[Music] The Four Horsemen of the investment apocalypse are fear breed hope and ignorance and only ignorance is something that you can address I saw some of these folks they lose everything in a day Le stock goes to zero they lose their house they get divorced as a venture capitalist your job is to serve
your three bosses the entrepreneurs your clients and your colleagues that is it that is your job you don't need to be right every time to dominate or be fabulously successful if you can't reverse a position then just go to the sideline it's just a lot better than bleeding I realize that my judgment is
the only one that matters for a particular train idea because everyone's fallible and to some degree Or Another We're All groping in the dark well hello everybody it's jimo shaas with yet another infinite Loops now today's guest I have really had to coax on to the podcast is my friend a alalia
who runs a hedge fund or VC fund rather excuse me the founder of island green Capital Management now why did I have to coax you on here a and welcome thank you I think um for me and what I do in Venture you know when you're constantly trying to service the entrepreneur your teammates or your LPS uh you really have to be in a position
to not want the glory right if you're helping an entrepreneur you want to make sure that they dictate the narrative in Venture you know they have investors that sit on the cap table that take board seats and they're effectively your boss they're thinking well can she led us to the C can she lead us to the D and
the IPO um so me speaking about uh anything in general to do with the business I'm always a little bit reluctant to do because flying Under The Radars are are calling card essentially um and if you don't want the glory there's so much you can learn so much you could do and and so many great companies and invest themes you can be a
part of so um that's probably why also personality wise I just kind of like reading and and and being a nerd and getting lost in my spreadsheet or doing the on-site visits in the factory in witch talk Kansas or or wherever the business takes me you and I have had some great conversations about something that we
both think a lot about um and that is this idea of how do we approach risk how do we approach risk management uh we're going to talk about some of the lessons you learned when you were at Goldman but but we have very similar views on that uh one of your quotes is Ironically in a changing World
playing it safe is one of the riskiest things you could do and I've often said that in the short term the investment which appears to be the safest like say t- bills is in the long term the actually the riskiest investment you can make so so let's dive into that yeah you know the thing you're trying to avoid usually
becomes the thing that happens because it's at the Forefront of your mind and because you think about it all the time the human mind has this unique ability to manifest what it thinks of most um whether that be good or bad um but particularly if it's something you're trying to avoid um when people think of
T bills of course they pay you an astronomical amount relative to the recent past of zero and and low interest rates but you know if you look at Someone Like Larry Summers right um treasury secretary under President Clinton well-respected guy across circles um and even he tweeted out that hey if you measured
inflation the way we did it peaked at 18% it's coming below six now so you're 5% on your T Bill while attractive relative to recent past maybe on a real basis is um not attractive at all whatsoever um and so I I think people need to to really think about what the real nature of the risk they're taking
is and I guess one of the best lessons I learned was during the crisis in Zimbabwe do you remember those trillion hundred trillion dollar notes and things of that nature the yeah so I had a buddy that worked next to me and uh he was uh from Zimbabwe and I asked him like oh man things supped to be awful like I
hope your family's okay like anything I can do and he kind of laughed and he's like man everything's great like I don't I don't understand why you would say that or I thought he was making fun of me or just you know something's happening and he goes dude when you can see a hyperinflation coming People Like Us will take out
loans and we will buy Prime real estate and then we will pay them back with this trillion dollar note sitting on my desk here so my family got to really you know triple the size of its of its land holding is in real estate holdings because we've seen how this movie ends and that was such a wild lesson to me
because if you thought hyperinflation was coming maybe you'd buy uh gold maybe you'd buy um stock Assets in other countries but you could have there there's many iterations and expressions of the trade for what safety really is and if you have a home bias or you can't actually invest outside of your own home
country um a lot of counterintuitive things happen at the extreme at the limits of of Finance let's talk about some of them uh because I've seen this pattern time and time again I love that story about uh your friend from Zimbabwe because you know what one of the things that both you and I do is look at things you know
from a different perspective I guess would be the way to put it and like the the precautionary principle which rules uh so many societies if you like do your homework and you look at the most uh you know tightly wound precautionary principle above everything else right like we can't take this risk because and
it's so easy to fill in all of the reason it's really easy to find things not to do something and yeah I also completely agree with your with your analysis of whatever you are spending all your time thinking about it's like don't sit there and think don't let my portfolio go down you know lead me to Ru
don't let my portfolio lead me to Ru guess what the universe is gonna say oh he wants his portfolio to lead him to Rune okay that's what we're going to do every single time and so let's talk about how you look at risk in particular because it's very different than the way even your average
venture capitalist or average hedge fund uh manager looks at it yeah I think for me risk is not really a question of sh sh it's a question of SP um because the the sizing of a particular position will dictate your ability to hold it and then the next layer is what gels with your emotional Constitution and that will dictate the
expression of the trade um you know there are occasions where you can buy in the money options in a stock that you like and you know you can maybe a Stock's $10 and you buy a $7 Co well there's $3 of intrinsic value maybe there's a couple cents or maybe a dollar over well if you think there's going to
be a big move but you also think there could be a big drop there's a way to to risk only three in the bit dollars on a $10 stock that you think could really motor um and you can either cut the amount ount of upfront invested Capital through that strategy or you can simply do three times as much or or however
much you want to lever at that point um I think a lot of times people will just think hey I'm taking less risk because I'm buying out of the money call but the implied to realized differential is so high that they're overpaying in Invidia earnings um when it was breaking out above a thousand uh 100 and split
adjusted um you know I think the implied move was something like 12% so there are times to play options there are different structures that one could take um but I think that when one's looking at Price risk in just that Dimension you really need to understand what your personality can tolerate from
a risk standpoint that will allow you to do the right thing continuously then it becomes a question of okay that's the price risk but what about counterparty credit risk you know what about other risks in terms of the Greeks what about risk when it comes to how that impacts the rest of your portfolio do just have
the same trade three different ways if you buy three semiconductor stocks and you think you've you know Diversified your Nvidia risk with AMD and broadcom you know you should probably have a conversation about that um you're tripling but um I really think about the expression of the trade probably way too
much uh to see what's optimal and then I spend even more time thinking about or have historically what gels with my personality and that's a function of the things I saw in the crisis yeah that is something that what I started out I was a real protier right it was like here is the way you need to invest listen to me I shall tell you I
shall tell you all and then I realized what a [ __ ] up I had been maintaining that attitude and your idea is the one I have come to fully Express for investment the the key thing investors need to get right is what is right for them and their personality right yeah like I I love ball I I will go people around me think
I'm absolutely [ __ ] out of my mind but I love ball and so I perceive these things very differently than other people and as I've talked to more and more both end users right so not professional investors but also with professional investors I realized okay what an idiot I was to suggest that this
was the one through way because if you can't put a strategy into action or if you can only do so in kind of a hit or miss way your results your results are going to be really poor and so how let's talk about like for our listeners and and viewers how would you walk somebody through kind of getting to
the essence of hey here's what I think I can handle in terms of risk return Etc man that's a great question there's two sides of that coin um there's how you feel about your process and how it gels with you and then there's how you deal with success um I don't know if you remember Ed sakota he said everyone gets what
