Invest Like the Best with Patrick O'Shaughnessy
00:40:40 · Patrick O'Shaughnessy
[00:40:40] S3: Say more about this capital markets piece. Historically, as markets get more efficient and liquid, their positive impact, in my opinion, grows a lot. You can chart this through market history, which isn't that long, three, four hundred years of like proper markets. What do you think is possible? Like, where might this be going and why you believe that creating more or less friction I guess in capital markets can be so powerful?
00:41:03 · Gabe Stengel, Patrick O'Shaughnessy
[00:41:03] S1: You're always at risk of sounding like the billionaire private equity guy saying that private equity is good for the world when you talk about how finance is good for the world. But I like to think about the origins of high finance. And when you think about a business like JP Morgan, some of the origins are JPropot Morgan helping connect European investors with the entrepreneurs in an emerging market, The United States to finance railroads and the infrastructure build out and everything that allowed The US to be a juggernaut economy. And that happened because there were intermediaries who helped connect folks who were risk takers and capital allocators with the folks who were entrepreneurial and wanted to innovate. And that was something that had a profoundly great effect on the world. And now think about all the parts of the economy, all the parts of The US domestically, but also internationally that can't tap into capital markets. Every emerging nation where you would struggle to raise capital, to finance your idea, to raise debt. And then the 300,000 American businesses that couldn't even tell you what Goldman Sachs does, and JPMorgan doesn't have the time to go out and work with them because the business is too small. If you're able to speed up the rate at which entrepreneurs and company founders and individuals can tap into capital markets, you can accelerate all innovation. [00:42:17] S3: What are you learning from your peers that are building companies kind of shaped like yours but in other categories?
00:42:17 · Patrick O'Shaughnessy, Gabe Stengel
[00:42:17] S3: What are you learning from your peers that are building companies kind of shaped like yours but in other categories? [00:42:23] S1: I am learning how much aggression it takes to grow this quickly. I am learning how much chewing glass it is on a day to day basis and how much conviction you need to have in the long term Tam and Sam to make sure that you don't fuss over all the things that are going completely wrong every single day. And you know, I'll call someone like Winston at Harvey and Winston's ability to just not worry about the 100 flesh wounds that are inflicted on him at any given time and just think about the kind of end state goal of where he's gonna be three years from now and the only two things that matter to get there is pretty amazing. [00:42:57] S3: What is the glass like and what is the aggression like? What does that mean?
00:43:00 · Gabe Stengel
[00:43:00] S1: I worked during COVID so I didn't even get to see what an office looked like. John, my co founder and I used to joke that it's a very expensive business school education. So you're just doing everything wrong. Didn't know how to hire, didn't know how to fire, didn't know how to mentor, didn't know how to manage, didn't know how to give feedback, didn't know how to set direction. And a lot of the people problems that arise with scaling quickly feel like eating glass to me anyway. And so when people quit, when you have retention issues, when you spend six months recruiting Canon, they don't join, that's chewing glass. When you spend a bunch of time working on a product that gets completely washed over by the next model that comes out and makes you feel like an idiot for spending all that time and capacity on something that was the wrong call, chewing glass. When you get rejected by 40 investors in a row before you're able to raise capital, chewing glass. And my experience of startup building is it's like a roller coaster where you have to feel the extreme highs and feel the extreme lows and I'm a super emotional guy. And I try not to let the team feel it but I will feel on top of the world at the high and like everything is cataclysmic at the low. But then if I look back at the journey, the lows get lower, the highs get much higher. And I look back three months ago at the low I was dealing with or the high I was dealing with, I was like I could do that in my sleep now. And I think it's just about modulating those things and channeling the emotion to push the business forward but not letting it distract you.
00:44:27 · Patrick O'Shaughnessy, Gabe Stengel
[00:44:27] S3: What about aggression? [00:44:28] S1: Like that seems kind of like a trope. You've interviewed Pat Grady. Pat Grady was at our board meeting on Wednesday and we presented what was it extremely aggressive plan for next year in terms of hiring goals, commercial goals, product goals. And one of the reasons I love Pat is because he boils everything down into like two bullet points and it's logically infallible. And, you know, he's just like premise one, premise two, this is the result. And he goes, Gabe, well, if everyone in finance is gonna make a buying decision on AI in the next eighteen months. And they are definitely gonna buy something no matter what even if you're not there. Then the only thing that matters is that you can blitz the market as quickly as possible to make sure that you are there. Given that, do you think this plan is aggressive enough or no? The answer was no. And the reason it wasn't aggressive enough is because I was being soft. And I think the reality is you need to be so so so aggressive and underwrite all that risk and know the game that you're playing. And my goal is if that enter back business is to increase the tails of the distribution. It's fine if it gets 30% more likelihood that I fail if the odds that I become a $100,000,000,000 company also increase by 20%. But you actually have to be okay with raising both of those tails at the same time.
00:45:39 · S0, Patrick O'Shaughnessy
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