Matthew Brown: Why a research management system?

Matthew Brown, investor and builder of a research management system

“So a research management system, in a nutshell, is all about the capture, the categorization of information so that it can be easily recalled and shared by the team.”

[00:05:23]

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Tilman Versch [00:00:00] Dear viewers of Good Investing Talks, it’s great to have you back on the podcast. Today, we are taking a look at an interesting investing tool. I was recommended too. It was built by Matthew Brown of Kalakau Avenue. Matthew, how are you doing today?

Matthew Brown [00:00:15] Yeah. Fantastic, Tilman. Yeah. Thanks for taking the time to meet with me. I’m looking forward to it.

Tilman Versch [00:00:22] Where are you based in the world?

Matthew Brown [00:00:23] So I’m currently based in Sydney. I spent the bulk of my investment career in the United States and London and then finally returned home to Australia and I’m living here with my wife in Sydney.

Tilman Versch [00:00:36] What have you done in the States and in London as an investor?

Matthew Brown [00:00:40] I started my career at Mechanic Capital. That’s an endowment model investment business based in California.I learned the ropes around asset allocation and manager selection there. I then went to the Harvard Business School over in Boston, and it was there that I met the Oppenheimer Family Office, they were the former owners of Anglo American and De Beers.

When I was at Business School, they sold De Beers to Anglo American, and I joined as part of the founding team. So we got to build out the philosophy, the process, the team, the culture, the infrastructure, the portfolio, everything from scratch. There’s a real privilege to go through that whole process.

And I’d say at that fund, I had the privilege to meet with and interact with a whole bunch of exceptional investment managers around the world.It was at the Oppenheimer Family Office, where Kalakau Avenue was born. The strategy that I created there is the same that I’m doing today. So as a side project to the main endowment portfolio.

I ran a pilot portfolio at the Oppenheimer Family Office that we ran for about three years and that was evaluating the transition from a pure third-party manager endowment model to a hybrid direct and managed model.

Most recently, I was the Chief Investment Officer at Tanarra Capital, that’s an Australian diversified alternative asset management business.That’s the easiest way to describe it, it’s like the Blackstone of Australia and New Zealand.The founding partners of Kalakau Avenue are the three individuals with whom I’ve worked across these three firms. So I’m appreciative of all of those firms.

Tilman Versch [00:02:42] So what did drive you to start your own thing? Are you the builder guy that wants to build or what is the kind of thing that drives you?

Matthew Brown [00:02:54] Absolutely. You know, at first, it was about the belief that ultra-long-term family officers could bring high-quality companies and long-term investments onto their own balance sheet and probably do that in a more efficient way than an external manager can.

For example, to justify management fees, a lot of investment managers will either have high return thresholds that mean excessive risk-taking. It sometimes means excessive trading and had a strong feeling that we could do that internally. So it’s about building and evaluating that process, building the research process that spark to then go and do this on my own really began.

I made the decision in 2021 to launch out and do this on my own. I took a brief sidestep to undertake the CEO role at Tanarra, but ultimately came back to launching the business and like I said, those three individuals it’s a sort of an honour and a privilege that they’ve been able to provide the support and backing both as mentors, but also as Capital Partners in the new business.

Tilman Versch [00:04:19] That’s interesting. So you try to solve a problem for a family office that is interested in long-term investing with your firm?

Matthew Brown [00:04:26] Yeah, that’s right. Now it’s at Kalalau Avenue. It’s how I manage my personal capital as well. So these are the investments and the philosophy is geared around how I want to manage my own capital over the long term and then to be able to bring capital partners along with me in that journey.

Tilman Versch [00:04:49] That’s interesting. But you have also built a super interesting tool which I already talked about and it’s called an Investment Research Management System. Maybe you want to open the page where people can find it so that we can see it shared on the screen and you will also find the link in the show notes as a viewer. So maybe while you’re opening it, I hope you can take this question. What is Investment Research Management System and why does it have four words?

