Conversation With Tech Legend Divya Narendra
At Harvard, you’ve mentioned that you took a variety of classes while also noticing that there were a few specific academic ‘tracks’ (i.e. finance, law, etc. that many of your classmates followed). How do you feel about the liberal arts educational experience versus a more career track-based approach?
It's so important to acquire broad exposure to a variety of subjects. You may enter college thinking you know what you want to do, but you don't know what you don't know. Forcing yourself to explore new areas of study can be eye-opening. At the very least, you’ll meet a wider range of personality types, which is particularly useful if you aim to launch a new venture and need to build a founding team with diverse talents.
What was the most important skill or lesson you learned in college? What was the most important skill or lesson you have learned in your professional life?
See answer to #3 below.
What did you learn with ConnectU and/or the early years of Facebook that helped you successfully execute SumZero?
Persistence. This is by far the most essential quality of any successful entrepreneur.
Of course, I also learned many business-101 fundamentals related to team building, strategy formation, network effects, and legal protections, but these lessons would have been worthless without the required persistence to apply them. The persistence – the discipline and patience – I developed during that time was invaluable in overcoming obstacles and staying focused when I started SumZero.
What was the hardest part about getting SumZero up and running? Were you ever skeptical or did you always trust the quality content platform model?
The core of any business enterprise is its human component. Hiring the right people is harder than it may seem. Screening candidates for the right mix of skill, integrity, and work ethic is tough, but it’s necessary to create the kind of chemistry that makes for successful teams.
These days, many people seem to hop from one company to another like musical chairs, which makes retaining talent that much harder. The COVID-19 pandemic may change this dynamic, but I imagine you'll still see a lot of movement between firms, especially in tech circles.
More specifically, at the inception of SumZero, we also had to overcome a challenging behavioral predisposition shared by many in the asset management industry: the tendency to closely guard proprietary insights rather than to share these insights more broadly.
We spend a lot of time thinking about what incentives we should put in place to compel analysts to think differently and reconsider their approach to, and relationship with, research. Our solution relies on helping SumZero contributors leverage their proprietary research to elevate their own brands by building a track record. This in turns helps them meet both fundraising and career placement goals.
When do you envision SumZero opening to a more general audience? What kind of access would you give that general audience? Would it be the same as what you give to your verified buy-side professionals?
My view is that anyone who cares about the financial markets should have access to SumZero research in one form or another.
If you have a brokerage account with any exposure to stocks, bonds, crypto[currency] or any other asset class, you should have access to SumZero. Our research repository covers companies of all market caps in all regions around the world. We offer a free tier of access to anyone interested, regardless of background, which we refer to as our Headlines page.
Mind you, Headlines is really just the tip of the iceberg relative to what lies behind the paywall but it's still highly educational market commentary. We also sell read-only access to our research database in the form of SumZero Elite.
Elite opens access to the entirety of our research database. It puts professional research ideas created by our buyside members within reach of investors who, until now, have either been left to their own devices in researching companies, sectors, and industries, or have been exploited by sites featuring often-dubious research, often by unvetted, anonymous users with questionable intent.
When you look at a research idea on SumZero, you can rest assured that it’s been written by a professional buy side investor with actual skin in the game. It’s information integrity: actionable business intelligence. In addition to Elite, and without giving too much away, we will soon be offering budget-focused tiers of access to non-buyside investors with a reduced volume of ideas but the same level of quality.
Very simply, in opening our platform to new audiences, we intend to disrupt the way individual investors approach the markets by giving them access to professional research written and used by some of the brightest minds on the buyside.
Given that you had some of the revolutionary ideas behind Facebook, where do you think the next game-changing idea will come from? Is there one in tech or finance? A more niche version of an already existing concept? Are there any other specific industries or companies that have caught your eye?
Most, if not all, industries are seeing innovation disrupting old ways of doing things: so much so that many in society are wondering if this pace of change is too frantic to control. I'm personally quite optimistic that this change is for the better, but I understand why Elon Musk and others see a more dystopian future where machines fully displace mankind. Having said that, I think that the pathways to larger goals, whether in space travel, technology, medicine, or any other future-facing industry or sector, will generate ideas and solutions with potentially infinite applications.
What are you doing during the pandemic to stay productive and hopeful?
