Invest Like the Best with Patrick O'Shaughnessy
· Patrick O'Shaughnessy
[00:00:00] S0: You flipped something around on me earlier today that was really interesting around this idea of 90-10 in a conversation, where I think maybe you and I both tend to really be curious about other people and ask a million questions. And very often, finish a conversation having only spoken 10% of the time or something like that, which I guess I've always thought is a nice thing to do for somebody else. I'd be genuinely curious about them. I like to think I'm that way. But do you have a different perspective on this? Can you explain that?
· Ric Elias
[00:00:00] S1: Look, somebody that is looking for love, the best thing that you can do is ask a lot of questions because people love people that listen to them. You can ingratiate yourself shortly to somebody who says, oh, how good? It was wonderful because you talked a lot about yourself. That said, one of the beauties of true friendships is allowing the other party to feel that they can love you back. And I told you the story of a dear friend of mine. One of my best, best friends. He's like my first best friend in the U.S. His name was How do you recruit people here? Just shaking hands and talking to some people a couple of hours ago, you get this incredible sense of excitement to be here, front footed-ness. So what are you looking for in the people that you bring to Red Ventures? I think part of that is who you bring here, so I think you making sure that people are comfortable with the way we operate. If you need certainty, if you need predictability, if you need to be the star of the team, if you have all the stuff, it's not going to work. But recruit so many young people, which -- that's really usually not the case. I compare it more to Charlotte. One of the things I love about Charlotte is it's probably one of the greatest places to live, not just because of the weather or the airport or whatever, it's because people are super nice. People here drive nice and whatever else. You take a New Yorker and you move him to Charlotte and within a month, they're saying good morning to you. So the culture of Charlotte is what, people come in and because you feel rude, you go to the third coffee shop in a week, and you walk in and they say, good morning, and you're like, "What do you want," right? And what you realize that that's culture. So in here, ultimately, people behave in a way. So when you walk in, you're like, "Oh, these are the norms on how you behave here." And all of a sudden becomes, "This is how I fit in." And it becomes the way that we operate with each other. We take our work really seriously, not ourselves. There's a ton of humor. We do a lot of things. We have tons of sports. We have tons of stuff just because it's all interconnected.
· Patrick O'Shaughnessy
[00:00:00] S0: If you think about the investing side of your brain or world, I kind of have the same stupid question I have about investing that I did about business. In some sense, you seem like someone that's just intuitively good at this. Yes, you buy the avocados for a 20th of the price you sell them, you make money. But do you have an investing philosophy? Because part of what you've done is allocate a lot of capital. In some very basic way, you're an investor. I'm curious, what do you think makes you good at it and what you like about it?
· Ric Elias, Patrick O'Shaughnessy
[00:00:00] S1: I love to bet. I hate to gamble. And I think life is about understanding odds and edges and risks, and this whole notion of can you win multiple ways also applies on the other side. When I look at a business model, if the business has three variables for it to work, I will never invest in it. There are some great businesses that need three variables. They're going to need a ton of capital, a ton of luck. They're going to have to figure some stuff. If the business has two variables, then you're compounding the risk. So you better be fairly certain that one of those variables you have high confidence on, and the other one you have some visibility. And if the business has one variable and you have an inkling, lean right in. So a lot of this is just decompose risk of what you're investing in, and it applies to everything. So it's both the multiplier and then the discount that you would apply to an intuitive decision. And when we see something, we're like, "Okay, that's worth the bet." But understanding that when you're betting, you're going to lose some. And if you're -- I think if anything, you need to have bad bets to be able to be a good better. Otherwise, you're just taking fastballs, 85 miles an hour down the plate. [00:00:00] S0: What episode of Red Ventures' history do you look back on with the most pride?
· Ric Elias
[00:00:00] S1: We all have revisionist history. It's funny because we're getting a lot of momentum back, and a lot of things are happening that are on the positive side. But still, there's this sense of, "Man, these are not the same days that it used to be." And of course, they're not. Everything -- Danny Meyer, a good friend of both of ours, says that cultures are like sharks. They have to keep swimming to survive. And to compare it to something, first, I don't think the past is always as good as we remember it being. But the reality is that there was a moment in our journey where I remember leaving a big company event here on campus, and it was a magical night and we had this incredible energy. And I got in the car and I'm like, "It just cannot get any better than this," to see a couple thousand people just completely pulling in the same direction, trying to do something, and it was -- just felt like unity. You couldn't -- it was like lighting in a bottle at a moment in time. And it was a moment in time. You felt that today, this is a magical place. There's a magical culture here. But comparatively, so probably when we were compounding at 30% for five years in a row and we're just success after success, it was like, "Wow, we're really good." Reality is we were really lucky that we were really good, and it was a matter of when that we needed to do it. I'm kind of very excited for the next five years. I spend a lot of time listening to your digestion of AI, but I think AI is really going to change a lot of our businesses, some of the traditional ones. But even our partner business, our client business is going to really change and some of our assets. So I think the next five years may be the most exciting ones. And we're either going to get run over or we are going to play in it, and we'll see.
· Patrick O'Shaughnessy
[00:00:00] S0: You described this evolution from the early days of performance marketing focus into businesses all over the world that do lots of different things. I know health care is one space that you're really interested in. We don't have to get into the specifics of the business, but we can if you want. Talk about what in that world seems like an opportunity and interesting to you. It does seem like such an important space, and that's a very different world than the world you started in.