Matthew Brown [00:05:23] So a research management system, in a nutshell, is all about the capture, the categorization of information so that it can be easily recalled and shared by the team. The tool that I’ve built, it’s built in Notion. It’s a research management system, but it’s also a basic CRM system. It’s a contact database. It’s a workflow management and prioritisation system and it is a web publishing system as well if you were to combine it with something like super.so. So what is Notion for those who don’t know what the tool is? Think of Notion as a next-gen note-taking tool. But think of it as a combination of something like Microsoft OneNote or Evernote in conjunction with Microsoft Excel.

So if you can imagine all of your notes sit within a series of databases. So you can add all of this metadata that helps with the categorization and then you can create all these cross-links between the databases. So your company’s database can be linked to your contact database, to your notes database, etc. So I think one of the real powers of a system like that as well is that if you think about the research process, it’s nonlinear, right?

So you’re really going from top to bottom. It’s sporadic. You sort of go down different rabbit holes. You’re doing different things at different times, whereas if you think about Microsoft Word or Adobe PDF, those are very linear documents. They’re designed to be read from start to finish, and so taking a nonlinear process and trying to record it with something that’s designed to be linear really doesn’t work. So this kind of tool I think can really help with that.

Tilman Versch [00:07:26] It’s interesting. So you’ve already explained a bit what Notion is. What is the advantage of Notion? Why it was a natural place to build it?

Matthew Brown [00:07:38] Yeah, absolutely. So the first time I built this was at the Oppenheimer Family Office. We started just with pen and paper back in the old days. We then went to just a simple e-mail, a shared e-mail account, and that was like that. That was pretty good, and it served a purpose really, of just having a super low adoption hurdle to make sure that it was used among the team. From there, we progressed to Microsoft OneNote, but overall I’ve found it’s not fit for purpose. For those of you who’ve used it, it gets unwieldly over time. You know it’s pretty clunky. There’s not a controlled sense of formatting, so it ends up looking very different across the platform.

And finally, OneNote and other tools like Evernote, etcetera. They don’t have the power of those databases that I mentioned where all the notes are sitting in an almost Microsoft Excel-like structure. And then the other solutions are your off-the-shelf research management products. Typically SaaS-based products. So my problem with those is not only are they expensive.

They do everything that you need it to do, and so if you’re trying to add extra functionality or to build things that are specific to your investment process, then unless you’re one of the top 10 customers, you’re not going to get on to the product pipeline and it’s going to take a hell of a lot longer for product developments to come out.

So having a solution that’s customizable I think is super important and so Notion allows that. Some of the other criteria I’d throw in there if you’re evaluating any system, it comes down to ease of use, being quick to share information is super, supercritical and that has to be across desktop, mobile and tablet. If you think about the way people do meetings these days with either their laptops or iPads in their meetings, being able to have that system is important. It’s got to be cloud-based just for ease of backing up information and sharing information.

Customizable as I said, and then finally it needs all of these sorts of standard enterprise controls that you would expect on any system and that’s IT provisioning across different users and de-provisioning, high security with two-factor authentication, you need to own and control the data so it’s not owned by some third party. So yeah, that’s how I landed on the tool.

Tilman Versch [00:10:32] So you said users can build with it, so an idiot like me could also build something that’s resonating with his brain.

Matthew Brown [00:10:40] Yeah, absolutely. I’m not going to lie. There’s a small adoption of how it all to get used to the Notions syntax, but it is super easy. You can, other than typing and filling out the information, it’s pretty much drag and drop. There’s no coding involved, it’s all zero-code built and instead of like the way you get used to using Microsoft Excel, you can kind of learn by the community pages or the Notion help pages etcetera. But it’s once you used it for a month, you look back and you think it’s very easy.

Tilman Versch [00:11:20] That’s great to hear. And what kind of persona did you have in mind when building this tool or who do you build this tool for? Because it was started at the Oppenheimer office, it’s not only that it’s your brain that’s resonating with this kind of system.

