3 Anecdotes
Three short stories from Main Street Summit
Howdy friends! I hope you’re having a beautiful week!
Welcome back to the Infinite Playground. Twice in one week! Wow!
Sometimes I think I only have room in my head for a few ideas at a time. I’m clearing out my mental backlog to make room for some new stuff.
This time: Three short stories from Main Street Summit, a conference in Columbia, MS I went to in early November. Each of these stories happened in rapid succession and stuck in my head, or left with something to ponder. Let me know if they resonate with you. Also fun to play with the format :)
A Good Story Is All You Need
One evening, I wound up at a happy hour hosted by a national bank with a household name. I found this second happy hour while working my way back to my car. I decided to network while I went akimbo with two waters and hydrated before heading back to my hotel.
With a couple bourbons still floating through my system, I walk up to a group of three guys who were in the corner of the bar, but easiest to approach. I didn’t pay much attention to their badges and was surprised to learn one was a speaker at an event the next day and the other two were the bankers hosting this event.
They welcomed me in and told me the conversation probably wouldn’t be that interesting to me - they were talking shop about deal flow for investments firms that I wouldn’t have heard of. I told them I’ll keep up. So they kept chatting.
They chatted for another 90 minutes, stopping every 30 minutes or so to ask me if I was following along, or when I brought a question.
For the most part, I was uncharacteristically quiet…
Because I was going through cycles of confusion, realization, awe and anger about every 10 minutes.
Here’s what I learned:
These guys were talking shop about investment deals where they would be an LP in someone else’s fund. Functionally, all that means is there is someone in more of an entrepreneurial position - the person raising money. Then there are these guys, the folks supplying money. In this case, the folks raising money are also investors trying to find capital for their strategies, but that’s not really important.
Two sides of the table. Fundraiser. Investor. For these deals, these guys are investors.
I’ve been on the fundraising side of the table for Barracuda. The first couple times you go out to fundraise, you have no perspective of how the other party is thinking. There are a lot of things that seem odd.
A lot of the oddities boils down to a lesson these buys reinforced for me:
They don’t care about your deal. You’re a card in their trading deck.
It was refreshing to hear deals being thrown around so nonchalantly. It bruises the ego of folks who’re fundraising, but the truth is your deal is a commodity to every investor you talk to. There job is create returns, not invest capital. You’re another decision on their desk that, necessarily, they have to be inclined to say no to.
Once they say no, you’re water cooler talk, just like any other job.
1: Did you talk to ABC? They were raising 800.
2: Yeah, in August.
1: Thoughts?
2: [visual disgust].
1: Yeah us too.
Notice that 800. Not $800k. $800 million. These guys operated with check sizes large enough that they stopped using “dollars” and “million” because it’d be wasted breath. It was a mundane amount to them after years of work at that scale.
At one point Guy 2 offered up: “Yeah we did that one for 700 or 710, I can’t remember”. $10m is a rounding error in their math. If you summed the net worth of everyone in my hometown it wouldn’t be close to $10m. It was a strange conversation to listen to, but eventually I fell into their lingo.
That 700-710 deal is key, and I’ll end this story here.
That deal was one of the few Guy 1 and Guy 2 differed on. Up until this point, they had found deals they had mostly agreed upon. Or they go to the deal at different stages (different fundraising periods). They would talk about what they liked, maybe a bit of what they found odd. But since they had the same view, they’d move on pretty quickly.
In these conversations, they’d talk about the pedigree of the fundraiser. What firms did they work for before? What was their track record there? If this was not the first fundraising period, how has the fund done since their last fundraiser? How are other similar firms doing?
But this time, they found they disagreed about a deal. Both firms spent a few months looking at the same deal, going through deep due diligence.
Guy 1 didn’t like it. Felt like there was a stink to it. Something wasn’t right. The fundraiser’s pedigree was good and his story was good, but it didn’t quite line up with reality. There was a lot of gusto and hot air inflating the deal. He might have done it, but not at that check size.
Guy 2 felt the same, oddly enough. When the deal came up, they talked through it in a negative way. When Guy 2 told us he did the deal, everyone was surprised. Why would you take a deal you felt so strange about. That you just talked negatively about for five minutes?
Why? Dear reader?
Because the guy took him out to dinner and got to know him. He re-pitched the story. After hearing the story again, Guy 2 liked the deal. Months of due diligence and gut feelings overturned by a story.
