Howard Lindzon – Fintech and Trend Following - [Invest Like the Best, EP.109]

Episode Summary

Executive Summary: Patrick O'Shaughnessy interviews investor Howard Linzen on his unconventional, trend-following approach to investing. Linzen argues that great opportunities come from observing what people actually do, backing weird but useful products, and drafting behind smart people and platforms. The conversation centers on fintech, fractional ownership, UI-driven disruption, and why social/financial tools are still early.

Main Topics: Trend Following as Investing Philosophy (Priority: 5/5): Linzen frames investing as staying close to obvious winners and useful networks, not predicting the future. Mentors and Network Effects (Priority: 5/5): He credits mentors like Mark Scatterday and Fred Wilson for shaping his confidence, access, and style. Weirdness as an Edge (Priority: 4/5): He believes slightly odd people and ideas often get mispriced, making them attractive investments. Fintech as Human-Nature Aligned Product Design (Priority: 5/5): He favors products people actually want to use, especially those that simplify complex financial behavior. Fractionalization Everywhere (Priority: 4/5): He argues ownership, investing, and even relationships with experts are moving toward smaller, accessible pieces. Media and Social Platforms (Priority: 3/5): He sees social media as crowded and brittle, while media remains interesting but hard to scale as venture.

Key Arguments: Trend following means drafting behind smart people and products, like pilot fish behind sharks. Great investors embrace weirdness because unusual ideas can be mispriced and overlooked. Fintech wins when it matches human behavior, not when it forces idealized behavior. Robinhood succeeded by hiding broker-dealer complexity behind a clean UI and free trading. Fractional ownership broadens access and can make scarce assets investable for more people. Software remains the dominant area of investable innovation because it scales best. The next fintech wave is pre-wealth: onboarding younger users and supporting them with software.

Data Points: angel investment in first company: $25,000 - He borrowed from his mom to back Mark Scatterday’s first business after college. Wallstrip funding raised: $600,000 - He says he cobbled together seed money from Fred Wilson’s phone list in 2006. Wallstrip sale timing: seven months later - He says the show sold to CBS seven months after funding came together. Rally Road sold-out example: $14,000 - A green Ford Mustang sold out quickly, validating demand for lower-price fractional assets. Rally Road earlier asset price: $200,000 - He contrasts a higher-priced car with the later $14,000 clunker to show broad demand. Fred Wilson blog discovery year: 2005, 2006 - He found Fred’s blog while transitioning from hedge fund work into venture investing. Google Maps dependence: one week - His son reportedly stayed home for a week after losing phone access because he relied on Maps. Bloomberg subscription price: $2,000 a month - He describes Bloomberg as a premium social/information network for finance.

Pivotal Quotes: "I don't care what other people say. I'm interested in what they say, but I don't care what they think about me." — Howard Linzen: He explains why he compares himself to Larry David in investing. "If you know who to follow and you draft behind these smart people, you are a trend follower." — Howard Linzen: He defines trend following using the peloton and social-network analogy. "We’re in the last stages of people that think walls work because they don’t." — Howard Linzen: He describes the breakdown of financial and media silos in the internet era.

Implications: Listeners should watch for products that collapse complexity and meet real behavior; the biggest opportunity remains earlier-stage fintech and software that make finance feel native.