Matthew Brown [00:11:35] Yeah, that’s right. So it definitely started and is geared towards an investment research process. So the headings and the way it’s structured is very much set up for an investment process. However, that said, I think it could be used for any research management process. It’s just a matter of changing some of the headings and titles and frameworks that are involved. Equally, it was designed originally for small teams, so Notions it’s perfect for five to six, seven-person teams and that’s sort of where it really shines.

That said, it’s possible to use it in the enterprise as well. So I implemented it during my time at Tanarra Capital and Tanarra has five strategies. So they’re doing private equity, public equity venture capital and there’s two credit teams as well. There’s certain information that can and copy shared between those teams, whether it’s firewalls for keeping the information siloed, whether it’s because of MMPI, all of those types of things. So it had quite a complicated, if you will, enterprise use case to provision and set up user access rights et cetera. And there’s a little bit of a learning curve to do that, but ultimately proved successful in being able to implement across the teams there.

Tilman Versch [00:13:07] That sounds super interesting. So it’s scaleable and it’s proven in the field.

Matthew Brown [00:13:12] Yeah, that’s right. I think I would limit it. You know, I’d be comfortable sort of recommending it up to a sort of a fifty-person organisation. I think beyond that and this sort of potential that the flexibility of it is maybe too much and allows people to change too much of it. So beyond that, yeah, you’re probably wanting to look at a more rigid system and then you’re looking at your sort of more off-the-shelf.

Tilman Versch [00:13:39] Maybe let us show a bit more details on the system and you have the screen shared. Maybe walk us a bit through the interesting parts of the system.

Matthew Brown [00:13:50] Absolutely so. For me, in the investment process, it comes down to a few different things. So it’s companies’ industries. Your contact database and then your notes database. There’s more on top of that, but those are your core building elements. So if I have a look in there. This is the company’s database, so this is all just filled out. You know, as a just for the viewing system. So it doesn’t have any of the Kalakau Avenue information populated.

Tilman Versch [00:14:31] No hot stock tips. I’m sorry guys.

Matthew Brown [00:14:36] And so yeah, this has all of your companies where you list them and if you double click you can go inside and you can set up each of the headings to be orientated around your research process. So for example our headings at Kalalau Avenue are a little bit different to this. Our headings all relate to our business quality framework. But these are your kind of general headings and whether you want to write your investment members here or not, they can be used and then therefore displayed among the team in a more web-like structure rather than a PDF document. And you can go a page inside of each of the headings where you might want to store your research notes and things like that where it’s set in a little bit more of an unpolished format.

And then the contact database is exactly as you’d expect. There’s no need to dig into that, but where I spend most of my time, sort of the daily process, if you will, where I’m sort of entering information beyond the sort of synthesis of research into the company section is the notes and meetings, so the notes and meetings are where I’m recording investor meetings, client meetings, anytime that I’m willing to just record something quickly, often real-time in a meeting on my laptop, on my phone or on the iPad, I’m sitting in the notes and meetings database and this example I think will highlight the interlinking between databases that I mentioned earlier.

So as you’re creating your notes, you can tag all the things you’d expect like dates, the topic, et cetera. But you can also through these links to the other databases you can tag the companies you were talking about.

You can tag the people that you met with. So when you end up going to that company, you’ll end up showing all the people you’ve ever met where you’ve spoken about that company. You can click on the people and it will take you straight back to the people database. And you’ll end up seeing all the times that you’ve met with that person, what companies did you speak about with that person, et cetera. So you can start to see how there’s that efficient recall of information and that interlinking of your information as a whole. So you end up with something like the product ends up looking much more like a Wikipedia-like structure, than a PDF document or Word document.

Tilman Versch [00:17:21] Is there any other interesting section that is added by default, so the sections by default are introductions? That’s a bit like telling people what the product is about. I think the notes, the priorities.

