStop for me. No Virgin Galactic or these like very very long-term stocks. It's mostly stocks that are here and now mostly profitable but some that are not profitable but will be soon profitable. And I'm ready for the stock market to go down another 50%.

With this uh kind of like step-by-step ladder buying…that's safe it's gonna go up eventually, one day…

Yeah yeah, it's gonna go up right? Because we believe in the U.S. economy, in the global economy.

That's actually an interesting question. Do you invest in any other companies from other countries or regions?

Not really directly. I have some small ETFs that are exposed to emerging markets and so on, but I just don't have enough information about the specific companies. So that's a very case where it's even more important to have passive investing

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And since you're working in this industry have you ever had any insights from people saying like, “oh this is gonna be the next Google you should definitely buy it.” Is it easy for you to trust this or do you always have to check, to do your own fact-checking?

I definitely have to do my own fact checking, yeah. But it's also the word inside is very close to, like, inside. And one thing is that inside information is illegal to use. But advice or excitement definitely is totally fine. So I don't mind listening to excitement. Of course I look at the company myself and see if I can believe [in] it.

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One last question: how much cash allocation do you have today and how has it changed over the last month?

It's probably zero and it was zero and it's still zero.

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Okay, so you invest with just the income that you generate monthly?

Yeah, yeah.

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Okay. Do you want to invest more today or are you waiting for the market to drop more?

I'm not waiting for the market to drop more. But as I said that I'm just trying not to time this market. I'm basically seeing that okay if it will drop more, I will use my income to invest more. If it goes up, I'll use my income to invest more, it's pretty much like this.

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There is a volatility index VIX, and there is a study that the market has never bottomed without VIX reaching 45. Now it's 32. So do you ever like you never look at indicators predicting, forecasting the rebound or anything?

It's interesting that this phrase is just one of so many crazy ones about technicals… I hear general market technical analysis, I listen to it from time to time. And there's so many things, so people analyze the put-to-call ratio. People analyze the bull-to-bear ratio. People analyze all sorts of multiples on revenues, on sales like percentage of companies doing 52-week prices two-week close. But to me, you know, and some people say that the market will rebound to be at the end of December, same as it was in January.

There's two articles both from very reputable people, one saying that recession is priced in but there will be no recession, so the market will have to go up. Somebody else is saying it will be a very hard recession and the market didn't price it in. So people have completely opposite views and both are very very established and experienced people. To me what's important is don't own the companies in this environment which are close to bankruptcy.

But other than that, own the company and all the companies and be careful that you are ready that you are not going broke if the market goes down another fifty percent, because it may, we don't know.

And have skills, you know, I mean have a way to earn income even if your investments are not doing well.

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True, that's really good advice, so you always have a side job side income. Also I think it's kind of difficult to earn money on just stock the market, and since you're a passive investor or you're more into like investing rather than trading. Do you believe that this is more effective?

Yeah

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Just one last question, I know I've already said this. Since you're a visionary and because I believe venture capitalists and people who invest in startups, they are visionaries, they feel the trends, they kind of see what's going to be in the future. What is one trend that you're particularly enthusiastic about now?

One trend? I think the fact that more and more people are participating in this ecosystem and finding ways to be exposed to the non-public market because this means that more startups can be started. I see more angel investors helping on pre-seed, I see more people buying secondaries, I see more people investing in VC funds for the first time in their life, you know like all of that is a very big trend.

And also big organizations like pension funds and that's more in venture. So all of this I think is a very good trend yeah.

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Thank you and have a good day!