He arrived from Korea with $5,000 and learned to never run out of cash
Years before Altos had a big winner, he wrote that patience and careful spending beat chasing home runs.
Joys of Compounding · Ho Nam - Lessons in Venturing Differently - [Art of Investing, EP.3]When Ho Nam, co-founder of the venture firm Altos Ventures, was nine years old, his family of five slept on mattresses that covered the entire floor of a tiny one-bedroom apartment in Southern California. He knew no English. As a child, he thought the wall-to-wall mattresses were fun, a cushion for jumping around.
He had been born in South Korea in 1966, when the country's income per person was lower than Ghana's. The family arrived in 1975 with about $5,000 and a shipment of furniture, after selling everything they owned. His father was the only one who spoke English, after spending time in the United States in the 1950s following the Korean Military Academy and working with the U.S. Army.
What stayed with Nam was how his parents worked after that. They ran small, bootstrapped shops, and for at least a decade they worked seven days a week, with no vacation and no days off. Survival meant depending on their own work and watching every dollar.
That childhood became a business rule. Nam tells company founders, whether markets are up or down, simply not to run out of cash. It also shaped Altos. The firm's first 12 years spanned the Asian financial crisis, the collapse of the dot-com bubble, and the global financial crisis, a stretch when very few investment firms last 10 or 12 years.
Between 2006 and 2008, Nam set out the lesson in an early blog post. He argued that patience and careful spending, building a company that needs little outside money and turns a profit quickly, were often overlooked by venture investors. Other firms looked for home run potential and, as Nam put it in summarizing the typical view, "The company should have $100 million in revenue potential within five years." He would rather help a company become profitable quickly and build a growth engine that could last a very long time.
He wrote that before Altos had backed Roblox, the online game platform, or Coupang, South Korea's largest online retailer, or any of its big winners. Nam said the conventional approach worked for famous firms but would not work for Altos, after early losses had humbled the firm. He was studying the investor Warren Buffett and Henry Singleton, a 1960s tech company founder, and other builders he admired.
If companies became profitable quickly, he wrote, investors could afford to be patient and build something that lasted.
Questions people ask
Why was his family able to immigrate?
Nam's mother was a nurse, and the United States had a nursing shortage in the 1970s. That shortage is what allowed the family to get a visa and green cards, though she never practiced nursing after arriving and instead joined friends in opening small shops.
How did Altos get started?
Altos began when two Stanford business school professors, who were too busy to keep advising an alumnus on a venture portfolio, suggested hiring young people to manage it. That led to Nam and his business school poker friend Han, the only venture capitalist Han knew.
How did Altos itself survive the busts?
In hard stretches, including after the dot-com bust, Altos survived on management fees, the annual fees investors pay a firm to operate. Nam has described those fees as guaranteed income that kept the firm alive while fundraising for a new fund took many rejections.