Letter from the author
A little background about who I am and my investing journey
Hello! I appreciate you taking the time to explore my substack. I wanted to take a moment to write a little background about myself so you can become familiar with me and how I arrived at where I am today.
Background
I was born in 1990 and grew up in Phoenix, Arizona. Growing up both academically and athletically, I had a wide variety of interests, pursuing as many different subjects and sports as I could fit into my schedule. A typical pattern I found myself repeating consistently is moving from one obsession to the next. I would discover a new idea, field, or sport and immerse myself into this new world until I considered it fully explored, then move on to something new. This generalist behavior is excellent for learning about the world but creates difficulty when getting into college and having to narrow down your interests.
In college, I jumped around quite a bit, from basketball to engineering to economics and entrepreneurship. Eventually, I graduated from the University of Arizona with a Master’s in Systems Engineering and Entrepreneurship and two undergraduate degrees in engineering and economics. Initially, I thought I would become an engineer, but I discovered economics late in school, which eroded my interest in engineering over time. After several internships and 2 degrees in engineering, I learned enough about engineering to know it was not something I wanted to pursue as a career.
After graduating, I moved to Chicago and began working in management consulting. The job required weekly travel to consult for various corporations. It exposed me to the inner workings of many different corporate cultures (which has proved invaluable later on as an investor). The work was interesting at first, but I burnt out fast, and after a few years, I quit consulting and, in 2018, joined a friend in launching an e-commerce startup. The startup posed a new set of challenges, moving from operating within the well-established systems of corporate America to building every system from scratch. Since then, the company has performed very well, making the Inc. 5000’s fastest-growing companies list in back-to-back years, 2021 and 2022.
Principled Capital
The idea for Principled Capital was many years in the making. When I was young, I read a children’s book titled “If You Made a Million” by David M. Schwartz, which introduced the idea of investing vs spending. I remember being fascinated with the idea that if one could earn enough money, one could forgo spending and make a living simply by investing instead of “working.” In college, I was introduced to economics and learned that an entire field was dedicated to the science of capital allocation. I began studying various schools of economic thought and read up on famous investors like Charlie Munger, Warren Buffet, and Peter Thiel.
An unfortunate hiccup in my investing journey was my encounter with the efficient market hypothesis (I will write a post that goes more in-depth on this topic), which essentially states no one can consistently beat the market as an active investor. After several years of feeling disillusioned with investing, I eventually overcame this significant intellectual hurdle and began actively investing my own money in 2016. My confidence grew the more I learned, and in 2021, I decided to launch Principled Capital Partners, emulating Warren Buffet’s and Monish Pabrai’s first investment partnership structure of zero management fees.
Since then, the fund has continued to grow in size and number of investors, and its success has ultimately led me to start this blog. The goal is to spread awareness about the fund and communicate investing ideas I have found valuable or perhaps others might find helpful. I believe the ability to invest well is a skill most modern education systems fail to teach, yet anyone can learn and gain greater freedom. I don’t claim to know everything, and I know that many future investing mistakes await (investing is a very humbling discipline). Still, hopefully, you will find the ideas talked about here thought-provoking and possibly applicable to your own life.
I welcome you to join me on my investing journey as I post my thoughts and learnings here on this substack.
Thanks for reading!
Paul Holtfrerich, Managing Partner at Principled Capital LLC