Stuart Miller
Appearances
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And so for me, that was my comparative advantage. I think now that Adam is running the platform, he has a different comparative advantage and it'll morph over time.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
On the seeding, I feel like the process is, can we set the table in a way on terms that the market will agree with, but it's unclear whether the manager would have gotten those terms without us. So that could be lock up a capital, that could be fee, that could be something else. I always tried to hold myself to the standard of I would invest in this manager even if I didn't have seed economics.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I would just do it smaller. I would just take less risk and I wouldn't wear any reputational risk. I feel like that's one key distinction between just looking for seed deals, but holding yourself to the same bar of like, I just size it smaller and I wouldn't shape it. And so that kept us, I think, out of a fair amount of trouble.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah. So Dan Sondheim was leaving Viking. I interviewed over the years all these people that worked for Dan. And they were always in such awe of him as a portfolio manager. And I felt like it was them at the expert or professional level relating to him as a master is how I interpreted it at the time. I remember one guy saying Dan would be planning how to get in and get out of a stock business.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
six months in advance of buying it. He was planning out the whole arc of, he was very focused on liquidity. And it was this mix of fundamentals and understanding market structure. We had a number of friends in common. And when he left, I feel like there's often within a hedge fund container, there's this dynamic where the founder of the hedge fund is pricing the up-and-comers each year.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And it partly is expressed in terms of how much carry are they going to have the subsequent year. And there've been a number of cases where I'm kind of tracking, did the founder of the thing hit the bid correctly this year or not? And if they didn't,
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And so there was this moment where Dan was ready to go do his own thing. He had enough of his own money. And I aspired to earn the right to a dialogue with him and help him in his hiring. Because we were in touch with so many analysts at any one time, I felt like I was able to calibrate on his taste in analysts and who would be at the right seniority and then help him with that hiring process.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And I think, forget of his initial, I don't know, I'm going to say I could get these numbers wrong. Of his initial 12, maybe four of them were from Patrick and me. And I got to know him very well during that process and saw how he had this very optimal grip. Like he has no defensiveness whatsoever.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
If you tell him a new piece of information about him or a process or a person, there's like no ego in it. He'll just drop it with no hesitation. So there were a couple of cases where I gave him feedback on things and the way he took the view, I was like, oh my God, he was such a quiet ego. So focused on being commercial first and ego second. So we ended up being a day one investor in there.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
It's had its ups and downs, but I continue to really believe in him as a commercial actor and as a leader of his firm as well.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
So the term originates, Adam used it at Goldman, other people at Goldman, I'd heard it from And it connotes all the cliches, moneymaker. I think what's in there is one way I've ended up defining it is it's the ability and the intent to create more value than you capture. So that would be a kind of abundant version of it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I feel like there are people who are signaling that they're in a repeat iteration game and they're not going to grab every penny on this transaction because they know that there's a sense of proportion about it somehow. You know, Goldman has that phrase, long-term greedy. It's like, I want to make money, but I'm going to do it with the knowledge that we're going to see each other again.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And that sense of, I'd rather make money than be right is another core tenet of it, where there are people who seem to me to be in the game in order to experience the satisfaction of being right. And that's the primary goal.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And that works some high percentage of the time, but then it can be disastrous, of course, because your ego and your portfolio can get caught up with that goal instead of just making money.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
There's a great story that Tina Fey has about the only thing she learned from Lorne Michaels. Not the only thing. One important thing she learned at Saturday Night Live that she brought to 30 Rock. was that you need in the writing room, you need the optimal mix of Harvard nerds and Chicago improv.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And I thought that was so profound when applied to investment managers, because I had experienced a lot of both types. And I would say the Chicago improv is pure plasticity, pure flexibility. They will do anything for a laugh to a fault. And the Harvard nerds, in her language, were planning everything out, very high order, very high stability, but not able to improv as much.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Over time, my taste evolved to accommodate more Chicago improv. I was at first attracted to Harvard nerds. Over time, I came to appreciate, Charlie Munger calls it the knack or called it the knack. I remember early on in working with Ted Seides, we were in a meeting with a former Milken credit trader of some sort. And we were sitting in a restaurant in Santa Monica.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And he turned to me at one point, he put his hand on my arm and said, Money's like water. All you have to do is learn to turn on the faucet, see? And I thought I was like in some sort of David Mamet movie or something, but he's right.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
There is this Wu Wei not forcing it, working with, there's a coach I like who I follow online named Joe Hudson, and he had this line, where does the water want to flow downhill? Working with, not forcing it, like working with what already wants to happen that I feel like is in there, lack of stuckness. It's like a pragmatism that at the end of the day rules out over other facets of investing.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
For that chapter of my life, it was pretty amazing and ideal and fit. It really felt like Stuart provided a playing field with no constraints, but you had to earn the right to go anywhere. And so I feel like if I were doing it again... I can picture, again, finding somebody, being purely opportunistic, and fitting the current opportunity set to the risk tolerance of the principal.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And then I can picture trying to seed somebody with a billion dollars if I had that level of confidence in them. And if I felt like the principal could have that level of confidence because it's the same aesthetic or the same map of reality. But I just feel like if you can eliminate the optics and the desire to look like you've added value,
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
as the agent and make it as pure an expression of this is genuinely what I would do with every single dollar if it were my money. I feel like there's such leverage to that. So I would fit it to the risk appetite and the trust level with another principle. But as I've said before, like, I think I'm pretty lazy and it's a curse and a gift.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And the gift side of it is like, I have no desire to work for work's sake, like zero, like negative.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
That's not lazy. Yeah, I think that's a good catch.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah. Yeah. My appetite for finding the best person in the world to do the thing instead of me doing it is almost infinite.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
So that applies to literally everything, including managing money.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah, it's figuring out the person in some new field, trying to figure out how. It's like the what's going on here. Like, I can't get over how profound a frame that is. Like, it applies, obviously, at any level to the point where it's so abstract, it may not be useful. But I have this, like, I guess there's hope in there, like optimism that I will find somebody.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
The kind of Jeroen Boyd thing of what's the... Pita Schuma.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I definitely have that. I've found the person when I thought there was no one enough times that I'm always like, I have hope. I could go through so many examples of like, are you kidding me? This person exists and they're that obsessed with this crazy thing.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And then I think one key thing that people miss on hiring is you need to understand why it makes sense for the candidate, why the candidate should choose this container and this setup and be rating it like 100 out of 100 if possible. Realistically, it won't be that. I see people make a mistake. It's like I'm hiring. It's like a left hemisphere approach.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
It's like I'm hiring this person to do this thing. It's like they're treating it as a machine. But it's so much more complicated than that. If you want the person to thrive and have the energy and then be rooting for them, you need to understand why, from their perspective, this is the right thing for them at this stage of their life with this set of skills.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
If you understand that, then it gives the stability to the whole thing.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
One aspect is that I have that analogy of a river with two banks. One is order and the other is chaos. And you kind of start off your career closer to order. And sometimes you swim closer to chaos over time. It's like a developmentally appropriate approach.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
of being an intern and learning a craft and apprenticing and all that stuff where you're not really often that in touch with what you actually want. You're just playing the game the way other people have defined it. And I feel like if you're talking to a 22-year-old, they have been on the playing field less time, and so they don't know what they actually want.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
They're socialized in Keegan's language. There are all these things they're subject to that they can't see. And so partly the hero's journey, or pick your metaphor, is about listening to what the world wants from you and what you actually want, and then looking for that intersection. So the questions I ask sometimes, what are you compulsive about?
