WSO Podcast | E130: Escaping BB Investment Banking to a Hedge Fund of Funds Career
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In this episode, @TexasInvestor shares his winding road from a non-target to starting law school to a sudden pivot to a Masters in Finance. Learn how he broke into a bulge bracket investment bank and why he was so eager to get out and what it has been like working for several family offices in the fund of funds space as a capital allocator.
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WSO Podcast (Episode 130) Transcript:
Patrick (CEO of WSO): [00:00:06] Hello and welcome. I'm Patrick Curtis, your host and chief monkey, and this is the Wall Street Oasis podcast. Join me as I talk to some of the community's most successful and inspirational members to gain valuable insight into different career paths and life in general. Let's get to it. In this episode, TexasInvestor Shares is winding road from a non target to starting law school to a sudden pivot to a master's in finance. Learn how he broke into a bulge bracket investment bank and why he was so eager to get out and what it was like working for several family offices in the Fund of Funds space as a capital allocator. Enjoy. All right, Texas investor, thanks so much for joining the Wall Street Voices podcast. Thanks for having me. Pleasure to be on. It'd be great if you could just give the listeners a short summary of your bio. Yes, so as my name implies, I am from Texas. I did my undergrad in accounting of had the bright idea I wasn't actually going to be a tax attorney might have been some family pressure there. So I was actually law school student for a year, really knew I always wanted to be in investing in investment management, finance broadly and. Year end decided I had made a terrible mistake and got my masters in finance
TexasInvestor: [00:01:28] And really built well on the accounting background, and now I'm professionally working as an institutional investor and have worked at several family offices and institutions, I guess you'd say.
Patrick (CEO of WSO): [00:01:41] Great. So let's start all the way back in undergrad where you always thinking
TexasInvestor : [00:01:44] Like, OK, why accounting?
Patrick (CEO of WSO): [00:01:45] Where you're your family? Like, it's safe? Just go do
TexasInvestor: [00:01:47] That. Tell me a little bit more about
Patrick (CEO of WSO): [00:01:49] Your background and why that was something that attracted you. So it's believe it or not, it was because I wanted
TexasInvestor: [00:01:56] To be an accountant. Interesting. So one of my uncles is he's a very successful big four accountant partner. All that, and both my parents are artists. And so I was like, oh, that guy has money. So like, it was just kind of that was the only direction I had to get into business. So obviously that was pretty guided. To be fair, I graduated in three years, so I kind of like as I was figuring out what I wanted to do, it was a little too late. And, you know, I think that's where I Really knew I wanted to do finance or investing, but kind of was already on a path to do. Of accounting, but specifically what was going to be a tax attorney and more or more corporate finance? So look, by the time I was your freshman year, you're having fun. Your sophomore year, you're kind of actually getting into me to college. And then really about my third year, I was already studying for the LSAT, applying to schools and didn't really have time to. Be methodical about did anybody like influence
Patrick (CEO of WSO): [00:03:01] You and your family that was like, hey, you should go do this like be a tax attorney, is what you said attack? Yeah. Well, it was again uncle he was telling me what he hiring, you know, tax attorneys out of school for. I was like, that sounds awful, but I want to do that. So I mean, honestly, that was the of that really seemed attractive. It was like AK or whatever a hundred k. Oh, it's I mean,
TexasInvestor: [00:03:23] 150 could have been. Yeah, I mean, it could have been higher, even higher, depending. But again, with
Patrick (CEO of WSO): [00:03:29] Your JD, that that makes sense with your JD.
Yeah, but it depends, though, like that's one thing you learn is. Yeah, that's it's a different thing when you're a high school
TexasInvestor: [00:03:38] Kid or into college and then, you know a little bit more what you actually get into it, you let a little bit more perspective, I guess you could say. So.
Patrick (CEO of WSO): [00:03:47] So tell me about how that it sounded like kind of by your third year, you were already kind of headed down that path, you felt like you couldn't stop. Exactly. And so you kind of just are like, hey, let me just take the L side, I'll get into law school
TexasInvestor: [00:03:59] And I'll see how I do on the set. So you did
Patrick (CEO of WSO): [00:04:02] Well in the LSAT or well enough to get in? Mm hmm. What was your thought process in terms of what law school to get into was like your LSAT like a big determinant of that? Or was it like just financial aid?
TexasInvestor: [00:04:13] What was that whole picture like? It came down to money for me, like, I mean, I got accepted to a number of schools, got decent scholarships into a number of schools, and then maybe it's the accountant in me like I was. There was some of those really top schools. I was like, there's no way in hell I'm going to pay that much money for a degree. So it was it was the perfect mixture of affordability quality. And, you know, they had a focus program for tax. So that's really where I left the analysis.
Patrick (CEO of WSO): [00:04:43] Ok, so you accept this specific law school you go? And when does it, when does it hit you that that you're just not going to do three years there? A pretty quick actually probably what I was moving in, I mean, I think it was one to like I knew in undergrad, like it was kind of like your point. I knew it was not the decision I wanted to make. And again, like the family time with the family pressure, then like uncle, really kind of like pushing you like this is just really good. It's safe. This is a path I would actually say less of pressure, just more of a
TexasInvestor: [00:05:16] Lack of perspective. So in the sense of like, that's kind of what you do, and I don't mean that negatively. Like my family was actually shockingly supportive. It was just I didn't know what investment banking was. I didn't know what investment management was. I mean, for me, it was, you know, I think you can buy stocks and bonds. But other than that, that's kind of where. Oh, I know, so.
Patrick (CEO of WSO): [00:05:37] Right, it was like there wasn't a depth to the understanding of careers that like you would get from listening to the Wall Street Voices podcast, just kidding. Oh, it's very one of the most critical, most critical mistakes in my law school path, though.
TexasInvestor: [00:05:51] You know, it's good.
Patrick (CEO of WSO): [00:05:52] A lot of a lot of undergrads listen to this, and I think it's important because they get a little bit of a taste of the little twists and turns. So, OK, so
TexasInvestor: [00:05:59] You're there for a full year or
Patrick (CEO of WSO): [00:06:01] Like a semester
TexasInvestor: [00:06:01] And then you just piece out like, yeah, I did a year, you know, it's kind of just made sense Of look, to be fair.
