Saturday, January 24, 2015

Career Day: What I Do For A Living

My wife took me to our 8 month old's music class to meet her teacher the other weekend. It felt a little like career day in elementary school when your parents come in and talk about what they do for a living and you dream about what you want to be when you grow up. After some self-reflection, I've finally figured out what I do for a living:

1.  I email men, unfortunately it's mostly men.  Increasingly more though it's women.  Woohoo!

2.  I ask them to get together with me to meet, either with or without the expectation of coffee or beer.

3.  I anxiously wait to hear back from them wondering if they'll respond to my email and want to meet with me.

4.  When they do, I feel gratified and am eager to meet.  When they don't, I feel rejected and wonder why they don't like me.

5.  We meet (hopefully over coffee or beers) and we spend the first fifteen minutes getting to know each other better with ice breakers and small talk. Talking about football, drought and children are safe words. Asking for sparkling water and not still is a clutch power move. It lets them know you move with the fast crowd. Sometimes we even have lunch or dinner and awkwardly dance around who picks up the tab.

6.  After the meeting, I email them and say how much I enjoyed getting together and hope to see them again soon. They usually reciprocate.  

7.  I plan my calendar around when I want to/need to see them again.

8.  I generally want to give them money after we meet (and often do), and for those that we don't have the opportunity to give money to, I hope that they don't reject me.

9.  Cold rinse, then repeat all over again.

Wednesday, January 21, 2015

Getting To No

My favorite book is Getting to Yes by Roger Fisher, William Ury and Bruce Patton.  I think about it all the time and re-read it once a year because I'm constantly thinking about its message as well as my other companion favorite How to Win Friends and Influence People.  I'm writing about the topic of getting to yes because of a conversation I had at Michael Kim's Cendana Capital LP/GP Summit in late 2014 where I made a comment about how I/we try and be the most value-added LP that a GP won't have.  The comment was certainly not made glibly but with a raw honesty in that LPs really are in the "NO" business more so than they are in the "Yes" business.  The same truism goes for GPs, perhaps even more so.  What I really meant by my comment is that we invest in about 2-3% of the GPs with whom we meet with on an annual basis.  As such, we're really remembered and respected (or not respected) for how and when we say NO more so than how and when we say Yes.  Saying Yes and committing to a fund is easy.  The hard part is saying No and knowing when and how to say no. Knowing when means not taking meetings knowing going into it that you have no chance in investing and you're just snooping or padding your stats.  That takes both confidence in what you are looking for, but more importantly confidence in what you are not looking for.  Not taking a meeting may seem brash at first, but in my humble opinion, it's better to not waste people's time and anxiety if you know there will never be a commitment.  Snooping is one thing, which LPs do a lot of to make sure they're not missing the new new thing.  That's okay though, if you're snooping and are value-added.  Meaning you offer to make introductions, you're an engaged listener during the meeting and can provide honest and constructive feedback.  Listening and helping and caring are really all that matters here. Knowing how to say no, is really more of an art than science. See my earlier post on the Truth in LPing Act. Honesty from a qualitative standpoint and fact-based reasoning from a quantitative standpoint are the only way to go. Not "we're over-allocated" or cutting back our allocations.  These aren't excuses that bode well with a GP after you've already sat down with them.  I like to put this parameter out front and center. This is what we do, this is what we look for and this is how much capital we have to hunt with. LPs by their nature cannot and should not invest in everything, and as a result, need to be mindful of how and when they say no. I use Salesforce to keep track of my notes as there are a lot of them, but what I don't have any of anxiety over and don't have to mentally keep track of is the rationale for why we didn't invest in a fund. I find comfort in the adage that if you always tell the truth you won't have to remember anything. So, in short: Getting to Yes is Easy and Getting to No is hard. Most importantly, getting to no is where reputations and memories are not forgotten and so honesty, even though it's hard is the only way to do it.  That takes courage and that's really what I meant by saying a good LP should have meetings where the GP walks away saying that's the most valuable LP relationship/meeting I have where I don't get any capital. There's nothing glib about honesty.