I would like to think that as financial machinery get more complicated and check sizes get larger and larger that there are more safe guards. Or more sophistication.
The reality is that these investors are still people. And people have the same flaws whether they’re being sold a vacuum, a car, a house, or a multi-billion investment deal. They love a good story. And the power of a good story will overpower any quantitative opinion we have. We had stories before we had math, logic or due diligence. We’re hardwired to vibe in a cave and listen to stories, not deploy hundreds of millions of dollars.
Find a good story. A good story will move mountains (and write checks).
Types of Confidence
If you know me, you know I have a general rule not to do anything with people before 10AM. The morning hours are not prime networking time for me, and they certainly weren’t on the last day of this conference. The bourbons from the previous story wrecked my sleep - so did ranting about it over the phone to multiple people until 11PM.
My brain had not fully turned on yet for the day, and while I was trying to hide my badge to avoid being approached, a man walked up and struck up a conversation.
What followed was a sequence of life advice I don’t think I’ll ever forget, because it snapped me out of 10 months of wallowing and self doubt.
We walked to get some coffee and swapped life stories.
I told him my story about Barracuda and my sabbatical, and that I wasn’t quite sure what was coming next.
He told me his story. He was a Canadian from Manitoba, functionally the midwest of Canada. His first business did well and then exploded. We didn’t get into specifics of the company, but we did get into the fall out. He filed for bankruptcy. Lost his home. His wife left him. He moved back into his parent’s house. (Really puts Barracuda’s failure in perspective, we had a very safe failure in comparison).
His parents sound similar to my own. They said “well this will be good for you in the long run. You can put this entrepreneurial stuff behind you and get a normal safe job and career.” He followed their advice and took a normal job for a while, but chaffed against it. It didn’t feel right. But neither did starting a new company.
He shared three realizations that got him back in gear:
There are two types of confidence that need repaired after a failure. There is the confidence that you’ve learned from your mistakes and accept humility. And there is the confidence to start moving again. They don’t necessarily come at the same time.
That second type of confidence comes when you realize that at one point in time, you were the one who failed. Your decisions and perspectives led to a failure and you cannot escape that. But with enough work and reflection, you become someone who has learned from that failure and grown from it. And that makes you a different person. You’re not crossing the same river twice. It’s not the same river, and you’re not the same man.
You have to think about the lessons you’ve learned as a PhD. You spent a lot of blood, sweat and tears learning those lessons. Not reinvesting them and doing something new would be a waste of that PhD. You’re throwing away those hard earned lessons that put you in a very unique spot on the map. Wasting those lessons is an even larger failure than the original failure.
These ideas helped heal the final cracks I had in my own confidence. Hopefully they’ll help you too.
I had met many folks with similar stories throughout the week. You find very quickly that everyone is presenting their best selves, but once you get a beer or two in them they start sharing their mistakes. Everyone is failing in different ways all the time. The key is to make enough money to survive the fuck ups along the way to your goals.
Long Hallways
I also met an Texan entrepenur with an infectious energy to him; A golden retriever style positivity and excitement for what he was doing that reverberated through the room.
He was born in West Texas in a lower income household. Managed to work his way through college and make it to New York and into an investment banking job. He did very well, but wound up heading home to Texas after several years.
The way he spoke about his return to Texas reminded me of a T.S. Elliott quote:
We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time.
He found a new respect for his home, how he was raised and the opportunities he could build there that couldn’t be done without him. I’ve had many of the same reflections about my return to Kansas.
After going through the story of how he started the company, I asked him if he had any philosophy of business that he applied to get things off the ground.
He said (paraphrasing):
I don’t overthink it. The goal is to find an opportunity that is like a long hallway. [mimicking a long corridor with his hands] a looooong hallway.
You want that hallway to have a lot of doors. More doors than you think you’re going to need.
And once you find the right hallway, the game is easy. Just start walking down that hallway and try to open every door.
If it doesn’t open, don’t kick it down! Just keep walking. Look for a door that opens. When you find one, walk inside and see what you can make work.
[pauses for a beat to let that sink in]
And every once in a while you have to circle back and check those closed doors again. Maybe they’re open now. You never know, maybe someone was just going to the bathroom ;).
Fantastic. I aspire to be this folksy with my analogies.