It’s struck me for a while that there are similarities between really good investors and great investigative journalists. The most obvious similarity is that they both ask good questions but I think there’s more to it than that.
As a journalist you have to uncover a story that nobody else has told. You have to zig when others zag, not just to be contrarian but because you believe in the importance of the story even though nobody else might at the time. I’ve lost count of the number of movies where journalists have to convince their editors that the story they’re working on is worth pursuing (why is it that editors always come in for stick?). Journalism is often a fairly lonely business in the early days of a story. You might get a big team working on a story once it has grown but when you’re finding out about it for the first time, it’s one or two people.
There’s also their role in uncovering information. Both professions rely on hard facts and those facts might not seem hard when you first come across them. In the case of journalism, it might be that somebody is trying to hide facts from you. In startup investing, it’s often that even the founders are struggling to spot the hard facts themselves. It takes pattern recognition to notice when things are really important and when things are inconsequential.
Then there’s the importance of telling the story in both professions. For journalists that’s obvious — if you can’t tell the story well you’re not going to get very far. But as an investor, the process you go through is one of helping founders to tell their own story to customers, other investors and the outside world. I think this is even more important for impact investments where the story of the positive social or environmental effect that the company’s product or service has should be an integral part of its value.
There’s a similarity in the temperament of great journalists and great investors that I’ve noticed as well. Both are hooverers of information — they read huge amounts and are constantly are looking for the next story/venture. They know that many of their investigations will come to nothing but all of them are good lessons.