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I noticed it for myself, like I could surf LinkedIn. I don't know what my appetite would be. I could probably do it for three or four hours, which is like, I don't think I've ever surfed LinkedIn. Boring. For most people, it would be very boring. And so I like looking at their picture. I feel like someone's self-selected photo is so crazily high signal.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
If somebody chose that photo to represent themselves, they are saying there's something of my essence that I want to have be my essence that's in this photo. And then matching it up with my impression of what life has done to them, what they've done to life in the photo, and then matching against the resume, I can literally do that.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
What's the thing you do that other people kind of make fun of you for? I feel a little embarrassed that I can do that somehow. It feels like weirdly tactical and kind of boring. But... On some level, I just enjoy seeing that dance of what somebody wanted and then what the world wanted from them.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And then other places, other than what are you compulsive about, that question of have you felt a moment of ignition where you saw somebody else and you said, I want to be that. I read that in the talent code. Have you read the talent code? You said it's me. Yeah. I read that in the telegram. I was like, oh shit, I totally had that. I had that twice.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I had that when I was in eighth grade and I was rowing. It was like the sixth time I went rowing. And this senior and junior, a guy and a woman who were tall and he was handsome and she was beautiful. And they just had such... presence and mastery of rowing. They had both won national championships. And I was in eighth grade at the time.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I was like, oh, all I have to do is row four hours a day and I can be that? Done. And then I didn't look back because it was so embodied. And it was also a recognition that I have enough overlap with them that I can do this. Like it's not completely random, but then that feels like a viable path. It's not that reliable a question, actually.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
A lot of people either fake it or they don't recognize those moments. It's kind of a subtle thing to catch. But Tim Galloway, the Intergame of Tennis guy, has this line, desire wants what it wants. I think it's so profound. From schools, parents, peers... Like we cover up what the desire actually wants and getting in tune with it is so powerful.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And hopefully that happens to somebody in their 20s or 30s from a career perspective. When it does click, you can hear it in their voice. You can hear it in the way they create language to capture the things they've seen.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I was working at a fund of funds and Dan Stern, who you may have met, who used to run Reservoir, the way these mutual friends described him and then his activity, which was so people-focused within investments, I was like, oh, that's my own orientation towards this. Oh, there's a path here of being an effective investor by selecting people, having very high situational awareness.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
on how to set up the right platform for them that I thought, you know what? I've never met him, but I could just tell based on the friends we had in common and then how effective he'd been that, oh, that's a thing. I want to be that.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Well, I think he apprenticed under Richard Rainwater and Rainwater had this
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah. And then you just tell from the people he had seated, there was a consistency to his taste, which was in seating, there's massive adverse selection, of course, like the people in general. Somebody who has pulled out enough money from the market should have enough money to put themselves into business. So you have to understand why you're so lucky that you're either catching them.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I generally like catching people super young. It's like a company going IPO. There's just not that much opportunity. information yet about them. And so it makes sense there'd be inefficiency. But then other times, another pattern I liked a lot was someone's former boss damning them either with faint praise or not even with faint praise.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
It's a huge structural inefficiency because if you're the guy running the platform and your star guy leaves... and you sponsor him and promote him too much, you create incentive for everybody else to do that. So I really like hair on a former situation, specifically where I know the former PM and I have a feel for why they might be a little sociopathic about it. Fair enough.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I've been on so many counseling calls with people thinking of leaving. Like at any one time, I have five to 20 conversations going with somebody who's thinking of leaving a thing. And the level of fear about how the source, the primary person of their existing platform is going to relate to them is so consistent and so high and correct.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Well, one is it's very easy to be defined almost everything online. You're thinking of doing in reaction to your current container. The genesis in part, I think, of Josh Waitzkin's cave process is that's not a healthy way to start a new thing. You can't do it in reaction. You can do it somewhat in reaction to the old thing because that informs your map of reality and what you want to change.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
But if it's all reactive... There's something kind of, it's like the psychologists divide things into approach motivation and avoidance motivation. It ends up being too much avoidance motivation somehow. There's like this negativity baked into the DNA of the thing if you allow too much of that. So I feel like that's one thing. It's easy to be too cute about that.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
You don't want to overweight that when someone's talking. But I feel like over time, they need to get to the point where they're articulating a proactive vision, not just... My job sucks. There is a category of it's like my friends have all started funds or they've all started whatever the thing is or all starting. You get this in Silicon Valley right now. The memetic kind of thing. Yeah.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I'm a founder. Are you not a founder yet? The founder thing is totally in this category. And it's so distinctive to my ear because I've just spent more time on it in the last couple of years. And the Silicon Valley version of it is so distinctive of founder capital F. So there's a version of it where someone is just frustrated with their current construct.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
The core motivation is I want to create a new job for myself. And I think that's not a great way to start a new thing. It needs to be slightly bigger than that, I think. And then at the highest level, what they're wanting is to be priced properly.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
by the market in a hedge fund context, or probably applies to startups too, of just what will VCs price me plus this opportunity at from a seed round or series A valuation? Like I have to think of it as it's like a pricing exercise. Like a guy who runs an enormous fund, I was talking with him recently and he's kind of debating whether to stay at this enormous fund.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And the question he's really asking is, if I launch my own fund, am I raising a billion or am I raising 5 billion? And it's a great question. And I think there's kind of an answer to that based on, okay, how long have you been there? Do you have a standalone track record? It's answerable. Does that square with your- 100%.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Price. What's my price? What's my price? And that should change over time. I remember there was a guy- running a regional office for a really large hedge fund and thinking that if we had been able to spring him, he would have raised $500 million to a billion. And we ideally would have seeded him, but quite possibly he wouldn't have needed it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
But then he ended up running, call it a $10 billion plus fund. I was thinking, oh, that's a very interesting spread. Outside this container, the market as a whole would price him at $500 million to a billion. He's running a $12 billion plus fund. The founder of that firm who made that decision, that's that guy's arb. That's the bet. And it ended up being the correct bet.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I didn't necessarily see it at the time. I was thinking, whoa, that's a huge spread. And if he went outside, it would be so much smaller.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Adverse selection. And the moment you have to... I remember we were so careful about this, and my partners who now run Eastrock continue to be careful about this. If you have all the mentality of, I need to put assets out, it completely screws up the dynamic. I wouldn't trust myself if I had- You had a seed fund. Yes.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
If I had $2 billion that's burning a hole in my pocket and I need to seed- Important point. The other thing that people do, I've noticed this, if you seed somebody, I was talking with a guy, I won't use the name of the fund, but he was at a very prestigious fund and somebody called him and offered him, it was a big seed, call it $200 million. And
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
My hypothesis, I remember talking to him, my hypothesis was if the guy hadn't called and given him the $200 million, he wouldn't have come up with it on his own. It's a very subtle, I forget, we've talked before about source dynamics, like workwithsource.com. It's a collection of information on this concept that I'm obsessed with.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
But it's like the argument is this guy, Peter Koenig, and he had looked at all these startups in Europe, several hundred, and found that even when there were co-founders, there was really one person involved. who took the first risk, even if that was calling the other co-founder. And that you'd be really careful about that first risk and who's taking it and why they're taking it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I remember meeting with a quant fund. And when I pulled the thread on the origin story, there was something about the energetic of the guy running the quant fund, which was that he was relating to it as a job, not his thing. It's like, that's so weird. And then I pulled the thread and it emerged that it happened to him. He'd been sitting at a fancy firm,
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And a friend of his had said, let's do this thing. And the source dynamics were screwed up from the start. And this guy, Peter Koenig, has this argument that all organizational dysfunction can be traced back to disagreements about who is source or the actual source playing small or not fully owning being the source of the thing. And it totally fit my sample of hedge funds where
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Our friend Diana Chapman has this analogy of the chick needs to peck through the eggshell and develop the strength through the pecking in order to make it once you're outside. If you break the shell for them, they will die. If you mess with the origin in any subtle way, it can affect the entire trajectory of the thing in ways you wouldn't think.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah. Kind of up one level looking to back people and fit their circumstance and they were going to do the thing anyway.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
In this language, I often think of it as who is the source and are they owning it? I mean, you see it a lot in succession. One of the arguments in this literature is that heading off source is extremely subtle and hard to do. Where else do you see it in the dynamics between co-founders?
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Is there resentment on the part of the co-founder who's not source towards source because they don't want to be in that role? I feel like I see that a lot. And 80% of the time that's held in check, but then conditions can change and then it's not held in check anymore. They can go through a difficult period or extreme success can also lead to it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I think it's because it's the skill set at the highest level. It's managing risk and being pragmatic and commercial, I think. And so, in general, those people tend to be older. I think giving a bunch of money to a kid... If you're running a family office, you need to do it in a way that there's room for them to screw up.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And there's something around like the people who I think would be good at managing a family office have taken risk with their own capital and other people's capital before. And I think ideally don't have identity. They have identity as being a moneymaker, but not as a specific thing.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And their EQ and social intelligence is high enough that when they're talking with other people, like Rainwater is the gold standard on this, they're okay expressing a bet through other people. I feel like that's a distinct skill set. And so retired hedge fund managers who were pretty high EQ are probably a pretty good pool if you could make it feel like it's their money.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah. And that's why like setting up, figuring out why are they available? People screw up and they think it's like, oh, it's just a role. I'm going to hire for it. No, it's not. It's like... It's up one level or by definition, if the person's good, it needs to be a tricky setup.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah. Your ego needs to be able to take somebody else having the successes and failures around it, I think. Because... If not, then if you want to be pretty involved or you have identity because I made a bunch of money and blah, blah, blah, and I want to keep making money and blah, blah, blah, and now I want you to do it for me.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Anybody commercial who's sitting in the front seat now has somebody telling them how to drive in the back seat. And unless the person in the back seat is extremely skilled, it's going to screw up the incentives of the whole thing.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Well, so I would say it's good taste in people from the perspective of the principal.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah. It needs to overlap. Otherwise, they're not going to trust the agent's judgments and vice versa.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah. I mean, I guess an example. The group of people around the Collison brothers, I feel like, is very distinctive. It's kind of nerdy. Alpha nerds. Yes. Right? It's a very specific aesthetic. And Patrick's got these public policy interests and Tyler Cowen and, like, that whole crew. It's a very specific group. And by signaling it out to the world, they attract more of it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah, and I would host these events and people would come to the event and then you'd see, oh, one guy who runs a large investment firm in San Francisco had come to one and he said, oh, he sent me a note afterwards saying, Graham, you've restored my faith in humanity, which was like such a high compliment. He's referring to the fact that it's like being at a really good wedding.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
You're like, oh my God, I like all these people. There's not a bad seat in the house. And I would do business with all these people. There's a level of trust or integrity or something.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah. It's creating talent density. And then to your point, it like creates a gravitational force of its own and people end up doing business with each other.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Sometimes, sometimes not. But what I do, it's just very visceral. It's like if I get stuck sitting next to this person forever. Am I neutral, psyched, or bummed? All psyched. All psyched. And then the result just takes care of itself. I came up with this back when I first started Eastrock as a way to evaluate hedge fund managers. I felt like often...