Matthew Brown [00:17:35] So yeah, the intro just gives a bit of help to explain this tool. In particular, it gives a little bit of help about Notion as well. The notes and meetings priorities database is where you might want to set your workflow prioritisation among the team and because it sits in a database. So unlike Microsoft OneNote where you might sort of write out your priorities in a list. When it exists in a database, you can have the luxury of flipping the view. So if you’re somebody who prefers to look at something in a list, you can do that or if you want to do it as a Kanban board, you can do that. So you can sort of manage the workflow among the team.

Finally, rather than just go through the list says the companies database. There’s an industry database for when you’re doing research on industries. The structure is exactly the same as the company’s database but orientated towards industries. The same thing for themes when you’re doing thematic research. I’ve mentioned the contact database.

The investment framework is just a database that I’ve put in because like Kalakau, like I said we have this business quality framework. We do a lot of research on what business quality means. We think a lot about understanding network effects, switching costs, that type of thing.

So we have these kinds of deeper level frameworks if you will where we’ll perform research around. If you want to do your investment letters to your clients in here, you can do that as well. There are a few other things like just cataloguing your data sources that you’ve found over time. So just cool little data sources that you’ll find on the web. It’s a nice way to categorise them so that they’re shared among the team and can be used another time.

And I’ve left one off intentionally, but I’ll leave it for last, but I think this one’s important. It’s a super important part of the process at Kalalau Avenue and that’s the decision log. So this is really about the recording of every decision and it can relate to, say, a bio cell in the portfolio, but more than that it could even relate to a decision to do nothing.

Any kind of decision you want I think it’s super important to be recording that the rationale around it. And that’s not just for external purposes, although that’s super helpful, whether that’s for regulatory reasons, whether that’s for your clients et cetera. But I think even for yourself, so when you’re looking back on your decisions and say three or five year’s time, you can get into the headspace that you were at or that you were in at the time to help you understand why you’re making certain decisions. So I think it’s super helpful for expert decision analysis as well.

Tilman Versch [00:20:25] You said you can build with this tool, but like, where did you experience the limits of the tool? So what do you say I use something else personally or from the people who interact with this that they said that’s the limit?

Matthew Brown [00:20:41] Yeah, I’d say one of the drawbacks that say on the CRM functionality I said earlier that it has basic CRM, so you can record your client meetings, which clients you met with and when what you spoke about. All of that kind of stuff’s easy and quick to do. But that’s the kind of limit, this is not a CRM system like Salesforce or HubSpot that’s kind of sending you notifications it’s now your three-month follow-up and therefore you need to go and contact this client, that type of thing.

So within that with that respect, if you’re more of a full-on sales function, this is not going to be the tool for you and you should absolutely use a superior CRM system. I’ve mentioned the adoption hurdle, so I think it’s super easy. I think it correlates to typically the younger audience. I think gets up to speed on these tools generally more quickly.

Tilman Versch [00:21:51] So is it boomer proof?

Matthew Brown [00:21:52] I think it’s boomer proof but still, if you’re the person in your organisation that’s like championing using a tool like this, I think it’s super important. Like from my experience, even switching from an e-mail account to Microsoft OneNote, from pen and paper to an e-mail account is to speak to the people who may be less tech-savvy and understand their concerns like taking the time to explain to them the benefits and why you think they need to invest the time. And I think getting those people on board early on can help sort of build that coalition and get some momentum in the organisation.

Tilman Versch [00:22:36] Any other limitations? I asked you for the boomer-proofness.

Matthew Brown [00:22:40] Yeah, I think the CRM one is key. I think as I mentioned, another key, one would just be I do think like once you get beyond the sort of 40 or 50 people, I think you do need to switch to a more rigid system. So when you have something so customizable like this and the ability to sort of add new metadata to edit some of the databases. You run the risk of people changing too much and in that kind of environment, I think you need to have sort of very strict controls on sort of your power users and your users that have like greater access routes and the users who are just consumers of the platform. Unfortunately, I hope that Notion puts this on their product map. Unfortunately, that ability to control the editing process is still in the pipeline for the product development for Notion. But I’m sure it’s, I’m sure it’s coming down the line.