they want out of the market so if what you wanted was attention because you failed you'll definitely get that um if you want riches beyond belief and you you're probably put in the hard work to do it you you probably get that too um but I think how you deal with yourself and then also how you deal with uh
winning is is the other side of the coin for me I got lucky in you know ' 08 I think I was I was 24 years old um they just let go of uh the head index Trader at Goldman um they brought me and another senior Trader over um so I went from putting out trade ideas that no one read to being a part of the biggest risk
book one of the biggest risk books in Europe uh the guy next to me ended up leaving uh after a few months for for personal reasons and you know you're kind of there on your own and the luck is there's no way on Earth that would happen today you're not giving a 24 year old a several hundred billion dollar
book and saying hey go prop trade that have at it um equally they had to have had enough risk going on macro wise for them to not really think about my age but just to say is he producing is he thoughtful can we trust him and so um a lot of luck involved in that but within that a lot of lessons were learned
around the emotional Constitution required to trade and then also how I thought about it there were Heroes of mine that I idolized that were just unbelievably intelligent and every day was a joy because I was never the smartest guy in any room anywhere including the bathroom and so you know I saw some of these folks not all but a
couple of them they lose everything in a day I mean they're riding High tens of millions hundreds of millions of dollars personally they came over from from Leman um you know their house was secured on Leman stock Leman stock goes to zero they lose their house they get divorced and all of a sudden you're like
wait a minute you have the exact same net worth as me which is you know around zero um and watching that happen uh was a shock to the system because it caused a handful of things to happen but the main one was I realized that my judgment is the only one that matters for particular trade idea because everyone's
fallible and to some degree Or Another We're All groping in the dark um and so that was seared onto my prefrontal cortex forever and ever um I had to do the work I had to agree with the trade and I had to put it on and own it um because I saw just incredible people just you know get fired in in half a
minute or or lose everything in half a minute and so um I thought that was um remarkable that the mark to Market is the only true purifier in the the only true objective judge like I like to think my wife's objective about me she's not um you know uh the the only thing that's really objective it's not your
relationships it's it's something like that it's the mark to Market and so uh watching that was um a really big deal um and I think you know a lot of my friends that aren't in finance are like what's the big deal all you can lose is what you put on and you can make within a certain probability a certain amount
I'm like yeah that's Trish if you have an option positions on on you can lose a lot like ask the Porsche VW folks who got crushed um ask ltcm the smartest guys in the room ask you know this happens over and over again ask anybody that's actually in finance and um the difference is your emotions aren
finite and aren't probable your emotions are more like you know in physics or in mathematics when you're stress testing a theorem and so you test it at the limit which is negative Infinity positive infinity and zero to see if the theorem holds true your emotions are like that so you might lose 1% or 20% but you're
going to feel like negative infinite bad emotions um you might make 1% or 10% if you're new you're going to feel you know elated as if you just conquered the world and so um I think the ability to manage those emotions in in a system designed to make you feel them at the extreme is quite important and for me
that means that I only look at things that are monopolies and oligopolies it means that I will not lever uh unless I see something that I can knock out of the park and then I have very strict risk limits as to how much of the portfolio it can take up in terms of size um I'm never going to take
something that will put me into stock that's three times my portfolio or something like that or in the case of venture capital it means that I'm trying to find the very best company in a specific category trying to help the entrepreneur out uh and making it a very big concentrated 10% position in the
portfolio never having more than 10 to 12 names and to get back to the risk piece for me that's because if you diversify a little too much and for me that's more than 12 positions you're effectively it just shows a lack of confidence in the process to me and it shows a lack of confidence in how you handle adverse situations um and if you
are blessed let's say in venture to not have a mark to Market you better do all the work all the work possible and you better have the most topf flight company so that since you can benefit from no Mark to Market in Co if every Venture investor had a liquid Market that they could
eject they would have hit eject but they didn't and some of those companies are now you know 10x 20x 30X um but the market doesn't treat everyone the same the liquidity from the FED doesn't treat everyone the same you really need to put yourself in a position emotionally where you understand how you're going to react
at every phase of the market and and how you've reacted in the past uh and structure as well yeah so much to unpack there because that was the other conclusion I came to as I actually started running money and it you you you you realize that you can simulate everything by the way I advocate doing so I I wrote a piece called The Thinker
and the pr and and you takes you through my grandfather taught me a thing which he called premeditating which essentially is okay so here's what I want or think I want what happens if I get it good but also bad right yeah what happens what happens if I don't get it bad but also good right and so it's a
great way to clarify your thinking but the the more I dove in the more I saw that you know the The Four Horsemen of the investment apocalypse are fear greed hope and ignorance and only ignorance is something that you can address fear agre well you by that I mean without trying right you can address you can address
ignorance through learning through do talking to people smarter than you Etc but the the ones that people you can affect but it's really hard because you got to figure out your own emotional makeup are you know fear greed and hope right yeah and so the deeper I got the more I understood that it really is an
emotional question and the immediacy of emotions and and the way they're I they're asynchronous with the way that we should behave right so like TR I'm going to blow the quote but the essence of his quote is you know driven by feelings that are destined not to last we make our irrevocable choices and and like that's what it's
like to be in one of those Leman moments and you know dur during that whole crisis so my solution was to be a Quant right like so the only emotion that I had to control was not overriding our models right and so after after I retired from oh Sam like that somebody asked me like what are you most proud of
and I said honestly what I'm most proud of is that I never overrode a model emotionally and and during the crisis my uh head of research uh used to come into my office every morning say good morning right like hey Jim how are you and I'm be like fine and well after the crisis he at a dinner he said to me I have
something to confess you and I said what's that goes remember during the financial crisis how I came into your office every morning and said good morning and I went yeah and he goes I was doing that because I was so [ __ ] freaked out about what was going on that when I walked in there I heard Bach
playing I saw you were very calm he said it like it like literally brought my own temperature down and and so like but that's not right for a lot of other people right one of the things that you also mentioned you know this and my friend George Mack talks about a lot the increasing the surface area of luck
right so you mentioned you get put chared up this ridiculously big book uh at age 24 like a lot of people would be would make that would make them crumple right it's like I've seen Traders literally that can't do it they can't push the buy or sell button just because they're they're so freaked out about what is happening to
them emotionally that they can't do it but I think that the calibration of One's Own emotions is a is a good topic here right because you mentioned uh several things that you did personally to do that but like if you were coaching somebody who you know you found to be super bright uh you know very sort of suited
to this world um a like where would you start where would you start with your questions of that person to kind of calibrate their their risk uh tolerance yourself oh was two parts I'd zoom out and um I really try and sus out how they felt about their partner and how they felt about their choice at
career uh that's step one uh my my aunt is a psychiatrist and she used to tell me when I was a kid all the way through to today she's like there's only two choices that matter who's your life partner and what is your career because you know one could be bad and one could be good and you have a good life if both
are bad you're in hell and if both are good every day you're walking in heaven and um so if I understand kind of how they're feeling how how they are on an emotional level from from a big picture standpoint um it gives you a little bit of insight into what matters to them and where their focus is drilling down you