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
If we had like 30 people in a room pitching investment ideas, the room knew who the best people were. I'd go in with a thesis on, this guy's the best on special situations. This is the best tech long short guy. And then some percentage of the time, the room agreed with me. But then over the course of several days of thinking, talking, different people would emerge.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
If you read the room correctly, the room kind of knows where the pockets of quality are most of the time.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Charlie Songhurst, who I think I introduced you to.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
He had left Microsoft and he was trying to figure out what to do next. And I remember counseling him at the time. He said he really appreciated that I wasn't trying to fit him into existing concepts, but I was just trying to figure out what was best for him. His appreciation of my doing that kind of made it object to me and I tried to do it with other people.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
He had been at an East Rock event, a hedge fund gathering we had, and had touted Bitcoin back when it was probably six months before we ended up buying it. But we bought a small amount at $300 a coin. And then it proceeded to go up quite a bit. And so I was trying to figure out what to do with the position, whether it was real, how to think about it. And so I went to a crypto conference.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And I've noticed this thing, I don't know if AI is like this now or not, but when you have a new field, it tends to attract the people who are available to be in that new field. And that's often unemployed people or people who are so Chicago improv that they're switching what they're doing and chasing the next thing. And so it can be kind of aesthetically distracting when there's a new thing.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Because the people who've gotten in there first are kind of scrappy, but also fly by night in this way. And crypto is like that. And so I went to this conference and I experienced a lot of the people as not like that line from Succession. They're not serious people. Yeah. And then I came across this woman who was running crypto for Facebook at the time. I was in a room of like 300 people.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I just followed her because I noticed that the room seemed to know that she was among the most credible in the room. And if I just sat near her, there was interesting incoming. And Matt Wong was at Sequoia at the time, and he came in. And then I was like, you know what? Actually, I'm going to follow him. And so I became kind of his wingman.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And it turned out, in retrospect, he and Fred Ursham were debating whether to work together on that. They had gone on this trip partly to figure that out. I ended up having a road trip. I drove the two of them to the airport and we spent a bunch of time together. And I was just struck by, I experienced them both as commercial actors that I would back, feel agnostic. I would bet on them.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
individually and as partners, regardless of what they were pursuing. And I ended up interviewing CFOs for them. I like to interview team members for people because I can often add value that way. And I understand how they're approaching everything. And I learned a lot about it. And I happen to have just read the description of Enneagram One.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
On the morning that I interviewed this endowment person who they were interviewing as a CFO, and she and I had this amazing deep conversation and I realized, oh my God, she's in Enneagram One. And I said to them, to Fred and Matt, I think she's an amazing hire. She's going to bring institutional credibility into the inside of the firm.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
The shadow side, the one catch is she's going to have this slight vibe of, of you're trying to get away with something. I said, particularly Fred, she's going to have this vibe of like kind of getting away with something. Why are you being that way? And if you take that personally, you're going to end up firing her. But if you don't, she's going to be amazing.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And Matt recently sent me, I think that email recapping that she's ended up becoming their CFO. She's amazing. She's totally built their firm. She's their third partner. And because I was there with her before, it's like she and I share this. I noticed this recently in visiting somewhere else where I helped recruit a lot of people.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
You're sharing the before and after reality with somebody and you're on the same journey in this camaraderie like way. So I've seen them go from nothing to, I think they managed like 10 billion today. And to their credit, they've consistently invested in crypto and put real money to work at multiple bottoms because of their long-term belief in it and the quality of their decision-making.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I've got kind of a front row seat to that, and that's been really fun.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Well, I think it's part of the pricing, right? You think of somebody like Musk, the terms of Musk's X.AI fundraise, I presume, are egregious, quote unquote, from an investor's perspective. They have no control. They have no transparency, whatever, right? So that's the market pricing, the fact that he's highly credible.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Part of pricing the talent, what you're pricing is the degree of autonomy, transparency, and and the fees and the duration of the capital, all those things are like, okay, what feels reasonable given where this person is in life, what their track record is, your assessment of their competence and all of that.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
The way I ended up doing is if I were them at this stage with this track record, with this set of relationships, Would I feel like this is a fair deal or do I feel exploited? And if I would feel exploited, I'd try to dial it back a little bit so that it doesn't feel exploitative. And sometimes I would get it wrong, of course, but I feel like that part of pricing. Pricing talent. Pricing talent.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
It's like how much money and with what constraints on the activity. Like what are your decision rights there? And how often are you going to check back in? And then I think there's a way to do it if you're the, I guess in this sense, the principal, there's a way to do it where you're Even though you formally have these rights, you're doing it with a very light touch.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
You can make the experience feel like a much more open field, depending on the tone of the people who you've struck the deal with.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Back to that part about identity. If you're the principal, you need an agent who can make money through other people and not care, be kind of indifferent about whether it's, quote, yours or somebody else's. It's just net of fees. How much money did you make?
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And I feel like I observed that a lot of people who allocate money to underlying GPs, they actually would prefer to be the underlying GP from a power and identity and experience perspective. You, the principal, should just want to make money. It's not all the identity claims about who did what or whatever. So many people actually are not good at making money through other people.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
They can do the analysis themselves, but they actually can't. It's like the stage of a portfolio manager's development where if they've been a stock picker and then they move to being a portfolio manager and they need to own a stock that actually is their analyst's favorite idea and they aren't as deep on it as the analyst's. That's a really big moment of transition.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And a lot of people cannot make that transition. It's the equivalent transition, I feel like, in the family office CIO, where I think the ideal is just agnosticism on enough self-awareness to know where you have comparative advantage, but also an ability to interview other people and appreciate them for who they are and what they're doing without any need to make it your own somehow.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
You need somebody who knows what it's like to lose money and cares in their bones about never selling puts or never doing something that could take you out of the game. Because people do weird shit. And so part of the trust is... A conservatism of like, yeah, I'll let some things go. You want the agent to view the money as though it's theirs.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And there's a price for that, which is ideally they've got enough money that they've already found a way to relate to money that way. Or they're just innately conservative. That's what I was trying to capture.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
There's a guy who has a quote, I'm blanking on the guy's name. The job of the leader is to define reality on the way in and thank them on the way out. Which I think is so profound because it speaks to how each container is a different reality. And I've been thinking lately how you've heard of Gell-Mann amnesia.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Where you're reading an article, it's about a subject you know about and you're like, oh my God, the reporter doesn't know what they're talking about. And then you turn the page and then you assume the next article accurately captures reality. I've been thinking I have that and most people have that about moving from one container to another.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
you're like, oh, this one is so idiosyncratic based on the source and the way the leader defined reality on the way in. Oh, I'm going to go to this next one, but that won't be the case of the next one. It'll be, quote, normal. No, every single one is so weird and idiosyncratic. And the older you get, your ability to
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
transition between containers gets really compromised because either you've grown up in one container or your willingness to put up with somebody else's frame on reality diminishes. And so I think the ambiguity that I was referring to when somebody's starting something new is just that act of defining the reality is a creative act. But while you're doing it, it feels...
