Invest Like the Best with Patrick O'Shaughnessy
00:37:56 · Jeremy Giffon
We just make up stuff for us to do and that's sort of the whole point of it. And that's good. It's better than being idle. Maybe more people should be idle. There's all sorts of ways that this shows through the cracks. The work from home thing I think is like a strong indication of most people don't have forty hours of work to be done. They maybe have forty hours of meetings to sit in or they have forty hours that they have to be on standby. Work from home I think wouldn't be that important. Let's imagine a version where you work on a factory line and you can set up the microcosm of the factory in your backyard, but you still got to be on the line ten hours a day. Yeah, I guess work from home, maybe you can have lunch at home, you don't have a commute anymore, but it's not like this huge improvement. The reason people are so attached to work from home is because they actually have like two or three hours of work to do per day and there's a lot of your time at the office where you're just sort of Yeah and so work from home Fridays is a soft launch of the four day work week and I think this is all fine. The fact that we can continue paying people to work from home and work four days a week is just a sign that we need less labor time out of people than we used to and we're still able to be just as productive.
00:39:08 · Patrick O'Shaughnessy
[00:39:08] S0: If in some sense some of these jobs maybe are made up and actually people will be happier not ushering bits from one place to another on a screen or something. I'm curious how you think about searching for one's vocation. You texted me one time something that stuck in my head, is that we all have some sort of moral duty to steward our gifts. If you agree that that's true, curious for you to expound on that. But that that then reframes success and failure in a cool way that maybe cuts through this priestly class thing of like looking to others to tell us what to do versus looking internally. Can you expand on that?
00:39:50 · Jeremy Giffon
[00:39:50] S2: I think there's something even just aesthetically bad about waste. One of the worst things you can waste is your gifts, your skills, attributes, things that you're uniquely good at, things that you can do for others that you might be able to do that others can't. For me one of the great challenges has been trying to understand how to best, first of all figure out what they are, is easier said than done. And then figure out how you can use them. There's kind of two modes, guess one is that you use them in a very pure and unadulterated way and you don't try and integrate your work with how you use your gifts and this would be the person who has a day job in order to support their craft or something. And then the other perhaps more ambitious version is trying to integrate commerce and their work with their gifts. This gets into the like, should you pursue your passion thing and it's really difficult but you said something to me which is the thing that you are spending most of your time on really ought to spark and utilize your sort of genius and gift and if you're not doing that like it's obviously not the thing that you should be spending most of your time on. There's proxies for this, people who are having a lot of fun at their job or like it's a very strong indicator that you've combined the two well.
00:41:12 · Patrick O'Shaughnessy
[00:41:12] S0: What do you think the future of finance looks like? The 80s and the last era was built by those people from KKR and leveraged buyouts whereas those firms are obviously really important and really big but they were started a long time ago and in many cases they're still run by people that were the founder or close to the founder getting up there in age. What do you think the next wave of finance look like?
00:41:36 · Jeremy Giffon
[00:41:36] S2: The founder is incredibly important, the founding act is incredibly important in any business or country or organization really. I do think that it's notable that the current paradigm in which we live, the largest and most important finance firms come out of a culture of leveraged buyout which first of all is a debt driven idea, it's financial engineering, it's extractive insofar as the primary goal is to make a thing more profitable and I'm not trying to disparage leveraged buyouts. I don't think they're like as evil as people say, but the core idea behind it is like using debt and financial engineering to make a lot of money in a way that the quality of the business itself is maybe ancillary to the core trade. And those are what the founders and the founding acts of these large firms today are. Now that the Apollos and Blackstone's and KKR's of the world, I think in a lot of cases the leveraged buyout is a very small part of what they do today, but I still think it's still in the core culture. One thing that we've pondered about before is what does the next twenty or thirty years look like when the largest financial firms in the world, their founding action was seed investing. It's equity driven, it's power law, it's hugely optimistic, it's largely qualitative. What would a Blackstone and Apollo look like if that was the core seed at the start of the inception of the firm? It's notable in the same way that equity financing is a far newer idea than debt financing and equity financing is obviously a far more optimistic idea. It's uncapped to the upside and so there's all these sort of philosophical ideas around equity versus debt and debt is far more ancient and debt obviously has very controversial past about whether it's morally good at all and there's this idea of like what if the crux of finance is with these kind of wildly optimistic people versus people who might be more conservative, concerned about the downside, more concerned about maybe one way of looking at it is a shift from the quantitative to qualitative.
00:43:38 · Patrick O'Shaughnessy
[00:43:38] S0: What other differences are interesting to you between East Coast and West Coast finance? The people doing it, the optimism versus not pessimism, realism or dollar orientation. You straddle these two in an interesting way.