can ask questions about them I think if someone says they did a thing you know you just simply chill back the onion and drill down until there's nothing there and you quickly find out was this a guy who worked at pick a generational company stripe or a SpaceX or a Goldman or oy Asset Management you were did you
just have a Patagonia with the logo said that name or did you actually do the deal that you say you did where you actually deployed x amount of capital under these companies and so I think pretty quickly you can sus out where they are um I I think too you can ask obvious questions like do they matter to
them if you say hey does does money matter I think it's popular to say money isn't everything is the root of all evil which is a misquote obviously or you know things of that nature but um at the end of the day there's this drive for a scoreboard and it solves multiple problems you know
um understanding the person's background kind of gives you an insight to do they have a choice or not like I mean so much of it's driven by mimic desire and doing everyone in my class from Princeton went to you know they went to Barkley's or they went to a city group or what ever so I'm here like how how much of it's
real and um the more you drill down the quicker you get there um their willingness to admit mistakes their willingness to take full accountability and say I'm wrong um it is shocking how hard it is to get people to say those two words uh but I really drill down there and then I drill down into do they
want accountability because everyone says they want a meritocracy the reality is every human wants leadership but they don't necessarily want meritocracy and so depending on how you structure their compensation you get to learn a lot about whether or not they really do want to eat what they kill or whether maybe
they want to do that just not yet they're not ready for it or um if they want something else entirely or if they just want a Cs and so I think learning about their views on where they're headed learning about their views on partner and career is it a function of theic Desire are they kind of on autopilot on some of these bigger
background choices um learning their expertise by saying okay and then tell me about this piece and then this piece and this piece and finding where the dead end is learning their actual quantitative rigor um and then learning like their views on compensation and accountability those that Matrix kind of
is I mean that's essentially the bulk of the hiring Matrix we use at our firm that I've always used um but uh I think that gives you a very good picture of where they're at kind of on Mark to Market basis as it were so as I listen to you like I'm tiing off in my brain uh you you're you're you're looking for people with high
agency accountability who are uh sort of the the least affected by B medic desire which had it its moment a couple of years ago you know lots of books Peter Deal's real big on mimic desire and reneer are I studied him for different reasons but then found how applicable they were to like the market and I love
your idea for example one of the reasons why naming my companies is simple is because when I started my first company uh back when I was 27 years old speaking about having a great life partner my wife now of 42 years um said to me because I had this long list right of of you know macrom might or uh you know New
World in you know just horrible names and she looked at me and she goes Jim do you really believe that you're going to succeed at this and I'm like yeah of course I wouldn't start it if I didn't believe that and she goes then put your [ __ ] name on it the only way the only way that you're gonna absolutely do 100%
burn the ships is to put your name on the company and I'm like wow and then of course I started immediately looking at all the old school worms right they were all named after their Founders and partners right yep it was like JP Morgan was a guy meral Lynch Pierce fener and Smith were guys yeah right and and so
but the the that that just cut through so much for me when she said that to me and it's kind of like duh so uh I found that to be incredibly helpful because you're not just putting skin in the game you're putting your soul in the game if you put your name on it and and but then your other comments are also equally
true it's like one of the things when I'm working with younger people who really want careers in finance like I will explore getting them to the point of saying I'm wrong or I don't know and like the best things in my life were opportunities where I was wrong and I didn't know and and just being able to
say I don't know let me find out and and I that that that leads to a a view on how people look at mistakes right so so I I do mistakes as portals to Discovery and and and growing my my mental models and and a lot of them are going to be completely wrong and there's nothing wrong with that right in the age
of tmy and his astronomy guess what completely wrong very useful like very useful for guiding those early ship to Discovery but you know along comes cernus and you got to change your your outlook do you look for that too do you look for an ability to in kind of real time because you like Mark to Market
like in real time for somebody to say he I'm [ __ ] wrong we got to change this I mean I love it if they're that thoughtful that they can say that that's huge um it tells me a lot about them and it allows us to then address the situation at hand um how many people do that very few um that's probably why you
know in a year we've hired two people three people um it takes a long time to to find these great people um but you're right the stakes um kind of purify everything they refine the process they iron out the wrinkles in in your worldview and your risk management system and whatever it is you're working on and um I mean I don't know Rocky
Miller is right what like 55 60% of the time and he's the greatest Trader in history so I mean you don't need to be right every time to dominate um or be fabulously successful I think uh I think you just need to be really good at kind of cutting and either going to the sideline or reversing and you know so not
everyone can do that like if you can't reverse a position then just go to the sideline that's just it's it's just a lot better than than bleeding um I had a boss named Wayne and an instrument I was trading was at like 9091 and uh I I didn't I wanted to buy it at 90 um and then it went down to like 8889
and he goes did you buy some and I go no and he goes oh good well you can buy some now and I was like well and he goes well let me get this straight at 90 you like it your conviction hasn't changed at 88 you don't want to buy it and I go no and he goes at 89 do you want to sell it and I go well no and he goes okay
well what good are you then and just walked away that's kind of uh you know raed it up like you have to get in the game and that's normal and yes you will make mistakes like just step up to the plate and make them um and figure out what your analogy is like so much of learning it's for a lot of people it's
visual sometimes it's audio figure out the thing that allows you to make the mistakes with regularity um so that you can just get on with it so like a buddy of mine said to me he used to play baseball and he's he's just like yeah a lot of popups a lot of popups but you know then every now and again is single
or double or whatever and popups you know is someone who is objectively awful at baseball that that really kind of resonated with me but you know whatever it is that resonates with you that gets you to get on with it in the right way I think I think is really critical yeah and you know the sports
metaphors are legendary right like I was just see I just read a thing uh the other day about how many shots Michael Jordan missed right oh and and the number is massive and and babe Bru number of times he struck out it's so funny because I think our human OS guides us towards only looking at the one side of The Ledger right like people
it's like no no no no no no you need to look at the full history of in the case of sports and an athlete but in the case of markets the the trader or the investor and you know one of the things that I was just talking to some of my colleagues at shy Adventures uh yesterday and we were talking again
about the financial crisis uh in a different context and one of the rules that I had when I was at osam for everyone at the firm starting with me was we don't call people when we're killing it right because like when we're killing it they know we're killing it they don't need us to call them and say hey hey
look at look at how good we're doing look at how smart we are however the rule was when we are absolutely getting the [ __ ] kicked out of us everybody's on the phone everybody is on the phone to our clients because that's when you they want to hear from you and I had one guy I still remember
again it was during the financial crisis say to me you know you're the only manager is who is called incoming yeah and and and then he told me about his frustration without being able to get other managers up line and like again to me those simple those simple things Orient you I guess and the firm to understanding like it's hard I
mean obviously nobody when when when let's say the market itself is down 30 and your stuff is down 45 or more right and there's this huge Delta it's not natural to want to call the person whose money is down way more than it would be if here or she had been at an index fund but that's the time that's the time to
call them that's how you build trust right I mean I don't understand they're not stupid they know exactly what's happen what they want is to know that you know exactly what's happening and if you're not calling then there's a real problem there and and it you know it breeds insecurity because it