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
super slippery and amorphous. And it's like, I don't know if I'm going to get the investors. I don't know if I'm going to get the team. You're holding so many 33% probability things at once that it's very taxing. And if you haven't run something yourself before, you're not used to having everything be up for grabs.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And I feel like the act of starting something new, you're sitting there on Monday morning Hopefully you have an office. If you don't have an office, you're sitting in a Starbucks and you're like, the sheer lack of strength, right? You've moved from order to chaos. There's no order. The only order comes from you asserting reality. And if you haven't done it before, you can feel fake.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
It can feel disorienting. You can have vertigo. It can be like, oh my God, what did I just do? So... What is it? It's getting comfortable with that level of uncertainty. And there's also this subtle thing where I'm actually working with somebody right now who's literally doing this very masterfully. You have to pretend it's more certain than it is. Because you're pretending makes it so.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
But there's something slightly intellectually dishonest about that. And it's particularly hard for hedge fund managers because many of them are kind of default skeptical. They're likely to see the downside and the risk and the calling bullshit on things. And so if you're in that mode and yet... your own thing feels like bullshit to you, it's not gonna work.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
You gotta thread the needle on it's real enough. I'm gonna find the thing that's real enough to me that I'm willing to put a stake in while at the same time having a sense of humor about it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
It's related to the idea in the investment world, but maybe it applies to founders too. Like the main asset is your future decisions.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And so when you're moving from the container you were in before and the way reality was defined into this new ambiguous setting, if in the transition, you are now sitting next to somebody, I use the example in the piece of often younger hedge fund managers will hire a more seasoned CFO, but the CFO is taking responsibility
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
risk that almost by definition, if they're a CFO and grew up in the accounting profession, is more risk than they actually feel comfortable taking. And so their risk aversion and slight skepticism about you, the portfolio manager, can enter your confidence when your fund is down 10%. You're less
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
senior and your own chip stack is smaller and you're sitting there and the guy sitting next to you in his body language and in his questions is conveying anxiety and fear, those are very contagious emotions. You want to be very pristine, particularly early on as you're holding the ambiguity and trying to assert reality about the
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
the energy of the people around you and whether they believe in you, because you need some skepticism in there. Of course, you don't want to go off a cliff because you're sizing something too big or in some other way, you haven't taken input, but you're managing your own psychology. And I think one of the best ways to do that is manage the inputs. And so it could mean turning down an investor
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
where the check size is really good, but they're actually kind of an asshole and they're going to call you weekly. And they signed up for your liquidity terms, but they've never signed up for a fund with that liquidity term before. They actually like quarterly liquidity. And in all these ways, they're faster twitch than you are. And you sold them on your strategy.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
The expectations you have with your team, with your investors have to be so pristine and so well managed or you don't protect the climate and the skull.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah, it plays a big role, of course. And it's back to the source point. You want them senior enough that you find them credible and they find you credible and you've had enough time together. But then, depending on the construct, you hopefully want them game for, at the end of the day, being on your ship.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And the challenge becomes if actually they wanted to do their own thing or actually they think they should be the PM or they should be co-PM or all of those. You're capturing somebody who's extremely talented on their path. Do they believe in you? And... Do they agree with how you price them? You don't want somebody who they think they should have 40%, you gave them 10%.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
It's just in the water all the time. And if they wanted 40%, actually, maybe they actually wanted 50%. And If you could hold it for a couple of years and then they go off and do their own thing, that's great. But that can screw up the energy of the system.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
It's also like why in those settings, if your partner has experienced failure in some form or done it themselves and knows how hard it is, is pricing it correctly. Because if they think it's easy, then they should fucking go do it. Yeah. And if they think it's too hard, they're probably not going to join you. So it has to be like right in that sweet spot.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And I'm thinking this in personality terms, depending on how you're wired, how they're wired. You need to understand how those two are going to go together just like it would in a marriage. Because if they're truly your business partner, I think David Senra picked out that amazing Zell quote. A partner is somebody who shares the same level of risk that you do. I thought that was so profound.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
That was such a good catch-up. That is a partner. You're in this new thing. And if it goes down, it has real-world implications for your family, for where your kids are going to go to school, where you're going to live. And yet, I think most of the time...
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
those systems benefit from at the end of the day, the buck stops one person and they are going to make a call and everybody needs to be okay with that.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah. And having it be dynamic over time, of course, to accommodate the shifting system. There's a quant fund I'm obsessed with, The Culture, and I probably shouldn't get into the specifics of it, but they have a very dynamic comp system in a way that gives rise to the culture. And so I think there are ways to be creative about that.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
how equity changes over time, how carry changes over time that allows for meritocracy and for change. And people tend to do the same self-expression hitting the comp system and how value will change over time, I think, is a fertile area as you're setting up something new.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
It's the what's going on here. It's what's going on here in this new setup. And can I or anybody else describe it in a way that's useful to you, truly understanding the structure of what's going on here?
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
If you have humility about it and realize the things you can't see, then if you read the right thing or hear the right person talking at the exact right moment, there's such leverage to that moment. Waitzkin has this language of firewalking somebody else's mistakes. Can you burn in someone else's mistakes or not?
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And it's really hard to do because it's obviously not visceral to you the way it was to them. But are there ways to inform your own compass in this whatever period, whatever rite of passage you're going through that makes you better at it or somehow improves your ability to do it? I just think there's extra leverage around those.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Well, a huge percentage of them are source related. Knowing when you are sourced and when you're not is such a valuable thing. So the first business I started with a professor of mine out of Yale, Richard Medley, he was sourced on that, but I was running the business. He wasn't really a business guy. I was a beneficiary of his poor judgment about people, which extended to me.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
So he let this 21-year-old run this thing and this completely inappropriate, massive imposter syndrome at the time. had 30 people working for me. Oh, wow. I don't think I knew that. Yeah, it built a big business. So if I were replaying that, there were moments at which, in retrospect, I was frustrated with him as source. Back then, I saw it as I'm producing The Richard Medley Show.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
But the moments when I didn't want to produce The Richard Medley Show, I wanted to produce The Graham Show, they were frustrating. And he and I had conflict in a way that was extra. Like, no, I'm not source here. This is The Richard Show. At the end of the day, everyone, including me, needs to understand that. that the buck stops with him and he started it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And over time, we tried to grow it off of him. But knowing source is super powerful of like, am I source? I think in some ways at East Rock, I didn't fully own source at times as an example. And my partner, Adam Shapiro, I kind of handed Source off to him, and now it's very coherent, is my sense. He's a great investor, and people in East Rock and the clients are living within Adam Shapiro world.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I'm helping an entrepreneur right now who I think is at risk of not fully owning Source. It's something that Enneagram 3s and 9s in particular, I think, are subject to where you can be so adaptable. and pragmatic that you write yourself out of the narrative. Because it's like at the end of the day, I'll take care of my own needs.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I'm going to take care of everybody else's needs and I'll do anything to make this thing work. And so there's a very fine line of being flexible and adaptable, but allowing your own creative voice, what's coming through you, the reason you started the thing in the first place. And it's why, I mean, so many things do not work.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
At the end of the day, you need to be comfortable with the power dynamic of who is source. One tiny crimp in that hose and all sorts of weird shit happens. And if it's clean, if everybody in a system says, yeah, this guy's source and I want to live in this reality, it has such a healthy vibe to it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
It affects my mood when I'm in the space, obviously light and ceilings and all of that art, all that kind of stuff. But one of the things about the East Rock office that I was focused on is I wanted a lot of extra space. I feel like one thing that people with capital should do more is provide physical space for up-and-comers. It's such an easy arb. And Richard Rainwater did that.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I think Barry Sternlich camped maybe in Dan Stern in Reservoir Space as he was starting Starwood. There's holding a physical space and covering the overhead of that. That's what a certain set of people are lacking. You want to pay their overhead and collect them And ideally, they find things to do together and you find things to do with them.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
So we have a cafe at East Rock with a great chef for some of the same reasons you do it here. Like it creates more of a restaurant or not quite a club, but just a vibe of.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
In January of 2020, I had moved to Santa Barbara right before COVID. And I realized that there was enough of a difference in management style between partner Adam and myself that it was incoherent to have me trying to input my claim to source from the West Coast. He's an amazing investor. He has such a different style than me. When we were in the same office, it worked.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
