Then and Now: @APAE


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Inspired by the recent return of some all-time great WSO members, we will begin featuring a series of posts from forum favorite 'superusers'. This "Then and Now" series will let people share a bit of their story through a handful of questions that touch on their career progression and how this site has supported that.

See posts made by CompBanker, WallStreetOasis.com, and thebrofessor, and expect more to come from @Frieds", @brotherbear", @Layne Staley", @CRE", @IlliniProgrammer", and if we're lucky, even @Eddie Braverman".

When did you first join WSO?

I registered an account in 2010.

Why did you join?

Many people spent a ton of time in the computer lab at my college. It was the best place to work on presentations for group projects and Excel assignments. Laptops ten-plus years ago sucked, and obviously not everyone had the newest ones. Battery life was brutal, displays were weak, and most had a little red dot called a ‘nub’ or ‘pointing stick’ instead of the large touchpad common today.

I kept walking past people in the lab reading the same website. I finally found out what it was and wished I’d found it sooner. Back in the day the Vault ‘Guide to Finance Interviews’ was basically the grail. Mergers & Inquisitions was just getting off the ground. There simply were not many resources for interview prep. There were fewer transparent conversations about the industry and lifestyle. You could only get that the brute force way: talking to upperclassmen and alumni.

By the time I found the site, I already had an offer at a top bank. I was weighing whether to continue with the other firms I’d spent the energy to research and network at. I appreciated the honest conversations on the forums. I loved that the site helped me scale my time. It was easier than digging for alumni to find, cold email, and try to speak with about their experiences.

I did the classic move and lurked without an account for a couple years before registering.

Where were you in your career then?

Young and dumb. I had a few brand-name internships under my belt and I thought I was set. I would be launching my career in a top-five group, I attended a target school, and I wanted to spend a year figuring out whether public or private market investing would be my next step.

I was arrogant, and worse, I thought I wasn’t. I was hungry, hardworking, and ready to break through walls, but that’s only a humility born out of knowing where you come from and being willing to sweat to make something of yourself.

That’s different from knowing your life means no more than any other person’s. The first is surface level. It’s about what you’ll endure. The other is internal and about your relationship with the world. I am grateful life taught me this. It’s something I will work on until I die.

Where are you in your career now?

I am in a decision-making role with the freedom to invest across the capital structure. I can access capital at just about any scale. My priority is to find good people and learn as much as I can from them, whether they are an operator or investor. Learning through variety is my favorite, so this works really well for me. I want to grow as a manager so that I can scale my time. I am excited for the decade ahead.

What can you share about your personal or family life?

Where I grew up does not correlate at all with where I am today. I saw a lot of violence and other things I didn’t like. The traits I developed that helped me succeed and move beyond that environment hindered me later.

The way you think and act in a ‘how do I survive’ mentality probably won’t produce behaviors that help you relate to or fit in with the people you meet at a Goldman Sachs or Evercore. No shit, Sherlock.

I had a bumpy time figuring that out. It sounds stupidly obvious on paper, but after living only one way, it was difficult to identify all those flaws and begin addressing them.

What this translates to is that I have a narrow core group of friends who truly know me, have seen me grow painfully, and respect me. I have been very intentional to build towards and with them. I make all the time for them. We have made career and geographic choices based on each other. Our conversations are honest, hard, fun, and fulfilling. I am so fortunate.

Outside of that, I have another narrow group of people who I have certain commonalities with. If you share an uncommon hobby, property in a similar location, or a specific lifestyle component like a hypercar or an overlapping investment, those people are the very few you can talk about them freely with.

One thing worth pointing out is how wildly isolating success can be. Our society is weird about money. The pursuit of it is celebrated, but we are incredibly judgmental of those who have it.

It can complicate your family relationships, distance you from people you’ve known a long time, and limit what you can talk about comfortably.

Sometimes it’s because you become a dick. I know lots of those guys. They’re conspicuous in what they have and voluntarily voice it.

Sometimes it’s not because of you, but because of a flaw in someone else:

  • Greed: people want your things – a relative asks for money, you say no, they paint an entire story about you across the whole family.
  • Jealousy: you can’t possibly deserve the things you have – someone sees something expensive you bought for yourself (a car, a second home, an expensive toy) and mocks you sarcastically.
  • Gluttony: giving a metaphorical inch and losing a mile – you take a group of friends out, someone orders a $5,000 wine and then look blankly at you.
  • Sloth: people who want help without lifting a finger of their own – someone asks you for an introduction or a recommendation, you take the time to point out what they can do to prepare, and they refuse to do the work but still demand the favor.
  • Lust: people spend time with you only out of selfish motives – you realize s/he’s not pursuing you for who you are but for what you have.

It’s easy to joke about (“smallest violin in the world”), but I don’t think it’s kind or respectful to minimalize the psychological or emotional burden someone may bear.

For the younger people on this site: if you envision meaningful financial success for yourself, it’s smart to think through ahead of time the challenges or compromising positions you may find yourself in.

I believe this is worst for ‘strivers’, the self-made who got there through their own efforts. Wealth in general brings a set of challenges, but it’s certainly a different problem set for anyone who earned it rather than was born into it. My children, for instance, will have a different relationship to money than I do.

I’m not married yet. I would like to be; I think fatherhood would be one of the most meaningful things I could experience in life and I would like to do that in the context of a traditional nuclear family.

I believe a family starts as a couple. Before I can be a good parent, I have to be a good spouse. Being a loving, caring, present partner is an immense challenge. It’s more difficult when you practice a demanding profession.

The people I am most impressed by are the ones who work on themselves the hardest. I want to emulate that. I continue to find stellar books providing science-based perspectives on love, commitment, intimacy, and attraction. There are also many on character development.

Having a stable, caring relationship seems like the prerequisite for stable parenting. I want to find someone who has a similar mindset. Being young in New York does not correlate well with that.

Looking back on your career, is there anything that you thought you knew starting out which turned out to be wrong?

Working hard and being smart isn’t enough.

Life put a number of hard things in front of me at a young enough age that I developed the mindset that you could overcome anything simply by buckling down and grinding through it. When you’re intimately familiar with sink-or-swim moments, it’s jarring to realize you’re being judged on your ability to dance. It’s an entirely different muscle movement. Without the muscle memory, you freeze. The grim smile of perseverance fades to a grimace of confusion.

The thing I failed to grasp early on was how much how you do things matters. Perception and relationships with the people whose opinions matter affects your success more than your work product. That only increases the farther you progress into your career.

A painful experience in my final summer analyst position taught me this most poignantly. I was frustrated because I had left another strong bank where I felt people were heavily invested in my success. It was a gamble. I felt that joining one of the top-five groups people worship on this site would set me up for whatever recruiting I wanted to pursue.

I learned the difference between a mentor and a sponsor. The absence of the latter can be catastrophic. Small things can mushroom quickly if there isn’t a warm voice in your corner.

Were there any opportunities that presented themselves along the way that you didn't take? With the benefit of hindsight, do you wish you had taken one of them?

No, I feel remarkably fortunate for how things in my life have unfolded.

During school I had a few pangs of regret or envy when I thought about my school choice. I studied business in undergrad. If I were counseling a teenage son on that decision, there are a few factors I would want him to reflect on.

The heavily pre-professional focus seemed to attract few people that were intellectually curious. I don’t mean people that weren’t passionate. My class was full of people who were very driven, goal-oriented, and committed. What I discovered was that very few of those people were willing to do anything without an immediately identifiable benefit.

The students that loved exploring for its own sake stood out. They tended not to be in the ‘hard’ courses that had competitive registration. They weren’t at the recruiting events; you didn’t hear about their offers. Five years after school, I saw them starting small businesses, running their own consultancy, several rounds of financing into their growing startup, living abroad, or something similarly unique. When I caught up with them, they seemed to have a really healthy relationship with their self.

What I realized was worse was how the culture suppressed any deviation from the norm. Looking back, I remember so many conversations where an interest or passion would sneak out of someone’s mouth and they would quickly bottle it up, almost as if they were afraid or embarrassed of it.

It felt like the school collected a lot of really talented, interesting, capable people who were painting themselves into a narrow box. The closer graduation came and the more the pressure of ‘where are you going to place’ seemed to dissipate, the more of people’s true self you got to see. As if they were free to voice it because the dust had finally settled.

College is most valuable as a time of exploration. If I were advising a child or a mentee, I would encourage them to find a school and topic to study that encourages exploration, that has no strong norms other than intellectual curiosity, and that promotes learning how to learn.

That brilliant Kanye lyric captures my feelings well: “Everything I’m not made me everything I am.” I discovered so many things I’m not built for or don’t fit well. Trial and error. There weren’t many things that I didn’t reach for.

What do you think has made you successful in your career? Are there any particularly interesting or unique challenges that you've faced along the way?

It is so valuable to examine everything on a psychological plane.

There is a finite set of levers behind any position any person you encounter in any context has chosen. The more you invest in identifying and mastering those levers, the better you will be at addressing them.

This also applies internally. You can grow to excel at interrogating yourself: why do you feel the way you do, is that an appropriate way to think about things, and what is the best action you should actually be taking?

Any investment you make in the caliber of your thinking is going to pay dividends globally in your performance. Investing in a single aspect of your performance will benefit only that element.

My worst performance has come when I fail to examine the underlying why behind whatever I’m facing.

Once I burned a relationship with a Forbes 400 principal. I wanted him to introduce me to other peers to help fill out the vehicle I was trying to capitalize. I had a great deal lined up, the structure was really favorable, and I knew by name some specific people he could connect me to who the thing was center-of-the-fairway for. It should’ve been an easy lay-up: me, him, them.

I got frustrated with the fact that he kept overlooking my request for a meeting in town and was annoyed to keep seeing invitations from his chief of staff every month for a shooting trip. I thought it was hard to justify taking five days on some remote ranch with no service, and I couldn’t shorten the trip by chartering out of the nearest FBO because at the time I didn’t have the money.

My dumb ass basically pressed so hard on the meeting that they stopped responding to me. I slogged on and never got the thing done. Another buyer closed before I assembled the capital pool.

Two years later I was on (you guessed it) a shooting trip in South America. I only knew the guy who invited me. Everyone razzed me a bit. It was fine. I was the only American, everyone was European or South American. I was at least a decade younger. I was the only one who showed up without a girl (most of them had companions of some sort of arrangement). We had a great time, shot a couple thousand birds, ate at great places, saw some sights, had some nights.

I figured that was that. Maybe I’d see some of them on future trips (the guy who arranged it is something of a super-connector in London).

I was wrong. Several of them sought me out in the following months, asked about what I was involved in, and either gave me a deal, money to do a deal, or someone else with one of the two to offer.

The memory of the American billionaire hit me one day like a truck of bricks. He just wanted to make sure I wouldn’t embarrass him. Hell, he probably wanted a private setting he controlled where he could tell me sensitive things about himself or them. It was idiotic of me.

My lesson was that people in a position of strong financial and social capital really want to get to know you on a human level before they do anything with you.

Turns out this isn’t an uncommon mistake for people who are relatively young for their seat. Again, it’s painfully obvious on paper, and doubly painful because I’d learned a smaller version of the same lesson years before.

Today I take pains to think through why the thing matters to the person saying it to me. It’s helped me uncover investment opportunities that weren’t immediately apparent, ask smarter questions in diligence, screen potential employees or vendors or partners more aptly, and engineer better outcomes in negotiations and sales and many other instances.

Is there anything else you’d like to share?

It’s very easy to exert yourself tremendously on something without thinking about why you’re doing it. I love the saying about missing the forest for the trees. Regardless of where we are in our career, we can always benefit from thinking critically about the task at hand.

The analyst who wants to get a private equity job might drill really hard on making the most complicated model possible so they’re a step ahead when recruiting season rolls around. It powers him through the late nights. That’s valuable to an extent, but does it really prepare you for impetus behind the interviewers’ questions?

No. They really want to know that you understand what matters in private equity. When you’re deep in some slides late at night, pull back for a minute and think about why what you’re writing makes the company more attractive to a financial buyer. It will do volumes more to make you compelling in an interview room.

A private equity associate might be so focused on perfecting the deliverable the partner asked him for that he never stops to think about the unspoken dimensions he’s being judged on as a potential vice president for the partner track.

It’s important to master your work product, but you can move up the ladder of life way faster by improving and leveraging your strategic understanding. It will manifest many compelling things for you.

Some will be easily identifiable: a promotion, a lateral role, or a better bonus. Some will be more opaque: a company that doesn’t fit your fund’s strategy but is one hundred percent worth owning, or a brilliant person whose skill-set yours complements where it might be worth launching a thing …

If you develop the habit of keeping your head up, you may begin to see cool things other people miss. I try my best to share through anecdotes how to do that. Hopefully people get value out of it.

I deeply appreciate the things I’ve picked up over the years from this site. Patrick, you don’t get thanked enough.

People don’t necessarily grasp the impact of this site. I have run into people in real life who have referenced things I’ve written anonymously on here.

One I’ll never forget was a conversation at some charity event with a senior HR person at Perella. I asked about their talent initiatives. “We have seen such an uptick in applications the past few years,” she said. They couldn’t figure out what changed when their recruiting process hadn’t really. She said she discovered the ‘David and Goliath’ post, asked some of their analysts as well as HR peers at other firms, and got several answers confirming it was a known thing. She laughed about it as the best free gift they’d ever gotten. That made me think about how far-reaching things on the Internet are.

Thank you to all the people who send me thoughtful messages, I enjoy thinking through the problems you’re facing. I apologize for how slow I am getting to some of them.

 

Really grateful to you for doing this and for all your work on the site. I have forwarded your posts to people I've mentored, and as an entrepreneur and investor myself, I appreciate your insights and what you share from your journey.

You mention books on relationships - can you share more of what you found useful. I enjoyed the Power of the Past on your recommendation.

Thanks again for what you do - it's a real service and I believe resources like this site at it best are crucial in leveling the playing field for access. What you have done inspires me as I think about ways I can potentially give back.

 
OracleofBromaha:
Really grateful to you for doing this and for all your work on the site. I have forwarded your posts to people I've mentored.
Thank you, that's really kind of you to say. I'm glad you find value in it, and even more that you think it's worth sharing with people.
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as an entrepreneur and investor myself
It's weird being both, right? I met one of the megafund founders once and was amused to see he referred to himself as an entrepreneur repeatedly. It was a window into how clearly proud he was of the business he built.

It made me pause to think about how he is way less of an investor at this point relative to being a general manager. I blocked some times that month to reflect on how I envision my own future: the mix of time between cranking on the minutia of an investment myself versus overseeing other people whose sleeves are rolled further up.

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You mention books on relationships - can you share more of what you found useful. I enjoyed the Power of the Past on your recommendation.
That's such a great one. I'm glad you liked it. Here are some others:

"How to Choose a Partner" - Susan Quilliam

This is a really practical book that frames partner choice as a journey toward self-development. Her lens is on the reader learning more about their self, about other people, and about life and the way they want to live.

"The Seven Principles for Making Marriage Work" - John Gottman, Nan Silver

Gottman is the best. He and his wife Julie run this fascinating institute housing the research they've done for over four decades. They focus on marital stability. They have a nine-point framework called the Gottman Method. Anything they've written is worth reading.

"The 5 Love Languages" - Gary Chapman

Nearly everyone has heard of this framework, but usually only in passing. This book unpacks it through very practical and valuable tools. There are variants of the book for teenagers, religious people, and people interested in its applications in their career. It's basically a Bible for interpersonal dynamics.

"Why Him? Why Her?" - Helen Fisher

This is a science-lite approach at framing your personality type as the driver of your romantic life. Not just what sort of person you're drawn to, but how you can find, attract, and hold onto them. The author has a straightforward and digestible style. Before taking a university position, she was at the natural history museum.