Patrick (CEO of WSO): [00:06:09] I think I knew. I think the way I was trying to talk myself into continuing is like law school still around beltway, getting into finance, right, plenty of
TexasInvestor: [00:06:18] Lawyers or hedge fund managers or investors. But let's be Real, it's a really roundabout and inefficient way of getting there and very expensive as well.
Patrick (CEO of WSO): [00:06:29] So what were you paying with all the not being the most expensive like 30k? You know, I think tuition was like with scholarships. Tuition was 10 to finish.
TexasInvestor: [00:06:38] So, it was like it was very like I financially, it was not a really bad decision, like anything that was that that's what drove it.
Patrick (CEO of WSO): [00:06:47] Like, it didn't sink you into a whole deep hole. $60000.
TexasInvestor: [00:06:51] Yeah, yeah. Ok.
Patrick (CEO of WSO): [00:06:53] Ok, so you're kind of coming up on you're trying
TexasInvestor: [00:06:56] To convince yourself to keep going. You're kind of
Patrick (CEO of WSO): [00:06:57] Approaching that end of that first year. And then what was that switch? It said, now I'm going to go jump and do a master's.
TexasInvestor: [00:07:02] Master Finance Master of Finance. Well, I think for me, honestly,I was just I didn't know that existed again. A lot of this is just like kind of discovery and you tell me when
Patrick (CEO of WSO): [00:07:11] Tell me when you came across that stuff, like when was finance finally like, OK, we are actually kind
TexasInvestor: [00:07:15] Of like this investor investment thing. It was it was honestly first of the whatever freshman or entry level finance. I took an undergrad that was like, this is cool. I like this again. I think it was just due to the shortened path of my undergrad program.
Patrick (CEO of WSO): [00:07:28] You never really kind of were able to explore that fully
TexasInvestor: [00:07:32] Exactly in
Patrick (CEO of WSO): [00:07:32] That path. So when did you know what did you learn about the Masters of Finance and what?
TexasInvestor: [00:07:36] How did you
Patrick (CEO of WSO): [00:07:37] Apply to that so
TexasInvestor: [00:07:38] Fast? Then jump make that jump. And I assume it was like you finish your first year
Patrick (CEO of WSO): [00:07:42] And then jumped
TexasInvestor: [00:07:43] Right into your. Yeah, I mean, it was a friend. It was honestly just a friend that had gone there. Told me about it. I'll be frank. I kind of got lucky with the application just in the sense of I was a relatively untraditional student, so I think I was able to sail through a bit. I was able, you know, Frankly, just called up the schools like, Hey, this is my background. I didn't have. I think I Still took a g out or whatever the entrance exam was, but right, it was more of like, Look, this is what I want to do. This is my background. Like, you want me in. And so it was, you know, obviously I still went through the application process and all that. But it was just having A dialogue with the with the whatever the dean or the person There and explaining my situation I wanted to do and making sure there's the right fit for both of us.
Patrick (CEO of WSO): [00:08:28] So do you feel like the master's? So how much did you have mapped out before? Let's start there before you kind of when you made that call to the dean, like, were you like, I know I wanted to be investment banking or are you saying, I know I want to be, you Know, I wanted to be an investor, but like, I knew it, right? It was like, I don't know, investment management because it's such an umbrella term. Like, did you know specifically what you want to do in investment management like? Or it was just like going in, though in grad school, I knew his alternative investments. So to the extent you could specialize, which you really can't learn alternative investments in grad school or in any sort of formal setting. So it was speaking with I had a couple of professors that were either hedge fund managers or teaching really specific courses on like futures or options or things like that. It was like, OK,
TexasInvestor: [00:09:17] This is cool.
Patrick (CEO of WSO): [00:09:18] And so for the listeners, alternative investments, meeting options,
TexasInvestor: [00:09:21] Futures, that type of
Patrick (CEO of WSO): [00:09:22] Stuff or alternative investments? Well, hedge funds, private equity. I mean, I guess you can define it as anything, right? Yeah. I mean, if you're for a super basic kind of explain it to my parents. If you have your traditional investments, think your fidelity Schwab's there, putting your financial advisers, putting you in Exxon or municipal bond or Exxon bonds, right? Yeah. Alternative investment is literally anything else because the one thing you learn about investments is you can invest in almost anything you can imagine.
TexasInvestor: [00:09:52] So it's that whole world. That's why I like it the most. It's the most intellectually stimulating. You get to learn about all sorts of bizarre things dynamics, ecosystems, just everything.
Patrick (CEO of WSO): [00:10:04] Small liquid markets. Oh, it's fantastic.
TexasInvestor: [00:10:07] Like, there's a Guy that's starting a fund that's investing a Broadway plays. They've developed an algorithm that helps identifies the characteristics of the most successful space. And so that's the whole point is it's just so intellectually stimulating. You get to learn about things you know you didn't even know existed, right? And not only not only do you learn about them, you learn how to potentially make or lose money in them. So. So that's the best part.
Patrick (CEO of WSO): [00:10:35] So, so you kind of you had a broad sense that you wanted to go investment management. You had that conversation with the dean. Did you feel like you were going to get in because, you know, master's in finance programs, they're they're typically pretty expensive and I think they're a good money maker for the school.
TexasInvestor: [00:10:47] Did you feel like they
Patrick (CEO of WSO): [00:10:48] Pretty much had the door open or did you feel like you still had to get a decent score in the game? Like, do they? Is the acceptance rate pretty high on those? I mean, I don't know about I think my program was so-so, but look, I think that one was one which probably helpful saying this is kind of one of those. Like, if you're going to write a check, they'll find a way to get you to your point. Like, that's a sense I get to be fair. Like, you know, that's a sense that I get for sure a lot of these
TexasInvestor: [00:11:11] Programs, even though. They're good,
Patrick (CEO of WSO): [00:11:12] They're nice little feeders. Yeah, well, it's same with him, too, like, right, when we graduated, there was an executive MBA professional. I mean, there was, you know, two hours of MBAs being announced across the stage. So I think the key point with these is
TexasInvestor: [00:11:26] Know what You're using it for, right? It's don't go do it for the sake of doing it. It's the same with law school, like if you're going to go spend an exorbitant amount of money and time on a degree, what is the internet know? What is what? What are you trying to achieve specifically? So.