Tilman Versch [00:23:48] So there is no chance to block others from editing your notes if you’re working in a team?

Matthew Brown [00:23:52] You can block certain things but it’s sort of like block everything on this page or block nothing. In reality, what you would want is to have free editing of the page, and free entry of each line in the database. But to be able to block users from being able to edit the structure of the database to prevent them from being able to edit how the database is linked to other databases for example.

Tilman Versch [00:24:22] How can I install this thing? And is there also a referral link people should use when they install it?

Matthew Brown [00:24:31] Yeah. Thank you. So you can get it from my website. You know, hopefully, you can show the link great. So you can download it there. You do need a Notion account. You can try it with a free account if you want. And then a team account is very cheap on a per-user basis. Anyway, once you have a Notion account, you can just open up the page. And you’ll be brought to this page here, and you can click duplicate in the top right-hand corner.

That will duplicate the whole system into your workspace and then you can go from there and sort of change the headings around as you see fit. It’s absolutely 1[00% free. You know, I only make a suggestion and it’s just a suggestion that if you download it and you think it adds value to your firm over time there’s very much an optional donation to the World’s Trust. It’s a charity that I’m that I’m passionate about. I’m on the investment committee for the World’s Trust and it funds the World Scholarships to Oxford University. Well, like I said, purely optional donation and only if it adds value to your firm.

Tilman Versch [00:25:51] Okay, guys. Donate, please. Is there anything you want to add for the end of the interview about the system? Anything we haven’t covered?

Matthew Brown [00:26:03] Yeah. So not about the system itself, but I’ll just step back a little bit. So well the objective, as I said of the research management system is about the capture, categorization and recall of information. It’s also about fostering a great learning culture in the organisation. So in my career all of the fantastic investment firms that I’ve come across have exceptional learning-orientated cultures. At Kalakau Avenue, we sort of think about it in three levels. So level one is very much about the individual level two is about team learning and level three is about the systematic capture of individual and team learning to evolve and improve the process.

So that’s organisational learning.

So a great research management system I think can help across all levels of building a learning culture, but I think where it shines is helping on level two in team learning. So my experience, team learning can often get derailed by a very common human behavioural bias that happens when the cost of doing something is certain and short-term but the benefit, even if it’s very large, is uncertain and long-term. And that’s the same thing with how we think about our health threat is that our long-term health has huge consequences for us, but we often do things to degrade it in the short term because we’re unable to sort of quantify those long-term uncertain impacts.

And it’s the same with team learning. So just to take the time to share an insight in a format that’s digestible with your team, it takes time, maybe it takes you 15 to 20 minutes to write something up and share it among the team, right? But the benefit is long term and uncertain, so it often prevents people from doing that so I think a good research management system can help reduce the frictional cost of sharing. Information with the team and thereby facilitate a great culture.

So on its own a great system like this, on its own, is not sufficient to build a learning culture. Learning and team learning individual all the way through to the organisational level learning is it starts and finishes with culture. But a system like this can really supplement and support that and ensure that combined the team can compound their knowledge faster than any individual.

Tilman Versch [00:28:50] And thank you very much for these insights and I hope this tool can contribute to some of the investor processes. Now you should know how you can try it out and also use the referral link and the donation function. And Matthew, thank you very much for your time and thank you very much for developing this system.

Matthew Brown [00:29:11] Thank you. Well, thanks very much, Tilman. And yeah, I hope I can be a source of help to others in their investment journey. Thank you.

Tilman Versch [00:29:20] I think you are already uh. Thank you and bye to the audience. Bye bye.

Tilman Versch [00:29:28] As in every video, here is the disclaimer. You can find the link to the disclaimer below in the show notes. The disclaimer says, always do your own work. What we’re doing here is no recommendation and no advice. So please always do your own work. Thank you very much.