Lessons from the World's Elite Money Managers

“The longterm that we all aspire to be, long-term investors doesn't really exist unless every part of the capital through the governance structure, to the individual making the decision is perfectly aligned. And unless you're Dave Swensen and a few other select people, it's just not the case. So the longterm for most people in the business is not 10 years. It might be five, which means that you can't really afford to be wrong for too long and still be in your seat.”— Ted Seides

p. 13

Strategy & Decision Making · Leadership & Management · Psychology & Behavior

DUR_ENDURING

Career risk limits true long-term investing

“There's a four part structure of noting your own distractions, mirroring what someone says to make sure they're heard, being able to validate it, that what they said makes sense. And then at times, empathizing that is amazingly powerful, everywhere from relationship therapy to hostage negotiation.”— Ted Seides

p. 9

Psychology & Behavior · Leadership & Management

DUR_ENDURING

Four steps: note distractions, mirror, validate, empathize

“Asking really brief open-ended questions that usually start with the words, how, what or why are incredibly powerful ways to get information. And I hear myself all the time when I'm listening back to interviews, expressing my view accidentally. Saying, Hey, Patrick, you asked me that question about an interview. Do you think that we really should start with a how, what or why, or should it really be about who? And just like that, I've cut your ability to just go with it wherever you want to go.”— Ted Seides

p. 16

Operations & Execution · Psychology & Behavior

DUR_ENDURING

How/what/why questions; Five Whys for depth

“The biggest difference in what the podcast has taught me from the interviewing I did in the allocator's seat, is that our interviews in the podcast setting are not evaluative. We're talking to someone, learning, telling their story and you get to go home and then share that with the world. And then they love you for it. It's great.”— Ted Seides

p. 8

Psychology & Behavior · Strategy & Decision Making

DUR_ENDURING

Non-evaluative stance unlocks deeper information

“The first is really understanding the purpose of the interview. Then the next is preparation, setting the stage the right way and active listening, and then feedback. The purpose of the interview is so simple. If you're in front of a manager, you are trying to gather information about some thesis you have to invest. And what I found when I thought about it is that each different interview you could have with a manager, you could think about different things you want to cover.”— Ted Seides

p. 7

Operations & Execution · Psychology & Behavior · Strategy & Decision Making

DUR_ENDURING

Distinct interviews for distinct purposes

“If you ask a compound question, the person on the other end will 90% of the time only answer the second part of the question. And most of the time when you ask the compound question, you're most excited about the first part. So you start asking a question and you're really excited to ask it. And then other thoughts come into your head and say, Oh, and this and that. And they only ask the second part and you miss that great insight you had in the first part.”— Ted Seides

p. 17

Psychology & Behavior · Operations & Execution

DUR_ENDURING

Compound questions lose first insight 90% of time

“Randall Stutman, a fantastic leadership coach describes the term of fanness, great leaders find lots and lots of different ways of constantly being a fan of the people on their team. And he asks the question, what would a fan do in this situation? If I was a fan of yours, Patrick, what would I do right now to show you support? And that's what great leaders do.”— Ted Seides

p. 16

Leadership & Management · Psychology & Behavior

DUR_ENDURING

Fanness: leaders as supporters, not commanders

“There are sort of four parts of the basic core tenets of leadership. The first is vision. The second is standards, the third communication, and then the last kind of inspiration and motivation. It starts with having a vision. Everything started with a vision and a notion of principles. There's this young star asset manager who created a vision for his firm learn, build, share, repeat. What does that mean for the organization?”— Ted Seides

p. 14

Leadership & Management · Strategy & Decision Making

DUR_ENDURING

Four pillars: vision, standards, communication, inspiration

“Most of these manager interviews take place across the table and in a physical sense, that is a directly confrontational setting, which is kind of enough mud to the thought that you're trying to gather information from someone.”— Ted Seides

p. 8

Psychology & Behavior · Leadership & Management

DUR_ENDURING

Context shapes disclosure; tables create confrontation

“What you see often in manager kind of allocator interactions, is that allocators want to be the smartest person in the room and prove themselves. And so they talk too much. You're not going to learn a whole lot about somebody else by talking, you're going to learn by listening. And so there's a bit of that purpose, if the purpose is to gather information, why are you trying to show that you're the smartest person in the room?”— Ted Seides

p. 8

Psychology & Behavior · Leadership & Management

DUR_ENDURING

Talking prevents learning; ego blocks information

“In the military, there's this line troops eat first, super interesting. You don't see that in a lot of hedge funds, the notion that troops eat first, you've got to take care of the people at the bottom of the pyramid to make sure everything works.”— Ted Seides

p. 15

Leadership & Management · Culture & Society

DUR_ENDURING

Military: leaders serve subordinates first

“Communication is this repeated process of reiterating the vision, reiterating the message, letting people know, taking examples, putting it in their vernacular of what that mission is. Michael Vrabel who is a head coach with Bill Belichick and Bill Walsh and professional football has this phrase, romps R-O-M-P-S. And so he says what you're trying to do as a leader, you need to command the room, command the message, command the process and command yourself.”— Ted Seides

p. 15

Leadership & Management · Creativity & Innovation

DUR_ENDURING

ROMPS: room, message, process, self

“There's a research study this past year that showed that generally speaking, active managers are quite good at buying securities. They're just really lousy at selling them. With trading data, there are a couple of really third-party providers where they'll go in and look at trade data and help a manager understand effectively mapping behavioral bias to their trading. So when are they entering? What types of situations do they enter well? Do they enter quickly enough? Do they exit quickly enough?”— Ted Seides

p. 21

Psychology & Behavior · Strategy & Decision Making · Technology & Engineering

DUR_ENDURING

Managers good at buying, poor at selling

“So many people go through interviews and they don't afterwards evaluate how they did in the interview. And the beauty of the podcast format is we have to listen to these recordings to edit them, and you can hear yourself and you can hear, where did you ask smart questions? Where did you fumble? What verbal techs have you created this time around? And getting that feedback is incredibly helpful to getting better.”— Ted Seides

p. 9

Operations & Execution · Psychology & Behavior

DUR_ENDURING

Recording enables self-audit and improvement

“Where technological advance comes into play, has more to do with the efficiency of information and risk than in making investment decisions. And the reason for that is fairly simple, which is that as you get a few layers away from the underlying asset, you have less and less data to go off of. So you could think about that and say, if you were an allocator, what type of technological advance would you want to be able to determine the difference between two great managers?”— Ted Seides

p. 19

Technology & Engineering · Strategy & Decision Making

DUR_CONTEXTUAL

Data degrades with distance from asset