Patrick (CEO of WSO): [00:11:40] So you felt like the master in finance was a better fit for you, it one year instead of two instead of the MBA? Exactly that type of stuff. Ok, so you went in there thinking, I'm just going to go here, I'm going to leverage it to get into some sort of investment management role? And did you? What was the outcome
TexasInvestor: [00:11:54] As you approached? Because you're
Patrick (CEO of WSO): [00:11:55] Basically recruiting right when
TexasInvestor: 00:11:56] You start, right? Because you just have
Patrick (CEO of WSO): [00:11:58] That one, you basically do the year and you're done?Yeah. So it's kind of interesting. Again, I was in a similar circumstance of so I did banking out of school. I was
TexasInvestor: [00:12:11] After my finance degree and it was interesting. Like, I mean, as your viewers probably certainly know much better than I did at that time of like that as a whole thing, like the investment banking recruiting process, the like, going to firms, all of that. And I was kind of like just thrown into it. I was like, what is this investment banking thing everybody seems to be so excited about? And then, you know, people come in and be like, oh, it's horrible. They work you to death like, it's miserable. And I'm like, Why are you signing up for this? But again, like that was, it's funny. I ended up going that route because the key point is for better, for worse, it opens a lot of doors, open standards.
Patrick (CEO of WSO): [00:12:48] The easy answer, right? It's like, yeah, you suffer. But then all of a sudden everyone's like, hey, you get chicken and calls from recruiters, right? And the key thing is to is, it's like you can go. You could be an objectively talented person. But if you're looking to land a job at a family office, a hedge fund, et cetera, there's a standard that at least it might be wrong. But at least people like I know so-and-so was at least good enough to
TexasInvestor: [00:13:10] Complete Goldman program or a Merrill Lynch program or so.I mean, that's just the way it works, right? That's the game.
Patrick (CEO of WSO): [00:13:16] So yeah, it kind of gives that stamp of approval. Then the smaller kind of family offices that don't have the training to bring you in feel more comfortable. Ted, you're going to be completely lost. Ok, so tell me about that. That relatively short stint.
TexasInvestor: [00:13:30] I'll call it
Patrick (CEO of WSO): [00:13:31] Banking. Tell me, what was it like when you first start?
TexasInvestor: [00:13:34] You're kind of, well, first, tell me what the recruiting. So you're in, you're in your master's in finance.
Patrick (CEO of WSO): [00:13:38] Was it? You're kind of got swept up in the whole system of that? Tell me a little bit about what the interviews were like. Were you ready? Did you feel like you? I mean, how did you get ready and you crash and burn, did you?
I mean, I crashed and burned like one. I actually remember pretty distinctly, and it was one of those I showed up for the Super Day or whatever, and they make you take the test. And all that I like was pretty unprepared, frankly.
TexasInvestor: [00:14:02] What tests? What do you mean? Well, so I took like an accounting test, like build a bunch of financial model on spot. And again, I was like, I was. I know this when I wasn't expecting it. So like, I didn't. I guess crash and burn would be an overstatement, but I certainly didn't do as good as I would have liked. So. I think that was fortunately for me, that was pretty early in the recruiting cycle, so I mean, I certainly tailored and prepared for the other one, so I wouldn't discount that at all. Right.
Patrick (CEO of WSO): [00:14:31] So besides that modeling test, I assume most of it, though, was behavioral or fit. Well, maybe with your accounting background. They might have drilled you a little bit. Yeah, no. I mean, they made me like build. I remember the three statement, and again, it was it was more of a boutique bank. It was. So it was not. I don't think they have the resources. Yeah. So they didn't have I don't think the process would have been as typical is like, we're going to go train you and you know
TexasInvestor: 00:14:58] You with a hundred other analysts you would have. You would have they needed you to do much to prepared. Yeah, exactly.
Patrick (CEO of WSO): [00:15:07] That's fair. Ok, so you end up at a bulge bracket and you
TexasInvestor: [00:15:12] Are in the credit team? All right. Yeah, so I actually I always got confused with the acronyms. So.
Patrick (CEO of WSO): [00:15:19] Yes, but tell me, like what? What this like?
TexasInvestor: [00:15:21] Yeah, what is that? What is? I was in the levered finance, so we were within the investment bank and we migrate specifically was working in your special assets or levered finance group. So we were you're essentially working with your companies that were having trouble. Let's just say that. And so it was it was interesting. So we worked on lots of transactions with the investment bank, right? We were just more on the credit side of whatever deal that was being done. So there was remember I was on and I was again, it was you're part of the whole process, but we were focused on how would we underwrite and syndicate this credit risk? And so, you know, I that was the flavour I took from it. Downsides were, I remember, you know, the hours people talk about right, those same proverbial sleeping under your desk and all that people weren't the nicest. And just to give you an idea of that group. There was three people when I started, I left, oh geez. And about a year I was the last person to leave like, so it was just, I think
Patrick (CEO of WSO): [00:16:27] That year and you were the last person to leave.
Exactly. So no, that group was tough.
TexasInvestor: [00:16:35] It was, yeah. And I think, frankly, that our reputation for it. And with that said, you know, it sucked. I mean, I'm not going to, you know, that was that's how I thought about it.
Patrick (CEO of WSO): [00:16:47] But this is good why we stay anonymous, because we don't have to name the bank or anything, but it's just good for people to know to have their eyes open, to get some of that group specific dynamics and information. Not that you necessarily had a choice be like, Hey, get me out of this group.
TexasInvestor: [00:17:00] But just if people do and they can kind of push for other
Patrick (CEO of WSO): [00:17:03] Groups that potentially are a little more
TexasInvestor: [00:17:06] A little more reasonable on the Work-Life Balance, let's call it well,No. But listen to that like that's serious because like I remember, everybody was saying that coming in like, Oh, it's this group. Oh yeah, I've heard stories like, yeah, whatever, like, you know, but it's real, right?