When I was on the West Coast... The people who worked for us were getting confused. This is no longer coherent. So I decided, you know what? At the highest level, what I'm really good at is finding somebody who's better than I am at doing a thing. And I realized Adam's better at running East Rock than I am. I'm not that great a manager of people I love. Coaching people.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I think it's a principal-agent thing, that there's a way in which this paradoxical thing where if you're the principal and you treat the agent like an agent, then they become an agent. And so it's this very subtle energetic thing where you got to have this vibe of let's make money together. So what happens is somebody who's commercial-
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I love having a sense of abundance. I love setting people free. I'm not that good a manager of people. If anything, not being that good a manager of people is in part why I have to be so good at hiring because I don't have the attention span or the desire to stay in their business if they're not doing the thing they should do.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And so I decided, you know what, I found somebody who's better than I am at running East Rock and he should take it and make it his own and turn it into the next era. And I always thought that there's this concept of third culture kid, which I learned about from a.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Israeli friend of mine who grew up in Puerto Rico and his Indian girlfriend said, you're a third culture kid, which is such a great mix. I guess the concept is it's when you grow up in a place that's not your family's home culture. A lot of military brats are like this and a lot of immigrants are like this, where you never quite feel like somewhere's home.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And I had grown up, my parents were hippies, started a nonprofit in Kentucky. And I grew up in Kentucky and And I was homeschooled, and we were so different from everybody else. It was like I was growing up in a foreign country. And in retrospect, it felt incoherent to me. I had no alternative basis other than the fact that we seemed very different.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I moved to New Hampshire when I was 14, and that immediately felt much more coherent. My dad had grown up in Boston. My mom grew up in Santa Barbara and on the West Coast. And when we moved in January 2020 to Santa Barbara, And it has felt like home in a way that I thought I was a third culture kid. One of the things about third culture kids is that nowhere ever feels like home.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
They always feel like an outsider. They always feel like they're visitors. And so one way I made the decision was this feels like home. I don't want to leave. And whatever I do next, I want to use this as the base and travel from here. And so that is ultimately how I made the decision. And it feels like it's worn well. I miss the team. I miss the clients.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I miss being in New York and the flow of it. But then I almost feel slightly smug saying this out loud. But on a 100-point scale, my life satisfaction is like a 98 or 99. I'm saying this in that spirit of recognizing how fragile it is, how quickly it could change.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I had heard Danny Meyer say on maybe a podcast with Tim that there are some spaces, restaurant spaces, potential restaurant spaces, that if you gave them to him for free, he wouldn't start a restaurant there. That totally clicked because I'd been keeping an eye out kind of opportunistically in Santa Barbara and specifically in Montecito for a restaurant spot.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And it constantly felt like I was forcing it. And so a spot came up that has such good feng shui. It's like your car kind of wants to go there. It's the center of this particular part of town. And I instantly knew, oh, if that were available, I would be drawn to go there myself all the time.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Of course, I knew nothing about restaurants, but I figured it was a casting exercise, just like most other things. So I was like, okay, so I need to find... A chef.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And the other thought I had was that the percentage mindshare that Chez Panisse has in Berkeley, like if I lived in Berkeley, being able to walk to Chez Panisse and having that one woman in a house totally disproportionately impacts that whole place's sense of itself. Like there's such leverage to really good food. culinary and more than culinary, just neighborhood experience.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I aspired to bring that in some way to Santa Barbara and Montecito. And this restaurant spot came up. It ended up taking about a year to get the lease. It ended up being a sublease, but a long one. And then I started trying to figure out what distinguished different chefs. And I interviewed a ton of chefs.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
wants more control over their life than most principles will give them. And so when the principal tries to bring an A player inside the boundary of their firm, it's not unleashing the commercial activity of the agent. And I think the fact that Stuart Miller let me set up my own company, it's possible it was path dependent because he initially gave me a smaller amount of money, 50 million.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And the reality is that for a chef to get leverage, they need to open multiple locations and then most often not be in the original location. And so I had several potential licensing deals with very fancy chefs because everybody seemed to agree once I had this lease that this was an amazing lease.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
But I realize there's something about when you're in a restaurant and the chef is there versus... Jean-Georges number 10. Yeah, yeah. That it just feels different and it doesn't feel like a neighborhood place. And I wanted this to feel like a neighborhood place.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I kept looking for either someone younger, this was going to be their first breakout restaurant, or someone for whom it made sense that they would actually be in the restaurant. And I interviewed a ton of chefs. And one of the co-founders of BlackRock, Keith Anderson, owns a restaurant called Community Table in Litchfield County. And I was speaking to him about it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I was speaking to him on a reference on a chef that had worked at Community Table back when he started it. And that chef, Joel Vealhand, ultimately we hired. And I'm super excited. He's moving to Santa Barbara in July. And we're going to open this restaurant.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
But there's a dynamic between the general manager and the chef that is very delicate because one runs the front of the house and one runs the back of the house. And one theme that people who own restaurants have is chefs are artists. They're only going to last three to five years. So you actually want the stability of the general manager and having it be an experience first and the food second.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And I wrestled for a while with that trade-off and ultimately decided I didn't want that trade-off. And I was going to try to, we'll see whether it works, try to have it both ways. But this particular chef, I had interviewed him early in the process. And he was so, Joel was so knowledgeable and wise about the business without being cynical.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
It was like this knife edge of, I interviewed so many chefs who were burned out. This is particularly probably a post-COVID experience. They had gotten slightly cynical and victimized feeling about the profession and how restaurants fared during COVID. And Joel didn't have that.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And then I was looking, so he's an Enneagram 6, which my wife is, and is the loyal skeptic or the, if you were to have a headline, it would be, winter is coming. So there's this underlying fear to it, but there's an excellence. The fear coexists with this excellence and judgment. And then our general manager I'd known for a while, she grew up in the business.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Her parents ran a restaurant in Santa Barbara. Her name is Jane, and she's an Enneagram 8. And I have a working theory that eights and sixes do really well together. The eights provide stability, the sixes are loyal, but also skeptical in a great way and alive in their decision-making. So I ended up thinking, like I introduced the two of them, sometime Joel did not want to be the general manager.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
He knew in his old restaurant, at one point he'd had to act as general manager and he hated it. It's a little bit like if you had a failure, It's actually better sometimes because somebody prices themselves correctly. He prices the value of the general manager, in my view, correctly. Oh, interesting.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And values it. And I feel like there's a good chance it'll be a very long-term thing for that reason. And so I guess the other element... in Santa Barbara is the housing is so expensive. And so a couple of years ago, when I started this project, I knew that the toughest thing, if I was going to recruit somebody from outside of Santa Barbara, was going to be the housing.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And the biggest carrot I could provide somebody would be a great housing setup. And I also wanted the feel of the restaurant to be of somebody of that neighborhood, not somebody who's commuting an hour in, but to serve somebody else, but somebody who's grounded in that community. So I had bought what at the time was the cheapest house in Montecito and redid it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
It's right near a great public school and it's a three-minute walk to the restaurant. And so I was able to get him. The reason I'm so lucky here and the reason I know why it's a good setup for him, he's going to live in this house, his kid's going to go to the school, he's going to walk to the restaurant. And so all those elements came together. And then the final one was
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I was kind of debating whether to have a ton of investors in it and pass the hat to the community or just kind of keep it simple and either just fund it myself. And I ended up finding a friend who's a partner at Sequoia, Brian Schreier, who he and his wife have a real interest in hospitality and have done other projects kind of like this.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And I ran that for a year and built trust. And then If it hadn't been like that, it's possible the market construct would have been just run my family office, but it's my thing. And it wouldn't have unleashed what it ended up unleashing. It's also like it has to be consistent with their existing aesthetic, right? I think.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And they met Joel, met Jane, were extremely excited about it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Six.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
You're right. It is that it's a casting exercise. It's so compact. This year we had 32 speakers. There was 32 choices that I did together with Paulino Lopez and a number of other friends on the host committee. And then one of the East Rock team, Brian Waterhouse, did Next Wave, which is how I started with Sewn 10 years ago.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I see it as, is the person a credible threat at saying something interesting? If I saw them on the agenda and I already knew who they were-ish, is that when I'm going to go take a call or not? And I try to have none of those breaks if I can. And then a little bit like what we were talking about on the retreats, if I were sitting next to them, would I feel engaged?