"Anatomy of Love: A Natural History of Mating, Marriage, and Why We Stray" - Helen Fisher

The same author wrote an earlier book about the known history and hypothetical future of sex, romance, and partnership across time. I read the first edition, apparently there's a newer one from a couple years ago. She studied several dozen known societies from 50 countries across different millennia and documents it all in the book. Her primary idea is that everything that most people think is just careless or unpredictable behavior actually isn't. There are identifiable root causes or prompts.

"Attached: The New Science of Adult Attachment and How It Can Help You Find and Keep Love" - Amir Levine, Rachel Heller

You may know the popular framework in psychology for attachment styles: secure, anxious, and avoidant. This book is about how those styles inform our needs as a partner. It boils down years of attachment theory research on the nature of human relationships into super actionable pointers on:

  • how to identify your own and other people's attachment styles
  • the emotional tax of a relationship with someone with different intimacy needs
  • communication skills to bridge the gap
  • people's different capacities for intimacy and the need to prioritize a partner's well-being
  • exiting a failed relationship or predicting ones that can work for the long run

Obviously in one book it's impossible to be exhaustive, so it focuses primarily on the common problem pairing (anxious and avoidant). If you're a secure type it won't be one hundred percent applicable. Still worth the read.

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Thanks again for what you do - it's a real service and I believe resources like this site at it best are crucial in leveling the playing field for access. What you have done inspires me as I think about ways I can potentially give back.
That's humbling, man. Thank you. Please do give back, it's important to help lift other people up.

I appreciated your perspective on how to interact with senior people in your recent thread. I owe a comment there, I think you raised some interesting things.

Chuckled when I first saw your name, thanks for that too.

I am permanently behind on PMs, it's not personal.
 

Thanks for your kind words and for these great recommendations - I really look forward to reading them, and I found a couple (like the 5 love languages) very helpful.

I also appreciate your candor about money and talking about the complexities it brings. As my business has gone from garage band hedge fund to hockey stick, I've gone from years of making nothing to suddenly having an exponential experience. It's weird in itself to make more money in a year than you have in your prior career to date (obviously it's nice, and that's also a function of bootstrapping and weird background, not just business doing well). So far it still feels fragile and I haven't really changed my habits. I'm struggling with how to talk about it while still relating to close personal friends and family in less lucrative fields. Normally, I just play it down and suppress it, and while that's better than being a jerk about it, I think there must be a more skillful way of owning the success in a classy but caring way.

I find it very jarring but revealing when the megafund founders talk about themselves as entrepreneurs since I view their firms as so consensus and compromised by their scale, hierarchy, product proliferation, asset chasing, etc. It does force me to imagine the leap they took, though I also think it's their way of claiming why they should still be be king of the hill - as an entrepreneur myself, I respect that. Its like how Schwarzman opens his book with being stuck in the rain when an LP ghosted him, or Phil Knight's memoir basically stops once Nike becomes a big success - the hand to hand combat of entrepreneurship can be very vivid on people's impressions of themselves.

 

APAE thanks a ton for sharing. Always look forward to your consistently insightful comments. Seems like you and I both come from similar beginnings and have similar ways of thinking, as well as a shared general attitude and disposition toward life (however I'm likely a decade or so your junior). At the risk of potentially asking something too personal, do you mind elaborating on how you've handled managing relationships with your family members? How have your relationships evolved as you grew in your career? Did you find them to become more understanding themselves or was it something you had to actively manage and work on (i.e. was it somewhat a one-way street of unreciprocated effort)?

On the career side, you aluded to this in your last response, but I was wondering if you could expand. What's your advice for junior-level professionals who are trying to prepare for the jump to becoming a mid-level professional? Outside of the obvious things, what can we do to position ourselves to have a strong case for an internal promote? What are some of the "unspoken dimensions" you mentioned we are being evaluated on?

Thanks!

 

Thanks for the comment, and the nice words.

I can't talk too specifically about my family unfortunately.

For your career question, the easiest thing to do is to borrow heavily from a comment I made two years back.

To me this falls into two clear categories: soft skills and hard skills. They overlap and reinforce each other in many ways. The latter has been covered well on this site and others. I will focus on the former.

Instead of a checklist of bullet points, here are a couple 'mindset' pieces that I've learned contribute strongly to success.

Relatability:

This is a people business through and through. I struggled with this a lot. Clearly, as you can see from my anecdotes opening the thread.

It's not enough to do the work the right way. The right way means you are reliable; communicate well about your bandwidth, other deadlines, and questions you have with any task; add value by proactively accomplishing unstated second-level objectives; and have a good attitude all the way through. That's no mean feat. It's hard to be a top-flight generator of work product, and that's simply table stakes in this game.

You have to do the work the right way while being the right type of person. Another user amusingly termed it being a "money salesman."

I'll paste a portion of another comment I made the prior year.

APAE:
Relatable means being an enjoyable presence on the floor. Note that I didn't say 'tolerable'. People self-censor so rigorously out of fear of standing out and getting punished.

This (the self-censor) seems to come in two primary forms; the person who's so fearful of any potential misstep that they eventually turn into the equivalent of the dog that's been beaten enough that it flinches each time a human near it raises a hand, or the person who knows they're so far from the cultural norm that they box themselves up to look like a drone.

Both of those look tolerable, but the first archetype is someone you can't stand to be around because they're so ingratiating and eager to conform to whatever they think you're looking for while the second is someone who looks either so disengaged or so ready to explode that you kind of shy away for your own safety.

Don't be afraid to bring your own personality. You don't have to be stuck talking only about the weather, sports, or vacation plans for your whole two-year stint. It's okay to bring more of your authentic self to the office. Be personable, ask real questions about the people you work with, and listen when they talk. Human moments in this industry are few and far between, and if you're the guy who becomes known for bringing them, that will serve you well.

People will smile genuinely when they see you, you'll develop deeper relationships with the people who manage you, and as your career progresses and you see certain people far less frequently as you change roles, the warmth of your relationship won't fade like it does for the people who simply clock in and clock out day after day.

In my case it actually meant tightening up how I presented. I have a lot of different interests. I'm expressive. That can be overwhelming, so narrowing myself to come across as less of 'a lot' helped me be more relatable.

This matters.

Picture a guy who started a company, sweat and bled and begged and borrowed to make it work, and after 15 years is looking for a sponsor to come in as majority owner and eventually buy the remaining interest. He is going to be really, really picky about who he lets take 80% of the cap table and works with for three to five years before jetting off completely.

Picture a lawyer who made partner off the back of a college roommate who got into a good fund and threw him the legal work for the bolt-on acquisition they did every single quarter. Think he's going to be careful about who he introduces to that old roommate over golf as "the right guy who could maybe take one of those babies off your hands now"?

Self-awareness:

People could write novels about this. Said simply, most people in this industry have a very strong sense of self. That strength often leaves little space for a habit of inward reflection.

Simply taking the time to think critically about how you're doing in each aspect of your role can surface key areas of development you can improve on.

For example, one recurring thing I see in private equity is how few people are good managers. I'll paste from yet another comment.

APAE:
The harsh assessment I make of most guys is that in that first post-MBA role where part of their job description includes overseeing (either directly or indirectly) people in a job they themselves had only two years ago, they resort to one of two extremes: either way too hands-on (over-managing) or hands-off (under-managing).

It's understandable. If you were a really good associate, you're now a VP, and the associate on your team is just failing to give you that last ten percent of output on work product that you're looking for, there are two easy defaults. Do the work yourself (leaving them with no developmental feedback on how they can improve for the future), or hound them until they get it right (micromanaging).

Further, most people lack the self-awareness to be critically reflective on developmental areas of their own, meaning John Q. Vice President isn't sitting down once he gets Principal to think about how he can be a better manager. If you didn't have it before, the chance you develop it later in your career gets increasingly smaller.

The transition from doer-of-work to part-doer/part-reviewer is really bumpy.

News flash: this is the real thing that people never clue into when they wonder where the soft-skills feedback they get as a PE associate comes from. It's the partners being indirect about saying the associate demonstrates no or too few indicators of being a good future manager.

News flash: Being a good manager is absolutely imperative to your success as an investment professional. It allows you to leverage your time effectively (delegating work components to more junior members of your team), streamline processes with service providers like counsel, bankers, and consultants to their peak efficiency (because you're managing the humans inside those service providers who interact with you on your deal), and also maximize what you get out of your portfolio executives.

This is just one example of failing to be self-aware. Others could be:

  • monopolizing board meetings - droning on, because who'll stop you, you're the fund representative
  • talking at your portfolio executives, not with them - dictating what your boss said he wants to see; obviously you have to communicate the strategy, but realize that they bring a wealth of knowledge you could never hope to have; don't miss the chance for them to tell you what they could use help with
  • not managing your physical health well - ignoring the proven connection between better physical fitness and better mental output

Character:

I spoke about the idea of respectability in the same comment I excerpted 'relatable' from.

We can think about this more broadly. Character matters. I love that quote we all heard as kids: "Character is what you are when no one is watching."

Think of everyone's complete disgust the other year finding out Experian knew about the data breaches for several months before it came to light, and even then it came out from journalists, not the company. It wasn't even because their steps to resolve the issue required secrecy, but out of pure complacency or fear of the public backlash.

I have several personal stories I could share. I have seen people blithely choose not to do a deal with someone because of some personal data point they have on the guy.

  • "Oh, he reneged on so-and-so on the such-and-such deal, wasted everybody's time and ended up costing my buddy another $80 for having to extend the debt financing."
  • "Ah, not that guy. He lied about one of the guys in my fraternity cheating on his girlfriend just so he could score on the girl. I know him, it's a good shop but I'd hate to see you do a deal there."
  • "XXX Capital? Let's not do anything with them, they don't really take compliance seriously, I want to avoid a headache."

In order, those were:

  • a billionaire telling me about a fund I was thinking of selling something to
  • a megafund partner when I told him about a venture fund that put a term sheet down for a company I'm already in
  • a PM at a credit hedge fund talking to me about another fund I thought we could sell an asset in a SPV to.

People do off-list references. They'll call and ask about you. They'll plug your name into LinkedIn and see who they know who knows you. Everything is a data point. If you are character-poor, you'll find it harder to succeed in the long run because people won't want to do things with you.

Vision:

Are you someone who is reactive, or do you invest your own time studying the world to identify key things you think will happen in the short or medium term?

The former kind of person chases all the stuff people are talking about today. He can't be behind the curve. The latter is heads-down and ends up doing something that looks a little off-center right now, but at least he has the chance to be proven right in the future.

This comment is getting really long, so here are some others I've made in the past about how to make moves:

The takeaway here is that you can get a lot done in not that much time if you really apply yourself. One quote that has impacted me most was Bill Gates's "Most people overestimate what they can do in one year and underestimate what they can do in ten years."

Develop a vision and hone in on it as your north star. You should do this not only for your life overall, but in specific areas within your professional life.

If you can identify a lane you want to live in as an investor, you can pour energy into becoming the Hulk of that lane. This will make it easier to 'serendipitously' manifest cool things. The CEO of Niantic (the company that made Pokemon Go) laughed at all the press coverage and said "Yeah, we were an overnight success 20 years in the making."

I am permanently behind on PMs, it's not personal.
 

I have fangirl-ed heavily on many of your posts, so I'll save the rest of the readers from more of the same. I wouldn't be able to do your contributions justice anyway.

Wanted to comment on this segment, about education:

APAE:
The heavily pre-professional focus seemed to attract few people that were intellectually curious. I don’t mean people that weren’t passionate. My class was full of people who were very driven, goal-oriented, and committed. What I discovered was that very few of those people were willing to do anything without an immediately identifiable benefit.

The students that loved exploring for its own sake stood out. They tended not to be in the ‘hard’ courses that had competitive registration. They weren’t at the recruiting events; you didn’t hear about their offers. Five years after school, I saw them starting small businesses, running their own consultancy, several rounds of financing into their growing startup, living abroad, or something similarly unique. When I caught up with them, they seemed to have a really healthy relationship with their self.

What I realized was worse was how the culture suppressed any deviation from the norm. Looking back, I remember so many conversations where an interest or passion would sneak out of someone’s mouth and they would quickly bottle it up, almost as if they were afraid or embarrassed of it.

It felt like the school collected a lot of really talented, interesting, capable people who were painting themselves into a narrow box. The closer graduation came and the more the pressure of ‘where are you going to place’ seemed to dissipate, the more of people’s true self you got to see. As if they were free to voice it because the dust had finally settled.

College is most valuable as a time of exploration. If I were advising a child or a mentee, I would encourage them to find a school and topic to study that encourages exploration, that has no strong norms other than intellectual curiosity, and that promotes learning how to learn.

This is complicated, and I think it's really important. I recently read "Prepared: What Kids Need For a Fulfilled Life," by Diane Tavenner. She's an educator who's a co-founder and the CEO of Summit Public Schools, a charter school system on the West Coast. The whole idea is that since most of us don't work in factories anymore, the purpose of school teaching us to put our heads down and follow the rules (listen to lectures, do homework, memorize, be in your seat before the bell, etc.) doesn't prepare people to function in a society or workforce where someone has to figure out how to solve unstructured problems.

The solution, as per the book, is to shift the focus from teaching kids how to do things to teaching kids how to teach themselves how to do things, as that has far more carryover to being an adult. I don't sit in a classroom very much anymore, but I do go to YouTube to figure out what I need to pour self-leveler in my basement.

This echoes your point from above, at least tangentially - there's a difference between learning a set of measurable skills or knowledge ("if I pass the bar, I'm a lawyer now!") and having deeper experiences that teach across a variety of subjects. My best leadership class wasn't "Leadership" in business school, it was being a captain of my varsity sports team in college.

I think there's tremendous value in putting kids in a learning environment that helps them learn how to learn, and I think that's the idea behind most top-25 universities today. Problem is, put simply, shit's expensive. I don't know as if it's executed well enough anywhere to be worth the price of entry. And if you're just going to go sit in a lecture hall with 450 other engineering students and listen to a PhD student who doesn't speak English like I did, then is that really worth paying for at all?

My kids are young enough that there's time for this to shake out - but I don't think they'll go to college as it looks and feels today. I'm with you in that I'm more concerned with making sure they have a chance to explore a self-directed learning path in depth, and that I help them acquire the tools along the way to set goals, plan, execute, succeed or fail, evaluate, adjust, and repeat. I suspect a lot of their learning will happen at home, using resources from the internet, and in the context of completing projects. I don't think my kids are going to memorize facts about the Battle of Hastings and then fill in bubbles on a Scantron. It's not useful for forging a life path that affords you the freedom to never have to sit in a cubicle again.

"Son, life is hard. But it's harder if you're stupid." - my dad
 

Hey Layne Staley. It's always a joy to see you. Thanks for such a thoughtful reply. You owe me a private message or reply on your distressed thread.

Thank you for the book recommendation, I wasn't familiar. I'll read it this year.

It's interesting, people bandy about the term 'future of work' a lot but the future of education doesn't get the same attention. One of the structural changes resulting from COVID is going to be a change in not only the delivery channel of instruction, but the core focus as well.

What you termed 'teaching kids how to teach themselves' will be the entire heart of it. I have seen memes about how we all know that the mitochondria is the powerhouse of the cell, but half the people in America don't know how to do their taxes or what compound interest is.

I've gone with friends to open houses at their kids' schools. It's helped me see a broad swath of what's out there: P.S. branches, Ethical Culture, the Blue School, and some of the more progressive or smaller ones in different cities.

Some of the ones in the Bay Area stood out starkly. They were started, funded, and hiring-planned by self-made successful people from new-economy fields like technology, healthcare, or investment management related to them.

I remember one administrator said verbatim that "We don't bother much with memorization-based homework when kids will have a pocket supercomputer for the rest of their life."

