Good Investing Talks - Matthew Brown, why have you built an awesome research management system for free?

Episode Date: November 13, 2023

Matthew Brown of Kalakau Avenue has built a great notion tool for investors. It can be very helpful to structure your research.

Dear years of good investing talks, it's great to have you back to the podcast. Today, we are taking a look into an interesting investing tool I was recommended to. It was built by Matthew Brown of Colorco Avenue. Matthew, how are you doing today? Yeah, fantastic, Selman. Yeah, thanks for taking the time to meet with me, looking forward to it. Where are you based in the world? So, currently based in Sydney.

I spent the bulk of my investment career in the United States and, London and then finally returned home to Australia and living here with my wife in Sydney. What have you done in the States and in London as an investor? Yeah, absolutely. So I really started my career at Mechanic Capital. That's an endowment model investment business based in California. I really learned the ropes around asset allocation and manager selection there. Then went to the Harvard Business School over in Boston. And it was there that I met the Oppenheimer family office, so they were the former owners of Anglo-American and De Beers. When I was at business school, they sold De Beers to Anglo-American, and then I joined

as part of the founding team. So we really got to build out the philosophy, the process, the team, the culture, the infrastructure, the portfolio, everything from scratch. So it was a real privilege to go through that whole process. And I'd say, you know, really at the that fund, I really had the privilege to meet with and interact with a whole bunch of exceptional investment managers around the world. And it was at the Oppenheimer family office where Calico Avenue was really born. So the strategy that I had created there is really the same that I'm doing today. So as a side project to the main endowment portfolio, I ran a pilot portfolio at the Oppenheimer Family Office,

and that we ran that for about three years, and that was really evaluating the transition from a pure third-party manager endowment model to a hybrid direct and manager model. Most recently, I was the chief investment officer to NARA Capital, so that's an Australian diversified alternative asset management business. The easiest way to describe it, it's like the Blackstone of Australia, New Zealand.

And the founding partners of Calico Avenue are the three individuals that I've worked for across these three firms. So I'm really, really appreciative to all of those firms. So what did you drive you to start your own thing? Are you the builder guy that wants to build? Or what is the kind of thing that drives you? Yeah, absolutely. At first, it was really about the belief that for ultra long-term family offices that they could bring high-quality companies and really long-term investments onto their own balance sheet and probably do that in a more efficient way than an external manager can. For example, to justify management fees, a lot of investment managers will either have really high.

return thresholds and that means excessive risk taking and sometimes means excessive trading and really had a strong feeling that we could do that internally and so it was really about building and evaluating that process building the research process that that spark to then go and do this on my own really began and so I made the decision in 2021 and to launch out and and do this on my own. I took a brief side step to undertake the CIO role at Tenara, but ultimately, you know, came back to launching the business. And, and like I said, those three individuals, it's sort of an honor and a privilege that they've been able to, you know, provide the support and backing, you know, both as mentors, but also as capital partners in the new business.

That's interesting. So you try to solve a problem for family office that interested in long-term investing with your firm. Yeah, that's right. And it's really, you know, now it's at Calico Avenue. It's really how I manage my personal capital as well. So these are, you know, the investments and the philosophy is really geared around how I want to manage my own capital over the long term. And then to be able to bring, you know, capital partners along with me in that journey.

That's interesting. But you've also built a super interesting tool, which I already talked about. And it's called Investment Research Management System. Maybe you want to open the page where people can find it, that we can see it shared on the screen. You will also find the link in the show notes as a viewer. So maybe while you're opening it, I hope you can take this question. What is a investment research management system and why does it have four words? Yeah, so look, a research management system in a nutshell is all about the capture, the categorization of information so that it can be easily recalled and shared by the team.

The tool that I've built, it's built in Notion. It's a research management system, but it's also a basic CRM system. It's a contact database. It's a workflow management and prioritization system. And it actually is a web publishing system as well if you were to combine it with something like super.com. So what is Notion for those that don't know what the tool is? Think of Notion as a next-gen note-taking tool, but think of it as a combination of something like Microsoft OneNote or Evernote in conjunction with Microsoft Excel.

So if you can imagine all of your notes, sit within a series of databases, so you can add all of this metadata that really helps with the categorization. And then you can create all these cross-links between the databases. So your company's database can be linked to your contact database, to your notes database,

et cetera. And so I think one of the real powers of a system like that as well is that if you think about the research process, It's nonlinear, right? So you're rarely going from top to bottom. It's sporadic. You sort of go down different rabbit holes. You're doing different things at different times.

Whereas if you think about Microsoft Word or an Adobe PDF, those are very linear documents. They're designed to be read from start to finish. And so taking a nonlinear process and trying to record it with something that's designed to be linear, it really just doesn't work. So, you know, this kind of tool, I think, can really help with that. It's interesting.