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And in terms of making it my own, Doug Hirsch, who started it, who is Source, his big insight was to make it all actionable investment ideas and to hold the line on not having panels. I feel like that's one of the things that distinguishes it. But I, at various points, wanted to bring in people like Patrick Carlson or other tech people where there wasn't really an actual idea.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
But I just gave myself a small budget of those on a given conference. And then this year, my friend Boykin Curry came up with the idea of this lightning round where we did a series of five-minute talks that I thought really complemented the longer format quite well.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah. Well, macro, of course, because Druckenmiller also comes to mind and Soros in his day had a long duration. There's something about macro where you're opportunistic enough to shift to the style of what's making money in that period. So you could do long short, you can do distressed, but you're not a hammer looking for a nail. So I feel like that provides some duration.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And then I do think in general that the financial markets, if you've made a lot of money, and your ego and identity is starting to solidify. The markets are such a good feedback mechanism to make you constantly learn. And so if you're going to choose one profession to grow old in to maintain intellectual and cognitive flexibility and responsiveness rather than
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
So like if you had a quant guy whose family office needs a family office or wants to partner with somebody or put somebody in the business to run a family office, the underlying agent is going to need to be super mathematical, left hemisphere-y in order to have the principles map of reality overlap enough with the agents that when shit goes down,
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I feel like financial markets are pretty good because you'll just lose all your money if you get too ideological or start drinking your own Kool-Aid. And so I feel like Tepper and Druckenmiller are both good examples of they're forced to constantly engage with new ideas, young people, and move with that chapter in the markets. And so I think there's something in that.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah. Love the game. Humility and bordering on paranoia that you're missing the thing that's now happening so that you maintain extreme high open-mindedness. I feel like there's a form where when sewn works, you've got all these listing posts of people who are on the edge of a thing.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I thought this year, Eric Steinberger, Daniel Gross's interview of Eric Steinberger was super interesting because Eric is neck deep in the AI world. And from my perception, maybe the blue chip end of the pool. And how he makes sense of reality is so different than mine. Daniel was trying to act as a translational layer between... He even said that as he was doing it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Like, let me translate for you. He was doing such a good job of it. And it was still hard. But the fact that in that world, there's this idea of, I want to be in the room when AGI happens. And there are like, I don't know, five to 10 places that are in the hunt for that. And they're paranoid they'll be in the wrong room. is such an interesting perspective.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Maybe that's not the right frame, but the fact that that's a dominant frame totally strikes me.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Maybe there are 10 to 20, 10 to 30. I assume there are a bunch who are just managing their own money. And I know a number of those. I bet I'm missing a couple. What's the distinction? The distinction is a shift to thinking of it as becoming source maybe of your own style of investing is how I think about it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And not those portfolio managers will have had influences before them that leave their mark, but coming into their own and not playing the game the way other people have played it, but like truly playing it in their idiosyncratic way. I think of an example beyond Tepper.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Tepper is such a good one because he's in the public domain and I don't actually know him, so I'm not violating any confidentiality. I do think there's a consistency to what I think of as that master level where their identity is up one at the level of I'm a moneymaker. I'm not a portfolio manager that invests in this sector. I think that shift is one elemental piece.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
it doesn't get wonky because inevitably something's going to go wrong. And it's those moments when it goes wrong that you either get shaken out and there's one family office that famously has gone through like 15 CIOs because of that getting the dynamic wrong.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah, also a handful. I think of John Arnold as working on the machinery, the platform of the country in public policy right now in a way that's consistent with that. It's not financial markets per se, but he seems like he's heavily engaged.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I felt like Bill Gates, controversy aside, I don't know if you think of him as an investor and that distinction between founder and investor, but at the beginning of COVID, I felt like he was acting that way, like he was caring genuinely for the system more than his own interests.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I feel like Mitt Romney is in that category right now as a former investor whose politics aside seems to, from my perspective from afar, to be its care of the system itself. When Druckenmiller is concerned about the debt And playing the role of a modern bond vigilante, that's him saying like, guys, I see this. You've got to be careful here.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I think if you define it at the right level, it is, which is back to the point that maybe founders versus or startup founders versus hedge fund managers and private equity managers is a tricky distinction.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
That the game, think of AI coming onto the scene and how much disruption that'll cause in investing, but how many new opportunities and maybe it'll be a startup founder who's organized as a company that ends up making the most money. I was talking with somebody who's deep in the AI world recently, and they're paranoid that there may already be AI at scale in markets.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And I thought it was such an interesting idea, even if they're wrong. Like, oh, it's the kind of thing that's going to happen sooner than you think, and then weird stuff's going to happen.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I think existential questions about AI and how it'll reshape the world aside, I think it'll morph and commercial, pragmatic, aggressive, humble people will continue to thrive in the system, but it may take lots of different forms.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
It would basically be the same. Decisiveness, the open-minded with a point of view, like at a high level, that's the same. There are moments where in 2008, 2009, we're like this, where you're on the field and the game itself changes in these structural ways. And people that can handle being comfortable with that level of change of mindset. no, you thought you had cash in a bank.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Actually, you don't. Oh, yes, you do. No, you don't. Those sort of movements of the game. I remember at the time, there were several managers who I would not have guessed felt wronged by... They were short. And when the SEC banned short selling, there was one guy in particular who just felt like that wasn't fair. I felt like the sentence underlying everything he said was, that's not fair.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And that's a version of, I feel like, trying to be right rather than making money. Like, what? Nothing's fair. It's not fair that you have a gazillion dollars and you're managing a hedge fund. Like, what? Yeah.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
So I feel like if you told me there was some shift in, I don't know what it would be, but just in the game itself over the next five to 10 years, that it's useful to be so opportunistic and so flexible that you're fine with that and you flow with it rather than getting stuck. And it matters more during periods of punctuated equilibrium.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Well, one thing was the time horizon. He just, from the beginning, had a very long time horizon. And then he's just a very skilled manager of people. I was listening to Randall Stepman, who was famously Jamie Dimon's coach. And he has this theme of they studied all the best leaders. And
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Scared and excited at the same time. Munger spoke at SOAN Australia a year before he died, and he had this amazingly poignant thing where he said, I was talking with Warren this morning, and we were both saying, like, if we could just watch what happens the next 30 years. And then he said, not even participate, just watch. Think how, like, oh.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah, I oscillate back and forth between fear around how my kids will navigate that reality and we as a society. And then Tyler Cowen's frame of like, number one, it's happening no matter what. Yeah. Number two, it's the return of history. Like there have been other eras that felt like this. And so that's how I try to rationalize it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
One thing is just the path dependence of it. You happen to have launched in a period where your first year, you made either good returns or bad returns. And then we tell all these stories after the fact. But I remember there was Cliff Asness, AQR. There was another manager who launched at the exact same time, very similar pedigree.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And it didn't work. And I remember one story on that is maybe they launched two months apart or something. There was a difference in their initial returns. Yeah. And then that led to just these crazy different that we have all these stories about after the fact.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I think there's a path dependence and an arbitrariness and luck component that we, in retrospect, tell stories about skill and other things. Of course, real life is it's both and it's messy. So that's one.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah. Yeah. And have a feel for where you are in the cycle, obviously. That requires a macro judgment that most people wouldn't have or that may not be available in any given period.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Well, the origin story is I worked for Ted Seides, who had learned it from the Yale Investment Office. Their emphasis on it and their professionalism around it was kind of my window into that where it's like, oh, it's not quite true. When I met Ted, I had started a reference-oriented business. business and was pitching him as a client. And then I ended up joining him.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
They found there's this quality of the people working for the leader as feeling like the leader's rooting for them. I knew exactly what he meant because I could feel it. That's exactly the vibe Stuart had been giving me and eventually my second partner as well. That feeling of, yeah, I'm rooting for you. First and foremost, like, let's do this. In retrospect, it was kind of crazy, right? Because
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
So I was kind of already onto it, but he was so good at it. I felt like I learned a lot from, in effect, the Yale Endowment lineage of references. And they were maniacal about it. Like they tracked down college roommates and that sort of thing.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And then I wrote that piece, What's Going On Here With This Human, partly to put myself, like I reread it before I do references, because it captures a mood. I'm trying to get myself back into the mood when I'm in the zone of holding somebody back.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
at the humility about how much you can see, how much you know at that moment, and then kind of enjoying the process of figuring them out together with other people. There's also just at this point, the felt experience of finding it so accurate. I can often find in the reference something that is highly relevant to what ends up happening later and how I end up experiencing that person.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I've just seen the power of it. I do believe that there's signal in there. It's not 100%, but it's like 75%.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I like Jonathan Haidt's metaphor of the elephant and the rider, which he says he came to in a psychedelic trip. And it resonates because both on references and when you're interviewing a candidate, there's some percentage of the time where you're interviewing the rider and his idea is that they're too separate.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I guess it could be just the ego and the unconscious, but it feels like it's more than that. You have to distinguish between what somebody's saying and How self-aware are they? And are they speaking for just the writer or for the writer and the elephant?
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And an example would be like, everybody knows that you need, quote, should be high conscientious and detail-oriented in most professions on most things. But the reality is some people aren't. And understanding in a reference process like... The implications, where are they on that? And the implications for that given role ends up being super important.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
You get at the elephant because it's the pattern of behavior over time that you're hearing from multiple people in different contexts. Past performance is indicative of future results. Past behavior is indicative of future behavior. Past behavior as experienced by multiple agents on the field over time in similar contexts.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
My wife knows my elephant well. People I've worked with, Waitzkin knows my elephant well. It's like, so it'd come out in adjectives from them. I'm extremely comfortable with ambiguity. And so I like to hold, I think one of the characters in Shogun apparently does this. I haven't just started watching it, but Torunaga, just hold, hold to the point where everybody else is losing their mind.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I'll notice it when I'm working with somebody else on a reference process or on a given human decision. And I'm like, I feel no need to make up my mind. There's all this evidence on both sides on X. It would be useful to make up my mind. It's like, I'll just keep eating the grass over here and then I'll go over here. It can be maddening for people who are working with me.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I started it in 05, the initial vehicle, which was just a fund of hedge funds. And then Stuart gave me the rest of his capital outside of Lennar in early 2007. And then I convinced Adam Shapiro to leave Goldman. And we started this new venture. And we had exactly a year to do stuff before the great financial crisis hit. And so picture you're him. Stewart. And it's the beginning. 08 is happening.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
It probably makes me frustrating to work with at times. But then I think friends would say like, then I can act very decisively. much faster than they would think when it lines up.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
A metaphor that Sam Harris uses when you're trying to get someone to understand the non-dual perspective is And his point is just that if you and I were looking out this window and there was a very strong reflection, but you were focused on the building outside, that using language to get you to see the reflection is very hard. And I like it in the hiring context because...