I'd asked her about homework because I'd recently read a bunch of research on the efficacy of homework in improving learning outcomes. There were some interesting studies that showed for kids all the way up until their teen years had effectively no worse learning outcomes without homework, provided that they enjoyed a low student-to-teacher ratio in an academic setting with strong resources and had a stable home environment.

It makes sense that such schools differ so strongly. The parent and funding audience is so convinced of these things from their own experience.

I wrestle with the fact that this is creating a new kind of inequity. There are so many people who lost the zip-code or womb lottery who will be so structurally disadvantaged as we face this Fourth Industrial Revolution.

The gap between the digital, physical, and biological worlds is shrinking - technology is also changing faster than ever. Being poorly equipped to face that feels like a death sentence; if not literally, then figuratively in a financial, intellectual, or cyber-consciousness sense.

Your comment about leadership outside of any four-walled room being the best teacher is so true. I have a similar comment I often make.

I didn't really have an agenda with this comment other than to say I really agree with what you wrote. I either didn't know or forgot that you had kids. That makes me happy, I bet you're raising them really well and we need more good humans in the world.

Hope you're staying safe man. It's a wild time.

I am permanently behind on PMs, it's not personal.
 

You mentioned trying to figure out whether public or private market investing would be your next step while going into your banking job. Ultimately, it sounds like you decided to go an alternative route than the traditional 2+2 or hedge fund route.

Could you elaborate on your thought process in deviating from the more traditional paths at that point in time? I imagine it was probably considered somewhat atypical compared to the rest of your peers.

 

Top Boy.

You're right. I did deviate.

I interned in one top-five group and went to a different top-five group after school. I saw how hard everyone worked at memorizing a bunch of minutia to prepare for buy-side interviews. I looked back at how hard I worked to get my successive roles. It didn't make me feel any spark inside, only like I had kept the door open to get somewhere even better down the road.

The countless hours teaching myself modeling, the classes I stressed over, the internships before the top-five one - it didn't add anything to make my spirit feel full.

If I could get all that done, why couldn't I carve something out of the universe that was both fulfilling and lucrative?

I tested my way through this, searching for ways to make money to prove it to myself before the irrevocable decision to forego 'the path'. I found a way to make a million dollars. I called a bunch of people until I got enough yeses. I did it. All those people introduced me to other people.

I realized I could keep practicing in the exact field I had labored so hard to equip myself for, but under my own parameters rather than the confines of the linear path as an employee.

Do the math.

Say you find a $20m business you think is worth owning. You want to buy it. Assume you can put the effort into financing the deal (which is fair, because it's really straightforward and there are very visible channels for doing that).

Cool, problem is now you have to run it. It's probably got all the inefficiencies that are endemic to lower middle market companies. Improving EBITDA 50% over a few years so that you can earn a couple million on the upside - that's going to be a slog. You have to brute force it, and there probably isn't much supercharged IQ to go around inside the company beyond your own.

You can do that. It will make you a million or a bit more.

Okay. What if you find a $200m business that's fairly well run and offers good prospects. Why can't you run the exact same process on financing it? Okay, you did that and now you have to run it. The difference here is that you have a layer of competent people who were already running the damn thing. You just have to stay out of their way. It's not about swinging the shovel yourself, you win by being the guy running around between them all with cold beer and cigarettes to keep them going.

You also have so much more budget to get yourself the resources to help make the thing go great. The same relative figure is a much bigger absolute amount.

It also can be spun as a less daunting thing for you to be in charge of. That existing business performance and layer of operational talent is a protective mechanism. So maybe it's less of a risky proposition than you being the sole hero pushing the lower middle market thing to new heights.

Say EBITDA improves 25% during your hold period and are able to find a buyer at 10x, two turns higher than you paid for it. You just earned yourself $22.5m if you did it on a 20% structure. Let me know if you need the math broken down on that.

You can do that. I'm telling you it's possible, and I know a couple dozen guys who can say so too.

EDIT: My mental framework was that it would be really challenging to get underway and really rewarding to experience success. I drastically underestimated the first. I drastically underestimated the second too, on both the financial and intellectual dimension.

Private markets are way more attractive to me. I shared my thoughts on this in a comment a few weeks ago.

APAE:
I always knew I wanted to do shit with money. I didn't know what that meant exactly as a kid. Then I learned what investing was.When I was young I didn't have any idea what distinctions existed within that world (asset class, strategy, and the like), and I certainly didn't come from a background that correlates strongly with the industry.

When I got to school and began soaking up career information, it became clear that banking provides a rigorous and respected foundational experience with basic skills that translate well to investing roles as well as strong recruiting opportunities. I was interested in banking solely for those points. As I began the job, I realized the network of peers would be of equal value; the diaspora as we all left the analyst program would yield me people I could tap for advice, deals, jobs, recommendations, and similar stuff as my career unfolded.

Private markets are much more attractive to me than the public markets. I chose private equity because:

  • I prefer to see my investments perform over time without exogenous factors beyond my control -- if I was in the public markets, I may be completely correct about the quarterly performance of a company, but other market participants or even events beyond my control like a liquidity crisis, a short squeeze performed between two other investors I have nothing to do with, or a proxy war fought between hostile parties with different strategic visions for the company's future could push the stock in a different direction than I want, even though I am right about earnings rising or falling or whatever
  • I enjoy being able to be a majority owner where I can rely on formal power to steer strategy -- in the public markets, I can't, the best I can hope to do is initiate board change through collaborative conversations with the company or hostile actions like a proxy, tender, or other activist campaign
  • I enjoy the complexity of deal structure -- in the public markets, I can only be a buyer or a seller, as opposed to being able to choose not just what asset I want to invest in but the exact format (leveraged buyout, growth equity, structured equity, hybrid equity and debt investment, direct loan, or whatever) that I think will maximize my return relative to the risk assumed
  • I believe there are greater inefficiencies in the private markets -- there is no central clearing exchange where everyone can see the price being paid for an asset, meaning I don't have to compete against the complete universe of possibly interested parties; I can find assets being transacted upon with a variety of reasons, deal timeframes, and counterparties that own them; those dislocations create opportunity

Separately, I have found that I think differently than many senior decision-makers in the industry do because I have had very different life experiences than are common for people with the educational and professional pedigree required to progress in the field. That difference in thought pattern makes me look at the same opportunities through a different lens. It also lets me identify different opportunities that other people didn't see.

Banking is an attractive career option for people who have a lower risk tolerance. Obviously if a sell-side process yields a lower transaction value, the bank receives lower fees and the MD receives lower compensation, but that's very different than structuring a deal, managing an asset, and having to secure an exit.

Neither is better than the other. Some people lik pineapples on pizza; others don't. You have to know yourself. If you'd be bored out of your mind advising on deals over and over, getting to a senior role in banking where you simply sell people over and over on your ability to do a deal for them would make you really unfulfilled and frustrated. If you'd be stressed and uncomfortable trying to choose how to deploy capital, private equity would make you miserable.

One thing I've seen is that as the private equity industry has matured, a lot of the opportunity at the top has evaporated. Some of the megafunds have gone public, so their compensation pool has narrowed. All the megafunds have launched numerous strategies in an attempt to diversify fee streams, and with that, have correspondingly hired hundreds of new employees; this add mouths trying to feed at the trough. Lastly, there's crowding at the top. Once you make partner, you're gonna practice for two decades: it finally got good for you.

All in all, there are a lot of factors that have colluded in more recent years to make banking more similar in how financially attractive it is at the senior level. So a lot of guys recognize that they can just keep doing what they're doing in banking and get to more or less the same point as their private equity counterpart.

The overall point is that to progress at the senior level, you have to be pretty invested in the thing you're doing. Since the two fields require a different mindset, different types of people tend to gravitate to and perform strongly in those respective paths.

I am permanently behind on PMs, it's not personal.
 

Thanks for doing this. Genuinely extremely helpful. At which point in the rat race did you venture off to do your own thing? Did you end up working in a PE shop post banking and was that experience helpful in doing your own thing? Raising capital at such an early stage of your life must have been extremely difficult. How did you demonstrate to investors you were up to the job without any sort of track record?

 

This is one of the most thoughtful things I've ever seen written, period. Very kind of you to contribute so much time. Have a couple questions if you don't mind answering:

  1. In (equity) investing, to what extent do you feel the job is natural aptitude vs. skillsets that can be learned? In what you can learn, what are the top 2-3 things that matter most to making one a better investor?

  2. What are your hobbies / how do you decompress?

  3. What do you want to be doing 20-30yrs from now?

 
hedgehog9:
This is one of the most thoughtful things I've ever seen written, period. Very kind of you to contribute so much time.
Thank you, I really appreciate that.
:
1. In (equity) investing, to what extent do you feel the job is natural aptitude vs. skillsets that can be learned? In what you can learn, what are the top 2-3 things that matter most to making one a better investor?
I don't know that there's a single formula. Someone may rely 30% on their natural aptitude and 70% on their learned skill-set, while someone else may be 80% natural aptitude because who they are is such a strong fit for their work that only a minority of their time is spent on learnable functional-type topics.

I am probably more of the latter than the former. Older and more successful people have told me I "get it" more often than I can remember. I don't have a formula for it. Most of the frameworks I share in my comments I come up with more or less on the spot after thinking for a minute how I'd map an answer to whatever someone's question was.

I love learning, so when I find something I should be better at, I do my best to first figure out the smartest way to learn it, then absorb it as quickly as possible. I wouldn't excel in a setting where financial engineering is the primary driver of returns in a buyout opportunity, for instance. It doesn't draw on my strengths, and I have so much fun in the situations that do that I would enjoy lower utils trying to make myself strong in that way.

:
2. What are your hobbies / how do you decompress?
Man, I'm into a lot of shit. Can I respectfully pass on this question? Not from any lack of enthusiasm, but because most of what I'd write would make me identifiable.

I did mention shooting. I have been on some really fascinating trips with fascinating people. Louis Bacon Moore shoots. Paul Tudor Jones does too. There's a whole pocket of guys who go around on elaborate trips. Bird sport is the most common game. From what I have seen the big game thing can be considered less genteel in some circles. No one in the sport feels bad about common game like pheasant, quail, partridge, or duck. A lot of people aren't down for land animals beyond deer or boar.

I love to read. Always have. I appreciate being able to absorb knowledge someone else had to work so hard to accumulate and refine.

:
3. What do you want to be doing 20-30yrs from now?
Spending every day surrounded by people I love with complete control over my calendar. Time is the most precious asset because it's the only one we can't replace.

I hope I find meaningful ways to give back at scale. I'm less interested in the classic board seat on half a dozen big, established organizations. It would be more impactful to take something from zero to huge, especially for a purpose that is harder to make a dent in. Like education in inner cities, or a thing for first-generation college students regardless of race.

I am permanently behind on PMs, it's not personal.
 

Thanks man. I love a ton of your posts. Your story has always been interesting. It's in a space I know little about -- ecommerce has so much minutia to stay on top of, and that breadth of minutia always seems to evolve so damn fast -- but find fascinating.

I am permanently behind on PMs, it's not personal.
 

Wow, I've reread this post multiple times to really absorb it all. I've only really been on the site for about a year now, but it didn't take long from when I first began browsing for me to take notice of you as a user from the high quality of your comments throughout.

Your point about considering the why and developing a strategic understanding to think more critically about what's in front of you stuck out to me in particular. I've been told by multiple people that I don't think like someone my age, that the way I approach things resembles someone much older than me, but the fact remains that I am still not even 20 years old, and because of this lack of experience, I struggle with that grasping of others' perspectives. Where I am now, I'm junior to all those I work directly with by 6+ years, and especially now that I don't have that in-person interaction to pick up on more of the nuances (body language, how they're interacting w/ others in the office, etc.) I've had additional difficulty in figuring out the "why" you allude to in how the thing matters to that person. Beyond going the extra length to ask lots of questions, to demonstrate the curiosity and interest that truly is there, etc, what else do you think is helpful for addressing this gap in perspective from significantly varying circumstances/places in life (student/very young intern vs associates and up many years out of school) to still be able to develop that sort of strategic understanding over time?

Array
 

Thanks for the kind words, I appreciate that.

First off, I know you are already sick of hearing this, but it will get easier with time. I know it's hard being younger than the people around you. High performers often face this. It can be isolating. Keep up the hard work.

It's important to understand that there are two different things at play here. One is strategic thinking, and the other is grasping someone's perspective. Both have a why behind the what, but the two are very different.

One you can excel at regardless of your age or life experience. The other you will progress in as you continue to mature and experience more things. Let's tackle both of those.

Growing comfortable at thinking through how someone got to the position they're advocating simply requires intellectual horsepower and some reps. You can improve on this by studying psychology. You can read books on negotiation, crisis communications, and self-help (like pop-psych). Take notes. Watch TED Talks, speeches by business leaders (the Dealbook Conference is a gold mine), and great debates.

Analyze what people say; see if you can dissect how they got there. If a CEO says something subjective, research everything you can about them. Who did they work for in the past (any prominent business leaders like Jack Welch, Andy Grove, Fred Smith, etc.)? What companies did they spend time at early in their career (a go-go risk-on powerhouse like Drexel, a white-shoe investment bank like First Boston, a cutthroat culture like Enron's trading division)? What school did they attend (a brainy place like Booth, an entrepreneurial place like GSB)?

Here's an example. If a pro basketball player emphasizes teamwork, ball distribution, and court vision in a post-game interview after a playoff series, why does he cite all that? If his Wikipedia page tells you he spent three seasons in San Antonio, you have your answer. He studied under Pop; that's the system he learned. Maybe you have to go deeper. Maybe he was on a different team coached by one of Phil Jackson's assistant coaches from the Bulls era who's now a player development guru.

Always look for what informs someone's perspective. If you can grasp that, you'll immediately be in a better position to communicate why your thing is sensible, or identify what to cede on, or choose what to say to make them like you, and so forth.

On the other hand, strategic thinking is not something that's purely about intellect. You actually need experience. That's good and bad. The bad: experience isn't easy to get. The good: you can absolutely toggle how quickly you get that experience.

If you focus on maximizing the variety of things you taste, you will begin to fill up your tank, so to speak, much more quickly than people who do one thing for a long time.

Think of it like a scatterplot graph. When you have very few data points, you can't get a clear picture of any trendline or correlation. The more data points you add, the clearer things become. It's like pointillism. Consider yourself 'Seurat the Dot' - you are painting by data points.

To excel at this, populate things as quickly as you can with the broadest variety of inputs. You want dots of different colors, sizes, and in different places on your graph. Ever heard "Variety is the spice of life"? It holds true here.

You don't have to have gray hair to develop strategic thinking. You just need to have a breadth of experience to draw on. If you're proactive and tactical, you can develop that experience quicker than other people. Some ideas on doing this could include:

  •   launching a side project outside of your working hours
  •   going full-on with a startup (trial by fire, learning through immersion)
  •   buying an existing business and managing it while keeping a day job
  •   traveling as much as possible to soak in new cultures, meet new people, and develop new perspective
  •   taking a job that presents a tremendous amount of variety (this is the single biggest advantage of management consulting, in my opinion)
  •   teaching yourself new skills constantly (front-end development, financial modeling, negotiation, CFA, foreign languages, dance, whatever)
  •   investing personal capital (you will have to learn so much in order to not fail and lose all your money)

Don't be put off by being younger than the people around you. Keep aiming high. It's the only way you'll ever reach lofty goals. 

I am permanently behind on PMs, it's not personal.
 

Exactly!

However, I would say someone who is exceptional skilled at one thing still trumps one who is a jack of all trades while being master of none.

The only exceptions are the ones who can find the connections between ideas and synergies them together.