I left my apartment in Tribeca to quarantine in a small ski lodge in Vermont. That lasted about a week as there wasn't enough wifi for both my wife and I. Since then, we've been in the suburbs of New York waiting for more clarity on when in-office work will resume in the city. In the meantime, we've tried our best to work from home and I must say that my team at SumZero has transitioned quite seamlessly. We are focused on how to make the most of what is undoubtedly a tough business backdrop. Though we've cut back on certain costs, we've also invested in other areas and continue to develop new products and features that we think will position us well coming out of this global crisis.
What is the best piece of career advice that you’ve received from a mentor that you’d like to share? How have you seen it implemented in your own career development?
Without sounding too generic, I'd encourage people to pursue careers doing something they fundamentally enjoy and, in an ideal scenario, are passionate about.
I remember watching a Jeff Bezos interview where he said only a small portion of the population builds careers (most merely have jobs), but that of those with careers, an even smaller subset find their true calling; their vocation. This is the holy grail, but if you can approach it, you're much more likely to be motivated and successful at work.
Is there a particular aspect of your upbringing or education that has contributed significantly to your mindset and to your success?
To this day, my parents work six days a week, even though they are both at or near retirement age. Whenever I find myself slacking off, I think of them.
What do you think we can learn from the 2008 market crash to help us navigate the current pandemic crisis, for example, growing unemployment numbers?
No one likes to see the market crash. However, there is no denying that market volatility creates opportunities for those investors with dry powder and a keen eye for value. Buffett famously urged investors to be “greedy when others are fearful,” an adage more relevant now than ever as we witness companies trade as if they are on fire sale.
In March, we saw many stock prices decline by 50% or more.
Many of these companies may never recover their market values while others have been on V-shaped recoveries. The incumbent challenge is differentiating between winners and losers. This is exactly what active stock picking is all about. On SumZero, nearly every idea posted over the last two months has had a COVID-19 component to it and we are seeing a lot of ideas featuring expected returns in excess of 100% (with V-shaped recoveries).
The government's bipartisan reaction to the pandemic has been incredible from both a monetary and fiscal standpoint, and is a direct result of what we learned from 2008. (Federal Reserve) Chairman Powell's recent comments pointing to unlimited QE should give investors some confidence as they navigate the markets. It's impossible to ignore the non-stop stream of media headlines pointing to skyrocketing unemployment but this isn't news. It's a given and should be no surprise during a forced economic shutdown.
The real question is how will the economy rebound now that states and municipalities are starting to reopen. This will depend on a variety of factors, including vaccine and therapeutics development which, from all reports. is moving at record pace. For anyone with a long-term investment horizon, the markets currently present opportunities that typically only come along once a decade.
Can you speak about how you ended up naming your company SumZero?
SumZero is literally and figuratively the opposite of zero-sum. We are trying to further the philosophy that investing doesn't have to be a zero sum game. Instead, by sharing research and ideas, investors can create win-win scenarios for both parties. This philosophy also underpins the transparency on which SumZero is built - members share ideas with their real names attached to their ideas; there are no pseudonyms.
Has SumZero ever had any issues with people posting non-public information? What do you do to keep SumZero clean from insider trading?
No, we've never had this problem. In fact, we think SumZero is the last place a nefarious actor would attempt to disseminate non-public information because of how transparent the system is by design.
This is the question I know you must hate getting, but a lot of people have critiqued The Social Network for getting parts of the story wrong and misrepresenting its characters. How do you feel about how the film portrayed the story?
Do you think they “got it right”? Are there any things you wished the movie showed that they didn’t?
There were many elements of the film that weren't exactly correct. But given artistic license, I think the film managed to convey the right ideas while still being entertaining. I had no interactions with the producers and as such, had no input on the script or casting. This may not come as a surprise, but Max Minghella, the actor who played my character, is half-British, half-Chinese. They painted him brown to make him look more like me....
As an adult who’s had years to grow since college, how would you say the events that unfolded with ConnectU/Facebook have made you into the person you are today?
Well I don't think these events changed me as a person or in any fundamental way. My personality is what it always was. The difference now is life experience. I just know a lot more - more about business, more about law and civil procedure, and I am probably a better judge of character. Beyond that, I think it's helped establish my credibility as an entrepreneur. I don't dwell on the past, however, and I'm working as hard as ever to keep building and to continue growing professionally and personally.
What is SumZero’s primary source of revenue?
The vast majority of SumZero's revenues come from subscriptions we sell to clients who want to access the full breadth of investment research on SumZero but are not in a position to contribute their own ideas, be it for compliance reasons or personal choice.
Written by Ethan Samuels, Jason Kauppila & Karina Thanawala, Edited by Alexander Fleiss
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