Patrick (CEO of WSO): [00:17:19] Like that you get there and you're like, Oh shit, this is,
TexasInvestor: [00:17:21] You know, hearing about 80 hour
Patrick (CEO of WSO): [00:17:23] Weeks or
TexasInvestor: [00:17:23] 100 hour weeks is much different than
Patrick (CEO of WSO): [00:17:25] Actually sitting there and doing it. Yeah, I mean, I'm not gonna lie. There was a time I was like, I'll go join the Navy. Like, I'll do anything like it was just
TexasInvestor: [00:17:34] Again of it was
Patrick (CEO of WSO): [00:17:38] Maybe within six months. You're like, I can't do this. Yeah, you're getting crushed. And so tell me you started
TexasInvestor: [00:17:43] Looking, you started talking to
Patrick (CEO of WSO): [00:17:44] Recruiters. I mean, that's early
TexasInvestor: [00:17:45] To look right.
Patrick (CEO of WSO): [00:17:47] Would they even take your call? What's the deal? Or I guess not. It is early to look nowadays, but
TexasInvestor: [00:17:51] Tell me, tell me what the deal was. I mean, look, it's all the above, right?
Patrick (CEO of WSO): [00:17:54] So it's interesting because I bet you there's a ton of kids in your spot in that same spot where they're in a group. It is like they're getting work to the bone and they just don't know where to turn. So where did you turn and how did you kind of map out your next step? Well, it was all the above, so I think the key thing was not to be rash, right? You don't want to, like, totally hinder yourself just for near-term gratification. So if there was a couple of recruiters I worked with, I actually ended up getting a couple offers from people I found through them didn't actually take those just because again, you know, be long term greedy, not short term greedy. It's like kind of one thing I've always you should always ask yourself whatever career position you take. So long story short, actually, I think I actually found that job through my graduate school recruiting that like the job board or whatever it was, the ones you turned down. Tell me what you meant by short, long term, greedy, not short term, greedy. There are some good. There were some high paying jobs that you're being offered that are paying.
Like what? Better work like that? Like what? No, no. Like one was. One was research for large hedge
TexasInvestor: [00:19:07] Fund, so it was almost more institutional. I wouldn't call it like you weren't getting paid a ton. One was more
Patrick (CEO of WSO): [00:19:15] Just and what were you getting started at the bulge bracket like? I assume the 80 base or 90 base, whatever. And. Well, no, because we were getting paid, that was the worst part is because I got the short end of the stick. We were getting paid more of the credit salary, but working the IV hours. So that's, I think, why it was horrible. I think it was the salary like seventy sixty five. I think it was like seventy. You know, you got like 10 or 15 bonus. Oh my gosh. Yeah, now you said you didn't even no reason to even stick around for the bonus, right? You're just like. Exactly. So I think that was and again, to the point I said before they had some turnover issues and that was exactly like. So then these other jobs you're getting, you're looking at like a jump from like 70 to 80 up to like one hundred one hundred and ten or something like that. It depended. I mean, you could have gone to one of the hedge funds and private close to that. Now a couple of research type role. Yeah, but when I say research, you described it out models, right? Which personally, I can't stand doing. So that's just not if that's what I do all day. But look, those again, that's the important thing is those are those firms I knew had reputations even worse, right? They just there was one guy I remember distinctly. He left to join that fund. He came back to
TexasInvestor: [00:20:32] The bank a week later and begged for his job back. So. So again, like, that's the point of like, put yourself in a position, you're going to succeed. And so that was one I turned down.
Patrick (CEO of WSO): 00:20:45] There was when, you know, it's bad that you leave a really tough group to go work on the buy side and then you just get absolutely. It's even
TexasInvestor: [00:20:52] Worse there. Wow. Yep. So, you know, that was it's trying to be aware. I guess that was key, right? You know, one was more of a just capital markets research.
Patrick (CEO of WSO): [00:21:04] So just say to people, if you can't find this information on specific companies or groups, there's a lot of chatter that goes in on the private messages. And so you can get a lot of information. So if you're not getting a lot of bytes from your forum post, if it's like a niche company,
TexasInvestor: [00:21:19] Small company, keep trying
Patrick (CEO of WSO): [00:21:21] Because you can often get like the person who I mean, LinkedIn is helpful too, because you can look at
TexasInvestor: [00:21:26] People who previously worked there. You kind of get the scoop and you can also look at how long they've been there because I've done that with a couple of groups of like, Oh, so and so when you start seeing the theme of why people less than a year like it should raise some red flags. I mean, look, long story short ended up in a family office. So. Those can be very interesting as well, kind of the saying is you've met one family office, you've met one family office. Mm hmm.
Patrick (CEO of WSO): [00:21:54] So how did you go about evaluating that? Because you had already turned down a couple of offers, it sounds like. So you were you're being kind of picky. So how did you
TexasInvestor: [00:22:02] Kind of get
Patrick (CEO of WSO): [00:22:03] Comfortable with the family office given that they're so idiosyncratic?
TexasInvestor: [00:22:06] You know, it's like it's not an easy
Patrick (CEO of WSO): [00:22:08] Thing to diligence at all, right? Well, back to the kind of same thing of just I did. I had no idea what a family office was at the time. Like, I had no clue. And so they had a product they manage that was investing in hedge funds.
TexasInvestor: [00:22:23] And so I was like, Bam, that's what I want to do. Alternative investments, it wasn't on, it was more on the allocating role. So investing into other hedge funds. But. I got a corner office and one of the nicest buildings in town, it was the people were great and it was exactly wanted to do. I got a little bump in salary, but like it was really Win-Win-Win, right? And it was a small team. So.
Patrick (CEO of WSO): [00:22:51] And you're working, what, now 60 hour weeks?
