Invest Like the Best with Patrick O'Shaughnessy
· Patrick O'Shaughnessy, Martín Escobari
[00:00:00] S0: This seems like, well first of all, incredibly important. All the data, we know how important the right tail is for investing outcomes. Well-worn truth at this point. How does one get better at assessing the option value embedded in a given business? That just seems so crucial. There's no book about that. There's no podcast about that. You've got 10 investments. How do you know which of the 10 has more embedded right tail option value? [00:00:00] S1: Pattern recognition from having seen winning lottery tickets gives you some help. If you've seen more of these, you begin to see how you can get lucky. As important, in all those lucky scenarios, there was a spear fisherman at the top to capture an opportunity that was available to many, but they seized it, so it's a lot more about- [00:00:00] S0: Capital allocator at the top. [00:00:00] S1: The CEO, is he someone that can spearfish? And some people, it takes one to know one. Some people are really good at it, some people are not spear fishermen. [00:00:00] S0: My final investing question is to wonder how growth as a part of the complex feels relative to other styles today. I'm US centric investor, but curious globally, I'm sure at different points in your history, growth versus say venture or early stage or pre-IPO or publics has felt distinctive, cheaper, more expensive, whatever, more opportune, less opportune. How does growth specifically today feel versus the other segments? [00:00:00] S1: Best window into growth equity since 2009. [00:00:00] S0: And why?
· Patrick O'Shaughnessy, Martín Escobari
[00:00:00] S0: And why? [00:00:00] S1: Everything's on sale. There's so much pressure on GPs to post DPI that we're getting 40% growers at 15 times EBITDA. That 30 to 40% discount until the public comps. This is not normal and it has to do with four years of no IPOs. It has to do with four years with no strategic exits, so the engines of growth are undisturbed. The valuations are half or 40% discount. It feels incredibly attractive, as attractive as the post GFC was. [00:00:00] S0: What is your unfinished business professionally?
· Patrick O'Shaughnessy, Martín Escobari
[00:00:00] S0: What is your unfinished business professionally? [00:00:00] S1: I could not think of a better activity than working in growth equity at General Atlantic for the next 10 years. Global growth equity in the middle of the AI revolution with the seniority that I have and the dry powder? Pinch me, pinch me because I hope I don't die on a plane crash because it's going to be great. After that, I think you have to start thinking, I've been active mentoring entrepreneurs through Endeavor, which is a not-for-profit. I'm on the board and I've been doing this for 25 years. I actually started mentoring, which is an interesting tidbit when my business was running out of cash. Dotcom sounds exciting, but there was a death, the dark valley of death. And Linda Rottenberg, the founder of Endeavor, says, "It is precisely at your darkest moment that you mentor because it's a sign of you have something to give in the darkest moment of the night." Which is interesting concept, the Hope: AA, I have friends who were in AA, the body system is so valuable because even at your darkest moment, you have enough light to help someone and that gives you the strength to make it through. So I'm a huge believer in mentoring. That's something I will do for the rest of my life. The unfinished business, I think as I get older, I want to help in higher education in the US. I think we've lost our way and I saw the impact scholarship to Harvard did to a young kid from Bolivia. I love that institution. I love education and I think it's in a moment that it's lost its way and we can find it back.
· Martín Escobari, Patrick O'Shaughnessy
[00:00:00] S1: I could not think of a better activity than working in growth equity at General Atlantic for the next 10 years. Global growth equity in the middle of the AI revolution with the seniority that I have and the dry powder? Pinch me, pinch me because I hope I don't die on a plane crash because it's going to be great. After that, I think you have to start thinking, I've been active mentoring entrepreneurs through Endeavor, which is a not-for-profit. I'm on the board and I've been doing this for 25 years. I actually started mentoring, which is an interesting tidbit when my business was running out of cash. Dotcom sounds exciting, but there was a death, the dark valley of death. And Linda Rottenberg, the founder of Endeavor, says, "It is precisely at your darkest moment that you mentor because it's a sign of you have something to give in the darkest moment of the night." Which is interesting concept, the Hope: AA, I have friends who were in AA, the body system is so valuable because even at your darkest moment, you have enough light to help someone and that gives you the strength to make it through. So I'm a huge believer in mentoring. That's something I will do for the rest of my life. The unfinished business, I think as I get older, I want to help in higher education in the US. I think we've lost our way and I saw the impact scholarship to Harvard did to a young kid from Bolivia. I love that institution. I love education and I think it's in a moment that it's lost its way and we can find it back. [00:00:00] S0: Can you teach me mentoring? How does one mentor well?
· Patrick O'Shaughnessy, Martín Escobari
[00:00:00] S0: Can you teach me mentoring? How does one mentor well? [00:00:00] S1: My strategy, there's many ways to do it. I don't have time to be someone's mentor for six years or to see them maybe as part of Endeavor, I'll see them twice, so I have to hurt them. For the mentoring to be impactful, I have to make it so obvious that it's so stupid they haven't yet focused on this, that they're like, "I'll show him." And then they act on it. My mentoring sessions are very uncomfortable. I do it with a smile in my face. [00:00:00] S0: Yeah, of course. [00:00:00] S1: But it works. It's like crash therapy, like three years of therapy, one hour, no time for both. We're going directly for the sensitive points and I've learned to do it in a way that's not damaging or disrespectful in any way, but it is very scathing, saying this is clearly an opportunity. Come on, wake up, smell the coffee. And sure enough, and now I have a couple billionaire friends who are like, "You really hurt me, but thank you." [00:00:00] S0: I'm always curious about literal process. If you're meeting someone for the first time, is the format you ask them a bunch of questions and then you quickly do the aggressive, why aren't you doing this thing?
· Patrick O'Shaughnessy, Martín Escobari
[00:00:00] S0: I'm always curious about literal process. If you're meeting someone for the first time, is the format you ask them a bunch of questions and then you quickly do the aggressive, why aren't you doing this thing? [00:00:00] S1: I'm married to a shrink, psychoanalyst, so as a condition to our marriage, I have to do psychoanalysis and it's a wonderful thing I wrote. It's one of the three things I wrote about therapy and meditation and one of my favorite, he's now deceased, but he was a philosopher, writer, an incredible Italian Brazilian guy, very famous in Brazil. You would go to this one-hour weekly session and he would look at you in silence and didn't say anything. After a while, you just say is translating and so, and let you take it. The most powerful way to start a conversation with someone you're trying to get to know is silence. You tell me. What do you want to talk about? What do you want to talk about? Simple. I'll give you another one. I asked, "What's the most important question you need the answer to from the universe?" The answer to that question is so powerful because vocalizing that which you most want the answer to is liberating. [00:00:00] S0: My traditional closing question for everyone is the same. What is the kindest thing that anyone's ever done for you?