A little advice from a F50 executive

So I was in business class on an transatlantic flight the other day and ended up sitting next to a F50 executive. He was surprisingly friendly and started up a conversation with me (we were both boozing pretty hard, as one tends to do in business class). It was a fascinating conversation - this guy essentially came from a family of European royalty/aristocracy, and although he was filthy rich he was still grinding in the corporate world.

You know how sometimes you encounter a stranger and the experience just sticks with you? This guy had this effect on me, since he was such a well read yet grounded person. Here are three things he said that stuck with me the most:

Consistent returns over time:

  1. He asked me what I thought the best business in the word was, from an investor's point of view. I gave him some BS answer, to which he replied, "You know, I own a block of apartment buildings in Europe. It only generates 6%-7% a year for me, but does so consistently over time. I know most of the tenants and some families have been there for over a decade. The property manager is this old Danish guy whose greatest pride in the world is keeping his dominion in perfect cleanliness and order.

    I show up unannounced and there is never a speck of dust on the floors - the place is always in perfect shape, because the guy is truly proud of what he does. I pay him well and help his family out from time to time. I don't care if I could make 20% elsewhere - the best business in the world is my little apartment block, because it gives me 6%-7% with 0 effort and maximum peace of mind." This is not how us finance guys tend to think about things, but it goes to show that at a certain point, your time and peace of mind are worth more than the marginal dollar in your pocket. Most of us aren't there yet, but it's a point worth remembering.

The grind will catch up with you:

  1. There are physical limits to one's ability to grind. Go ahead and grind for as long as you can, but take care of your health or it will catch up with you quickly. When you first reach a VP-type position and suddenly have real responsibility on your hands, the stress may test the limits of your endurance. Power through it with as much grit as you got, but know how to recognize a mental breakdown if you're getting close to the edge. This guy apparently had one before in his life, and it took him a couple of years to recover. From his experience, people don't usually recover from the second one.

Book recommendations:

  1. He recommended the following two books, which I found to be fascinating reads:
  • "Shredded: Inside RBS: The Bank that Broke Britain" because it illustrates how human psychology rationalizes its way into ridiculous situations and how this effect can spread through an organization in the most toxic way

  • "I Contain Multitudes: The Microbes Within Us and a Grander View of Life" because it reshapes your view of the world. Humans are ecosystems of multiple microbes and organisms competing for energy and constantly in flux in and out of equilibrium states. Almost anything in the world can be views through this lens - from a pond in a forest to a large F50 corporation to the entire economy itself: all are complex systems, and what we see is the result of millions of interactions between the system's constituent parts, bringing it in and out of equilibrium over time.

Comments (15)

 
Feb 14, 2017 - 11:52am

Thank you so much for sharing. Point 2 is very important - and ironically is one of the most ignored or overlooked aspects when we are early in our career.

NuckFuts:

Power through it with as much grit as you got, but know how to recognize a mental breakdown if you're getting close to the edge.

This. And knowing when to seek help as well. Some people know that they're on the edge but refuse to find help from others even when needed.

 
Best Response
Feb 14, 2017 - 2:34pm

NuckFuts:
He asked me what I thought the best business in the word was, from an investor's point of view. I gave him some BS answer, to which he replied, "You know, I own a block of apartment buildings in Europe. It only generates 6%-7% a year for me, but does so consistently over time.

Wrong. Clearly this guy was a total troll. The best business in the world is obviously cocaine.

Overwhelming grasp of the obvious.
 
Feb 15, 2017 - 3:39am

Not really. In this context it's about the marginal cost of effort invested in a business versus the marginal utility of the additional returns from that effort. Obviously you're not going to make 20% by investing in an index fund, so the implication here is that a 20% business requires a lot of time/effort to successfully manage.

 
Feb 20, 2017 - 7:17pm

NuckFuts:
1. He asked me what I thought the best business in the word was, from an investor's point of view. I gave him some BS answer, to which he replied, "You know, I own a block of apartment buildings in Europe. It only generates 6%-7% a year for me, but does so consistently over time. I know most of the tenants and some families have been there for over a decade. The property manager is this old Danish guy whose greatest pride in the world is keeping his dominion in perfect cleanliness and order.I show up unannounced and there is never a speck of dust on the floors - the place is always in perfect shape, because the guy is truly proud of what he does. I pay him well and help his family out from time to time. I don't care if I could make 20% elsewhere - the best business in the world is my little apartment block, because it gives me 6%-7% with 0 effort and maximum peace of mind."

I always wonder how to go about identifying these kinds of opportunities, now that I have saved enough for a down payment, but continue to rent. A little passive income from putting my money to work wouldn't be half bad.

 
Mar 2, 2017 - 1:02am
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