TexasInvestor: [00:22:54] Oh, if that like, that's awesome. 40 to 50
Patrick (CEO of WSO): [00:22:59] Vacation. Oh yeah, exactly. It was like it was one of those. Remember, for a while, I was like, I don't know, is it all this time? Like, you know, so it's one of those things where if you actually think about it, you actually didn't get the salary bump you, you doubled your pay, you doubled your hourly pay. Well, it's the same with like I think a lot of I guess your viewers should remember that two of the only thing you're doing is trying to do what you want to do. Because if you're only worried about the ratio of energy put in versus money made like you're better off being a unionized plumber or electrician than an investment banker, and a lot of
TexasInvestor: [00:23:36] Cases am dead serious. Think about that. Like just because I mean, if you really, really want to evaluate it that way, there's a lot of other ways to make money, too.
Patrick (CEO of WSO): [00:23:45] So, yeah, I mean, Tom, talk to me how you got comfortable going to
TexasInvestor: [00:23:49] What was really like a place where you
Patrick (CEO of WSO): [00:23:52] Weren't making direct investments, you were
TexasInvestor: [00:23:54] Making investments for hedge
Patrick (CEO of WSO): [00:23:55] Funds. You just you just really love the space, the alternative space. You loved looking at different types of investors and stuff like that was that
TexasInvestor: [00:24:02] That's what
Patrick (CEO of WSO): [00:24:02] Excited you. So you're like, hits is perfect for me.
Exactly. And then also, to be fair, in a family office, you do in direct investments as well, right? You're doing like co-invest and stuff with them. So, yeah, portfolio companies, you manage, you have co-invest, you have private equity. So you're kind of a flavour of everything, which is really nice. Yeah. And you learn what you like. You learn. What's B.S. and what's not? You found this roll through. Sorry to interrupt you, found this roll through your alumni network. You said just the job board of the university. So dumb luck, I guess is the technical term. So were you networking at all kind of coming out of your bulge bracket where you like networking and then you talk to a few recruiters and then got some offers through them? But I was networking, but that is not even remotely how I found this. This is pure dumb luck, without a doubt. So. And look, it was the cool thing about this, and I think this is probably shaped a lot of my career thus far. Mm hmm. Again, look at the environment you're going into. So the person I replaced was technically managing director was right there 15 years, right? And so I stepped into his role. There was so as a family office, there was the patriarch. We had a couple admin support people and then our CIO, which was located across the country. So the whole point is you stepped into an immense amount of exposure. Right. And an immense amount of autonomy.
TexasInvestor: [00:25:32] And I think the key thing with that is don't take it for granted because I was a person or everything. So I met with managers. I went out and worked on new deals. I got an incredible amount of exposure and experience. So like, it's kind of one of those that like, if all I was trying to
Patrick (CEO of WSO): [00:25:49] Convince them less than a year out at the bulge bracket to give you this job or this guy's been there for 15 years and did the guy. Did you get any kind of flavour of why
TexasInvestor: [00:25:59] That person had left After so long? Yeah. So it's funny. It's kind of one of those like you could tell something wasn't, I don't want to say, not adding up, but like so he moved across the country. He got married, by the way. He was independently wealthy, exceedingly independently wealthy. So this was for a long time. Yeah, yeah.
Patrick (CEO of WSO): [00:26:20] So. Well, yeah. And then look, it was to be fair. So there's always a catch. That's every investment. Always has a catch, right? So this one, to be fair, it was an incredible amount of exposure, but it was also declining business. It was a declining firm.
TexasInvestor: [00:26:36] It wasn't dire, but
Patrick (CEO of WSO): [00:26:39] You say that. What do you mean? The family office was declined. Yeah. So the family office is one thing. But the asset management business they had, that was declining. The family, you could tell, was losing interest. And you know, look, family offices are exceedingly expensive and they're only successful in certain instances. And I mean, you could just tell, right, the guy didn't have an interest in it. So that part was kind of becoming less prioritized. And look, the business which is Related when you say the guy, you mean the guy who left her, the CIO, the I'm sorry, the patriarch, the family patriarch that the head had. So when were you meeting with them? With the patriarch. Yeah. So, no, he was in the office, so I saw him every day.
Patrick (CEO of WSO): [00:27:25] Ok, so but your CIO wasn't there? He was in the New York, Connecticut area. And where were you? Texas, OK, you're still in Texas. Ok? Yeah. Got it. Ok. So, yeah, tell me with the dynamics like. Did you ever?
TexasInvestor: [00:27:41] It's a little
Patrick (CEO of WSO): [00:27:42] Scary going to something that would give him so much autonomy after being told, like when you can go to the bathroom. Tell me about how you made that
TexasInvestor: [00:27:49] Transition, was it? I know for me
Patrick (CEO of WSO): [00:27:50] It was very difficult going from banking to private equity because I felt the same way. It's like all of a sudden I'm in this office with like four other people, five other people. No one's talking to you or saying anything to you,
TexasInvestor: [00:28:02] Ever, and they're just kind of like occasionally
Patrick (CEO of WSO): [00:28:05] Like, Oh yeah, we're going to meet with this company, blah blah blah.
TexasInvestor: [00:28:09] See, at the airport
Patrick (CEO of WSO): [00:28:11] Kind of thing. Very different. Very different. Tell me how you got comfortable with that. Uh, I mean, look, you don't hesitate. You just take every that was the biggest thing. You take every single opportunity you're given, right?
