Should I stay or should I go?
Knowing when the time is right for what's next may be the most important trade you ever make.
I had lunch with one of my old associates yesterday. He was the easiest hire I ever made. He had the horsepower, and he had the hustle. Boy did he ever have the hustle. All I had to do was teach him a few parts of the business: where to look, how to do the math and how to tell the story of why or why not the company was going to be a good trade or a good investment. And I knew that if I had him for four or five years, he would be one of the great analysts. I also knew that for most of what I could teach, he was going to pick it up before that time lapsed. And I told him as much. Let me in on your exit plans. I’ll help you get to where you want to go next.
We became close friends, as people that work well together often do. And through it all, what became clear to me was the whole analyst thing was just not a high enough plateau for him. He was going to want more, and in some respects, he was going to want different. So, when he came to me and said, sincerely and respectfully, “No mas! Please God, don’t make me write up another earnings call,” or something to that effect, I made a call to another friend. He happened to be at the same firm, but if the very best person for what came next was not at that firm, I would have called someone else.
It was an easy call to make, “You’re getting a rare gift. Take it and run. He will be a star.” And that friend obliged. And my old associate rose. And his career thrived. He became. And he ain’t done yet. The funny thing was it was never about the money. Just didn’t come up. Not once. And as a mentor, I never felt like it should have. Quality finds a home. Always does…
At lunch, I asked him about problems he’s trying to solve. He’s managing a successful fund now. I was thinking about investment problems for long/short investors, but he was at the meta-level. He went right to talent, “How do I keep these people from taking the bid away for ridiculous money from one of the big boys?”
Of course, this is at the heart of every conversation I’ve had with consultants or allocators. Some version of ‘how do you find and keep talent?’ always comes up. In part, this was because the big funds plant that seed every chance they get. I know. Because I did when I was at a big fund. Scale matters. Resources matter. The smaller funds are just going to run out of road.
And if you are at smaller fund that sucks, you probably will. But if there are great mentors, great process, and a winning culture, those smaller guys can not only hang but thrive. And it can be a wonderful place to work and grow.
Here’s some advice for very talented people who stand ready to enjoy the largess the behemoth funds stand ready to offer: Don’t believe the hype or the narrative. You’re not going to run out of time and the big funds are almost certainly not going to run out of money.