 
Most Helpful

Let me start by congratulating you on being an excellent writer. If I could give any single piece of advice to people on this site, it would be this: learn how to tell a story. I'm not just talking about being more engaging over dinner or drinks. I'm not just talking about one day giving speeches or interviews on TV. I'm talking about story-boarding an idea. It's such a rare skill that I don't ask interviewees to do modelling tests. I ask them to write me a story. I don't care what it's about. I just have to be able to read it without wanting to shoot myself. Writing mirrors speech. If you write poorly, you present poorly. If you write poorly, you can't order your thoughts clearly. It's incredibly important to write well, and as a reformed journalist, I applaud your writing ability. For me, it's the clearest indication of intellect.

To that point, I'd like to call out the following:

"The heavily pre-professional focus seemed to attract few people that were intellectually curious. I don't mean people that weren't passionate. My class was full of people who were very driven, goal-oriented, and committed. What I discovered was that very few of those people were willing to do anything without an immediately identifiable benefit"

You had several other well-made points in your piece, but for me, this hit home. Intellectual curiosity is rare even at the very best of schools and even in the very best of firms. It's exceedingly rare everywhere. In my experience, mental laziness is far more common than physical laziness. There is an ocean between drive and a desire to learn. Both are important for success, but the latter makes you interesting. I am so, so tired of meeting uninteresting fucks who think they're clever due to a degree or a job that places them in proximity of driven people, none of whom have to be interesting for the business to succeed.

Interesting people--those who are intellectually curious--can very rarely work for others for very long. The innate desire to question everything and learn something new typically makes for a poor quality in an analyst or associate, but might be the only thing that matters in an entrepreneur or CEO. For me, it's one of the only qualities I seek in friends because everyone else eventually bores me. There is a good reason visionaries are rare--the world can't handle many of them at any given time. If you find one, keep them close--God only made so many.

 

Intellectual curiosity is so rare, in school (even great ones) in business (even finance, which I think can be pretty stimulating). It's pretty easy if you have a good platform to hire people who are competent technically - they're a commodity, albeit an expensive one. Finding someone who has enough curiosity that they have a chance to develop wide angle investment judgment that you would pay your own money for is quite hard, at least in my experience. So many "investment professionals" and so few investors.

I always joke I was an involuntary entrepreneur when starting the fund. This partially because of a background that made it hard to get hired conventionally, but also partially because it is very hard to work for people who aren't intellectually curious if you are.

A message to younger people on this is to embrace that curiosity and what makes you different not just suppress it. You do need to fit in in certain situations, but you also need to be different and right if you're going to be a great investor long term.

 

Hi Brotherbear, I’m a bit of lurker but I’ve always enjoyed reading your posts. Your writing style in particular is a breath of fresh air and I find it crispy and succinct. Glad people like you are regulars on WSO. I would love for you to expand more on what you mean by intellectually curious and if you could share Any examples as it relates to investing or from your time in banking? Looking forward to reading more!

 
brotherbear:
Let me start by congratulating you on being an excellent writer. If I could give any single piece of advice to people on this site, it would be this: learn how to tell a story. I'm not just talking about being more engaging over dinner or drinks. I'm not just talking about one day giving speeches or interviews on TV. I'm talking about story-boarding an idea. It's such a rare skill that I don't ask interviewees to do modelling tests. I ask them to write me a story. I don't care what it's about. I just have to be able to read it without wanting to shoot myself. Writing mirrors speech. If you write poorly, you present poorly. If you write poorly, you can't order your thoughts clearly. It's incredibly important to write well, and as a reformed journalist, I applaud your writing ability. For me, it's the clearest indication of intellect.

To that point, I'd like to call out the following:

"The heavily pre-professional focus seemed to attract few people that were intellectually curious. I don't mean people that weren't passionate. My class was full of people who were very driven, goal-oriented, and committed. What I discovered was that very few of those people were willing to do anything without an immediately identifiable benefit"

You had several other well-made points in your piece, but for me, this hit home. Intellectual curiosity is rare even at the very best of schools and even in the very best of firms. It's exceedingly rare everywhere. In my experience, mental laziness is far more common than physical laziness. There is an ocean between drive and a desire to learn. Both are important for success, but the latter makes you interesting. I am so, so tired of meeting uninteresting fucks who think they're clever due to a degree or a job that places them in proximity of driven people, none of whom have to be interesting for the business to succeed.

Interesting people--those who are intellectually curious--can very rarely work for others for very long. The innate desire to question everything and learn something new typically makes for a poor quality in an analyst or associate, but might be the only thing that matters in an entrepreneur or CEO. For me, it's one of the only qualities I seek in friends because everyone else eventually bores me. There is a good reason visionaries are rare--the world can't handle many of them at any given time. If you find one, keep them close--God only made so many.

This. I cannot put it better than you have brotherbear

APAE great thread.

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 

brotherbear, I fuck with you heavy, man.

I think much the same way. Life is about storytelling. Narratives matter. If you can't compellingly articulate any thing, it ain't happening for you.

I love the stuff you share. I wish you did more of it. Right now I'm thinking of that "Women, when did you decide to have children" thread from a year or two ago. To this day I very often (more than weekly) think verbatim of your reply about being a 'math dork' and the principle of a constrained optimization.

Thanks for the positive encouragement.

I am permanently behind on PMs, it's not personal.
 

I just re-read my posts on the thread you mentioned and couldn't remember writing any of it. I must have been full-Hemingway drunk at the time. Still--I like the framework of thinking about life as a constrained optimization problem. I wish I had remembered writing it. I'm going to use it in the future now that I have read it while sober.

 

"I'm liable to go Michael, take your pick: Jackson, Tyson, Jordan - Game 6."

Go Michael

You put a smile on my face, man. Cracked me up. I think I owe you a PM. I can't stay on top of the inbox. I asked them to add some more functionality to it, I hope it comes in a few months.

I am permanently behind on PMs, it's not personal.
 

hey man as someone who will be interning at a top bank this summer, but came from a pretty shitty upbringing, your story is super inspiring to me. I have one question, are you a partner in pe? because you say you graduated in 2010, and if you are congrats because you're probably an amazing dealmaker

 

I'm glad you've been able to persevere and exceed your circumstances. I hope you set high goals for yourself and are able to attain them.

Congratulations on a strong internship. I'm sorry for you and everyone else who will have to deal with the frustration of a virtual experience as opposed to what you envisioned. It's annoying to work so hard to get such a competitive thing, then see it changed completely by a thing out of your control. That's a lot of life though; we actually control so little. One benefit of this entire ordeal is how it can help us keep or gain perspective. I hope you're able to convert and get the analyst role you want.

Yes, I am in a decision-making role with autonomy and a number of deals in my track record with sole attribution.

I am permanently behind on PMs, it's not personal.
 

i remember reading your stuff through the years. it was always gold. though it's just now that i learned your user name -- always remembered you as the fresh prince of bel air butler!

 

It’s a joy to see you back APAE. You’ve been one of the most thoughtful mentor I have had over the course of my undergrad.

While I ended up in tech, a lot of the ideas about relationship matter. Being able to communicate (I m not talking about presentation) well your progress to your manager/stakeholder is very critical.

Being able to tell a great story (AKA the language of social media) is also very important. As the digital world is overlapping with the real world, you need to be able to craft a story that resonate with your audience to hold their attention. The best content that lack entertainment will lose out to entertaining crap.

 

It's been fire man!

Finance wasn't working out for me. I swallowed my pride and went against all the momentum I have built in finance by pivoting to tech. I had reached one of the lowest point in my life and it was a real slap in the face.

Everyone I knew in finance thought I went crazy until I landed a SWE position at a FAANG level company.

Now I am earning a compensation that far surpass my friends in IB, working on gravity defying projects with world wide scale, and on top of that have ample time to come up with new creative ideas everyday.

 

Thanks for doing this.

  1. If you could start over, would you still be in PE/ Finance? I was discussing this with a few colleagues and a lot of them said they would be in tech or became a Quant if they could start over. What about you? What would you do knowing what you know now?

  2. What are some good books on strategic thinking and personal development?

 

I think a lot of an answer I shared above applies here.

Drawing on what I wrote in a comment on a thread two months ago:

APAE:
I always knew I wanted to do shit with money. I didn't know what that meant exactly as a kid. Then I learned what investing was.When I was young I didn't have any idea what distinctions existed within that world (asset class, strategy, and the like), and I certainly didn't come from a background that correlates strongly with the industry.

When I got to school and began soaking up career information, it became clear that banking provides a rigorous and respected foundational experience with basic skills that translate well to investing roles as well as strong recruiting opportunities. I was interested in banking solely for those points. As I began the job, I realized the network of peers would be of equal value; the diaspora as we all left the analyst program would yield me people I could tap for advice, deals, jobs, recommendations, and similar stuff as my career unfolded.

Private markets are much more attractive to me than the public markets. I chose private equity because:

  • I prefer to see my investments perform over time without exogenous factors beyond my control -- if I was in the public markets, I may be completely correct about the quarterly performance of a company, but other market participants or even events beyond my control like a liquidity crisis, a short squeeze performed between two other investors I have nothing to do with, or a proxy war fought between hostile parties with different strategic visions for the company's future could push the stock in a different direction than I want, even though I am right about earnings rising or falling or whatever
  • I enjoy being able to be a majority owner where I can rely on formal power to steer strategy -- in the public markets, I can't, the best I can hope to do is initiate board change through collaborative conversations with the company or hostile actions like a proxy, tender, or other activist campaign
  • I enjoy the complexity of deal structure -- in the public markets, I can only be a buyer or a seller, as opposed to being able to choose not just what asset I want to invest in but the exact format (leveraged buyout, growth equity, structured equity, hybrid equity and debt investment, direct loan, or whatever) that I think will maximize my return relative to the risk assumed
  • I believe there are greater inefficiencies in the private markets -- there is no central clearing exchange where everyone can see the price being paid for an asset, meaning I don't have to compete against the complete universe of possibly interested parties; I can find assets being transacted upon with a variety of reasons, deal timeframes, and counterparties that own them; those dislocations create opportunity

Separately, I have found that I think differently than many senior decision-makers in the industry do because I have had very different life experiences than are common for people with the educational and professional pedigree required to progress in the field. That difference in thought pattern makes me look at the same opportunities through a different lens. It also lets me identify different opportunities that other people didn't see.

Banking is an attractive career option for people who have a lower risk tolerance. Obviously if a sell-side process yields a lower transaction value, the bank receives lower fees and the MD receives lower compensation, but that's very different than structuring a deal, managing an asset, and having to secure an exit.

Neither is better than the other. Some people lik pineapples on pizza; others don't. You have to know yourself. If you'd be bored out of your mind advising on deals over and over, getting to a senior role in banking where you simply sell people over and over on your ability to do a deal for them would make you really unfulfilled and frustrated. If you'd be stressed and uncomfortable trying to choose how to deploy capital, private equity would make you miserable.

One thing I've seen is that as the private equity industry has matured, a lot of the opportunity at the top has evaporated. Some of the megafunds have gone public, so their compensation pool has narrowed. All the megafunds have launched numerous strategies in an attempt to diversify fee streams, and with that, have correspondingly hired hundreds of new employees; this add mouths trying to feed at the trough. Lastly, there's crowding at the top. Once you make partner, you're gonna practice for two decades: it finally got good for you.

All in all, there are a lot of factors that have colluded in more recent years to make banking more similar in how financially attractive it is at the senior level. So a lot of guys recognize that they can just keep doing what they're doing in banking and get to more or less the same point as their private equity counterpart.

The overall point is that to progress at the senior level, you have to be pretty invested in the thing you're doing. Since the two fields require a different mindset, different types of people tend to gravitate to and perform strongly in those respective paths.

The thing I like about finance is that it's the language of transaction. If you think freely enough, you can go accomplish outsized things at a younger age. You can do that in technology as a founder, but I didn't study any technical subjects growing up. I have dabbled out of curiosity.

The best of both worlds would probably be to develop technological fluency as an engineer, whether self-taught or through college, and to practice finance in the first years of your career. You could launch a company, repeating until you hit with one that scales.

You could then basically buy your way through a variety of businesses where your technological know-how helps you assess the viability of their product or market, figure out what adjacent products could be developed organically or inorganically, and basically be a buy-and-build sponsor entirely on your own. Effectively do a Vista or Siris strategy but as a technologist. ESW is the closest to this I can think of, and sure enough, Joe was an engineering wunderkind.

Some book recommendations, beyond the classics like Art of War and 48 Laws of Power and Marcus Aurelius' Meditations:

(personal development)

(strategic thinking)

I am permanently behind on PMs, it's not personal.
 

Thanks for your great reply and for these great recommendations - I really look forward to reading them, So, if you could go back to school and start again would you study CS or electrical engineering? What do you mean by Vista or Siris strategy and ESW? I am very curious and I have found that I think differently than many students. Would you recommend me to switch my major to CS or engineering? So I can pursue the path described above. I would like to have the best of both worlds.

 

I wrote a similar response to this thread here a while back: THE ULTIMATE CAREER PATH

And was shitted to oblivion by children of WSO with no critical thinking ability. Instead of being curious and asking for more details to learn something insightful, they make childish remarks.

Here's a snippet of my response which is closely similar to APAE: "

Career paths are for loser who can't think on their own. Herd mentality. You'll never reach your full potential. Just not going to happen.

The winners carve out their own path by doing their own shit resulting in a non crowded market.

Examples:

Start a company? No. You buy companies and own their distribution channels. You buy digital assets with your audience.

Climb the ladder? No you build relationship with those at the top in a lateral industry. Then you run private deals with them and leverage the assets they have already built."

Having worked in both finance and tech, I can tell you the characteristics of each:

Tech bro - No business brain. Dwelled too much into the technical details. Tries to solve artificial problems by forcing whatever "tech stack" is trendy. Might get lucky if they try and fail enough time.

Finance bro - Overly pragmatic. Too profit driven. Lack critical thinking and any resemblance of creativity. Monkey see monkey do people (follow the carrots -> PE -> HBS/GSB -> PE/HF)).

I can tell you the real money isn't in either group but from bridging the two together and amplifying it with reality bending marketing skills. Marketing is the final piece of the puzzle that breaths life into your work. Judging by lack of creativity in this crowd, this is unlikely to be a reality for many of you.

The real money comes from deal making (finance mindset) while utilizing technology to scale your marketing effort.

Then suddenly, you view every marketplace as your playground.

 

APAE, have you read Grit by Angela Duckworth? I'd be curious to hear your thoughts assuming you've read the book. Her work centers upon the importance of focused persistence (relative to exceptional talent) in understanding professional "success" and draws parallels to many of the discussions held in this thread as well as the grind of an early career in financial services. A few noteworthy quotes:

"Yes, but the main thing is that greatness is doable. Greatness is many, many individual feats, and each of them is doable."

"...a high level of performance is, in fact, an accretion of mundane acts."

 
 

I bought one that hasn't begun customer delivery yet. There's usually about a two-year lag between when a manufacturer invites you to the purchase queue and you receive it.

I am permanently behind on PMs, it's not personal.
 

I just realized I owe you a private message. I'm sorry. I really struggle to stay on top of it. For better or worse, I'm pretty visual, so not being able to manage it with read/unread/archive/tags like you would with an email UI makes it hard for me. Let me manage this thread while it's active, and I'll get to it soon.

Thanks for the supportive words.

If you have more questions that the broader audience could benefit from, share them.

I am permanently behind on PMs, it's not personal.
 

Thank you for another thoughtful post — you’ve been a wonderful online “mentor” to many of us in dealing with our careers and personal lives.

One question: I know you do (micro-cap LBO?) deals of companies on your own. Why did you decide to pursue this asset class and strategy with what I’m assuming is your own personal earnings, rather than a more “scalable,” liquid, or passive investing style (real estate, for example)? If you’re able to tell us about some of the specifics behind your deals, how you make an income, and why you made this decision as opposed to being a large-cap PE partner, that’d be some beyond valuable information. Thanks again.

 

I don't do microcap. I don't find it very worthwhile personally. That has two dimensions: financial and experiential.

Let's break down the numbers.