So you've already explained a bit what notion is. What is the advantage of notion? Yes. Or why it was a natural place to build it. Yeah, absolutely. So, you know, the first time I built this was at the Oppenheimer family office. You know, we started just with, you know, pen and paper back in the old days. We then went to just a simple email, a shared email account.

And that was actually like, that was pretty good. And it served a purpose, really, of just having a super low adoption hurdle to make sure that it was used among the team. From there, we progressed to Microsoft OneNote. But overall, I found it's not really fit for purpose. For those of you have used it, it gets unwieldly over 10%. time. You know, it's pretty clunky. There's not a controlled sense of formatting, so it ends up looking very different across the platform. And finally, you know, OneNote and other tools like Evernote, etc. They don't really have the power of those databases that I mentioned where all the

notes are sitting in an enormous Microsoft Excel-like structure. And then, you know, your other solutions are you're off-the-shelf research management products. So typically SaaS-based products. So my problem with those is not only are they really expensive, they rarely do everything that you need it to do. And so if you're trying to add extra functionality or to build things that are really specific to your investment process, then unless you're one of their top 10 customers, you're really not going to get on to the product pipeline. And it's going to take a hell of a lot longer, you know, for product developments to come out. So having a solution that's actually customizable, I think, you know, is super important.

And so notion allows that. And, you know, some of the other criteria I'd throw in there if you're evaluating any system, you know, it really comes down to ease of use. Being quick to share information is super, super critical. And that has to be across desktop, mobile, and tablet. If you think about, you know, the way people do meetings these days with either their laptop or iPads in their meetings, being able to have that system is really important. It's got to be cloud-based, you know, just for ease of backing up information and sharing information. Customizable, as I said.

And then finally, it needs all of the sort of standard enterprise controls that you would expect on any system. And that's, you know, IT provisioning across different users and deprovisioning. you know, really high security with two-factor authentication. You need to own and control the data so that it's not owned by some third party. So, yeah, that's how I landed on the tool. So you said users can build with it. So an idiot like me could also build something that's resonating with his brain. Yeah, absolutely.

I'm not going to lie, there's a small adoption hurdle to get used to the notions syntax. But really, it is super easy. You can, other than typing and filling out the information, it's pretty much drag and drop. There's no coding involved. It's all zero code built. And sort of like the way you get used to using Microsoft Excel, you can kind of learn by the community pages or the Notion Help pages, etc. But it's, you know, once you've used it for a month, You look back and you think, you know, it's actually very easy. That's great to hear. What kind of persona did you have in mind building this tool?

Or who do you build this tool for? Because it was started at the Oppenheimer office. So it's not like only that it's your brain that's resonating with this kind of system. That's right. So it definitely started and is geared towards an investment research process. And so, you know, the headings and the way it's structured is very much set up for an investment process. However, that said, I think it could be used for any research management process. It's just a matter of changing, you know, some of the headings and titles and frameworks that are involved.

Equally, it was designed originally for a small team. So, notions, you know, it's perfect for a, you know, five to six, seven person team. and that's sort of where it really shines. That said, it's actually possible to use it in the enterprise as well. So I actually implemented it during my time at Tenara Capital. And Tenara has five strategies, right? So they're doing private equity, public equity, venture capital, and there's two credit teams as well.

And there's certain information that can and can't be shared between those teams, whether it's firewalls for keeping the information siloed, whether it's because of MNPI, all of those types of things. So it actually had quite a complicated, if you will, enterprise use case to provision and set up user access rights, etc. And there's a little bit of a learning curve to do that, but ultimately, you know, prove successful in being able to implement across the teams there. That sounds super interesting.

so it's scalable and it's proven in the field yeah that's right i think i would limit it you know if you're you know i'd be comfortable sort of recommending it up to a sort of a 50 person organization i think beyond that and and there's sort of potential um that the flexibility of it is maybe too much and allows people to change too much of it and so beyond that yeah you're probably wanting to look at at a more rigid system and then you're looking at your sort of more off-the-shelf products maybe let us show a bit more details on the system and you have the screens still shared maybe walk us a bit through the interesting parts of the system absolutely so for me in the investment process it really comes down to a few different things so it's it's

it's companies industries your contact database and and then really your your notes database there's there's more on top of that but those are your core building elements so if i have a look in there this is the company's database so this is all just filled out you know as a just for the viewing system so it doesn't have any of the calico avenue information populated but no hot stock tips i'm sorry guys um and so yeah This has all of your companies where you would list them. And if you double-click, you can really go inside and you can set up each of the headings to be orientated around your research process.