TexasInvestor: [00:28:25] Happy hours, conferences. And when I say happy hours, I'm serious like a industry. Happy hours, conferences managers coming through town talking like I. You have a when you're what is called an allocator or an investor, somebody who allocates money, you're given a special card. Everybody will talk to you, right? And you use that to the fullest extent, right? And so that's what I did is I as much as I could talk to hedge funds, talk to other family offices, other high net worth investors,
Patrick (CEO of WSO): [00:28:59] You start kind of mapping the landscape, trying to get a better feel like
TexasInvestor: [00:29:02] Who you should be watching
Patrick (CEO of WSO): [00:29:04] And who you should stay away from Exactly and build your network to right because this is this industry like this, the institutional investor part of the industry. It's well, it's just incestuous, right? So like it is all network based and it's figuring out. I don't want to say who's who but like really building that out and figuring out where you fit. And really just building those relationships. It sounds cliche, but it's really true. So and so you were doing all of that. But how did you
TexasInvestor: [00:29:34] Even how
Patrick (CEO of WSO): [00:29:35] Did you convince the patriarch to actually bet on you when the person had been there for so long with so senior and had all those relationships? I mean, isn't losing that person like a big deal and then bringing in somebody so green to kind of take that over? Or they how did you convince you were the right person? Well, I mean, look, it's I guess it sounds cliché, but just, I mean, worked really hard. And then I think it was just a genuine enthusiasm, right? Like, it's one of those things of if you're doing something you really enjoy doing like, it's just it's not work life. It's literally all meshes together, right? So I mean, look, I started off Maybe as specifically as I can answer that question. I started off into more of a pure research building their models role but bringing insights, bringing in new investment ideas again back to us saying before talking to
TexasInvestor: [00:30:25] People, finding out what's out there and bringing it back and presenting it. Because how did you even
Patrick (CEO of WSO): [00:30:29] Source those, though? How did you even know where to look or where to source deals in specifically? Or I know you could talk to hedge fund and they all wanted your money, right? So that's easy. But like other specific niche opportunities and stuff, how did you it all gets back to the network, right? So the family offices, club deals, and all of a sudden you started getting into these networks where like deals are getting passed around, you know, Oh, we're coming
TexasInvestor: [00:30:53] In on this one, you want to come? Yep. And it's a flywheel like, right, it's a virtuous cycle like you kind of put in when you get out in mind was. Look, you just show up your genuine and there's a flywheel effect, right? The more people introduce you to, the more people, et cetera. And so I think it's trying to do. And then
Patrick (CEO of WSO): [00:31:14] Go ahead. Yeah, I'm just going to say, when do you feel like you hit your stride like a year in where did you feel like you had that kind of built out? Or did it just continue to kind of build throughout the two years to the end where you were, like, basically super well connected? Or did
TexasInvestor: [00:31:26] You tell me
Patrick (CEO of WSO): [00:31:27] Kind of how you felt you progressed through that those two years? The first year was like just a huge learning. Well, first six months a year is a huge learning curve, right? Because you learn the landscape. It was entirely foreign. What are the different types of hedge funds? What are the private equity vehicles like? Just kind of figuring out what fits where? Yeah. And look, you reach a point where you kind of get to that stride, I guess you could say. And look, I'm still learning like if you're a good investor, you're always going to learn there's always something new to invest in, but
TexasInvestor: [00:31:59] For me is like once you could. Look, I'm pretty self-sustaining as about a year, and then the rest just really becomes really cultivating networks, really cultivating relationships and just ability to kind of tell what's best and not so.
Patrick (CEO of WSO): [00:32:15] So I assume the interview process team
TexasInvestor: [00:32:16] And get this was very just ad
Patrick (CEO of WSO): [00:32:18] Hoc, like you had met them a couple of times and they're like, OK, yeah, you're hired. Yeah. Well, I just remember, I don't know. I think no modeling tests any of that stuff. Oh, that was just like it was a pure culture. I do remember one
TexasInvestor: [00:32:33] Distinctive conversation with our controller who's like, I'm still really good friends with, and I told her I was like, she was like, Why should I hire you? And it's like, I don't. I really don't care. There's probably other smarter, more intelligent people. I'm going to work in this industry, so it's either going to be with your company or somebody else's. And I that's the only thing I distinctly remember from that interview. So I think it was just there was a clear intellectual curiosity and eagerness to be doing that specific thing. So was the controller.
Patrick (CEO of WSO): [00:33:04] Did she like that answer? She told me she did so, I mean, she could be bold. Just like, look, this is this is what I'm going to do. Let me look at the big thing, the big thing. I think particularly when you get to a hedge fund or you're an investor. This is what I see investing in people or from other successful investors. The number one defining characteristic is a genuine interest. They would do it. I don't want to say no matter the pay, but it's because I love doing it. There's an intellectual stimulation, a curiosity. Yep, that's what's innate with a really good investor. It's not about corporate. I mean, I'm not saying it's not about money, but like, yeah, that's I think that's just the scoreboard. But it's yeah. And I think that's ultimately what drives people right
TexasInvestor: [00:33:49] Is like that intellectual desire to go find and research interesting or whatever opportunities for sure. Okay. So you're there for two years.
Patrick (CEO of WSO): [00:34:00] Why, as you're hitting your stride in your second year, you know the person before you had been there for so long, why start looking elsewhere? Was it a regional thing you wanted to move elsewhere? The founder shut the company down, so like I said, it was OK. Yeah, it was back to the family office thing.
That's what I want to say. I'm like, it's really risky with the family offices, too. It can be great upside and great autonomy, but it can be. Yeah, that could happen. Luckily, you got two years in there. Look, remember any anything with a family office. There are, in some ways are the ideal jobs if you find the right group.
TexasInvestor: [00:34:31] It can be the greatest job ever. It really can. Now with that said, remember you're working for one person and that person is prone to the same emotions, just everything, right? So there's that there's an inherent level of volatility embedded in those organizations. And so I mean, look, that's ultimately what happened. The company shut down and pretty abruptly, I might add, so ended up looking for my next gig. I actually moved, kind of. I'm assuming your next question be where to go, how to find it. Yeah, that was.
Patrick (CEO of WSO): [00:35:04] Tell me about that, that
TexasInvestor: [00:35:05] Stint of learning, you
Patrick (CEO of WSO): [00:35:06] Know, you lost your job to landing on your feet somewhere
TexasInvestor: [00:35:10] Else. Tell me about like,
Patrick (CEO of WSO): [00:35:12] First off, what was it like when they told you where you just completely shot? Was it? Was it out of the blue? It says abrupt. You said
TexasInvestor: [00:35:18] Abruptly. But was it like a
Patrick (CEO of WSO): [00:35:20] Complete shock or were you're like kind of worried it Before that? You know, that's an interesting question. The abruptness was shocking. It was kind of one of those of like, you could tell that the guy had no interest in really focusing on this. And it was, let's just say, what were they? What was he interested in focusing in of going to his very large ranch elsewhere? So look, I mean, do
Patrick (CEO of WSO): [00:35:44] You want to be
TexasInvestor: [00:35:44] Bothered with their very expensive to right, the very expensive real estate? Lots of employees like they're not cheap. You know, how many employees did the family have?