Say you buy a $10m company that has $20m in revenue and $2m in EBITDA - you thus paid 5x. Since it's so tiny, all the banks with a sponsor coverage team are uninterested - you have some small regional bank who agrees to 3x EBITDA, so $6 in debt. You pool $4 in equity from friends, family, the search fund universe, whatever.

You run it well. You execute a revenue thesis, doubling top-line to $40. You improve performance, streamlining costs resulting in optimized margins of 20% thanks to fractional professional services, outsourced BD channels, a dual inside/outside sales org, channel partnerships, professionalized employee roster (no more nepotism hires, employees in their 50s without college degrees and basic technological proficiency, or attendance problems), all the classic stuff. Cool, you're now at $8 in EBITDA.

You know people in private equity and successfully run a process where one of your contacts acquires it at 7x. Wonderful, you just successfully executed on a multiple expansion thesis too.

They paid $56. You wipe out the $6 in debt (let's assume you only serviced it during your hold period), so with $50 left, your MOIC is 12.5x. Wow, GSB will want to write a case study on you. Your gross returns for your investors are $46 ($50 minus the $4), and your net returns are $36.8 ($46 minus your 20% performance fee of $9.2).

You just earned $9.2m pre-tax. Congratulations. Depending on how you set up your life, you're losing several million in tax. Let's say it takes four years to do that. That's $2.3m per year. Five years? $1.8m ish.

And let's thing about just how many things have to go perfectly for that to all occur. Re-read the list of stuff on the cost optimization and revenue optimization axes. No joke.

Let's switch gears and consider what it's like during those four, five, however many years.

  • You have a bunch of people who are concerned the moment you first walk in the door because you're the new owner. You've got to manage their psychological state, hand-holding them individually all while trying to get the lay of the land yourself.
  • You've got to figure out who is reliable and competent, who is useless and a liability, who is in the middle that you can tolerate for awhile.
  • You inherited all the goodwill and badwill of the prior owner. Some people loved him? Great, you're not him and they're suspicious of whether you're able to execute. Some people hated him? Great, they think anyone he convinced to buy the thing must be a bigger piece of shit than he was.
  • You're trying to hire people into a business that probably isn't sexy. You have no name recognition to draw on. Your lower middle market business services company or niche manufacturing company or consumer goods company is drawing from a talent pool comprised of people with education levels varying between high school dropout to colleges you may have never heard of - criminal records, drug convictions, DUIs are likely to be present - the white-collar, highly-educated peer set you're used to from your professional services background is nowhere to be found.
  • You're under immense stress. The buck stops with you. You start to feel the physical effects of it. You sleep worse than before. Exercise doesn't produce the same results in your body for some reason. Random things hurt. You're developing wrinkles and dark eyes faster. There's no one you can really commiserate with, because you probably don't have a really built out C-suite, and even if you did, can you actually have those conversations there? None of your friends are in a position to relate, and if they were, can you spare the time?
  • You miss out on a lot of things in life. Your family decides to have a get-together at the end of the summer? Sorry guys, half of our annual revenue basically hangs on these two conferences in September where all vendor decisions get confirmed, we're slammed on getting RFPs and stuff together. Your college roommate is taking a month-long trip across Europe? Man, that would be great, but you've got to interview and onboard eight new hires for your sales org ... then write some instructional collateral and build out a sales ops org you're going to personally oversee because you can't afford to hire a senior sales ops manager yet until you get the first revenue resulting from that org. I could go on.

What I'm trying to illustrate is that it's a slog the smaller the company is. There's a higher percentage of the entire shit within the company that hangs on the CEO's shoulders.

If I'm going to deal with the weight of a thing at all, I would prefer to strategically minimize it as much as possible. I can do that by finding businesses that have a good existing professional management layer. That correlates with a larger company. Bigger deal sizes also create better absolute fee revenue, meaning I have more room to hire support professionals to oversee the investment, whether consultant or full-time.

The exact same relative performance improvements create a bigger absolute outcome. Add a zero to the example we just walked through. Obviously everything won't be a one-to-one ratio - you're unlikely to buy a $20m EBITDA business for 5x, and it would be more difficult to double margins, although doubling revenue isn't out of line at all - but imagine it with me.

I'm now way happier with $92m in performance fee income. Best of all, I almost certainly had a way easier time doing it. And after doing this three times, why don't I roll it all together - the GP entity, performance fee entity, supporting investment professionals - into one place and call it a firm?

I like to find things that are really attractive on a time-weighted basis. I gave some examples in Layne Staley's "Distressed Investing: This Time It's Different" thread.

So if it's small, it better be damn near hands-off.

I didn't want to be at a large-cap firm because the politics, lack of control over your life balance, and 'climb up the mountain' timeline inherent to them. If you can print an eight-figure outcome for yourself, you will be unhappy waiting more than a decade to reach a seat where things are finally good.

I am permanently behind on PMs, it's not personal.
 

bravo sir. couple questions

  • how have you navigated the family dynamic? how close do you keep with them? I have a hard time even beginning to speak about work when I have family members living off disability checks (when they're not disabled imo) and complaining about their circumstances. I'm going to make more money this year than I ever have, and yet somehow I feel a tinge of guilt, and this will get worse around the holidays. more than that, I dread interactions with family on topics like business, economics, and so on, and usually have to extricate myself from the discussion because while I can easily point out where someone's misinformed, it does no good to the family and if anything, alienates me. it sounds like you had a rougher go at childhood than me, but I imagine we have similar family archetypes, and I'd appreciate your perspective.
  • where do you want to be in 5 years? 10 years? geographically, career wise, etc.
  • what's the hold up on marriage?
 

Whoops, missed the comment about marriage.

I am the age where women are just starting to get serious about relationships but may not have much experience in doing the inner work that leads to growth.

(The trope that people outside New York get serious earlier is true. I went to a friend's wedding in the south a few years ago and was one of a single-digit number of single people there out of a hundred. The people I know who went to Chicago or other Midwest cities after school are all married or engaged.)

I don't want a relationship where I have to teach. That may sound bad. I don't mean it to.

My point is that if you haven't taken the time to study yourself, identify what your weaknesses are or your chronic traits, and begin making efforts to change them and grow - we are going to be a poor fit. You will feel like my standards are unreasonable. If not that, you'll still be frustrated at the fact that you aren't at them. I'll be frustrated that you don't have similar standards. If not that, I'll be exhausted explaining them. It's a recipe for resentment.

Places like New York are hard because there's such a breadth of options that it's very easy to bail at the first sign of difficulty. If you hit an uncomfortable conversation, it's not hard to decide to stop seeing that person in favor of the other twelve options you have at any given time. 

I am fortunate to have been in some relationships with amazing women who had so much of what I want. Ultimately, each proved to me that there was a piece of them I couldn't sign off on. I want to be able to trust in my partner full-stop. Partner in raising healthy and responsible children, maintain control in an emergency, be comfortable at the expensive charity table, have interesting and stimulating conversations, be responsible with our money, help manage our homes and toys - the works. It's a tall order.

One thing I noticed was that a lot of people have a really lofty goal for who they want to be with but fail to think of what that means they have to be worth. I continually work hard to make myself that person. The best way to sum it up is that it's hard to find someone working as hard at that.

I've met truly beautiful women all around the world. Met some really kind women. Some really intelligent, thoughtful women. Tried relationships, and have chosen to end each one because I knew I couldn't love them the way I think a wife deserves to be loved - without reservation. I don't think it's because my standards are too high. I think I haven't found the right person to unlock that in me yet.

I am permanently behind on PMs, it's not personal.
 

Hey man.

I would love to speak freely about family. I don't know how I can without giving away things that would easily tie back to me. If you're interested in my take on social settings more broadly, sure. This isn't going to be profound.

I make things easy on myself. I either limit who gets to be around me or who I voluntarily am around, or I immensely limit what someone gets to know about me.

The first is pretty straightforward. If you know a gathering or event you could go to will have someone who - will - just - not - get - off - the - politics, don't go.

It's like if you know you have a drunk uncle who will corner your girlfriend in the kitchen and get handsy, no matter how many times people have yelled at him, said he can't come, told grandma that if she keeps letting him in they'll stop showing up - why on earth would you go and subject both you and her to that?

That covers if someone is offensive. It sounds like you're hitting the juicy spot of your personal upward trajectory. (Congratulations, you deserve it and I'm not surprised.) What if there's someone who is just offended by inherent aspects of your life?

I said it above in my reply to OracleofBromaha (it's nested, you have to click to expand): there are people who are brittle enough that your success will make them crack. You have a couple options.

You can be the bigger person - permanently. That gets tiring, frankly. I think it's also impossible At some point you're going to get fed up and either tell the person off or just cut them out of your life. Since that's the case, why not skip the years of agony and just take the shortcut?

I don't believe it's good for your soul. We aren't put here to shovel shit. Some of us have to; some of us are lucky enough to break out of that at some point. You have. Why would you willingly subject yourself to it again?

If you had to slog through it ... you can defuse.

Relative: "Bankers are all bastards, these fuckers will bleed you dry. It's like 2008 all over again. How the fuck can we sign a law for trillions to go to small businesses but not a single goddamn person I know got a red cent of it? I swear, they all kept it, they're paying themselves bonuses, and the rest of us will have to pay taxes to make up for it. They're fucking us. Hey, brofessor, aren't you guys all fucking us?"

You. "Gosh man, that's above my paygrade. All I know is I try to help people pick the right stocks to buy. I just can't wait for sports to be back on, missing the Masters is about the worst thing I could imagine in the whole sporting calendar. You remember Nathan Green and Ryan Moore both on #16 in 2010? God, I'm itching to get out there."

You could also deflect. Agree and amplify - comedy shows confidence. People will see you're not rattled and it tends to unwind the situation. "Yeah man, personally I found a way to embezzle twelve million and I'm gonna buy a jet. It'll be a small one to start, but I hope next time there's a crisis I can get the Gulfstream." Say it with an exaggeration and people will be on your side laughing.

Again, if someone is truly toxic I think it's not worth allowing them to influence your world in the slightest. Take the simplest, most direct path and just create some space.

Create controlled circumstances. Invite the people you care about, who care about you, and who don't create friction to things you designed.

For example. Make friends with a great local restaurant or two. Keep it mid-priced. That has two benefits: your cost will be lower, and your family and/or friends will not feel out of place themselves or like you're living a completely different lifestyle than they are.

Get the manager on board with the program: no bill is ever coming out while anyone is there. Cover it later, or pre-auth your card. Tip 30% the first few times. If that sits poorly with you, walk the tip down after a couple times. Point is, the restaurant will love you, they will go miles out of the way for you, and nothing will ever be a problem there.

The first few times, people will protest. "You have to let me give you money!" It's up to you, but don't take it. "Cuz, thanks, I'm just happy to be able to spend time together, I got this. It's the least I can do." If you're clearly not holding it over anyone, have a genuinely good spirit, and the people you've invited aren't problematic, this will settle into an easy thing nobody brings up.

At a place where entrees run below $40, this will cost you under two grand all-in counting tax and tip. If you do this four times a year, you're still in the four-figure range. From what I remember you shared in your thread, you're in the upper half of six flirting with seven - this seems super reasonable to me to completely control both the dynamic in which you interact with non-negotiable people like family and the roster of participants.

You get time with the people who really matter to you. The people on the wrong side of the fence will hear about it. They'll bitch. They'll moan. Is that new? Nope. At the minimum, you have the ammo to point out that you go out of your way to bring people together.

I believe it's bad form to mention your own generosity, but if anything ever gets slanderous, people will probably stand up for you, and if they don't, you can point out that you've been taking half the family to meals for x-years. Up to you to stir shit by pointing out the obvious fact that it's just them that doesn't get to come.

The other channel is to place people on an information diet.

I had a friend whose mom and sister could not keep their mouths shut. He made the mistake of telling them he had a $70k base for his summer analyst gig. Of course they were too dumb to know that it's pro-rated, so it immediately became "Oh my God, why aren't you taking us on vacation?" - "This is the purse I want for my birthday" - and shit like that. Not just from them, from the rest of the broader family.

His mom opened his mail and saw his full-time offer letter (at a small-ish hedge fund that indicated the bonus expectation range on paper) and it just got way worse. So he put a master plan into play. He got a shit first apartment in the city on purpose. Like a Lower East Side hovel. Dude got paid (he cleared a million his fourth year there), he was not hurting - he didn't need to.

His second year he got a new place, Union Square high-rise with elevator and doorman and everything (the one over the Best Buy on the south corner, for you New Yorkers). He never told them about it. He kept two wardrobes. All the shit he bought, the girlfriend he eventually got, the places he went, he kept to himself. Any time he went home or they visited him, they saw him in cheap clothing or on IKEA furniture in the first place.

He had no social media, and although he said it made girls suspicious when he was dating, when he met the girl he ended up proposing to, he just explained how abusive his family was and that he did it to give himself sanity. That's obviously an extreme approach to take, but I think it's a funny and creative example.

If your lifestyle continues to scale upward, think about how what you do or have will be perceived. Are they hurt that your kids go to private school? Maybe sponsor some of their kids' participation on travel sports teams. It's a couple grand. Do they envy your vacations? Maybe pick one accessible place like Myrtle Beach or something, rent a couple neighboring houses on VRBO for everybody, and take a week in the summer.

You don't have to tell everyone everything in your life. You probably benefit from not doing that. If you distract people with the perception that you are showing them your life, you can create space to live your actual life.

I am permanently behind on PMs, it's not personal.
 

Hey first off thank you for posting this and continuing the dialogue, a lot of insightful stuff here.

I'm curious to hear your thoughts on when it's "appropriate" to venture off the well-traversed path (banking -> PE -> MBA -> post-MBA PE) and create your own path/business. My thoughts are that there is significant foundational knowledge you'd be missing if you started your own venture/business right away after college, as opposed to doing a formal program in banking / PE first; is there a significant developmental (and financial risk) if you don't go through a structured program in your junior years?

I'm pretty close to the start of my career (interning in a TMT group this summer) and I've always wondered about the trade-offs and when you should add some risk in your career. Thanks again for your time!

 

You're welcome, I'm glad you feel the discussion is worthwhile.

Good luck this summer, I hope your internship goes well and you're able to convert or find an offer that you're happy with.

The simple answer is that there's no one-size-fits-all answer. Doing your own thing is both the best and worst decision you can make. Worst in that you're signing up for stress, uncertainty, disappointment, and rigor. Best in that you're guaranteeing yourself the only path with a possibility of complete control over the configuration of your life.

Your comment about foundational ingredients being valuable to your story and toolkit is correct. Analyst or associate programs in banking, management consulting, and private equity are universally known for the training, professional network, work experience, and industry knowledge they grant people.

Forgoing any of those is undoubtedly more risky than doing them. That's the point. They are very predictable things with very predictable outcomes. The deciding factor for pursuing something riskier is when the unpredictable outcome associated with it is too screamingly obvious to ignore.

If you're in a banking analyst program wishing you could live a life of 50-hour weeks spent at your home office while making millions, you're stupid to leave if you only have a half-baked idea of something you can do to make that real.

If you're unfulfilled in a private equity job where you're tired of a culture of conformism, politicking, and consensus through faked civility, you may be smart to leave if you're doing it after identifying an asset worth owning and parties that would be interested in financing it.

If you're enrolled in an MBA program and striking out in recruiting, unenthusiastic about returning to the corporate ranks, and generally listless in your career, you probably aren't wise to decide to pursue the search fund route.

It is inherently subjective.

One way you can maximize your chance of scoring on a shorter timetable is by giving yourself more shots on goal.

The private equity associate who puts their head down for two years then lifts it up to look around only when it's time to matriculate at business school is going to be in a really different position than the associate who spent two years applying all the investment analysis elements he's learning from work to a variety of targets he has been developing on his own for years. (See a comment here for an illustration.)

