Squaring the Circle
You know me best as an investor and an entrepreneur. But at heart, I’m a math geek. Always have been. As long as I can remember, I’ve peered eagerly into a challenging problem set and felt my pulse quicken. To my eye, great math problems are like music. And every once in a while, I catch a glimpse of genuine beauty.
Most of my time spent inside the numbers is spent searching on your behalf. Every day, my team and I relentlessly refine and improve our financial models, honing and optimizing our investment decisions. More and more with each passing year, we’ve dived deeper into intangibles: the values of a company that can’t be precisely quantified. In fact, many of the values that evade capture on a company’s balance sheet are the key drivers of their returns. I’m talking about intangibles like a company’s culture; their brand value; their care for their employees & their customers; or the long-term value of their research and IP.
Sometimes the math geek in me wants to rebel against these intangibles. It’s only natural for some to take the easy road, and to stop trying to solve the unsolvable. But I know full well that our commitment to keep wrestling with these intangibles is precisely what differentiates us from other investment advisors. We’re committed to doing everything we can to better measure the immeasurable; achieve the impossible; or, as it’s been called: “square the circle.”
This idea of “squaring the circle” reintroduced itself to me recently as I was reading up on a bit of history. A transcendent moment practically jumped off the page. Almost 2500 years ago, while imprisoned, a Greek mathematician named Anaxagoras attempted to solve a problem: armed with only a compass and a straightedge, could he draw a square and circle of precisely equal area? He couldn’t do it. Nor could the generations of mathematicians who succeeded him. Centuries passed. Not only was the challenge impossible to prove, it was impossible to disprove. “Squaring the circle” with only a compass and straightedge seemed to be an ever-moving target.
2000 years later, in 1882, the German mathematician Ferdinand von Lindemann cracked the code. He proved the negative solution once and for all, proving conclusively that drawing an equal square and circle with only a compass and straightedge was impossible. (Disproving a mathematical theory can yield just as significant a breakthrough as proving it. It reminds me of the all-important “negative dimension” of focus: how saying “no” to certain opportunities defines our focus (and our success) as much as the opportunities to which we say “yes.”)
But it was how Lindemann arrived at his breakthrough that caught my eye. Lindemann rested his proof on an earlier equation known as Euler’s Identity. It states, with breathtaking simplicity:
e𝑖𝜋 + 1 = 0
This stunningly concise equation knits together five of the most fundamental figures in all mathematics: e, i, π, 0 and 1. Euler proved that they are all connected: surprisingly, as they are so different. Pi is the quintessential transcendental number (no equation with integers as coefficients would have it as a solution); i is purely “imaginary” (it squares to negative one); and e is used most commonly to compound interest continuously in finance.
The beauty of Euler’s identity reached forward in time and connected with me deeply. The fact that these seemingly unrelated constants are linked emboldens me to search for value in new places: intangible assets, human capital, innovation, and stakeholders’ ability to change a firm’s value.
We, as investors, will never fully square the circle. While that end goal is impossible, we know how to get very close to it: as close as we like, in fact, to the decimal of our choosing. We can’t design a strategy that beats the market all the time. But we can strive to lock in as much value as possible for our investors.
This continuous striving for perfection represents our refusal to rely on conventional wisdom, or to accept the status quo. Look inside Euler’s numbers for yourself: the math geeks among you will notice three forms of growth: additive, multiplicative, and exponential. We see these same growth patterns in the companies we analyze at Quent every day. Only by continuing our quest to measure the immeasurable can we find, along the way, the breakthroughs that define our work.
This journey towards achieving the impossible is our destination here at Quent Capital. I’m grateful that you’ve chosen to join us.
-Gregg
P.S. You may notice that as a tribute to our quest to square the circle, we have created a new Quent logo and brand identity. We hope, when you look at this new identity, you remember this story, and recognize in it our daily quest to achieve the impossible.