TIP790: Wealth Beyond Money w/ Thomas Mueller-Borja

“BlackRock is this bottomless pit of incredibly talented people. Emily Hazely, who's a behavioral scientist, a psychology PhD, and we together redesigned our investment committee process. We made some changes. One of the big ones is that now the committee votes autonomously. Rather than at the end of the session everybody saying yay or nay, we vote through a link and the results go to our risk and quantitative analytics team, independent from the portfolio managers.”— Thomas Mueller-Borja

Leadership & Management · Psychology & Behavior · Operations & Execution

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Anonymous voting defeats peer pressure

“We introduced this role of a challenger who's not an IC member. This is the role of the devil's advocate, the pre-mortem terms, conceptually the if this were to go horribly wrong, what's the most likely path of that happening. This challenger has the mandate and is protected as such to be the most pessimistic person in the room. I think that's a really helpful perspective to have at the committee.”— Thomas Mueller-Borja

Leadership & Management · Psychology & Behavior

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Protected pessimist defeats groupthink

“Real estate is correlated to rates in the fixed income space. Cap rates are correlated to risk-free rates, but not to nominal rates, to real rates. In an ideal world, when the front end of the curve comes down, the whole curve comes down. With that, your cap rates come down, which means your capital value increases. But now we live in a world where sovereign indebtedness is at a level where people aren't convinced debt levels are sustainable.”— Thomas Mueller-Borja

Economics & Markets · Business & Entrepreneurship

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Yield curve steepening blocks cap rate compression

“I had a wonderful childhood and we lived on like this little road. But one day they closed down the motorway and they redirected all the traffic past our house. So there was this massive traffic jam and it was a hot summer day. The 10-year-old saw an opportunity, went down to the basement and emptied it and brought out all the bottles of water and soft drinks and snacks and put them in a basket. I went car by car and sold these grossly overpriced soft drinks to this very captive audience.”— Thomas Mueller-Borja

Business & Entrepreneurship · Psychology & Behavior

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Captive audience pricing power

“If we want to participate in cap rate compression upside, we probably need to look to countries that have lower levels of indebtedness. We quite like Sweden, for example, where debt to GDP is 35%. We quite like Germany where even with a trillion euros of fiscal spend, debt to GDP will be somewhere in the 85% range. But it's not like what we're seeing in France or in the UK, where we're a little bit more nervous around the fiscal picture.”— Thomas Mueller-Borja

Strategy & Decision Making · Economics & Markets

DUR_CONTEXTUAL

Low sovereign debt as positioning edge

“If we're raising $2 billion for the next European value-add fund, and we know our average ticket size is €50 million, we need to bring in 40 investors. We probably know our conversion rate is 20%, so you need a funnel of 200 prospects. You go out and meet and somebody falls away because it's not a good fit. You keep rebuilding the funnel.”— Thomas Mueller-Borja

Business & Entrepreneurship · Operations & Execution

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Reverse engineer fundraising funnel from target

“When raising capital at BlackRock, you're selling twice because you have a distribution team that could sell 2,500 products and about 100 in private markets. So I need to convince my own team that this is a valid strategy that's going to throw off good risk-adjusted returns where we can raise capital from the client base. And then together we go and meet prospects.”— Thomas Mueller-Borja

Business & Entrepreneurship · Leadership & Management

DUR_ENDURING

Two-stage selling in large orgs

“I was reading Kahneman's Thinking Fast and Slow, talking about System 1 and 2. He says that he's not optimistic that one can get better at regulating System 1, intentionally controlling your flight and fight response. That never sat well with me. I always felt like that can't be true. I discovered this whole other world of how one can do that through meditation and slightly more spiritual Buddhist principles.”— Thomas Mueller-Borja

Psychology & Behavior · Philosophy & Reasoning

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Meditation trains what Kahneman called untrainable

“I subscribe to sleep, food, exercise, and meditation. I would add a 5th, which is relational: family, friends. In order to get to a state where I can go into flow, certain boxes need to be ticked. I need to have slept. I have this Sleep8, which regulates the temperature in your bed. Over the last 2 years, I've been able to increase my deep and REM sleep by 25% from 3 to 4 hours. That's a real game changer. I try to exercise.”— Thomas Mueller-Borja

Psychology & Behavior · Philosophy & Reasoning

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Five pillars for flow state readiness

“When we recruit for the team, there's 4 things we look for: talent, drive (which I think is different from ambition, much more inward-looking, inner scorecard, not outer scorecard), teamwork, and humility. Not in a naff way. Jason Zweig said that in his episode with William: trying to be humble, striving to be humble, but also accepting that you're never really going to be humble. That's the right level of humility.”— Thomas Mueller-Borja

Leadership & Management · Psychology & Behavior

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Drive not ambition, humility as striving

“What impresses me is members of the team who are intrinsically motivated, who are self-starters, who bring a lot of energy to the team, who have what I would consider hustle and do that consistently in a non-selfish kind of way. Those people can move through the ranks very, very rapidly. We have some very talented young members of the team who are incredibly creative, great lateral thinkers who combine IQ with EQ and just have that special sauce.”— Thomas Mueller-Borja

Leadership & Management · Psychology & Behavior

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Temperament trumps pure intelligence

“Honesty for me is easier just because being dishonest is so hard for me. I find it energetically really consumes a lot. I just naturally don't do it. I strongly believe that honesty is really something that you do for yourself. It's actually selfishly the right thing to do. I imagine this fork in the time continuum where you create two parallel truths that then inevitably in the future meet again, then that's when it's going to come and bite you. Honestly, it's just an easier way of living.”— Thomas Mueller-Borja

Philosophy & Reasoning · Psychology & Behavior

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Dishonesty creates costly parallel truths