So, for example, our headings at Calico Avenue are a little bit different to this. Our headings all relate to our business quality framework. But these are your kind of general headings. And whether you want to write your investment members here or not, they can actually be used and then therefore displayed among the team in a more web-like structure rather than a PDF document. And you can go a page inside of each of the headings where you might want to store your research notes and things like that, where, you know, it's set in a little bit more of an unpolished format. In terms of, and then the contact database is exactly

as you'd expect, so there's no need to really dig into that. But where I spend most of my time, sort of the daily process, if you will, where I'm sort of entering information beyond the sort of synthesis of research into the company section is really the notes and meetings. So the notes and meetings is where I'm recording investor meetings, client meetings, you know, any time that I'm wanting to just record something quickly, often real time in a meeting on my laptop, on my phone, or on the iPad. I'm sitting in the notes and meetings database. This example, I think, will really highlight, you know, the interlinking between databases that I mentioned earlier. So as you're creating your notes, you know, you can tag all the things you'd expect, like date, the topic,

etc. But you can also, through these links to the other databases, you can tag the companies you were talking about, you can tag the people that you met with. So when you end up going to that company, it'll end up showing you, you know, all the people you've ever met where you've spoken about that company. You can click on the people and it'll take you straight back to the people database and you'll end up seeing all the times that you've with that person, you know, what companies did you speak about with that person, etc. So you can really start to see how there's that efficient recall of information and that interlinking of your information as a whole. So you end up with something, like the product ends up

looking much more like a Wikipedia-like structure, you know, than a PDF document or a Word document. Is there any other interesting section? By the are added by default. So the sections by default are introduction. That's a bit like telling people what the product is about, I think. Yeah. The notes, the priorities. So, yeah, the intro just gives a bit of help to explain this tool in particular.

It gives a little bit of help about Notion as well. The notes and meetings, the priorities database is really where you might want to set your workflow prioritization among the team. And because it sits in a database, so like, Unlike Microsoft OneNote, where you might sort of write out your priorities in a list, when it exists in a database, you can really have the luxury of flipping the views. So if you're somebody who prefers to look at something in a list, you can do that. Or if you want to do it as a combine board, you can do that.

So you can really sort of manage the workflow among the team. Finally, or rather, just to go through the rest, says the company's database, There's an industry's database for when you're doing research on industries. The structure is exactly the same as the company's database, but orientated towards industries. The same thing for themes when you're doing thematic research. I've mentioned the contact database. The investment frameworks is just a database that, you know, I've put in because at Calico, like I said, you know, we have this business quality framework. We do a lot of research around, you know, what business quality means.

a lot about understanding network effects, switching costs, that type of thing. And so we have these kind of deeper level frameworks, if you will, where we'll perform research around. If you want to do your investment letters to your clients in here, you can do that as well. And then, you know, there's a few other things like just, you know, cataloging your data sources that you've found over time. So just, you know, cool little data sources that you'll find on the web. It's a nice way to categorize them so that, you know, they're shared among the team and can be used another time. And I've left one off intentionally, but I'll leave it for last, but I think this one's really important. It's a super important part of the process at Calico Avenue,

and it's the decision log. So this is really about the recording of every decision. And, you know, it can relate to, say, a buyer or sell in the portfolio. But more than that, it could even relate to a decision to do nothing. Any kind of decision you want, I think it's super important to be recording that, the rationale around it. And that's not just for external purposes, although that's super helpful, whether that's for regulatory reasons, you know, whether that's for your clients, etc. But I think even for yourself, so, you know, when you're looking back on your decisions in, you know, say three or five years time, you can really get into the headspace that you were in at the time to really help you understand, you know, why you're making

certain decisions. So I think it's, you know, super helpful. helpful for ex post decision analysis as well. You said you can build with this tool, but like where did you experience the limits of the tool? So what do you say I use something else personally or from the people who interact with this that they said, oh, that's the limit? Yeah. I'd say so one of the drawbacks that says on the CRM functionality, I said earlier that it has basic CRM. So, you know, you can record your client meetings, you know, which

clients you met with and when, what you spoke about, all of that kind of stuff's really easy and quick to do. But that's the kind of limit. You know, this is not a CRM system, like a Salesforce or a HubSpot that's kind of sending you notifications on, you know, it's now your three-month follow-up and therefore, you know, you need to go and contact this client, that type of thing. So within that, with that respect, if you're more of a, like a full-on sales function, like this is not going to be the tool for you, and you should absolutely use, you know, a superior CRM system. You know, I've mentioned the adoption hurdle.