The associate consultant who convinces her father or some family members to let her put $5k into ten different seed or Series A startups on Angellist over the course of a year is learning valuable lessons early and cheap. She's testing her way through portfolio support, learning how to apply her general business-IQ to the never-ending fountain of problems that bubble up inside emerging companies - and can then join one of those startups as an employee, or if the overall micro-portfolio is performing well, start managing a syndicate or go raise a microfund.

I could give more examples - my point is that you can mitigate some of the 'developmental risk' you mention by running tests earlier and often.

Separate from risk tolerance, the reason many people struggle to reach for an audacious thing is because they haven't seen enough in the world to have conviction in a big problem or a big opportunity where a solution is highly valuable.

Some people are proactive and work to get to that light bulb moment through populating their perspective as quickly as possible and as fully as possible. More tests, more results, better decision-making. More shots, more goals. 

I am permanently behind on PMs, it's not personal.
 

Thank you for your helpful comments over the years. I have done a banking internship before pursuing tech, and have now spent a year at a FAANG as a PM and found the work less than interesting. I have realized that I am more suited and interested in finance. This recent piece from a principle of Founders Fund about the tailwinds of the internet has mesh well with my own views that financing/ owning LMM technology companies will become massive in the next decade. Do you have any advice on roles to pursue to eventually be in a position to acquire LMM tech companies? Is it VC(although the investment thesises feel wildly off), operating role at startups? How can I best position myself to sources of capital without having done a stint in banking? Here is the piece and thanks for your advice! luttig.substack dot com /p/when-tailwinds-vanish

 

Thank you for sharing that piece. I found it fascinating and agree with several elements of his argument.

Curious: how did you make the connection between that article and a thesis about owning smaller technology companies?

If you buy the author's argument, you probably want to go to either a venture lender or a late-stage fintech startup.

With the former, you have three real categories:

  •   venture banks -- cheap for the company; require an institutional equity investor prior to getting involved on the debt side; generally only play if they have a full banking relationship with the borrower
  •  debt funds -- non-bank lenders with dedicated capital for debt instruments into high growth, venture-backed companies; generally less restrictive than bank debt (fewer or no covenants) but more expensive - and a forced drawdown with a repayment schedule
  •   revenue lenders -- creative royalty-based approaches where repayment is tied directly to revenue and comes with a pre-negotiated repayment cap; cost of capital is thus predicated on how fast the company grows

Venture banks: SVB owns this, then there's Bridge, Square1, CIBC, Comerica, Live Oak, PacWest, Signature, First Republic, and maybe some more.

Debt funds: WTI, Horizon Technology, ORIX, Triplepoint, Eastward, Escalate, Espresso, Hercules Technology, Level Structured Capital, Multiplier, North Atlantic, SaaS Capital, Trinity, Vistara, Silver Lake Waterman (don't know if this strategy is still active), Lighthouse ...

Revenue lenders: Lighter Capital, SaaS Capital, Cypress Growth, Recurring Capital Partners, Riverside Acceleration Capital ...

Then there are a bunch of 'scale-ups' experimenting trying to figure this out. Square, Avant, and a bunch of the big marketplace lenders.

If you take your product management experience and pair it with a firm understanding of how to evaluate business models, key operating metrics, and how the two overlap to present a new financial profile that a lot of legacy players haven't evolved to present relevant financial products to, you would be in a really compelling position.

Venture capital won't get you to the same place. You'd be screening hundreds of pitches every year trying to find the few that fit the mold your firm is looking for. You're underwriting a completely different return profile.

A general operational role at a random startup isn't as relevant either. You'll get more startup-IQ, especially relative to a BigCo experience like you're familiar with at your FANGA employer.

If you went the route above, you would be well positioned to pursue a joint venture or limited partner arrangement of some kind with half of the lender names I shared - or try to bleed into the search fund or independent sponsor capital audience as well.

I am permanently behind on PMs, it's not personal.
 

Thank you so much for your excellent comments over the years - its a real resource to many people and shows incredible generosity in offering (thoughtful, often personalized) advice to folks you may never meet.

You clearly have a lot of throughput and seem very focused on maximizing your time. What have been some ways you do this?

Also, you talk a lot about 'managing up' (and mistakes that early managers make) but what have been some of your learnings about hiring and managing people/identifying talent?

 
burnerearner:
Thank you so much for your excellent comments over the years - its a real resource to many people and shows incredible generosity in offering (thoughtful, often personalized) advice to folks you may never meet.
I appreciate that a lot, that's really kind of you to say.
burnerearner:
You clearly have a lot of throughput and seem very focused on maximizing your time. What have been some ways you do this?
I love to look for unfair advantages. I'll give you a couple very different examples.

I have mentioned before that I have a powerful voice-to-text tool. One guy whose company I invested in is a machine learning savant. During college he built a transcription protocol in his dorm room for shits and giggles. One of the first use cases was a natural language processing application that murders computational linguistics.

A couple thousand bucks on some hardware let me build a rig allowing verbal input. It has made me massively more productive. Here are a couple of comments with more color. My unfair advantage here is that I can get things done on a computer exponentially faster than most people. 'Writing' a post like this takes a few minutes. Emails are fast.

Another unfair advantage can come from making sure to do things for people who will unlock more for you. It's intuitive.

If you make $100m for an institution, it's impersonal and faceless. Literally no one will ever say 'thank you'. You'll probably get a commitment for your next vehicle. That's it.

If you do that for a person, they're probably going to sing your praises. They'll tell their friends. They'll introduce you to whoever you want. The unfair advantage is letting your results do more for you than simply be results.

Second, I am really good at prioritizing my time. I find it really easy to say no to most things.

There's the professional context. Deal that might be interesting but take a lot of time to diligence, structure, find the right partners (whether financial or as operators), and oversee? Less attractive than something that may deliver half the absolute dollar return but require one quarter or less of the time.

There's the personal context. It's shocking to me how much emotional energy or mental space people dedicate to things that just don't matter. When you die, is your ability to talk in incredible detail about Game of Thrones going to matter? Did the cumulative 624 hours you spent on Bleacher Report every Saturday morning for half a dozen years nursing a hangover prepare you for anything worthwhile? Does spending an hour in the groupchat with the boys every day produce anything substantive?

I'm not disparaging television, video games, or any part of popular culture. I love it, and it's been a joy to practice that passion by beginning to invest in some of it. The reason I immediate recognized Dushane Hill's username is because I met some of the producers behind the Top Boy series and went and read some of the developmental materials as context for the meeting.

I'm also not encouraging being an automaton. We're human. We need release, we need to interact with people we have things in common with, we need stimulation. What I'm trying to share is that it's really simple to make a connection between low-output activities and poor life satisfaction.

If you know what matters to you, being more rigid about focusing your time on the high-output things that relate to that will unlock a lot for you.

burnerearner:
Also, you talk a lot about 'managing up' (and mistakes that early managers make) but what have been some of your learnings about hiring and managing people/identifying talent?
This is a great question.

You can't put enough of a premium on mindset. I will gladly take the person who knows way less today but demonstrates a fundamental personality trait of self-initiative over the person with a perfect resume and paper fit for the objective at hand. The ideal is someone with both: high relevance to the requirement, high score on the self-starter dimension.

You also can't put a premium on similarity in communication style.

Just this week I had a sourcing partner (industry expert, great relationships, understands the intricacies of his space better than just about anybody, exceptionally low professionalism score - a very common set of factors in creative industries, for the record) reinforce this to me for the tenth time in a year.

He consistently fails to tell me in advance what he's working on. Instead, I get an email or text late at night (always) with some kind of exploding timeframe that usually coincides unfavorably with a weekend or holiday. It's routine at this point.

Let's say it's a 14-day total timeframe for a thing he's hunting. What's better? Saying on the first day that he's identified it and it has a two-week timer, on the third day that he's had the first conversation with the counterparty, on the fifth day that he received their first terms, on the seventh that he delivered a counterproposal, and on the tenth that he has it almost at the finish line and it's time for my eyes on it - or staying completely out of my inbox until the last minute and handing me a ticking device?

What else.

  • I have learned that my tendency is to do more than I should. I'm not a micromanager, I'm self-aware enough to make the connection between hating living through it with a bad boss and avoiding doing it myself. Sometimes I hurt myself by being the bottleneck though. I have not yet perfected the ratio of things I do myself versus things other people do that flow up to me. New hires coming onboard should help alleviate this. The schedule young people in this industry have to follow is absurd. Right now I'm thinking about the lag between people signing and starting.

  • People follow cues. "Culture starts at the top" is true. Anything you do, intentionally or not, will shape how people act. If you have a habit of interrupting people, you're going to have an environment where people don't feel their opinion is respected and may begin to not share it. If you don't take any time off after the birth of your child, people won't. If you never talk about mental wellness, people won't be open about what's going on in their lives.

  • Allowing people to be their full self will make them very loyal. If you have a brilliant employee who is unconventional, you can either force them toward some kind of norm or step aside and accommodate their quirks. Say you've got a wunderkind who puts out double the volume of work others do, goes deeper in research than anyone else, and is impeccable in analyzing risk factors and expanding the purview of diligence, but that person sleeps 4am-noon - do you insist they be in the office by 10am every day? You might think it would be impossible to accommodate that person in the context of a private equity firm. You're wrong. You could do committee at 2pm. Well, that person will probably never leave you, and if they're integral to your investment review process, that's pretty valuable.

  • It's nice to have different people around the table. I think this gets lost in the debates around diversity. It's way less about what you look like and way more about how where you come from shapes how you think. The two correlate, but that isn't causation. Discourse benefits from increased variety of contributors. It's impossible to learn if you never encounter new perspectives. I continually explore new ways to find new sorts of thinkers. It's challenging in an industry that rewards conformity so heavily, especially at the junior level.

That's what comes to mind right now.

I am permanently behind on PMs, it's not personal.
 
APAE:
I'm not disparaging television, video games, or any part of popular culture. I love it, and it's been a joy to practice that passion by beginning to invest in some of it. The reason I immediate recognized Dushane Hill's username is because I met some of the producers behind the Top Boy series and went and read some of the developmental materials as context for the meeting.

Wow that's very cool. Did you end up investing in the show?

 
APAE:
I have mentioned before that I have a powerful voice-to-text tool. One guy whose company I invested in is a machine learning savant. During college he built a transcription protocol in his dorm room for shits and giggles. One of the first use cases was a natural language processing application that murders computational linguistics.

A couple thousand bucks on some hardware let me build a rig allowing verbal input. It has made me massively more productive. Here are a couple of comments with more color. My unfair advantage here is that I can get things done on a computer exponentially faster than most people. 'Writing' a post like this takes a few minutes. Emails are fast.

Where can I get this? My last post took me about 2 hours all in to type and edit.

 

As always I find your comments very insightful and violently agree with a lot of this. The last three bullets really resonate.

I'm struck by how you channel your obvious curiosity while also being able to say no quickly - I'm getting better at balancing that but would be interested in how you've done that or if it's always been natural.

I'm also impressed that you are able to get such polished "writing" from a voice to speech app.

Finally, I'm very impressed at how entrepreneurial you've been in private deals.When I was younger I could never see a long term fit between "the path" and the creeping conformity of a lot of the private equity industry and my personality. I gravitated to public investing partially because I could see an easier way to be both eccentric and entrepreneurial early in your career. No regrets on that but I admire how you solved that equation in private markets.

 

If you want to share things in more detail than you're comfortable disclosing publicly, sure.

If it's questions a broader audience would benefit from, post them here.

I am permanently behind on PMs, it's not personal.
 

Broadly, how do you gauge / think about risk in a non-work context?

I'm in my mid-20s and trying to plan for the next 5-10 years (I think planning has clear benefits: see it/believe it/achieve it - type of mentality). What I am struggling with is how to think about opportunity costs and/or picking the "right" path, if it even exists. (eg. Should I move cities, change industries, take a year off to go sailing, etc.).

 

Hey APAE!

Great to see you back. It's always a pleasure to read your stuff, and this was no exception.

I'm curious to hear more about your work on being relatable and coming across as less intense in your interests / hobbies -- how did you go about changing yourself in that area?

As I see it, the popular self-help trope of the moment is "you're never too much," "you're enough," etc. By some standards, you've done the impossible and changed a very fundamental part of yourself.

What did that process look like and how long did it take you? And did you ever have to "fake it 'til you make it" (which is a premise I disagree with, to a certain extent)?

 

Hello my friend. It's nice to see your name again, I hope you're doing well in this weird time.

dcrowoar:
I'm curious to hear more about your work on being relatable and coming across as less intense in your interests / hobbies -- how did you go about changing yourself in that area?
Have you ever heard of the term 'love bombing'? It's how a narcissist or emotional manipulator can take advantage of someone by showering them with affection, flattery, and gifts early in a relationship in order to make that person attentive to them - and thus vulnerable or subservient to the manipulator's controlling behavior.

My default as a younger person was something we could call 'interest bombing'. If you asked me about a thing I happened to be passionate or know something about, I would easily crank it up to eleven and shower you with a bunch of facts, all kinds of research or analyses on it, and what I planned to do to continue exploring it.

That's overwhelming. Imagine asking someone in passing about a picture you saw of them jet skiing only to get waterboarded by a verbal barrage about everything that person's ever done in watersports. Then imagine it six more times for the next half dozen things you tried to change the topic to as a potential escape. You'd leave the meal or drinks or whatever dying to get away.

Not an uncommon thing among smart young people. Debilitating if you want to get far in life.

I realized at one point that I did most of the talking when I interacted with people. By default, if you're not listening, you can't be learning. From a selfish perspective, if you want to learn, you have to let other people speak. I wanted to be more likable, and I also wanted to get smarter and more knowledgeable.

This was my initial impetus - how can I make myself more likable and more equipped to win in the future. Over time it shifted to a healthier perspective. I am not my best self if I am interrupting people, making them feel uncomfortable or unseen or unheard or undesired, or flexing to demonstrate my knowledge because I am interested in attention or acclaim.

dcrowoar:
As I see it, the popular self-help trope of the moment is "you're never too much," "you're enough," etc. By some standards, you've done the impossible and changed a very fundamental part of yourself.

What did that process look like and how long did it take you?

There's a difference between recognizing your inherent self-worth as a person and a laziness or weakness related to improvement and growth.

You are enough. You are enough to deserve basic respect as a human being. No one can take that away from you.

You are almost guaranteed to not be enough to reach your goals in your current state. You may very well be too damn much on a specific dimension, and too damn little on many others.

Many people are uncomfortable with a level of honesty in inward reflection because it shines a bright spotlight on places they are deficient. We all shy away from discomfort. It's a natural reaction. Growth isn't easy. It isn't painless. It's worthwhile though.

I read a lot. I wrote a lot: about myself, what I was learning in my readings, things I remembered that I did poorly or did well, the places and experiences and traits I wanted to go and see and have in the future, among others. I apologized to many people.

It won't ever end. That's the point. It's called a journey for a reason. We're all on one; just not everyone knows it.

dcrowoar:
And did you ever have to "fake it 'til you make it" (which is a premise I disagree with, to a certain extent)?
Again, there is a dualistic element to this.

You should not 'fake it' in that you should not be someone who you aren't. It's important to bring your authentic self to the things you do. Otherwise your experience will be very much like mashing the pedal as hard as you can while being in neutral - even if you don't know it.

You can 'fake it' in the sense that when you've identified places in which you want to grow, you will often feel like your efforts are futile, that you won't be that better self, that your bad behaviors and thoughts are just who you are - and it's healthy then to just pretend that those better things are who you happen to be. If you live in it long enough, it will become natural over time.

This brings color to the example of a timid person wondering how to meet people at a group event. It's easy to revert to "I'll just never be strong enough to just go say hi to someone." But acting confident enough to walk up to a group of people and say "Hi, I'm Jane, I heard you mention renovating your home; my mom is an interior decorator and I've just started learning some of the basics. What are you thinking of going with?" will give you the strength where over time, it actually is who you are.