shows incompetence and that's natural um you do want to overcommunication should trade a Markt Market book and feel accountable to themselves for a long time to really you know just beat the whatever it is inside of you that thinks they're better than everybody else because we all have that to some
degree or another um and just to just to make everything humble and nice and smooth again right like um I I think that's that's really critical that's funny no I I think uh yeah your clients see their statements they know they know when you're making money they're all right you you pick up the phone when
they call for sure but you definitely pick up the phone if you need to alert them to something yeah and like it you know let's not kid anyone any anybody who decides they want to come to the world of Wall Street like when when I became just infected with the with that bug I was still a teenager and like
before she was my wife she was obviously my girlfriend and like she's like why are you so obsessed with market and I'm like it's the Olympics of buiness it is like markets are I mean they're just endlessly fascinating and and they can have endless outcomes right and so it's just like this great puzzle that I I was
really interested in trying to figure out because they touch everything right like we started our conversation about how you got to calibrate yourself emotionally right because that is what's really driving things I'm a I'm a huge fan of the uh well I guess he's I don't know what I'd call him I guess the
enlightenment author Jed McKenna who himself that's a that's a n diplom and he I I always joke that he the author created the fictional character of Jed McKenna to tell us we're all fictional characters but he he a friend of mine Dan Jeff who's a a technologist wrote a brilliant essay couple of them on Jed's
work and one of the things that he found was who who is the closest to reality right like the way [ __ ] really is without your fantasies without the way you want the world to be and and he lists the following three the first are emergency room doctors who like have to make a life andde decision immediately
the second Special Forces special forces are like they can't have delusions they they have to have the best map of reality as it exists right in the here and now and then the third one was the one that surprised me Traders he said basically people who trade billions and billions of dollars like he loved them because he goes like
they're the they are the closest to reality and they have very very few Illusions good ones at least yeah right and and you know it reminded me he's got a great quote which is um you know uh if somebody comes along and doesn't buy your fantasy narrative about having a tea party for Lord lion and Lady gazelle
maybe they're not mean and maybe your fantasy narrative is just a little bit fragile and he just see so much of this today right like like these fantasy narratives that just make you shake your head and and like how do you maintain these with with like the the best thing that happened to me was well let's step
back the worst thing that happened to me I was originally interested in trading options yeah um and the the the Fatal thing happened my first trade I doubled my money and I like I am God's kid to markets I will simp be a multi-billionaire and then of course the market kicked the [ __ ] out of me for the
next several years and and it's like you I I am pretty convinced no matter what your level of abstract intelligence no matter what like how clever you are how however good your ideas are you need to be made humble by the market yeah because if you're not you're going to get you're you're [ __ ] because ultimately ultimately and like I have it
like tattooed on my brain if I think one thing and the market thinks another I'm wrong right and and and so that just that simple thing get it's really hard for people to get to no I mean that's absolutely right I a lot of people think a lot of people thought Wing was very direct and abrupt with me and uh one of the guys like man
he he really goes after you I'm like actually I'm fine with that we're actually talking we're communicating uh he's preventing me from making bad mistakes it's just one of those things like everyone thinks because they're good at one thing they're good at everything right and as humans we have a
tendency to believe that and so the difference is like I have doctors in my family does that mean I can go into a theater of operation and conduct open heart surgery no I I've read books and contracts does that mean I can go into the the courtroom and defend somebody and understand the legal ease and procedure
absolutely not but in the market you just literally have to sit sign a document to Wi are the money in and you're good to go you're playing against the Michael Jordans of the space like you're literally squaring off against Dron Miller and ptj and you know all those guys and there is no guard rails
it's just you on your own trying to figure out reality um and uh I I think that that's a great hierarchy of folks i' had one more pilots you can't just um you know fake being a pilot you kind of have to know how to land the plane take off you can't just decide to maybe or maybe not running the mountain
you have to be really good at it and so um I think that's another uh another one but you know even some of the guys I've worked with historically some of the best guys and girls um were were Special Forces operators um that can cut a position with zero remorse zero thought I'm going to go to the gym now dude down like 3% to like
okay yeah I I don't care dude I'm going to the gym um you know I've seen bigger things than my 3% p&l and so um I think that that that's a really good one it's very important it's also it puts perspective on things as to where where you stand because some things are are not linearly difficult they're
exponentially difficult um right and and as Traders we kind of on the bottom of that totem pole and get to have the most fun um but nevertheless it is interesting to see like I said earlier your your emotions will range from negative to positive Infinity unless you can really control them and bind them
and and understand how to channel them um and people most people just you're never forced to do that right um yeah I'm curious about the gentleman that that you talked about before that couldn't push the button to buy or sell um I wonder what his background was you know because there is no defined
background like uh the old give me a uh poor smart and hungry um yeah that does work most of the time there's a reason that saying is popular but you know I've seen a lot of insanely wealthy young folks that want to make it on their own that want to prove that they're not there because of their mother or father
or whatever um work just as hard do just as well so there's no one template but um certainly there's a lot to find out about on S yeah that that's another great quote about the market if you don't know who you are the market is a very expensive place to find out and and and and again it's that it's that reality and like like uh your boss uh
Sir John Templeton had he he knew his own limits I remember reading an interview with him and and he said that uh he would often put bids uh uh good till cancel bids on stocks that he loved way below where they were trading like if if it was trading at a 100 he would put have been like 20 good ta cancel and
they're like why do you do that and his response was beautiful it was like well because I know that if the stock ever actually gets to 20 I will never ever ever have the emotional fortitude to push the buy button yep and so his way of dealing with it was to do that right and there that's what I love about when
you study like some of these great investors and Traders is is they figure out the right way that's going to work for them and it's different for everybody right so for me it was like okay uh I I know that uh I'm running human OS just like everyone else I I'm probably not any better or any worse
probably somewhere right in the middle of that fat bell curve as to how I react to emotions so what can I do well I can neutralize them by being a qu and of course I was drawn toward algorithmic investing anyway how how have you noticed the changes of of your history of trading how what has ported over
toward uh Venture in terms of uh you know the way you think do you think do you have different systems when you're looking at Venture Investments which by their nature are much longer term yeah I I think um I want to intellectual stimulation is kind of one of the the key benefits of both career paths I think in in Venture
um everything sounds sexy at seed Jim we've got this chocolate that cures cancer and it can grow in any climate this cocoa bean and you can just you know Harvest it immediately everything we've got this laser that loosens up the gravel or whatever you'd call it the moondust and it creates diamonds and
we're going to bring them back like there's all sorts of things that sound incredible um I know that's not for me um micro caps are not for me I want the big liquid you know Blue Chip tickets that I can trade options on that are going to be here forever or the guys that are creating a new sub sector where
I think they'll be uh the winning player um regulatory Advantage IP Advantage whatever the case may be and so that ports over in terms of my mindset um I run a concentrated portfolio that ports over the fact that you know I know this about myself like I've got guys on the team that work really smart like if they
wanted to they could only work like a couple days a week and they would do just as an incredible job if they worked all five days a for seven days a week actually technically for us but um you know I'm not that guy I know that about myself I I have to leave no stone UNT so I'm gonna read everything about that