So, you know, I think it's super easy. I think it correlates to typically, you know, the younger audience, I think, you know, gets up to speed on these tools generally, like more quickly. So is it boom-up proof? It's, I think it's boom-a-proof, but, you know, there's still, if you're the person in your organization that's like championing using a tool like this, I think it's super important, like from my experience, even switching to, you know, from an email account to Microsoft OneNote, from pen and paper to an email account, is to, you know, to speak to the people, you know, who may be a less tech savvy and understand their concerns. It's like take the time to really explain to them the benefit and why you think they need to invest the time. And I think like getting those people on board early on can really help sort of build that coalition and get some momentum in the organization. Any other limitations?

I asked you for the boomer proofness. Yeah. So, yeah, I think the CRM one is key. I think as I mentioned, another key one would just be, you know, I think. I do think, like, once you get beyond the sort of 40 or 50 people, I think you do need to switch to a more rigid system. So when you have something that's so customizable like this and the ability to sort of add new metadata to edit some of the databases,

you run the risk of people changing too much. And in that kind of environment, I think you really need to have sort of very strict controls on sort of your power users and your users that have greater access rights and the users who are just consumers of the platform. Unfortunately, and I hope that Notion puts this on their product map, unfortunately, that ability to really control the editing process is still in the pipeline for the product development for Notion.

But I'm sure it's coming down the line. So there is no chance to block others from editing your notes if you work in a team. You can block certain things, but it's sort of like, you know, block everything on this page or block nothing. In reality, what you would want is to have free editing of the page, free entry of each line in the database, but to really be able to block users from being able to edit the structure of the database, to prevent them from being able to edit how the database is linked to other databases, for example. How can I install this thing and that there's also a referral link people should use when they install it? Yeah, thank you.

So you can get it from my website. Hopefully you can show the link. It's in the show notes. Great. So you can download it there. You do need a Notion account. You can trial it with a free account if you want. And then a team account is very cheap on a per user basis anyway.

Once you have a Notion account, you can just open up the page and you'll be brought to this page here and you can click duplicate into the top right-hand corner. That'll duplicate the whole system into your workspace. And then you can go from there and sort of change the headings around, you know, as you see fit. You know, it's absolutely 100% free. You know, I only make a suggestion, and it's just a suggestion, is that if you download it and you think it adds value to your firm over time, that there's a very much an optional donation to the Rhodes Trust.

It's a charity that I'm really passionate about. I'm on the Investment Committee for the Rhodes Trust, and it funds the Rhodes Scholarships to Oxford University. Like I said, purely optional donation, and only if it adds value to your firm. Okay, guys, donate, please. Is there anything you want to add for the end of the interview about the system? Anything we haven't covered?

Yeah, so not about the system itself, but I just step back a little bit. So, you know, while the objective, as I said, of a research management system is really about the capture categorization and recall of information. It's also about fostering a really great learning culture in the organization.

So in my career, all of the fantastic investment firms that I've come across have exceptional learning-oriented cultures. At Calico Avenue, we sort of think about it in three levels. So level one is very much about the individual. level two is about team learning and level three is about the systematic capture of individual and team learning to evolve and improve process so that's organizational learning and so a great research management system i think can help across all levels of building a learning culture but i think where it really shines is is helping on level two in team learning so you know in my experience team learning can often get derailed by a very common human behavioral bias that happens when the cost of doing something is certain and short term, but the benefit, even if it's very large, is uncertain and long term. It's the same thing with how we think about our health, right, is that our long-term

health has huge consequences for us, but we often do things to degrade it in the short term because we're unable to sort of quantify those long-term uncertain impacts. And it's the same with team learning. So to take the time to share an insight in a format that's digestible with your team, it takes time. Maybe it takes you 15 to 20 minutes to write something up and share it among the team, right? But the benefit is long-term and uncertain. So it often prevents people from doing that.

So I think a really good research management system, can really help reduce the frictional cost of sharing information with the team and thereby facilitate a great culture. So, you know, on its own, a great system like this on its own is not sufficient to build a learning culture. Learning and team learning, individual all the way through to the organizational level learning is it starts and finishes with culture. But a system like this can really supplement,

support that and really ensure that combined the team can really compound their knowledge faster than any individual. And thank you very much for these insights. And I hope this tool can contribute to some of the investor processes. Now you should know how you can try it out and also use the referral link and the donation function. And Matthew, thank you very much for your time. and thank you very much for developing this system.

Thank you. Well, thanks very much, gentlemen. And, yeah, I really hope can be a source of help to others in their investment journey. Thank you. I think you are already. Thank you. And bye-bye to the audience. Bye-bye.

As in every video, also here is the disclaimer. You can find a link to the disclaimer below in the show notes. The disclaimer says, always do your own work, what we're doing here, is no recommendation and no advice. So please always do your own work. Thank you very much.