What is the most surprising and /or counterintuitive lesson that you had to learn
over the past in your career for in the private equity space? Gary, do you mind
taking a stab at that one?
How much people count? Yeah. And that's the jockey.
We invest in the company And I think their game plan wasn't going to work.
But the CEO was a really good thinker, and he really listened. And I said, we're
going to go with him because he'll figure out how to pivot, and he has. So I
think that's still the major one. The second is control of information and being
able to do better with information. And I was surprised how important that is in
any kind of company.
I'm going to jump into this as to what was a really rough lesson that you learned
that was very expensive. And I've got another three. This is a 3P alliteration.
First there was cat, sorry. First there was cat. Now I've got three P's. It is
prioritized physical proximity. We did an acquisition at the end of 2020.
It was COVID. This is our third Ugh, it sucked because we couldn't get in -person.
Sure, you're doing all the video meetings and you're still seeing people, but the
ability to actually have your acquisition, understand your culture, understand your
vision, feel valued, we had so much regrettable talent attrition, it was terrible,
and our time to value extended much longer than we had anticipated. And so it was
a very expensive lesson for us to learn. So as you were talking about the people
matter, you've got to prioritize physical proximity in an acquisition. Sure you can
go remote later, but there's nothing like being in the room together. That's what
Family Office Club is all about, right? You're here together in person because that's
where the relationships get formed. That's where the value is added. So prioritize
physical proximity. - Well, I think the point is you can learn more about a person
and a transaction if you're in the same room with them, then being on Zoom,
there's something about the human spirit that transmits when you're close to people.
So I heartily agree with that. I went out of my way to see a person.
I said, "I love what they're doing. I need to be next to that person for a few
hours. Yes, that's great. So I would say the pandemic caught me but obviously all
of us by surprise but but but also what the pandemic did in the multifamily market
markets that were pretty good markets really deteriorated and there was regulations
that allowed people not to pay rents for a couple years and that that really hurt
deeply some of the some of the investments we were involved with and it took We
had a higher way more people just to collect the money and go through the
government loopholes, all the different hoops they had for us. And then the other
thing was how fast interest rates rose. I was caught off guard that it would rise
that quickly. Fortunately, we were in 99 % fixed rate instruments,
and so it didn't impact us that much, but still it was a big surprise.
Yeah, I would just say investing in industries or companies. You don't have a prior
domain expertise in maybe I don't say chasing a trend, but just It's not your
typical bread and butter and I think I've seen families just make a mistake. I'm
investing in industries They don't know very well and they get caught. So Sticking
to what you know, I think is important there really is a trend or Family offices
have been more active in direct investing than in the past. Let's say, how can you,
I mean, any offering of advice from that for your own experience, perhaps? - Sure.
One word is infrastructure. I think investing directly is great. The economics look
fantastic, but I just think sometimes people don't know how much work it takes to
actually run the infrastructure from the due diligence, the background. Again, actually
know what you're doing once you actually make the acquisition and look in theory and
on paper it's fantastic, going direct rather via some type of fund or vehicle,
but it's really hard. So if you can do it great, but I just think it's important
for people to know what they're getting into before they do that. You don't know
what you don't know. That's right. Yeah, I'd sort of combine those two things. I
think we're a family office investing direct.
We're lucky in that we have teams all around the world so we get a lot of
feedback. I think one of the problems that family officers have is they don't
necessarily see what's going on outside that area, whether that be at a state level
or international, so you could potentially make decisions like not realizing COVID was
coming or the impact of COVID, not understanding the significance of payment systems
in e -commerce, that if you're not going out to other countries, going out to other
industries, you're not seeing that risk to your assets because you're only seeing a
small amount of the data. And obviously, the smaller the family office, the less
resources they have for looking at that. Right. Thank you for that.