there's 400 items in the data room I'm gonna go through every single one I'm gonna go through every line of every spreadsheet um until I feel like I've internalized this um and well in advanced I'm going to go visit the factories on the ground in Chicago or witchar wherever I'm going to talk to
your suppliers I'm going to talk to your clients I'm going to talk to if you have government contracts I will find out who you have them with and how those are going because of our connectivity within uh the Department of Defense and um I go through all of that um and you can do that in the Public's but in the privates
I guess what's different is um they don't have to give you information so you have to figure out why does this board member CEO CFO Uh current ex employee whomever why do they want to give me information why do they want me to participate on the cap table so that's very different here the other thing that's different is how am I going
to help them like something that Adella is a stud he does not need my help with literally anything other than passing time with good conversation probably right um and even that's debatable uh he doesn't need my help but in the private some of these CEOs you can actually help them um and it's a lot
like Christmas where sometimes I might get you the gift I want not the gift you want and what's really great about ventur ish that sometimes they want silence to to help us out with this one thing and go away sometimes it's hey we have this huge project you need to come on for six weeks and really help us dig
into the nuts and bolts um that would never happen in public um the fact that there's not a liquid uh exit or entry is very interesting in privates I traded CDs at when CDs was 10% of the bond market in route to 500 times the bond market so understanding how liquid assets at scale is very important and I
think one of the key lessons from that is gain Theory who are you up against um I don't know a single asset class other than Venture Capital where somebody would tell you all their positions uh post it on a website it's the craziest thing to me even now whereas and you're advertising to the entrepreneurs I get it but it's also
kind of weird to me whereas in the Public's like I don't know Millennium and de Shaw and you know stand Dr I don't know what they're holding I can look at regulatory filings in certain cases but it's on delay and you kind of don't really know you know it is a Delta versus an option what is it um and
that's very different here very very different than um than in in in the public market versus the private Market um I'd also say that those same lessons still apply as to how do you analyze the company the financials and like I said I don't do seeds so what what actually fits my emotional Constitution what is delivered
me consistently High returns it's the valuation of a 100 million up so half of what I do is probably 100 million to a billion in valuation the other half's a billion up and I'm always constantly thinking well at 100 million that's an arbitrary floor more or less but at that point you've got a real income statement
a real balance sheet cash flow statement I can do forensic accounting I can talk to your clients below that I I I'll fall in love with the story and I'm not a story guy it's all just a number on a screen in Publix in Venture it's not that but at that valuation floor you do get real numbers that you can then start
to marinate over and see where you can be helpful if you can be helpful if you like the company regardless of the degree to which you get involved um and how it complements your portfolio so there's a lot of really um big differences but the behavior the understanding yourself the emotional
Constitution required for it the accountability that all stays the same that Foundation is is very consistent um but uh yeah it is kind of interesting I think the mark tomarket experience is so important the fact that you you really understand how to manage up how to manage laterally you understand that
there are no Heroes you don't want to I don't want to get in something just because one of the best firms in the world is involved um in the Venture side uh why are you even seeing it then right there's a degree of negative and adverse selection that people trick themselves into getting involved with um so I think
there's a lot of lessons in public I think you have to go public to private as opposed to private to public but um I think there's a lot of lessons to be learned and applied uh I think the game theory part is so huge you know like you have price action in Publix that tells you the game theory embedded within it
in privaty you have a cap table you know the top 35 funds run 70% of the dollars in venture if one of those top 35 are not on your cap table and you have a capex heavy business let me tell you right now that if the cycle finds you and it always does you're gonna have to take wild amounts of structure dilution aggressive
Fram Downs whatever and so you know that's a very different world to a public market right and so you have to really think how am I going to work with these 35 folks these 35 firms that are illustrious and have decades long multi-decade generational kind of returns some of which are new but still
have that gravitas how am I going to work with them because Venture is a rising tide lifts all boats economy it is not a zero sum game like publ are quite obviously or real estate is quite obviously and so um I think you really want to understand who are the players you're up against or working with because if you don't
respect the people that you're up against you'll get devoured it's it's unfair it's like a goldfish and a shark and so you really have to respect the ladies and gentlemen you're up against and figure out how you're going to work within the Frameworks that exist um where that fits your emotional Constitution and and how to really
respect like their past Investments and how they've reacted Under Pressure there's so much of this business like is me understanding the competition how they operate are they likely to put lick press on are they likely to put you know options warrants structure because we trick ourselves a lot in this business
it's an upu right why does it have structure on it then half the deals this year 54% of the deals this year so far and last year have had structure on them as UPS okay why do you need structure if you're doing well and have momentum and it's an U it's a synthetic it's a synthetic upu it's a Down Round by any
other name so I think you really need to understand who you're up against um the terms of the trade the different permutations and expression of the trade secondary primary PR to primary notes structure CR all that um and in that way it's very similar to public you really want to respect the
process and and have a great really great risk management system um that gels with your your kind of emotional Constitution but um I I don't know I could go on about hundreds of lessons from publics that have applied here yeah I had a similar where uh the lessons from the public markets were invaluable
but when we started in private markets in about 2006 uh my my my basic uh strategy was if I'm seeing a deal it's so bad it's so horrible that I can just pass on it but then so I'm like but I want to see these deals because I want to learn what a horrible horrible deal looks like and so like via negativity I learned a lot
right like at I I agree with your your statement that it's seed which we do seed by the way because of you know the the way I'm built uh is very attractive and interesting to me but you're right at seed everything like looks [ __ ] unbelievable it's like wow they're you know the they they've discovered how to
turn the moon into cheese how to make that cheese transportable back to the Earth and they've solved hunger I mean what is the Tam for solving hunger like that's amazing that's exctly how I se I know that about myself because quite obviously personally I lost a bunch in seed when I was still working at Banks
and hedge funds and before I became an operator and then before the asset management side I know you know again just because you're good at one thing does not mean you're good at everything there are very few Elon musks out there that are good at a host of things most of us very good I'm good at growth and
late stage very good at that and so I want I don't want to go to seed and compete with you or SEO or anybody else down there there um yeah that that's really funny the other funny uh thing my son Patrick who is the real podcast King uh with invest like the best and all of his other offerings at Colossus he he
was he was very kind in that he named his podcast as kind of an homage to me because that was the title of my first book in best like the best and and we were chatting the other day and he's publicly said this lots of times that the name he really preferred was this is your comp ition and and it was with like
these legendary investors because he too is like man if you don't know who you are competing against if you don't have like know who they are why they are that way like you're just you're you're you know the old adage about poker right if after a half an hour at the poker table you can't figure out who the sucker is
you are the sucker yeah you know for for me that valuation floor eliminates a lot of stress I'll tell you that um a lot of stress and so that that's kind of where I play but at seed you know the other thing is I I know this about myself I like a high hit rate my LP is like a high hit rate so I I
kind of it's really hard for me to evaluate a seed manager in a world of zero interest rates up until recently where I'm like okay yeah you made 70 bets one of them was Airbnb or Uber or coinbase or paler you know pick pick a great name um and the rest of them were zero so how much of that was you know
