Earlier this year, when catching up with a friend and talking about love, he shared his greatest relationship advice. “You want to marry someone who believes the world happens because of them, not to them.” And it really stuck with me. Both he and I are people who have big dreams. That in order to make our dreams happen we need every oar rowing in the same direction. That includes the people we surround ourselves with. More than anyone else, our romantic partner is likely the one we spend the MOST time with. But that in itself is a slight digression.
In a somewhat parallel sequence of events, at the end of last year, I had the opportunity to join a much, much larger shop. And while I ended up choosing not to join, the primary question I was asking myself was: If I were successful here, would I be successful in spite or because of the institution? The truth was from an outsider’s perspective, maybe even personally, it’d be really hard to tell.
Now why do I share the above? And where the hell am I going with all of this? What does love have to do with career opportunities?
So… this won’t be my most graceful transition between thoughts, but in my head, they all orbit the same genre.
One of the questions I used to ask LPs during my time in investor relations was: “What was the last investment you made that didn’t work out? Without naming names, what happened?”
And there are two reasons I ask that:
- Oftentimes, knowing what an LP doesn’t or won’t ever invest in again is more telling than asking them what they do invest in. LPs are, by definition, generalist. And under that premise, they technically invest in “everything,” so you’ll end up getting very broad answers, especially if they cover more than one asset class.
- Do they describe an investment that didn’t work out with active or passive verbs? Did it happen to them? Or do they own up/exhibit agency over their own decisions? Are they arbiters of their own destiny? “I made this investment decision, learned, and this is what I won’t do in the future. Or will still continue to do.” is different from… “This mishap happened to me. How could I have known? It is what it is. It’s not my fault. It was out of my control. It was someone else’s decision.”
For the latter point, people who don’t seem to be able to own up to the decision will likely not be your greatest champions if you’re an emerging manager. If at all. To them, life happens to them. They can’t control it. They have a narrative they keep telling themselves that they have no power. Some might be true. But these folks rarely stick their neck out for you.
By default, most emerging managers look less than pretty. A million reasons (most of which likely true) of what could go wrong. And it’s actually in the best interest of a capital allocator’s career and income that they stick their neck out for risky bets. Many institutions don’t compensate their team based on outlier performance. So incentives won’t be aligned. But to borrow an adage of Jobs, “the people who are crazy enough to think they can change the world, are the ones who do.” And at the very minimum, they have to believe they can change their own world.
When things are non-obvious—from a returns perspective or strategy or anything else—you need people who can and will invest courageously and own that decision.
Photo by Everton Vila on Unsplash
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The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.