I am permanently behind on PMs, it's not personal.
 

Back at you, APAE. Hope COVID isn't putting a damper on your mental and physical health.

That was a great read; thank you for bringing the wisdom, as always. I like that you're always pushing yourself to new (and better) heights -- e.g., "you're enough, yes, but you could be a lot better," or being attentive to genuinely learn and not just liked/tolerated. I loved both of those examples.

You described my issue with "faking it to make it" perfectly; people use it as an excuse to be something they're not, instead of building up muscle in areas that aren't fully developed (social skills, confidence, whatever), forcing them to put a mask over their real self. Which makes you ask, what they so scared that people will see, and is it really worth hiding?

Speaking of reading and writing, are you reading anything solid lately, outside of the relationship books mentioned above?

 

Hey Andy. Thanks for the kind words. I hope you're safe and sound right now. Thanks for the effort you spend on the website.

I am permanently behind on PMs, it's not personal.
 

Great thread with a lot of thoughtful replies. Thanks for doing this

Can you touch on how to build more and better relationships (business / friends rather than romantic)? I am thinking from the perspective of someone who is junior transitioning to mid-level so interested in beginning relationships that could ultimately lead to more business or new career opportunities. In other words, I want to build a pipeline of future opportunities rather than seeking something immediate

Some specific topics potentially worth touching on:

  • Identifying people to reach out to
  • Cold vs warm introductions (cold only feels right when applying to an open job position to me)
  • Maintaining contact
  • Leveraging existing contacts for new contacts
  • Any activities that might result in making meaningful relationships with interesting people more broadly (I have found have a good night out on the town can strengthen relationships but is less good for making meaningful new relationships)
 

I think the thread OracleofBromaha started last week was pretty solid: "Don't Throw Away Your Shot - Networking With Senior Professionals As An MBA".

You could find a lot of value from reading that alone.

I'll keep it brief given that he touched on so many relevant points.

You should always think about what kind of value you kind bring someone. It's not manipulative. Your intent shouldn't be "what should I give this person so they give me the thing I already know I want." It should be "what can I give this person that they would appreciate" - irrespective of what you think they might be able to give you.

If you're really interested in learning how private equity firms get liquidity on late-lifecycle investments, you could go look for junior lawyers who are a couple years away from making partner (it's usually six years minimum as an associate in BigLaw, often seven, sometimes eight) who specialize in secondaries or SPVs or related structuring.

You can email them directly, tell them you have been reading up on the space out of personal interest, saw an interesting deal in their bio, and would love a short phone call to share what you know and see if they can point out any resources that would be helpful in your journey.

Many people won't reply. That's fine, such is life. When someone does agree to speak to you, be a good human. Have a really compelling and compact intro. "I'm Jay and I'm a first year analyst at Lazard and I'm trying to learn more about secondaries" is pretty listless.

Contrast that with: "I'm fortunate to begin my career at Lazard. One cool aspect of the firm is some cross-staffing where junior bankers can see both M&A and restructuring. I feel like there's such a rush to recruit for your first investment role that it can be hard to be thoughtful about what your interests really are and where your strongest skills actually lie. I didn't do on-cycle this year. My most interesting staffing was a sell-side for a sponsor-owned company that was divesting a non-core business unit, then spinning off from the sponsor's main fund into a new vehicle with only a subset of LPs maintaining exposure. It made me want to learn more about secondaries. Can you talk to me about where I'm best off trying to dive in? Anything is helpful, I'm a beginner."

People respond to genuineness. They also respond well to a compelling narrative. Be genuine and have something awesome to hook people with.

Then as you progress through the conversation, always look for little hooks people leave dangling. Did they mention something about law school? Ask what it was like, how the teachers were, whether the culture was cool. Something about having to travel for work? Ask what that's like for a lawyer - is it a quick trip like bankers do, or are they ever embedded for awhile at the client's location? Did they mention something about trying to exercise more? Ask what they like to practice for fitness.

These are a wonderful way to demonstrate an interest in the person you're speaking with. That's important; you should be looking to connect as a human first and foremost. These also give you all kinds of ground to find commonalities. Commonalities give you all kinds of follow-up material.

A week after you sent your quick one-line thank you email sharing your appreciation for their time, you can shoot over links to two books and a Youtube series on home calisthenics since they mentioned doing bodyweight exercises while rehabbing from an injury. Or if they mentioned attending Columbia Law School, send over a video of a talk a professor gave and ask if it's someone they knew.

Cold emails are fine. They're most easily done when you mention a natural and lightweight reason to reach out. In terms of staying on top of people you meet, just dropping people an email like mentioned above every couple months is great. If you develop a habit of sharing things that make you think of people any time you come across those things, this will become pretty natural over time. If it's been several months since you spoke to them, feel free to stick in at the end of your note "It's been awhile, want to catch up for 15 minutes on the phone sometime?"

As you develop relationships, you will start to see opportunities to connect people who don't know each other. When one person talks about a new interest in cycling and their struggle to buy their first expensive bike, you have a slam dunk if you put them in touch with a guy you went to college with and reconnected in similar fashion with who is a nut, owns four bikes, and does endurance competitions (looking at you, @Isaiah_53_5").

Relationships get meaningful the more personal they are. You can improve that through:

  • frequency of interaction -- someone you speak with monthly is closer to you than someone you talk to twice a year
  • length of mutual acquaintance -- someone you've known for four years is a better contact than someone you met at a conference six months ago
  • level of intimacy -- relationships where you both know heavier things about each other are usually sturdier; if someone mentions a miscarriage and you talk about a relative's death, there's a gravity to your friendship
  • degree of overlap -- the more you have in common with someone, the stronger things can be; someone from your analyst class who also exited to private equity who is also at a direct-promote shop that won't push you out to b-school who also just got engaged and is also thinking about buying a home is a person you can raise a whole host of meaningful topics with

The more meaningful the relationship is, the heavier an ask you both can make of each other. This is how you can ask for harder intros, recommendations, resources on an industry, and so forth.

I hope that's helpful, I went chronologically through your bullet points.

I am permanently behind on PMs, it's not personal.
 

Great post and follow-ups APAE. This thread is one that people should bookmark and revisit often, like most of APAE’s posts!

CompBanker’s Career Guidance Services: https://www.rossettiadvisors.com/
 

Man, don't even get me started. You are the original high-impact poster on this site. It wouldn't be what it is today without you. Your threads drove the traffic that powered the platform.

I hope you have a great weekend. I owe you a PM and will fire one over when I catch up a bit on the backlog that grew while I managed this thread.

I am permanently behind on PMs, it's not personal.
 

Hi APAE im trying to break into PE and would love your view. Given we all have limited time in a day / week, what's the criteria that you are using as it relates to Prioritizing your portfolio companies? And What are you doing with them? How're you determining which one gets more of your time and attention? I’d be very interested in hearing your take on this as you invest across the capital structure. Thank you so much!!

 
Regularfreak:
Given we all have limited time in a day / week, what's the criteria that you are using as it relates to Prioritizing your portfolio companies? ... How're you determining which one gets more of your time and attention?

Here are a couple frameworks I lean on routinely.

What requires my time specifically?

I'm one person. I have a particular set of traits and skills. Separate from me, there's a number of sharp people who can be made familiar with an investment, understand the game plan for the asset, possess the appropriate financial/analytical/business skill-set and professionalism, and follow directions/input.

Many tasks, even urgent ones, can be done by the latter. If the oversight requirements an investment creates fall solely into that bucket, I will happily have an employee 'own' them. My job then is to be the coach.

I see that having two aspects. One is to have unprompted check-ins where I inquire about key things so I can interrogate whether the way my team member is doing things has room for optimization. The second is to be available enough where if they need help, I can afford the time to give it.

On the other hand, some things require the unique ingredients I have. These seem to fall into either a matter of vision or execution. Sometimes I'm the only one who sees a thing, and it would be ineffective or inefficient if I tried to unpack it for someone else who would then go do it and have to report back to me on it step by step. Sometimes it's about how well the thing will get done. Not everyone can have a conversation the way I can. Everyone knew Jordan was taking the clutch shot.

So one way I prioritize how I allocate my time between multiple active investments is based on what requires uniquely me and what doesn't.

Summing this up, certain things require my unique attention. Other things run on autopilot fairly well and simply require monitoring. I give those to capable employees, then make sure I'm maintaining oversight so that nothing goes wrong and that no easy wins go unseen or not acted on.

Where is the fire happening?

Often you'll face fire drills where you have to drop any plans and spend time solely on an emergent topic. Some recent examples are an employee harassment issue, CEO change, litigation, breakage of a major contract, death of a board member, PR crisis, unsolicited acquisition offer when I have a minority position and want the company to remain autonomous, and the like.

Where does my time generate the highest value?

We all have finite time. There's more things to do than could ever be done. I like to be very clinical in analyzing what I get back on my time.

If I have to spend 100 hours spread across five weeks trying to help the worst-performing business in my portfolio stop its hemorrhaging (key employees quitting, growing customer churn, whatever), sure I could. But if I have a high performer where revenue is growing 5% MoM, I would way rather spend the 100 hours there because maybe I can push it to 10% MoM. Maybe there's a complementary business I can buy that will then enjoy the 5% MoM growth.

This correlates strongly with the first point. For the things on the wrong side of this 'highest value' dimension, can I create a resource layer to still create a positive outcome? Maybe that's adding Operating Partners, hiring another employee at either the company or fund level, or even exiting the investment.

Regularfreak:
And What are you doing with them?
In credit, I am pretty passive. In specialty finance, you're really reliant on the integrity of your construct. If you're getting high-teens returns or better, you like how that money prints.

In credit you really aren't in a position to do much unless you're in some special situation and doing a loan-to-own type of thing. I haven't done much of that so far, only put dollars to work alongside another manager who had a thing stitched up through a DIP loan.

In equity, whether venture or growth or buyout, you wear a lot of hats. I wrote in another comment that high-EQ investors move fluidly between therapist, coach, cheerleader, adviser, headhunter, and house dad.

You aren't the CEO. You're supporting and sometimes directing the CEO. I say it often: it's not about swinging the pickaxe, it's making sure the guys doing the swinging have cold beer and cigarettes so they're happy and can keep going.

Founder fatigue, messy personal life issues (infidelity, breakups, divorce, unexpected children, expected children, major health issues, parents' death ...), disagreements over very senior hires, tough business steering decisions, general stress -- these are all things a CEO or founder is going to face.

I spend most of my time supporting people on the unseen dimensions. Other voices in the boardroom tend to focus on all the tactical stuff. If I see a glaring hole on the tactical side, yes, I'll raise my voice. But I tend to be the guy focused on the psychological stuff. Even when discussing tactics or strategy, I approach it with a psychological lens.

I am permanently behind on PMs, it's not personal.
 

Hey APAE great stuff here man. Im currently in business school and through a random sequence of events got a business school club position as a fund raiser for our incubator and I'm also a VC intern at a well known Texas firm. I don't have the typical background one finds here (3.8 GPA, target school, etc) I'm in a MBA program in a well respected regional school. I didn't have a 3.0 in undergrad and my resume experience is pretty spotty. Given that background how would you advise someone like me to take advantage and spin these opportunities into a buy side role (PE, VC, etc) after business school?

 

Looks like there's a pretty obvious answer. If a place that's well-known liked you enough to offer an intern position despite the atypical profile you have, you should really focus on convincing them to give you a job after school.

Find ways to excel at the job.

  • Come up with a sourcing framework, flex yourself, and present as many compelling investments that match the firm's model as you possibly can.
  • Meet all the portfolio companies. Talk to the founders. Find out what their biggest problems are. Make a deliverable just on that alone. It will be received very favorably. Then attack a few of the problems, ideally the ones that you're able to identify are highest-impact and lowest-effort. Maybe someone's direct sales strategy sucks and ARR is crap. Find them some channel partners that make sense and tee them up for the partners at your firm to figure out how to make warm intros. Maybe they don't struggle with revenue but their sales org is sloppy; they need a sales ops person. Find four qualified candidates that you personally talked to, did references on, and got all their availability teed up across a tight two-day window.
  • Develop a thesis. Find a space you really care about. Go meet all the companies currently playing in it. Talk to other investors who have invested in them. Come up with what you think is going on and two or three startups that seem best positioned. Base this on your research, conversations, and diligence.

You will not fail to get a job if you do the job at a higher level than people expect for a new hire.

On sourcing and venture more broadly, here are a couple posts I've made before (look for more, I don't have unlimited time to hunt them all down myself):

Separate from your current firm, you should also look at your internship as a license to contact anyone you want in the industry. It's kind of like showing up to the prom with a date. Even if she isn't a smokeshow, you have some validation because you aren't there alone.

If you are really articulate, informed, and knowledgeable in your conversations with the other firms you speak with in your thesis-building exercise, you will make positive impressions. You can run the exact same strategy I outlined above, but for a different audience. If there's a specific fund you want to work for, do that work tailored toward them. You'll get the same favorable reaction.

I think private equity is going to be effectively impossible with the ingredients you've got. A GPA below sea level, what sounds like no prior investing experience before school, and a regional b-school. There's some difference between a T-25 like Rice and a Texas Tech that won't show up on any list, but either way, in light of your overall profile there is no difference.

I think you can easily hustle to maximize your current seat to convert for a full-time role or take your body of work and convince another venture firm you're worth a shot.

Good luck, and congrats on the role you're in now.

I am permanently behind on PMs, it's not personal.
 

wanted to update you. Took your advice and now I have an intern to possible perm position with a small REPE fund. Thx for the advice once again. 

 

Hi APAE, Always love reading your posts! Had a question about consulting gigs that you start on your own where you could make over 500K per client; what kind of industries would that be in? Thanks again for all your amazing posts.

 

I'm not sure if you're referring to anything specific I've posted or posing the question more broadly.

Here's what comes to mind:

  • business development
  • inside sales
  • placement agency
  • strategy
  • integration

In startup land, BD is different than sales. It generally means partnerships, and that's in the context of a channel strategy rather than a direct strategy. Meaning Company A has a product that makes Company B's product way more usable or cool or valuable, so Company A says "Hey, let's team up. Any time you sell our combined bundle, it's 80 you / 20 us. Any time we sell the combined bundle, it's 40 us / 60 you." So if there's a startup working on benefits administration that happily partners with benefits brokers, you could negotiate an arrangement where you get x% of deal value paid out on the same schedule the partnership rev-share follows.

Inside sales is an ugly world. My hat is off to the people who excel here. It's a volume game. This I think would be hard, but it could work if you knew a number of great pre-validated buyers for someone's software solution and had relationships where they'd follow your advice and convert.

Placement agents get paid a percentage of assets they raise for a fund. Read this comment I made two years ago on someone's thread "Startup Comp Structure & Fundraising".

Strategy is the most vague and broad bucket possible. It tends to work when you're someone who has either deep domain expertise or topical knowledge. The best is when the two overlap. I know a guy who has been a senior or C-level revenue guy in three different new media publications (Upworthy, Refinery, Vox type places). He gets six figures for stepping into larger organizations and helping them for a quarter or two with the execution of a digital initiative. I've also seen ex-MBB people 'retire' for whatever reason from their firm but still do work independently. It looks like a good trade for both parties: the person gets paid 100% of the engagement and the client is getting billed one-third or less of the big firm rate.

Integration is when you help someone oversee the combination of an asset they just bought with the core business. You'll see this sometimes in sponsor-owned businesses where the sponsor team may be thin and the tuck-in is not perfectly aligned with the platform asset. You see it a lot in startup land too. A fast-growing Series C company buys a seed-stage company before they raised a Series A. The small one never had strong product leadership, and the big one has a good product org but no one there is perfectly familiar with the buyer audience for the acquired product. So having a specialist is beneficial to make the whole thing work more seamlessly, and you pay them just for the outcome you're looking for.