how much of that was the environment we were in with the most liquidity in the history of mankind ever essentially in the US and you know how much of that was you so so hit rate kind of matters to me that's something that you would look at in a uh quantitative context as a Trader uh win loss ratio wins in a row losses
in a row you know sharp sortino all of that you can't really quantify that in Venture but I do think hit rate still matters in Venture um especially given the stages that I invest in um and again like it for me it comes back to like what makes the most sense to me on the oligopoly monopoly part in macro sectors
with such aggressive Tailwinds that um you kind of have to really really mess it up on purpose to not find something favorable like I don't know if you ever sh saw the show The Wire where Omar love love the wire there's a scene where he's facing off against brother buan and he goes um you'd have to hit me
first and he go and Omar goes this range with this caliber even if I miss I can't miss and so when you have a great entrepreneur in a great sector with tail ends I mean then it comes down to who am I up against what's the structure what does that look like you know where does it sit in the portfolio how does that
impact various correlations within sector specific themes we have Etc I I really think you want to find what is it for you that you know at this range and at this caliber even if I miss I can't miss yeah I love that quote I love that show um so I I I know that we we're not going to talk about any of your actual
positions or your LPS but get what are you loving now from a macro macro um view I really really like um robotics manufacturing and AI we obviously as a country have um offshored a host of mission critical jobs both on you know our ability to print everything from basic Machinery all the way through to
you know the most advanced defensive technology um I think that's a theme that will continue near Shoring on Shoring friend Shoring all of that um you know you see the chips act the IRA all of the different uh inflation reduction acts for for folks who who don't follow it but all of those specific programs I mean if you hear
Donald Trump in Bloomberg Business Week former president Trump basically said we need to get the dollar down so we have manufacturing back on Shore so I think things that are involved in manufacturing industrialization particularly for um Mission critical products in various sectors to me is
very interesting um AI is very interesting I think to everyone for a host of reasons um Aerospace and defense for me is very interesting space is kind of a new frontier for you know it's always been a frontier for defense and commercialization but it's having um you know its fifth kind of Renaissance uh
and a lot of capitals pouring in there and thanks to SpaceX you kind of have a an ability to connect uh via their Falcon 9 and other offerings you basically have a super highway that lets you iterate the latest generations of R&D in very like varied sectors um and also for defense and so I I think
Aerospace defense manufacturing robotics AI we look at a lot of deep Tech we we look at a lot of software um as well uh but those are the areas that we really focus on um and I think there's a lot that that is getting done that will continue to get done within that we we kind of have to keep a critical
towards what's shifting on the macro side you can't on the one hand look at oh there could be dollar devaluation or oh hey there's the IRA and the chips act you also have to think like what could get cut from the US budget in a world in which the FED is operating under fiscal dominance where they're really operating
to just fund the government debt as opposed to um their dual Mandate of employment inflation they're kind of doing it but they're kind of in a fiscal dominant situation you know uh Terry Yellen is or well Char secen now she shortened the duration of the debt twice she's obviously frontloading in t
bills because foreigners are frankly balking at a lot of our longer term longer duration debt we've kind of run out of pockets to tuck that away I mean we regulated it in with fasil 3 and supplementary leverage ratios for banks but in a world where the banks can get hit via an FB kind of svb situation in May of
22 you really don't want to May 23 actually you really don't want to find yourself in a situation where you're on the wrong end of of that curve and so so we really think about well what do we like what is the macro picture where will the US government be forced to cut and what kind of volatility could that
induce um and then what does that mean for everyone on the cap table as well like we we we drill down to the various kind of permutations and game theory around that but but those are the sectors we we really care about and we're lucky in the sense that because we don't see Glory a lot of the Venture firms a lot of the entrepreneurs or
serial entrepreneurs will come to us with their ideas and we're able to track them um a couple of the names we've done in defense um you know we've been tracking them for six eight years in some cases in some cases 15 and so um having that rich catalog we're able to see when the cycle favors them or um when they've actually
hit critical mass and have inflected and and when something's inflecting and inflecting on those unit economics that are oligopolistic in nature um you really want to make sure that you're thoughtful there and that you're you're along for the ride not just oh hey the sector sounds cool but do the numbers
make sense do does the team make sense and and are they are they really at a place where they can do well and so the sectors I mentioned I think are are perfectly positioned for that for the for the forthcoming five to 10 plus years and one of the red flags as somebody who reads everything that's in the data room
right and goes through every line of the spreadsheet and and meets and talks to the customers and and early meets with and and gets to understand the founders and their team what are the things where like your initial interest is on the macro view which you just described like it fits
perfectly um and everything else from from a 30,000 foot looks great but then when you're when you're in the data room what what are some of the red flags that that others who are interested in in doing this uh maybe aren't looking for that you that you find and use often you know we're always directed cap
table and we're always fully integrated with management with the SE Suite so a lot of that is in the data room but a lot of that's also it depends on the sector depends on their economic models but a lot of that you can get face to face if I ask you a question and you answer an adjacent question you think
either I'm stupid or you don't know the answer you're hiding something like it can be nothing else um and so how they answer the question do they answer it do they skirt around it that really matters um hey how many robots are you guys producing this year if you don't know the number like there's a problem there
if you answer a different question about your production facility there's a problem there and so I I think how someone answers the question and degree of hesitation there matters um I think that a lot of the red flags we see is when I have to keep asking you for things that aren't in the data room you're probably reluctant to show them
uh particularly financials um there's a lot of pro fora financials and games that are played there uh when somebody joins The Firm there's um there's a couple books that we make them read just so they can have a basic understanding of like I like to hire folks that that don't necessar necessarily have a a pure
form Venture background I want them to be real operators or you know to have um a dimensionality that other Venture players might not I think Venture is one where you can you can learn it if you've got like a rigorous background and something else whether you're a scientist or an operator or whatever um
so I give them those books and and and there's some basic manipulation that you can see uh in a lot of Prof fora accounting which I think um really matters um I also think that when someone says hey we're the Uber of X or the Airbnb of Y like no you're not Uber is the Uber of uber of ubering and
taking cars from here to there you are not that like stop telling me that because you're trying to Anchor my perception on the most survivorship biased focused firm that you think I would like and I don't like that I just want you to just give me the facts um that happens usually I'm I'm not um I'd say 99 99% of the time I'm never the
smartest guy in the room but I'm certainly one of the most effective and so I need you to answer my plain English questions as if I'm you know five to 10 years old and again I do the same thing that I do for interviewing people I peel back the onion okay tell me about this tell me about this and there is a there
is like there's certain context clues within an interaction if I email you and I'm GNA give you money that you need for your firm to work how long does it take you to get back to me with the answer that's a big deal right because capital is the lifeblood certainly of my firm but it's the lifeblood of all firms and
you know if you're you know I don't know if you're Bill Gates Jeff Bezos or Elon Musk you can raise money just by saying hey and everyone will just Chuck it at you you know like you've earned that right because of your your well-earned success for other people and yourself um
if you're not that guy like you should be answering it quickly so timing really matters as well um I asked questions about competition see how they answer it um if you don't know your competition I don't know what you're doing frankly um and in the data room you can see all of that um all of that I I found there's
