Angels, salespeople, and perspective on gratitude
Just a few random notes from my experiences this past week.
The most important trait for angel investing
If you want to be an angel investor, perhaps the most important trait you can possess is a high tolerance for bullshit.
You have to review the hockey stick exponential growth charts with a straight face.
You have to listen to management claim that next year is the year that exponential revenue growth ramps up… even if they’ve been telling you this for at least the last 7 years and failed to deliver each year.
You have to somehow believe that “if we just capture 1% of the TAM” that we can justify a “conservative” valuation of 10x revenues because the public market comps are all trading at least 15x sales. This is a bargain!
You have to keep throwing good money after bad, but this time there are bonus warrants attached!
You must have faith that the IPO market will be open at just the right time, and that today’s lofty valuations and investor exuberance will still be around in a few years.
You must have a high tolerance for management excuses, blind optimism, and mounds and mounds of horseshit.
Yep, this is why I don’t do early stage investing.
Your assets are their annuity
I have been a vocal critic of the wealth management industry’s propensity to take advantage of clients for profit. And yet somehow, as bad as I painted it, I am still surprised by what I see.
In Low Risk Rules I made the case that a profit-maximizing “wealth manager” would want to develop a business model that maximized the fees charged, locked in client assets for the long-term, and minimized costs. Most try to do all three.
Well wouldn’t you know it, I met a client transferring in a large portfolio, a good chunk of which was locked in a fund that offered no liquidity for ten years. We are in year two. Eight very long years to go. The client had no idea that they had made this long-term commitment to the manager (who they, of course, are now looking to leave).
For the manager, this is a score. They might be losing the client, but they will be collecting fees for a full decade while providing zero service. The contribution to their bottom line is obvious. The contribution to the client’s financial success, not so much…
It’s the alternatives era!!!
Many of you may have seen this already. If not, prepare to be amazed. Blackstone is the world’s largest alternative asset manager. They have been entrusted with over $880 billion dollars of client capital. And they thought that this video was a good idea.
I’ve been kinda rough on the alternative investment side of the business, but honestly, if these guys are on one side, it feels pretty good to be on the other side.
After seeing this video, anyone lining up to write them a check? It is the alternatives era, after all.
Gratitude
I’m not sure who said it first, but there is a saying that goes, “gratitude is the antidote to entitlement.” This quote was brought up during a conversation with a group of post-exit entrepreneurs in a discussion about raising kids in an environment of wealth.
It’s not just entitlement. It’s hard to be angry, or jealous, or depressed if you are in a spirit of gratitude. It’s a mindset that takes away a whole host of negative emotions.
And despite knowing this, we so constantly forget to be grateful for what we have (at least, I do).
Our reminders to be thankful too often come from our friends and family who face the biggest challenges. Somehow, though it all, they are granted the wisdom to see what really matters in life.
The people who bear the biggest burdens so often wear the biggest smiles. Perhaps part of the meaning of their suffering is to point us in the direction of gratitude. We owe it to them to live our lives based on their example.
Sadly, these past couple of years, I’ve seen too much of this. In the words of the great David St. Hubbins while standing over Elvis Presley’s grave, “Too much. There’s too much fucking perspective.”
None of us have any idea how much time we have, or whether the next time we say goodbye to a friend might be the last time. Let’s treat it like it might be, just in case it is.
This will be my last note of 2023. I’ll see you next year.
Thank you for giving my writing your attention.
Merry Christmas, and best wishes for a healthy and fruitful new year.