Those are some quick ideas.

I am permanently behind on PMs, it's not personal.
 

APAE First off, thank you so much for taking the time to respond to so many of the above questions and put together the original post. Posters like you are the reason I have decided to keep coming back to this site even as many of the threads these days center around rankings, interview processes, etc. I've found some of the posts you and other senior members of this forum incredibly instrumental in understanding how to start one's career and also how to think about the different elements of building a career in investing and finance. I'm a pretty young guy who comes from a pretty non-traditional background and non-target school and some of the things that I have found to be pretty challenging are the following:

  1. Insecurity - It's super easy for me to worry about the various elements of my background that differentiate me from my peers also going into IB at a similar tier firm as me such as the non-target school, minority group, engineering rather than finance/business/econ major, and middle class background. At times, these factors have motivated me to work harder or look for backdoor avenues to find my ways into the opportunities I have wanted and I'm usually glad about this additional neuroticism and how it has ended up getting me to where I am today. However, I think there are healthier ways of approaching and coming to terms with these elements of my background now that I am where I initially aspired to be at this point. How have you handled some of these worries that some factor outside of your control could end up having an impact on your career trajectory? Or are these things just imagined roadblocks that are relatively easy to overcome once you've gotten your foot in the door?

  2. Directing curiosity - I have always identified as a curious person. Reading news constantly to make sure I'm in touch with the world around me and being prepared to identify growing trends ahead of their mainstream emergence is something I thoroughly enjoy. However, I've felt that at times my interest in so many things makes it hard for me to really identify a path that I would like to pursue further. As I think about a next step after my banking analyst years, I've considered a host of range of investment strategies and asset classes, but decision paralysis has set in for me since I struggle to decide where I want to be digging even further since so many different things interest me. How do you understand what passion for something is rather than a passing interest? What has triggered you to determine some new interest isn't just a passing fancy, but rather a deeper passion?

  3. Failure - Peter Thiel is someone I've found to be really inspiring and a unique thinker and his take on failure is particularly interesting to me. Rather than aligning with the truism that failure is a learning opportunity, he posited in an interview I saw that failure is often not that beneficial to an individual as it's usually a range of reasons that causes failure and it's difficult to really drill down on that. In the example I'm referring to, Thiel is discussing businesses, but I like to extend his words to the individual. Having gone through failures (as most people do) it's been difficult for me to really be confident in the lessons I am taking away versus becoming insecure about a range of potential shortcomings my work or personality may hold, which connects to the first point I raised above. If you had any advice or examples of times you felt you were able to analyze a failure or missed opportunity, that would be helpful.

Apologies for the super long post, and thanks for taking so much time to respond to these messages once again. Looking forward to what you think.

 

Was kind of further thinking about these things after I posted this and wanted to add a question on how you think of competition. Finance and investing (especially public markets) feels highly competitive given the sometimes zero-sum nature of it, and I wanted to get your thoughts on how competition and cooperation factor into your thought process when you're examining opportunities and working with your peers and colleagues. At the junior level, some firms really tend to encourage this, while others do foster cooperation. I tend to veer towards the competitive end of the spectrum generally and I'm ultimately not sure what the implications of this are longer term - should I be looking to beef up the cooperative elements of my interpersonal style? Or is that competitiveness something that you tend to see in top performers?

 

Thanks for the really kind words, I am glad you feel there are resources on here that are meaningful as you explore your first career steps and that I'm among them.

Let's look at your questions.

Insecurity:

Que sera, sera. You cannot control the starting hand you're dealt. You can only control how hard you work to change that hand.

You mention looking at your circumstances as motivation. That's wonderful, you should. It's the best mindset to take. Keep it as fuel for the long journey you're embarking on.

The only other thing you should do is begin a habit of reflection on how where you've come from has molded you. What traits did it instill, what behaviors did you pick up, what grooves did it carve in your mind?

You may find that there are some bad behaviors, poor thoughts, emotional weaknesses, or psychological ruts that are part of your nature. That's not your fault. What will be your fault is if they're permanent because you never address them.

Some of the things I wish had gone differently early in my career happened because I wasn't self-aware enough of the developmental areas I needed to address. The way I thought, acted, or carried myself was a bad fit for where I worked so hard to get.

The simple fact of the matter is that once you get the interview, you're on equal footing. The Harvard kid with an impeccable resume may have had an easier time getting to the same superday as you, but he can stumble over a question as easily as anyone else there. You shouldn't let your school, grades, or personal background weigh on you when it's time to perform.

Yes, I'm cognizant that even today there are rooms I'm going to walk into where someone who's only heard of me by name or spoken to me over the phone may be surprised to see I'm not white. Maybe that surprise is for the worse. It happens. That doesn't mean I get hurt over it. If they treat me poorly, they did me the favor of helping me see quickly that I shouldn't spend time with them.

I get that I have the luxury of choice today thanks to the fact that I control my destiny, and it's different for an intern or analyst. The thing we can have in common is the imperturbability. Don't let it ruffle you.

Lean on your creativity, don't ever lose your hustler's mindset, and make sure you are spending adequate time looking inward to prompt further growth. This will take you past the people who started further ahead than you did but never developed the inward habit.

Stick with it, and over time you'll find yourself much further than people on the much harder dimension.

Curiosity:

I spend time on the thing I think I'm interested in to see if I really am.

Look, if you want to be strong, the easiest thing to do is go to the gym. If after two hours pushing yourself through everything you are smiling while drenched in sweat, you know you're on the path to Valhalla. Wheymen. If you find it uncomfortable and unfulfilling, that's not a thing you're really passionate about.

If you think deep value or distressed investing is your calling, you better go read Moyer's Distressed Debt Analysis and the Houlihan Lokey case, start attending conferences like the CBS VIP and HBS Investment Conference, and showing up at your school's best club's weekly meetings. If that jazzes you up and you happily skip beers and Xbox for the night-time club meetings and all the prep you put into your stock pitch, cool, you're discovering it really is a passion.

If tennis looks cool, you can join your school's intramural or club team. If you get really tired of huffing it half an hour across campus to the courts four times a week, and you never really feel like spending a couple hundred on a decent racket, you've got the proof in the pudding. It doesn't matter enough to you.

I like to learn by doing. The things I'm most passionate about were pretty self-evident: I happily prioritized spending time and money on them.

Failure:

Life is going to beat you up. Everyone experiences failure in some way. The kid you may be most jealous of -- tall, good frame, attractive, smart, rich parents, great school, popular -- has gotten rejected or ghosted by girls, waitlisted at his top choice school, dinged after an interview, you name it.

You should be confident in the lessons you unlock. The only time you shouldn't be is if the lesson was clearly wrong - because you screwed it up. Or if you forgot the lesson and didn't live in light of it. Don't be insecure. Look at each new failure as an opportunity to round out your inventory of lessons. Add another book to the shelf. If you stick with it, you'll eventually be more likely to succeed than fail if for no reason other than that you've eliminated so many errors that were part of your native behavior.

Competition:

The most high-performing people I know are highly competitive - but with themselves.

My approach is that it's way less about me versus the other guy and way more about me versus worse me. Worse Me loves to play Xbox all day long and eat four steaks in a row. That guy will be unhealthy and unproductive.

The man I want to be is diligent, disciplined, reliable, thoughtful ... and I could go on for hours.

In situations that are zero-sum, my personal stance is that I'm not interested in the other guy losing. I'm interested in and committed to pulling the best performance out of myself so I win.

You need to decide your own style. People can't tell it to you for you.

Yes, it's highly beneficial to have strongly refined and well-developed interpersonal skills. When you need to work with someone, you don't want it to be a rusty tuning session. You want it to be a well-rehearsed symphony, all your thoughts and actions combining to work well with your colleague. Natural, not forced.

If you can marry that with a healthy sense of competition based in the idea of excellence, you're probably in great shape.

I am permanently behind on PMs, it's not personal.
 

This is really great stuff - I'll definitely be thinking hard about this before my analyst stint begins this summer. Your points on addressing insecurity were particularly reassuring and I can pretty easily see the connection to understanding past failures as well. Another thing you spoke about in your initial post was about the differences between a sponsor and a mentor and given the background I described above that's definitely something I have thought hard about since alumni aren't usually around at the firms I have interned at and will be joining full-time. Could you walk through the situation you began to understand the difference between the two in? I understand anonymity is important, so if not, could you talk through how you have gone about deepening those relationships in the past? I believe at my new firm there's someone who I could develop a relationship with such that I could count him or her as a sponsor if I play my cards right. Thanks again for doing this!

 

You wrote that you think differently. So, why did you choose PE over HF? . In HF you’ll be around smart, ambitious, creative, somewhat quirky people that have hard edges. The whole point in HF is to think differently from the crowd (or at least think u do) and come up with complex ideas.

 

Somewhere buried earlier in this thread I quoted a comment I made a few months back. I think that's what you're referring to. I don't have much more I could say about it.

Why did I choose private equity over public equity?

APAE:
Private markets are much more attractive to me than the public markets. I chose private equity because:
  •  I prefer to see my investments perform over time without exogenous factors beyond my control -- if I was in the public markets, I may be completely correct about the quarterly performance of a company, but other market participants or even events beyond my control like a liquidity crisis, a short squeeze performed between two other investors I have nothing to do with, or a proxy war fought between hostile parties with different strategic visions for the company's future could push the stock in a different direction than I want, even though I am right about earnings rising or falling or whatever
  •  I enjoy being able to be a majority owner where I can rely on formal power to steer strategy -- in the public markets, I can't, the best I can hope to do is initiate board change through collaborative conversations with the company or hostile actions like a proxy, tender, or other activist campaign
  •  I enjoy the complexity of deal structure -- in the public markets, I can only be a buyer or a seller, as opposed to being able to choose not just what asset I want to invest in but the exact format (leveraged buyout, growth equity, structured equity, hybrid equity and debt investment, direct loan, or whatever) that I think will maximize my return relative to the risk assumed
  •  I believe there are greater inefficiencies in the private markets -- there is no central clearing exchange where everyone can see the price being paid for an asset, meaning I don't have to compete against the complete universe of possibly interested parties; I can find assets being transacted upon with a variety of reasons, deal timeframes, and counterparties that own them; those dislocations create opportunity

How do I think differently?

APAE:
Separately, I have found that I think differently than many senior decision-makers in the industry do because I have had very different life experiences than are common for people with the educational and professional pedigree required to progress in the field. That difference in thought pattern makes me look at the same opportunities through a different lens. It also lets me identify different opportunities that other people didn't see.
If you are surrounded your whole life by people from a similar socioeconomic background, enjoy a great deal of things that are provided to you no questions asked (both tangible and intangible), benefit from behind-the-scenes help at every inflection point or challenging scenario, work yourself into a particular seat that you then sit in for a really long time, and find a fairly familiar set of peers or colleagues around you in that seat ... your worldview is going to reflect that.

If you spend your formative adolescent years in bumpy domestic circumstances, encounter a lot of things (tangible and intangible) absent or withheld from you in some way, face a variety of inflection points like the middle to high school transition or college application ordeal or internship application process entirely on your own, work yourself into a particular seat, and find that it's just like all the others you've known where the peers and colleagues around you have very little of their life arc in common with you ... your worldview is going to reflect that.

Neither makes you a good or bad person. It's simply the lens that's default in your life. Doesn't mean you can't develop other lenses. Just determines your default.

What I've found is that my set of ingredients makes me:

  •  look at the same inputs differently - finding different outputs to pursue
  •  speak to the same people in a different way - unlocking different things as a result
  •  think about those different things in a different way - combining them for an uncommon result

My track record proves that - and gets me grilled in a way that I used to find distasteful but now relish.

I was open to the hedge fund route, but all the results from my self-study indicated that this was a better route to take - and when it began working handsomely, I happily dove deeper. At this point I am very much in a lane and happy.

I am permanently behind on PMs, it's not personal.
 

Thank you for doing this and for your thoughtful contributions to this site. I find myself referencing your posts again and again as I think through my career arc. You’ve provided such valuable roadmaps in the past for how you would approach particular career paths, and was wondering if you had any advice for someone interested in getting involved in entrepreneurship through acquisition or venture capital from an industry background, which in my case is real estate investment and development. Feel free to answer more broadly if you think it’d be more beneficial to the group, and thank you in advance for any advice or wisdom you are willing to offer.

Corporate Grind / Traditional Path: The tried and true paths of either working up the ladder at a REIT, fund, or developer or breaking off to start my GP are both attractive to me, but both are really “get rich slowly paths” and I am interested in exploring other avenues of wealth creation.

ETA: I think ETA presents the unique opportunity to buy myself into a senior level role running a smaller real estate services company / investor and avoid the time it takes to climb the corporate ladder and eliminates the uncertainty of starting a firm from scratch. Your belief and past writings about leveraging your time more affectively by targeting larger assets has challenged my belief directly, as most of the businesses I am speaking about are sub $2m ebitda. If I wasn’t looking to exit and was planning on running the firm in perpetuity, would that change your advice?

VC: (PropTech / Contech). I think there is a massive opportunity due to historic underinvestment in technology by the industry, but also think many of the startups in the space don’t have the in the weeds real estate experience needed to solve real problems. This may be because I am in the industry, but I believe the biggest winners will be tech enabled service providers that help the pros in the space do their job better, not tech that replaces pros outright. This is where I think someone with real industry experience could be valuable. I think in the near term I’d like to get involved with entrepreneurs and be willing to offer advice / services just to get exposure to the space, but I am not sure where to start.

Going forward: I’ve read much of the Stanford materials and the HBR book on ETA and am very up to date on the things happening in the PropTech and ConTech spaces, but am wondering if you had any advice about how to more seriously pursue and explore those paths given I need to fill in some skills gaps from not having an ib / pe / vc background. Also, do you think it is possible to explore these paths concurrently with advancing my career as a real estate developer over the course of years or do you think I should go all in on either?

Apologies for the length of this post, and appreciate any advice or guidance you’re willing to offer.

 

Re-reading this post, the way I wrote it comes off as critical of the VC / Proptech space in a way that I had not intended. There are plenty of platforms that I believe will one day replace the intermediaries currently in place (especially on the residential side), but the companies I am more interested in are the tech enabled providers where someone like myself who has in the weeds real estate experience can contribute by pointing out the major pain points and paths to solve them.

 

Sorry for the delay. I took a long break from the site. It looks like you either made this after I went offline or I missed it while replying to the earlier comments.

ETA:

I don't think the search acquisition route is inherently unattractive. I simply think you have to weight what it yields you in exchange for your time. A couple factors in tandem would make it really attractive. If it was a business you could compartmentalize to a fraction of your time within a couple years, and if cash flows would be steady (ideally growing), then yes, it's a wonderful first move. You can make yourself both financially independent and someone with a thing to point to that demonstrates your success as a doer of deals (or operator, if that's how you want to portray it).

Proptech:

This is a space I know very little about. I can say that if there's a market you're interested in, the smartest thing to do is simply show up and meet people. Try to add value. I've written a lot about it in this thread and others. Meet people, listen to their problems, send resources that you uncover or create, and people will share their ideas or opportunities with you. This is one aspect of market discovery.

Going forward:

You can do an 'unfunded search' where it's simply something you do for only a portion of your time until you find a target. To do this, go meet all the search fund LPs (Peterson, Yudkoff, Thorndike, and the firms), get their blessing ("we'll back you when you come back with a deal"), and then go search. This means you don't have to quit your job. To do this successfully, you want to be able to show that you're not a W2 worker - you're already doing things independently and this is just one avenue to finance the type of thing you like to look at.

It's not a bad story if you're working as a developer on your end. If you're an associate at some firm, not sure how it's coherent.

I am permanently behind on PMs, it's not personal.
 

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love, django the rat
 

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I am permanently behind on PMs, it's not personal.
 

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