one founder where I asked him I was like oh so tell me about the debt you have uh um tell me about the interest rate um and and what you're thinking right like what are you thinking there like do you want to refi he didn't know they had debt because he was a new CEO but he'd been there for 12 months like surely you
know you have debt right like even if it's di Minimus even if it's a legacy position that's like one % of your total Capital stock you know if you have it right surely you've sat down with the CFO and poured over the books and so I I think it's more about the people there um one of my colleagues she is uh she's
one of the smartest people I've ever worked with she does real background checks on people like she can understand like this person was fired for cause here what the cause was this person is incredible here's what they actually LED she's able to discern by by talking to people and factchecking do you just have
the the polo shirt with the logo or were you the girl or guy driving the deal and so I think there's a lot of that that goes into it and then you know in the data room there's always something about the clients you'll ask like hey like let me talk to a client like you can verify the information there's a lot of like
basic stuff on on the accounting side there's a lot of rigorous kind of formulations we build our own models we we uh sometimes we'll have folks that are experts in that sector kind of we contract them to to make sure that they can triple check my work and our analysts work Etc um but but there's a lot that you have
to do there and that's why I think on-sites are valuable if you're investing in something you don't know management you've never been on site sorry what are you doing again right like in a world with the liquidity inventure you really need to you need to be on it from a diligence perspective what are the books you give
uh people joining The Firm man I give them a lot now but the the first two are Venture deals um and Fin Cal intelligence um so like you know books nowadays I think Publishers are like hey like make this 600 pages so we can charge $6 um those books are a couple hundred pages each but every line
matters you know um so I I think that's what somebody that's what I give somebody that's a new analyst and and you know that's even for me like you know 15 years ago when I did my first SE deal I was reading stuff like that so I think that's very important for people and then there's a host of stuff on on
different sectors there's academic work we have a a self-development budget for folks on the on the team like um I had to learn how to code at night school at NYU when I was living in New York and I had my company so I could talk to the engineers so we can scale our business Etc and I could understand what they
were doing um I want these younger Folks At The Firm to to have that ability because because they care about compensation sure but they also care about personal development um and that'll get them where they need to be in various sectors because we're a generalist firm you're not going to know
everything from you know biotech to aerodynamics that's just not how the world Works um so making sure that they get what they need from an online course or you know whatever they need um has to be made available I think yeah there is a a book that I recommend often uh by Peter Ducker called Adventures of a
bystander um and like I've read almost everything Peter wrote I Really find the stuff he wrote on management incredibly boring and Antiquated but his uh book Adventures of the bystander I love because it's basically character studies of people that he met and he met some really extraordinary people over his
lifetime but but the one that's Germaine here is he worked for an old school Merchant Bank in London in the 1930s and and the guy who was the head of IT Ernest fredberg was old at the time and uh had brought in these younger brothers to run the firm on on a day-to-day basis and and one of the things I glean first off he's a he's a
fabulous character he would be great in fiction right but one one of the things that was that I really gleaned from it was that fits with what you're talking about is the the the brothers got really enamored of this guy that everybody in the city was putting money with they that this was the best thing in the
world they were so excited because they were a small firm they were so excited that they got invited because it was all of the Blue Chip names in the city of London at that time and and so freedberg decides to sit in on the on on the presentation and afterwards he goes we're not putting a dime with that guy
he's a liar he's a fraud and they're like what the [ __ ] he's been vetted by like the the most important players all backing this you're insane Mr fredberg what why are you saying that and he said if I'm getting this right I haven't reread it in a while he looked at them and said he came in here with answers to
every single question that we could possibly have asked and he goes an honest man wouldn't need to do that and would say oh that's a great question I don't know the answer let me get back to you on that just that simple observation right you came in here with answers to every single question right and it's
like oh yeah and then like when you apply that when you're talking to Founders and that it instantly hits me like when I meet somebody like that right it's like aha Ernest is telling me to pass on this one that that's actually a great point I mean there's there's things that you know from being a human being and
walking this Earth and talking to people that you can apply quite quite that's that's pretty amazing I I keep uh I keep going I keep drilling down into you know tell me about that oh you ran that book tell me about it oh you built that company tell me about it that a a really good buddy of mine um Ali made the
comment he goes yeah he's the uh 25th 25,000th top first 25 employees at at Uber because apparently there's so many people that say they were the first employer at Uber or first 25 employees actually actually know one that was like the third higher and you know whatever but um he gets really mad about that too
he's just like dude it's deluded my brand complet and so you know it's it's funny how people just can't say I'm wrong I don't know it's it's also like you're in a service business you can't forget what you're doing like a lot of people it it feels good like to be in finance you know there's there's more Capital
involved there's more autonomy involved but like what do you actually do I I asked this in a lot in interviews I'm like what do we actually do here and they're like uh or who who's who's the boss that that's an seemingly innocuous or even a trick question but it's it's not it's not a trick question it's like
the one gentleman I hired he goes well I mean God you have a lot of bosses don't you he was like like you said we're focused on cash on cash returns and a compliant manner for LP so I guess the clients are your boss and he goes you're always talking about we got to go work for this entrepreneur make sure we can
help him with everything from asset back lending out of Japan all the way through to you know an entree into the Department of Defense so he can sell to various procurement officers in the government is like so the entrepreneurs are definitely you know they're definitely your boss and well I guess like you know we all
have part of the firm you give everybody carry it's a really you know good package and and so I guess you report to us because if I have carry I have ownership and if I'm an owner you report to me in some sense like I'm not trying to be rude I'm like yes that's exactly right you're in a service business you
report to everybody you need to really crush your ego or check it at the door because you will never from like this moment on be the smartest guy in any room you go into even the bathroom and so like you know I think it's it's really telling when you have people some of the best entrepreneurs in the world have been
lucky enough to be in the room with them or on a conference call with them and the humility there is really striking and you really need to dissociate the Persona on CMB C or like Bloomberg TV or whatever that they're giving an interview on um in a public form versus who they are in private and how hard
they work and what they're actually doing um there's so much methology around it or so much branding uh and marketing but a lot of what they do a lot of how the sausage is made it's it's mind-blowing how some of these folks work and and how good they are um and I think like understanding you know what
is your job do you remember Force Gump where the sergeant uh gum what is your job and he goes to do whatever the hell it is you tell me to Sir that is exactly right like what is your job in in in as a venture capitalist it is your your job is to serve your three constituents your three bosses the entrepreneurs your
clients and your colleagues that is it that is your job and then within that yes you have to do a ton of due diligence you have to do a ton of work you have to do a ton of analysis you know a ton of lunches and dinners and drinks and all of that and a ton of favors for for firms you know and they
know you won't invest in but it's a rising tide ecosystem and you have to be in the information flow and you have to be well thought of and um you know it that's another big difference in to compared to traditional Finance right like and it suits my personality better like every one of us wants to make the people
around us feel good they you know I guess some people call people pleasing or whatever but you know NRA lets you do that it really does and you can make a hell of a lot of money and do uh it learn about the best technology and pay play the most supporting of supporting minor roles and and and being a part of
