Carnival Glass

Spend each day trying to be a little wiser than you were when you woke up. Day by day, and at the end of the day - if you live long enough - like most people, you will get out of life what you deserve.

Charles T Munger.

Mr. Munger

The passing of a scholar, a gentleman, and a hero of mine like Mr. Munger a few months back wasn’t just something that hit close to home, but rather represented a visceral feeling that was amplified through the entire finance and business communities at large.

Had there been no Charlie Munger, particularly at such an integral period in my investment education years ago, there would be no Countercyclical. Period.

As a firm that proudly builds tools for the very audience Munger nurtured to his last day with us, the weight of his passing didn’t go unnoticed in the slightest. In this time, and as a lifelong duty value investors ultimately possess, the greatest service we could offer him would be to pay down the debt of ignorance we all start life with.

I’d personally recommend reading Poor Charlie’s Almanack if you haven’t already (you can also purchase a physical copy here), and then I would recommend sending it to someone else either as a gesture of goodwill, or simply because it’s a Thursday in April. In any odd order you so choose, I don’t think you’ll regret making such a decision for yourself or others.

Thank you, Mr. Munger.

Where We've Been

Most of our time in the past year has been spent in the infamous following two buckets - talking to customers and building product. As boring as it might sound, it’s how companies get built (luckily for value investors, we like rather boring things).

While larger companies tend to have the two categories separated with walls of bureaucracy that require "paper airplanes" to be fashioned and chartered between, the two are proudly gelled together at Countercyclical.

Getting our product both in front of new customers eyes - and ultimately getting workspaces up and running for them - has been nothing short of a delight.

Closing the loop between getting a piece of feedback resolved - whether initiated on a demo call or simply from an existing user reaching out to me - prompts a sort of circuit of momentum that fills the air with an aura made of equal parts excitement and courtesy.

In balancing our bias towards craft with the need to move swiftly at times, the vibrato produced between the two polarities continues to be a buzzing undertone that I love hearing (amongst the juggling of other online and offline activities too).

It’s also a pleasure, as the company goes through some of these rituals, to turn a few sacred cows into steak along the way. You would think in an industry as “forward-thinking” as technology that these pastures would be few and far in between, but as a collective of people who are largely indexed on short-term thinking (with an almost off-putting predisposition towards history), it leaves all the more opportunity to those of us who have the historical capital available to allocate when the dollar bills start trading for pennies.

One in particular that I’ve been thinking about recently is how software isn’t this isolated, sterile thing that gets built from carefully crafted planning meetings where every single T is crossed and every I is dotted perfectly beforehand.

Rather, it starts out as “carnival glass”; a wonky and strange medium, but all the while possessing a very distinct underlying purpose that some person - or group of persons (as is the case in the enterprise setting) - finds deeply rich with both character and utility.

Over time, taking on a mosaic-like form of evolution, this poor man’s Tiffany absorbs a sea of different colors through small yet bespoke alterations. What once begins as a fragile patchwork matures into a centerpiece of stained glass that your cathedral builds itself around.

It’s the decisions you make "in the micro" that either produce the caustics that elegantly dance their way off of the windows, or drums up an undercurrent of inertia so strong that the potential for the worst of all outcomes falls into purview; death by word-of-mouth.

What We're Doing Right Now

Starting with that latter version of hell and working backwards so as to ensure we never end up there, we believe one of the best defenses a company can equip itself with is in bringing truly world-class folks together and centering them around a worthy cause.

Partnering with wonderful people (team members, vendors, clients, etc.) demands that a continuum of responsibility exists; the need to produce narratives around a deep historical context backing up our philosophy alongside building a modernized technology platform that will chariot a company’s efforts handsomely into the future.

Bar-belling these two forces is yet another fun game we get to play (have I told you that I kind of like my job yet?), and there's plenty of work that Countercyclical's done, and will continue to do, to demonstrate this as evidence in the investment research space. The realms of hiring, onboarding expansion, and partnerships remain a focus of ours going into the year, and it’ll be wonderful seeing this unfold further as the product, team, and overall story of Countercyclical continues to evolve.

Where We're Going

We put out a post not too long ago about vertical enterprise software and how we’re thinking about the future with its impact on capital markets, and we are largely optimistic for what’s likely (given the distribution of outcomes) to unfold.

Firms leveled up a great deal in the late aughts thanks to the advent of wonderful software services, and this next iteration we’re currently living through - we imagine - will take the wonders that these globalized tools brought us and simply expand their capacity in a much more “depth-first” approach (in place of the previous “breadth-first” iteration).

The heuristic I will promptly borrow from Carlota Perez is as follows; While there won’t be any shortage of “installation” phases we'll see (particularly with an industry like ours that’s stitched so closely at the hip with markets that get lathered into constant states of excess), “deployment” phases will occasionally crystalize, and the firm will be well positioned for when such moments occur (as sparse as they may be).

Getting anymore specific about what value will be created is bound to get me into a world of trouble, but it does beg the question as to where the value will accrue to. As a firm that deeply respects cycles, I’m sure these players will gladly become recognized for their tremendous efforts in due time.

How The Story Continues

As was stated in our first letter, Countercyclical operates freely from any principal-agent quandaries. Management and ownership continue to be matched one-to-one going into its second full year of operation, and this will continue to be even more important as we stay the course on installing the virtues of value investing into the workflows of capital allocators around the world.

With such a “destination” as our North Star, alignment isn’t just a fluffy term we throw around to check a box, but as an operating standard that necessitates the minutia in our daily actions.

The goal of the game ought to be in keeping the game going, and that’s really how we have been (and will be) playing. Taking this approach, the outlines in the field we’re running atop kindly extend themselves beyond the arbitrary boundaries set by industry, common sentiment, and other variables that fundamentally don’t matter.

Moving outward from that claustrophobic box and into the rolling meadows that rest beyond the horizon gives us the bandwidth (both intellectual and financial) that we’ll need for this next chapter of growth.

We’re (still) open 24 hours a day, 7 days a week, 365 days a year - and we will continue to do all that is in our control to use those minutes, hours, days, weeks, months, and years to provide managers, allocators, and research teams with the tools they need to be as successful as possible at every step in their value discovery process.

Thank you once again for allocating your attention with us.

We’ll see you next year.

William Leiby
Founder and Chief Executive Officer
Countercyclical