Patrick (CEO of WSO): [00:35:57] Shh. Two, three, four six. Yes. Adds up. Yeah. And two very expensive office spaces. So you know you're dropping a couple of million dollars a year on something that's ultimately, you know. And so it's just more of a headache than benefit, right? Yeah. Look, kind of moving on. And I think anything I've got beyond that is total network driven because it's once you have that strong foundation, ideally a strong reputation. That's what kind of guides your next moves. So interestingly, our old, well, somebody I knew, our old CIO, I guess so. I'd say sat in the same office is the person that I ended up joining their firm. And so just back to that small world, right? So my old cio, my new boss, sat in the same office as my old
TexasInvestor: [00:36:51] Boss, but I had moved across the country kind of on a whim, right? I was young, didn't really have anything keeping me there, joined a large Investment consultant. So what we do did rather is large, ultra high net worth, foundation, family offices, foundations. We were outsource Research. I focused particularly on hedge funds. So. You know, we there was a number of, let's say, very well known billionaires, tech billionaires and Silicon Valley that we consulted on their hedge fund portfolios.So it was, you know, it's a simply put, is that right?
Patrick (CEO of WSO): [00:37:37] So and why did you jump there just because that connection that network kind of made you feel comfortable going there that you do a little more stable? There was that the connection, frankly, was a job, and we'll struggle to get interviews
TexasInvestor: [00:37:51] When that family office
Patrick (CEO of WSO): [00:37:52] Kind of shut down. I wouldn't say I struggled. I think one thing to remember is, and this is an important thing like, I guess with any job, but you start if you get too specific of a skill set, you almost start eliminating yourself. So, yeah, I've done a lot of work in alternative investments, but like there's not a ton of people that it's like, you know, that are looking for, Oh, I need a hedge fund private equity. So it's like there's not a ton of those jobs out there, right? So it was kind of a. It was a very Conservative investment fund of funds, person or whatever. There are those funds, though, like there's a lot of them in New York and stuff. Did you ever consider going to New York? I did. I mean, between you and me? I don't know. I spent a lot of time for work there. I don't know if I want to live there. Okay. So, yeah, so you're OK. So your
TexasInvestor: [00:38:44] You move somewhere else, you get this
Patrick (CEO of WSO): [00:38:46] Role. It takes you a while to land in that role. So did you have other offers
TexasInvestor: [00:38:49] That you turned down again? Were you being
Patrick (CEO of WSO): [00:38:51] Picky even though you're unemployed? Yeah, I mean, I think
TexasInvestor: [00:38:54] There was only one Or two, and I think those were more in your pension kind of world. And so that's
That's a different game. It's a little less I want to say, well, I guess entrepreneurial, literally, but it's the way pensions allocate. Investments are more risk averse, right? So it's your job is to
Patrick (CEO of WSO): [00:39:14] Meet something that's more entrepreneurial. I think it's the opposite of less, less. Yeah, yeah. Yeah, I agree with that. So it's I mean, look, the whole
TexasInvestor: [00:39:21] Point is like your job is to keep it, keep it down the fairway, right? So nothing, nothing excite.
Patrick (CEO of WSO): [00:39:28] You didn't excite you. Yeah. And I think honestly.
TexasInvestor: [00:39:33] Yeah, I think that was Personality wise, maybe not exactly the best fit for me. So at the at the consultant, I was actually there only briefly back to the network. I had a colleague that I met in the area who ran an investment firm and he took a position. You know, when I moved up there, we talked ideas, we stayed in touch. You know, I had helped him get into a couple of specific investments.
Patrick (CEO of WSO): [00:40:03] And your previous firm, both actually at both. Yeah. And just again stayed in touch.
TexasInvestor: [00:40:11] Try to be creative wherever I could. And he'd actually reached out to me, took a position at a large foundation, I guess you could say. And also, I'd be interested in stepping in for him as more of a portfolio manager director of research role, which again, let's caveat that it was a very small organization. So trust me, I was not rolling in. You know, it was it was more back to the experience, the exposure, right?
Patrick (CEO of WSO): [00:40:38] Because this is the latest role. This is your time of your latest role. Yes. And so are you able to share kind of pay at the family office and
TexasInvestor: [00:40:47] Then to this
Patrick (CEO of WSO): [00:40:48] Consulting kind of hedge fund research analyst role and then latest like just ranges? Even so, look, and it depends on the structure the family office more like 80 to
TexasInvestor: [00:41:00] One hundred, um, consulting, I'd say about the same. Now the last role which you start, where it starts getting tricky is when you start getting into GP and equity interest, right? Because then there's theory and reality.
Patrick (CEO of WSO): [00:41:14] So tell me cash comp and then tell me potential. You know,Let's just say cash comp was eighty to one hundred
TexasInvestor: [00:41:22] Similar. Ok, but you have some upside now. Yeah, right. And that's. There's some funny things about that, but, you know, I think
Patrick (CEO of WSO): [00:41:32] So is this is this there's LP's and GPPs and there's Kerry and all
TexasInvestor: [00:41:36] That good stuff.
Patrick (CEO of WSO): [00:41:37] It's very much a hedge fund. Yeah. Ok, well.
You know, I guess in our case, technically, we were a fund of funds, so I still same structures, albeit more depleted. Yeah, right now, ok, yeah. And so you're doing a lot of the work, similar work you did from
TexasInvestor: [00:41:53] When you were at the family office. Basically, you're going, you're
Patrick (CEO of WSO): [00:41:56] Making those connections again. You're OK. Very cool. So tell me, how has that been? Is it a smaller office,
TexasInvestor: [00:42:03] But not smaller, probably smaller
Patrick (CEO of WSO): [00:42:05] Than the consulting. But yeah, yeah. Tell me about that. So we got three people and all the investments. We have somebody that does a lot of our operations
TexasInvestor: [00:42:17] Work back office. And then this is called founder who does more of the client relationship, et cetera. So look, it's kind of back to I was saying before it's about. The level of exposure you get, right, because you're the guy for better, for worse, right? And so that's the key difference is when you make it an investment decision, if it goes bad, there's no director or anybody else to hide behind like that one was you. So see how that's. It's it really changes the way you think about a lot of stuff. I think, I think for the better.