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I think many people are blind to the way that they're creating the interaction themselves with the other person. And so if you're interviewing somebody, the example I use in my essay is like, if you're interviewing somebody and you're nervous and holding your breath yourself, often they will start to do that. And then you experience them as nervous, but actually you are the prime mover on that.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
That's why references using the interview is just one piece. And then what's so hard is The interview is so vivid in your mind, you're inclined to really weight it. But the reality is if you can do really good references, then you can control for the fact that you've created the other person.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
We've talked earlier about containers and how different the reality is in each container. And I think of the water as they're making sense of reality based on their lived experience within a given field and within a given company. And you don't want to take somebody out of reality. water that's working really well and just assume it applies somewhere else.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And trying to think of an example, if you were working at Goldman Sachs in the 90s, there was a certain way of doing business That if you took that person out, somebody who's extremely commercial and extremely successful, and you put them in a different firm with a different style of doing business, they could be seen as super sharp elbowed or super something.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And just being conscious of how different it is moving from container to container. And they aren't necessarily aware. They will not control for that themselves. So you have to control for it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Nine.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I feel like that's something I aspire to for my kids is because I feel like that experience for me. It locked in this sense of my identity being I can outwork other people if I just try hard enough. So when I subsequently hit challenges like having launched East Rock a year before the great financial crisis, I had this underlying confidence that it could only get so bad somehow.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Because I can always fall back on working hard. I've seen it before, so it's tangible in this way. Like, I believe it in my bones. And that underlying confidence that I'll figure it out, I feel like when a kid has that or a grown-up has that, it allows you to operate from integrity in periods where it's stressful.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
There's a lot of pain tolerance. So the races, depending on how fast you row, it's 2000 meters. And in a single, you'll do it between like seven and eight minutes. And so that's a length. It's not a sprint and it's not a marathon. You're producing an incredible amount of lactic acid.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And you have hired these two kids.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah. Yeah. There's a threshold of, okay, I'm going to get used to the pain and be okay with that. There was also a big difference between... I first won a couple of national championships in the double, and it was striking how different it is to be out in the water with just one other person compared to being just yourself out there and how there's nowhere to hide. And so I feel like I learned...
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Partly just a training mindset. I was fortunate in that the club I worked at was mainly training national team members, like adult national team members. We had fancy boats and we were videoed in every practice. You'd go home and watch video. and constantly work on your technique.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah, exactly. And you know me pretty well, but not that well. And then all of a sudden, your stock goes down to like, I don't know, three bucks. So close to going bankrupt. And all of a sudden, all your money is with this kid that you don't know that well. Yeah.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And so that training mentality that my friend Josh Waitzkin is very focused on applying to any profession today is that confidence that the investment in the training pays off was one thing I learned. And that you could always, this optimism, you can always tweak it a little bit and make it slightly better. My dad always said I was very coachable. which I think is true.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
So I was able to evolve my technique, I think, pretty effectively and pretty quickly because I just wanted to win. I didn't experience much friction. Did anything formative happen to you at Yale? One was just the experience of being with so many ambitious, smart people kind of blew my mind. My freshman year, I was in a program called Directed Studies.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
You had to apply to get into, and it was 60 kids, and you had full professors teaching you classics. And I was in this philosophy class, and of the 60 kids, seven of them were from St. Ann's, the school in Brooklyn. And I'd gone to public school in New Hampshire, and two of the St. Ann's kids were reading Plato in the Greek. At first, I mistook one of them as the TA.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And when I remember calling my parents saying, I don't think I'm going to make it. Definitely in directed studies, I knew they'd yell if this is what the standard is. The other thing was you're writing a paper a week. It was intense. And they called it directed suicide at the time. I'm sure that's no longer allowed as a term. But
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I was at that guy's wedding, George's wedding, 15 years later, and I'm sitting at a round table where it was all directed studies alums. And somebody else told that exact story. It turned out half the table had called their parents because George was reading Plato in the Greek. So...
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Making it through that, over the course of the year, I got better at writing because of the paper a week, and I got my footing and decided I could make it. The confidence that that built, it felt formative. And then sophomore year, I read a paper by a professor, which implied that he was going to roll out this application of his political philosophy to a bunch of different domains.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And I remember sitting there thinking, oh, that's going to require a lot of work. I wonder if he needs help and if that's an opportunity to apprentice under him. His name was Ian Shapiro. And I emailed him at 11 p.m. at night and he emailed right back and said, yeah, actually, I do need people for exactly that project. And he and I grew very close over the subsequent two or three years.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And I did a ton of research and kind of learned a standard of research from him. But I think that sense of taking initiative and of being like, I wonder if you're just reading things that are in the public domain. Can you intuit what the next thing is from that?
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
He ended up writing a book, and I built, with my dad's help at the time, I built out a huge Lotus Notes database of all the literature around workplace democracy. And he ended up using a bunch of the things I had found there. And credited me in his book. And he became a real mentor. He's South African. He and I are still in touch.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And there's this scene I talk about in one of my essays where he and his leadership team at Lenar is going around trying to raise money at the bottom. And he comes and he notices that Adam and I are kind of depressed. We were down like 12% at the time. But we had anticipated some elements of the Great Financial Crisis and thought we'd be flat or up. And we weren't. And so we were sad and mopey.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And it was kind of an intellectual touchstone of quality that I could measure somehow.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah, exactly. Like, oh, people are doing a thing at a standard I was not aware was a thing.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
So he may be arguably the best at this. Yeah. It's that belief in what's possible, right? Sometimes I would interview analysts who I realized were not calibrated on what excellence was. They had been at mediocre banks and mediocre hedge funds, and they thought they knew the territory, but I was experiencing them as not. So yeah, I think it's super profound.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah, yeah.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
There's a great moment in an interview with, what's Serena Williams' husband's
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah. He talks about dating her and thinking he was kind of a tech guy in Cisco. And he thought he knew what hard work was and he thought he knew what training hard was. And so he's kind of macho about it. And then as he started to date her, he was like, oh, my God. The number of hours a day, the sheer intensity is at just a whole other level of what Serena does than what I thought was possible.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And I remember thinking, oh, he's capturing exactly that moment when you see a person do a thing, they're bringing something to it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
So Ian Shapiro, this professor, had done his PhD at Yale in the, I guess, in the 80s together with a guy named Richard Medley, who dropped out of his PhD program and went on and ended up working for Soros and being a partner at Soros, being his kind of in-house political intelligence guy. And so I remember there was this moment. I was sitting in my room senior year.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I had already selected all my classes and Ian Shapiro emailed me that there's this interesting professor, visiting professor, and I should check out his class. Actually, I gave him grief for this later. He didn't pound the table on it, but he was like, you might want to check it out. I was in my gym clothes and the class was in like an hour.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I remember thinking, okay, do I go to the gym or do I play out this option? And thank God I played out the option. I went to that class. I was like, oh, my God, this guy is in. It was a moment of ignition. This guy is in a world that is extremely interesting to me of financial markets meets politics. I didn't even know this was a thing. And it was a very small class.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And over the course of it, he offered me a job of after graduation, starting a company with him, which I ended up doing.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Larry Summers called us a private sector CIA. I felt like I'd built a business a little bit around a Tom Friedman-like character who was very good at narrating what's going on and a feel for how events might unfold. He was a really good writer. So we had, in essence, a newsletter business. At first, we tried... Different business models.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
But I was out cold calling people and trying to sell them these services. And I had a... I think we were charging $400 a month. I wasn't getting any meetings. And on a lark, I decided to try saying, oh, actually, we charge $20,000 a month. And all of a sudden, I got five meetings right in a row. Because they were like... Who the hell has a... 20 grand worth of stuff involved.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And then eventually we charged even more than that. We built a big business. I remember I started to develop kind of a feel for how information leaks through a system. And I remember we were trying to track what was going on around in 97, 98, around the Russian emerging markets crisis. And...
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And he said to us, you guys, what the hell do you think? Like, I knew we were at risk of losing money. You don't see me moping around. There's something about his physicality. He was like jaunty. And it was totally like... What I imagine a SEAL team captain is just going down like he's so funny.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
What you're trying to do is find people that are in the rooms where stuff is going down and are willing to talk to you. It's like an intelligence operation. You're trying to figure out whether when somebody's telling you something, and they could be a journalist, they could be a professor, they could be a former central bank official, are they overstating what they know?
