Some might say Joshua Kushner has the Midas touch, since everything he invests in seems to turn into gold. He's the guy who invested in Instagram just days before Facebook (NASDAQ:FB) bought it, nearly doubling his investors' money overnight. He was also an early investor in Twitch, which like Instagram had a major tech company buy it for a billion-dollar valuation. Those are just two of a growing list of investing successes for the 30-year-old.
Kushner does have a bit of a leg up on most other investors, since, as a venture capitalist, he can invest in very early-stage companies before they go public. Still, investors can still learn a valuable lesson by getting to know what he's looking for in the companies he invests in.
Looking for change
Kushner is the founder of Thrive Capital, a private-equity and venture-capital firm he founded in 2009. His first fund raised a mere $10 million, quite small by Wall Street standards. However, as his investment successes have stacked up, investors have piled into his funds. His most recent fund, and Thrive's fourth, has raised more than $400 million.
Kushner has caught investors' eyes because of his keen ability to pick winners early in their life cycle. In addition to investing in Instagram and Twitch before their billion-dollar buyouts, he has also invested in start-ups such as shaving-products company Harry's, eye and sunglass brand Warby Parker, secret-sharing company Whisper, and home rental and sales start-up UrbanCompass. Each of his investments has one common trait that Kushner favors: They're companies that are changing people's lives.
In pinpointing what he looks for in an investment, Kushner told Crain's New York Business: "There are a lot of things that don't exist yet that will make the world a much better place. ... Our ambitions are to find those."
The disruption of change
Kushner, however, can't always find the change he's seeking, so he's not afraid to create the change he's seeking himself. He's doing just that, having co-founded Oscar Healthcare, which is an Obamacare start-up that focuses on health insurance. His mission with Oscar, which was named after his great-grandfather, is to create a cutting-edge health-insurance company that's more modern and consumer-friendly. He's doing so by taking technology, data, and design to transform the relationship consumers have with their health-insurance companies.
In founding Oscar and investing in other early-stage start-ups, Kushner is investing in the view that the disruptive power of technology is still in its infancy. He views it has having the potential to disrupt legacy industries such as healthcare, as well as financial services, government services, and education. The reason these are ripe for disruption is that all have been largely resistant to the transformative power of technology. In an article from Forbes earlier this year, Kushner was quoted as saying:
The potential impact of software on some of the world's most significant industries remains largely unrealized today. New technology has the power to transform industries by reducing the cost economics in various stages of the supply chain. ... While many industries will continue to be created from the proliferation of technology, many more will be destroyed–at least in the form that they have existed in the last century.
Kushner sees software and technology as being big drivers of change in the future. Legacy industries will either need to adapt or see their business models destroyed. It's change he plans to invest in whether it's founded by another or if he has to create the change himself.
The great investment ideas of tomorrow will be those that are using technology to disrupt the way things have always been done. It's a revolution that has just begun, as several industries have yet to embrace change. This is where the opportunity for the average investor lies: We can seek out companies that are changing lives and disrupting old systems. While we can't get in as early as Kushner does, that doesn't mean the average investor can't still create a very comfortable retirement by riding this revolutionary wave of change.
Matt DiLallo and the Motley Fool owns shares of Facebook, which The Motley Fool also recommend. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.