Patrick (CEO of WSO): [00:42:57] So how do you think about like portfolio construction and just like the
TexasInvestor: [00:43:00] Fund, like
Patrick (CEO of WSO): [00:43:03] The fund of funds and how you're allocating things like, is it super? Maybe if you can, whatever you can share. Is it super like? Diver, like, are you allocating resources to like 30 hedge funds,
TexasInvestor: [00:43:14] 10
Patrick (CEO of WSO): [00:43:15] Hundred? How do you think
TexasInvestor: [00:43:16] About that and your diversification
Patrick (CEO of WSO): [00:43:18] And strategy? So for our group in particular, it doesn't. I mean, if you're it depends what game you're playing. If you're a family office, if you're a foundation like everybody's trying to accomplish something different and you should structure your asset allocation accordingly. Right? So what we do? I mean, look, we help with some direct stuff like we have a couple of ultra high net worth clients. We'll work with either real estate deals or
TexasInvestor: [00:43:44] Maybe some co-invest, but predominantly in the flagship vehicle. Mm hmm. We're small. And so what is our value add to like, why should you give us your money, right? And it shouldn't be put you a millennium or any of your marquee names, right? Like, why would you define that or what we consider our value pitch? Our value proposition is. We're going to go find interesting and unique investments that you can't find elsewhere, and because the whole point of the hedge fund, let's just step back, the whole point of a hedge fund is in my mind, It is either the only way to access a particular asset class or strategy is the best way. So the only way there's, like I said, an infinite number of hedge fund strategies and hedge funds are pretty nebulous term. There's an important
TexasInvestor: [00:44:32] Strategies, and sometimes the only way to invest in them is through this vehicle. On the flip side, it might be the best way. So let's think of a biotech manager.You and I could go buy some biotech stocks tomorrow. I would recommend we let the hedge fund manager with the PhD and do that for us. So that's the best way. So that's kind of how we approach it, right? So with those metrics? So with those kind of characteristics, the question is, OK, so what's good, right? Because there is a whole bunch of junk out there. So really, where we see our value add is we go talk to a whole bunch of people. We turn over a whole bunch of rocks, but there's really interesting managers or strategies or just even investment opportunities. And by definition, these guys aren't at Goldman, they're not at Morgan Stanley's flagship conference. They don't market their keep to themselves, and they're busy making money, right? So that's how we approach it. I mean, I know it sounds simplistic, but you learn a lot. You see all sorts of different things. And I think that's what keeps me doing it is you're consistently learning, you're consistently seeing something interesting. And it's never I always say it's never dull, but. It's. Not as dull as some other things you could do.
Patrick (CEO of WSO): 00:45:51] So tell me a little bit about just some of the pressure in the hedge fund industry. That's the experience of the last several years and just how you view. I mean, there's a lot of fee pressure already. And then you as a fund of funds, how you view kind of. Your ability kind of withstand that pressure, obviously, if you're doing a great job as managers, there's some protection there. But can you talk to me about your thoughts there? Like, do you feel like this is a good place to be? Do you
TexasInvestor: [00:46:18] Feel like as long as you're at the right,
Patrick (CEO of WSO): [00:46:19] You pick the right on the phones, you're OK? What's your thoughts there? So that's a lot. There's a lot of interesting questions there, right? So first of all, I think the way it's the old model is dead. I mean, I think without a doubt, like the old access model, we're going to aggregate assets and put you in big names. There is no value to that now.
TexasInvestor: [00:46:39] Potentially, it's the question is where do you add value? So one maybe finding something interesting, finding something new, ideally giving some
sort of seed capital and taking a part of the general partnership? You're essentially investing in that fund. Is the business right? Mm hmm. That's where you add tangible value to not only yourself, but your investors. I think the hedge fund industry as a whole. So if I was giving advice to somebody that's like, I want to go work for a hedge fund because I'll make millions and millions of dollars, like, yes, there are those cases. But I can tell you, for every single multi millionaire billionaire hedge fund manager I've met, I've met hundreds that make less than your average software salesman. And again so. Why would you do it, I know this sounds super cliché, but you have to love the research process picking stocks, and that's, I think, not only what makes you successful, but if you're only concerned about making money like for the love of God, go do something else. Like there is so much like it's just not worth the time. Yeah, exactly. But I mean, again, it's. If it's if you like the research part, if you like learning just the intellectual, I know I keep saying this, but it's true that intellectual curiosity. Mm hmm. It can be very rewarding. So but. Then ask yourself that question and. You know, I think try to play a different game. Right, so maybe you're value oriented, long short manager. Maybe that's tougher, but can you invest in, I don't know, a fine art strategy or of government or, you know, investing in government receivables like there's a lot of different ways to do it. It just may not be the tried and true methods for sure.
Patrick (CEO of WSO): [00:48:29] For sure. Interesting. So, yeah. Anything else you'd like to share before we call it anything, any kind of final words of wisdom? I think you kind of just shared your final words with them. But anything else that we missed,
TexasInvestor: [00:48:40] You think is important? I mean, hopefully this has been somewhat helpful for people. I think the other thing? I would tell people is what's the guy look for asymmetric opportunities right to go, meet with people go like if it's not, if it's not hurting you, go to that happy hour, go to that, just talk to people, build, build your own opportunities and to the next to that next point is the long term greedy, right? Like what? Where does this get you long term? Whether that's pay, whether that's a profession, whether that skill set like, I'm not saying. Don't care about anything short term, but like. Humans by nature are short term oriented. Try to, you know, try to try to build your future success. So yeah, exactly. Very cool.
TexasInvestor: [00:49:31] Well, listen, Texas investor,
Patrick (CEO of WSO): [00:49:33] Thanks so much for joining us and sharing your wisdom. All right, thank you. And thanks to you, my listeners at Wall Street Oasis. If you have any suggestions whatsoever, please don't hesitate to send them my way. Patrick at Wall Street Oasis. And till next time.
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