that Journey um but you got to know what your job is right yeah and the idea um the difference between the Persona and and the the the way the person really is like I I've I've been lucky in my life to meet a lot of like incredible entrepreneurs incredible people in finance and like there is such for the
most part a gap there because everybody like we're the Uber of right it that gets back to the medic behavior and like let's go for the easy metaphor right and and and you you so what do you do you attach your Enterprise however remotely similar normally not similar at all to like like this anomaly that that is Uber
and and it's kind of like you're lazy right it's it's kind of like no you are not that what are you really and it's just like if you just keep asking that question and asking that question they you can tell when again back to my being lucky enough to meet all these people it's like the difference way that that
gets answered right is it's just like so telling right there's there's none of that [ __ ] factor and and and it just so much more fun I also like your your idea which we touched on earlier about trust I a lot of people who don't understand Finance who like have never experienced the world of Finance be it
publ or privates or whatever like they they give me their I'm I'm actually shocked face when I say you you don't understand our business is based on trust and it is based on reputation right those two things together and one feeds the other and and and they're just like oh that's [ __ ]
like you know that's you're all just a bunch of used car salesman and like it could not be further from the truth well that's actually an important point that they're almost making but not quite which is what kind of sales person are you because if you're in a service business you are selling and there's two
types really there's you know if we can be simplistic about it there's a used car salesman slick back here that can sell you like the used car for full for top dollar if you're going to do that man you better be just a you you better have it all together it is that's terrifying to me I just tell you exactly
what it is I one LP he asks me questions and they're usually one-word answers unclear yes correct correct correct no and then sentence explanation and that's how we interact because that's what the situation called for but I think if you're a straight shooter you have to be okay with rejection because if you're a
straight shooter you know we're in the rejection business this is a maybe a bad metaphor but I tell everyone it's like dating in high school or it was for me you're gonna ask a 100 people out they're all GNA say no right like you just need one person to say yes and that's that's kind of you know you have
to be selective um but you have to be okay with rejection and that's okay because why would someone a lot of people take a person say why won't they says to me like dude they have a whole life over there that you have know nothing about maybe they have a lot of Il liquidity and Venture since 2022 and
they invested in certain people that have lost the money maybe the family business isn't doing well whatever the case may be you don't know it's also none of your business but you do know that trust is a function of experience and experience is a function of time so maybe go in there with No Agenda be
helpful do your job you're in a service business and maybe in 10 years they're a good fit for you maybe in 15 maybe never but you'll you you will get something out of it whether it's the information flow thinking about like what somebody intelligent is on top of mind for them that maybe you should be thinking about there's always
something there and I think uh I think in a world of instant gratification in a world of of very integrated Communications it can be very hard for people that were not born pre- internet to just do what it takes to leave no stone unturned and just do what the job do what the situation calls for um that's the trade-off these
younger folks are infinitely smarter at an age like pound-for-pound than I was at 24 34 whatever um but but equally you know I remember writing a letter to my grandfather putting a stamp on it and a photo and envelope and you know you you know that it matters business gets done in person in the postco world a lot of
people think I'll just do it on Zoom I'll hop on Zoom I mean you know we're on Zoom now but if you want to do business you have to meet people where and address the actual need this another I mean Goldman taught me a lot but one of the things that I used to do I knew I wasn't at Inception anyway the first
couple days I knew I wasn't up to scratch in my own mind we all deal with imposter syndrome or whatever that dude just PA 100 Milli that guy just did this um I'd figure out the 10% of someone's life that they hated hated and I would make it go away just make it go away and then I started doing a lot of favors
with zero in return and at first people are skeptical but after a period of time you know they're just like oh that's the guy every time I see him I get like a dopamine hit he is every time there's good news or there's the like he's just gonna tell me how it is um and I think if you can do that um you really become
indispensable on a fundamental level and then if you actually go through the you can actually add value on an investment basis I mean you're unstoppable at that point that also so they find the 10% that they absolutely hate and and fix it for them like that's a great way to look at new companies right like are they
finding those pain points and are they making them go away is it repeatable does it stack up right like getting rid of people's pain man if you just look at things through that lens alone right you can fit it to virtually it doesn't matter the industry it's absolutely Universal if you can find a company that
is effectively repeatedly able to remove the pain points for the end users that is something that's very interesting right yeah and if they don't have a 10% that they hate I don't think they're an entrepreneur I don't think they're doing it as an operator I mean it's such a hard I've done it once and it is brutal
and I got lucky that there was an exit there at the end of the rainbow but like oh my God that is hard everything is hard um and every fire comes to you you're on 247 it's it's forced accountability in the most raw sense and so I I think uh if you don't have stuff that your buyers you're trying to put out then uh
probably won't be investing in you um well this is I'm getting the hook here from my producer this has been so much fun like I I was so lucky to be able to coax you uh because uh guys it it's it's folks like a te that you really want to be able to listen to I've been after you to like you should write
a book you should be doing all this and you're like Jim like I don't have time to do that because I'm doing this as we're we we've grown quite a lot and scaled um dramatically in the last year so um I'll be able to start maybe talking about more stuff as time goes on uh but I always want to check with with my
entrepreneurs and and make sure everything's Kosher for them which is exactly the way that you should be doing things well if you've listened to the show in the past you know that at the end we're GNA make you the emperor of the world and uh you you can't kill anyone you can't put anyone in a re-education cab what you can do is
take a magical microphone speak two things into it and you're going to incept the entire population of the Earth everyone is whenever their next morning is g to wake up and they're going to think that both of those two ideas were theirs and unlike every other time they wake up in the morning with a
great idea they say you know what I'm actually gonna act on both of these two ideas what what are you going to incept into the world's population man I'm going to steal like my my aunt's uh thing that she told me it's it's probably been the guiding principle in my life it it really matters who you choose as a partner and
it really matters what career you choose um you want people around you that aren't going to say I Told You So when you're low they want to bring you up and when you're riding High they're not trying to snipe you and bring you down they want you to go up and I think so many people I've seen LED astray it's
because they're trying to please people that that will never be pleased it's not about them it's not about you it's about them so so really focus on what you need in a partner and a career because that's all you got is is this one shot and this one go around and then the second thing I I would really impress on people is
you are in a service business karma is very real and you report to everybody like people rise and fall every day um the guy who got fired now runs his own company it's worth $3 billion like the guy who had a $3 billion company turn $30 billion company is a fraud and he's in jail like um you really do you really
do want to take a Karma heavy approach to life and if you're if you're living a life of service that is not a negative thing you're not demoting or demeaning yourself in any way what you're doing is setting yourself up to to be in front of the most opportunities and the and have the most enjoyable time with people so I
think you're in a figure out your your career path figure out your partner and then the second one would be you're in a service business focus on the karma um if you're in the game long enough it works really well both of those are absolutely great well listen this has been absolutely a
tremendous amount of fun for me I hope that as you uh grow grow uh your your company that you'll have a little more time because I'd love to have you back but but for now thank you so much for for uh coming on and uh sharing some really deep wisdom thanks so much I I appreciate it Jim and I'll talk to you soon