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Are they telling you exactly what they know? Because there's an incentive to overstate it. And I realized I was good at finding people who were a credible threat at having access to an information stream that was relevant to a given thing. And in the Russian case, I found a woman who was a documentary filmmaker who just had bizarrely high signal reads of what was going down.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I later, I think I found out 80% chance in retrospect, she was sleeping with the finance minister at the time. I But whatever it was, it was like very high signal and bizarrely accurate. And we had hundreds of stringers in effect. And we would be able to publish things that were more hunches than a normal newspaper would at the time.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
We had the opportunity to sell it to one large news organization. The professor ultimately didn't want to sell it to them. I asked him to buy me out at that multiple, which he did. They ended up selling to the Financial Times a couple of years later. I was producing someone else's show.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I wouldn't have had the language for it at the time, but I kind of wanted to try out being source and having my thing be at the center of it. I tried to start several businesses. They were failures.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
A wilderness period. I remember somebody giving me grief for how many different email addresses I had. And that really stung at the time. I was like, ah, yeah, he's right. Like, I've had like three email addresses in two years or maybe more than that, four.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I think one would be just patience and not overweighting. If you're doing that at what Bob Keegan would call the socialized stage of your life, where you're really focused on approval of other people and where you are in the system and being, quote, relevant. You got to make that as object as you can and not let it freak you out. Tom Morgan did this five-minute talk at Zone. Have you watched it?
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
It's great. And he closes with one of your favorite quotes, I think, on Joseph Campbell, follow your bliss. There's a follow your bliss element to it and trusting the universe that if you get in touch with the thing you're compulsive about and that you love, the world will come to you. It's a trust fall, and it's hard.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And I remember during that period thinking, I'm very interested in people and information networks. There's an element of almost being an anthropologist. And we were thinking, how does that fit in? I had that ignition around Dan Stern that we talked about, who had run Reservoir. And so that was one compass point through that period.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Turned on and just cracking jokes left and right. And like no identity as... billionaire or as rich guy, just pure, this is a game. We're playing a game. It just got interesting.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah. The tolerance for the ambiguity, the willingness to take risk, to not play on somebody else's board. Yeah. But I think you're right that it's a nice image of you try chaos and then you go back to order as a default. And then you try chaos and it's like, a repeat iteration game. There's a quote I love from Michael Singer, who's a spiritual teacher of sorts.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And he says, eventually you will see that in the way of the Tao, you're not going to wake up, see what to do, and then go do it. In the Tao, you are blind. And you have to learn how to be blind. You can never see where the Tao is going. You can only be there with it. I think there's something like that.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
It's like the tolerance to be blind and not know and just experiment and figure something out is very hard to do. at any stage of life, but particularly when your rent is due or you have a family or you have financial obligations. So that seems to come.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I had been working with one of the co-founders of Greenlight, Jeff Keswin, and running a fund of hedge funds and doing some seeding. I was keeping an eye out for how to be source on something myself and got an introduction to someone who was advising the Miller family. I wanted that sense of selecting people, empowering them. I had observed that a lot of
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
fund of funds people and endowment allocators had this scarcity mindset and were very focused on fees and felt like they would be taken advantage of and kind of disgruntled all the time. I thought there was an opportunity to approach it as being on the same side of the table of let's take risk together, let's make money together and have that be the overall gestalt of the place.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yes, exactly. There's something about that vibe of like, we're doing this together and we're grownups and we're taking risk. And I know shit could go bad. that I think to your earlier question, the principal has to set this condition where it's okay for the agent to make mistakes. And there's a lightness to it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Adam Shapiro had been a year ahead of me at Yale, and we'd talked about working together over the years. And he was in the special situations group at Goldman. And I remember thinking, actually, Vinod Khosla has this line that if you can hire somebody that your anchor client could not hire themselves for some reason, but is blown away by, try to do that. And I remember thinking, oh, I did that.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I found it turned out Adam and Stuart knew people in common. and had been involved in similar deals. Adam had done a lot of real estate and they had a similar, enough of an overlap in sensibility that that ended up being an amazing hire. And it was more than a hire. He ended up being the co-founder and co-CIO with me. And then we built a great business.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I think it's somebody who's got similar taste in people that I do or that I can sense their taste in people and it's a subset of mine and I can constrain the things we invest into that. And then the ability to hunt for opportunity in an extremely opportunistic way.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
unconstrained way where because I have so much money at risk, there's this mutual trust and credibility and it overlaps with how they're already inclined to manage money. There are no style points. The lack of gap between principal and agent is so thin. It was what I would aspire to.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
and that the amount of money total provides leverage so that you can play interesting games and find interesting people and have it be worth their time. At this stage, I kind of want license to hunt big game. I already have some big opportunities in mind, and my own chip stack is not quite big enough to closing those deals. But
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
If somebody shares my taste and my map of reality and says, oh, yeah, you're right, then that would feel very satisfying. It's like the ease of it is a quality of it.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Because otherwise, the agent, depending on their own risk tolerance, may not take enough risk. The difference of managing your own money versus managing the optics of something can get so huge based on one word from the principal.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
In terms of applying it to me, I feel like at this stage I'm very open to what the world wants. Rather than trying to assert reality, I'm more letting it unfold and trying to surrender a little bit and see what comes in. I think I'm good at, I can be of service in putting two people together.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
All the source dynamics we've talked about or finding the right fit for somebody at that stage of your life. I really like giving high context advice when there's a lot at stake, whether that's picking a business partner, picking an investor. Picking a spouse, I think picking a nanny is oddly high stakes. And I really care about it on behalf of that person's kid.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And so I think around that, I can act as a sounding board for people and hold the complexity of the decision they're trying to make. And if I've met the person they're trying to decide about, I can sometimes give them a feel for unexpected positives and unexpected negatives that they may not have seen yet.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And when I do these gatherings, sometimes I'll have people go around and say, call me if you need help with X. And people answer that at such different, it's a little bit like the criteria question of what criteria would you use to hire somebody. People answer it at such different conceptual levels.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And like one famous hedge fund healthcare guy said, if you or any of your family members get sick, call me and I'll help you find. It was such a beautiful sentiment. That is his highest use. Like he does know the energy in the room, like radically shifted when he said that. And then from then on, the offerings were much more high level and generous in this beautiful way.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Call me if you need help with my current formulation. That would be that if you have an extremely high stakes relationship, decision that involves a person and you're agonizing about it and there's a lot of leverage to the situation, I just enjoy that inherently.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I'm going to answer that professionally because it's more useful. In an absolute sense, it's obviously my parents and the way they raised me.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
In a professional setting, the level of risk that Stuart Miller took in entrusting this kid to manage his money, and then navigating the financial crisis together, and then this feeling of him rooting for me all the way through, I would put that in that category. I've never really had a boss. I started that company, The Professor.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I've done all these things, but I've had one or two bosses and it didn't go that well.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
I don't know why, but that feeling, when Randall Stutman said that's the mark of a good leader, I aspire to take that
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah, I came, I guess... I mean, it was literal. I rode a lot in high school and a bit in college. And when you're holding the oar, there's a tendency to really grip it, in which case your forearm tightens up and you're kind of muscling it. Versus there's a version where your grip is... It's paradoxical. It's both solid but also loose.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
And if you catch a crab, it's called catching a crab where the oar goes under the water, the blade goes under the water, and you can get thrown into the water if you're not careful. In that case, you need to be able to let go of the oar, otherwise you're going in the water. So there's this tight but loose grip that I started noticing that when I speak to certain people...
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
if someone's ideological about the thing they're discussing, they're kind of subtly conveying to you, it's not up for grabs. It's not debatable. They're not looking for your input on it. And so you're asking, is that the way Stewart was relating to this situation? Yeah. He had like a light grip on, I remember telling him at one point, JP Borgen, it was at the bottom in 08. And
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
people who were buying gold and really ready for physical gold and he cracked a joke about yeah i can just see myself graham you're gonna buy me a bunch of gold and then i'm gonna like be dragging this bag along the street with my with my brother-in-law and what are you gonna drive the car like he's basically give me a fucking break so it's like This whole thing is that life is absurd.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
This whole capitalism is a construct. We're playing this game somehow. But it's the humor is embedded in the light grip, I feel like, in those situations. You're conveying to somebody else, we're going to do the best we can here, and who the hell knows what's going to happen.
Invest Like the Best with Patrick O'Shaughnessy
Graham Duncan - Talent Whisperer - [Invest Like the Best, EP.409]
Yeah, I think it was downstream of an understanding I felt that Stuart and I had of the goal is to make money. And not lose too much. And it sounds so simple, but it's actually, of course, because of principal agent dynamics, like super complicated. And I didn't feel like I had comparative advantage in picking stocks or doing any number of other styles of investment.