Working to Achieve a Long-Term Perspective

Warren Buffet made a well-publicized bet just over ten years ago with a hedge fund called Protege Partners. The bet was pretty simple: Warren believed that a low-cost, unmanaged S&P 500 index fund would out perform a selection of investments picked by Protege Partners. Warren felt so confident in his bet because of the discrepancy of cost between the two options. Warren believed that if the money you put into an investment solely went towards that investment - instead of 98% to the investment and 2% to the people who would manage it for you, you would stand a better shot to grow your wealth further. Time Horizon is so essential - because over a short time period, anyone would be able to pick a period where hedge funds, despite their fees, outperformed an index fund (could you imagine them existing if you couldn't?). However, over the long run - playing with the same stocks in the S&P 500, it's safer, and ultimately more profitable to invest in the lowest cost fashion one can.

Jeff Bezos has been building Amazon over the past 20 years despite numerous claims that "Amazon isn't and will never be profitable!" I will admit, I was skeptical ten years ago that Amazon would be able to sustain itself at the rate it has , but alongside Jeff's consistent focus on customer first, lower price, and faster delivery, he attracted investors who allowed him to reinvest every last single dollar which could have instead been profits and therefore dividends. Amazon surely could have slowed its hiring, stopped building data centers and distribution centers, or creating new technologies like Alexa, but if it had, it likely would have collapsed halfway on it's path - because it would have lost the investors who believed that Amazon would be different. Amazon's investors and its founder all believed in reinvesting in the business - which led to an investor class who would give Amazon money at any price because the returns would eventually come.

I share these two examples, because as an entrepreneur, I think about a lot of things which can set me apart and contribute to my success in the long-run. Everybody has bad days and everybody has good days - I try not to take too much away from the random gyrations of luck which finds itself into our lives - most folks experience good and most experience bad. I think the path I've embarked on will be successful partially because of the investors who I've convinced to support me in my pursuit of a company to buy and run.

There is so much money funneled around trying to buy companies - and it would have been easy to make a couple phone calls and have a full bank account to use to acquire a business - but more important than having easy money was having investors who believed in me and the long-term perspective of investing in people and organizations. I ranked all of the potential folks I could call upon to support my endeavor and after culling down to a list of investors who (a) had experience running businesses and (b) investing in small businesses to support growth (along with a variety of other factors), I stepped back and asked the most important question in my mind "Are these good people? Will they understand when we face mistakes and challenges?" If there are challenging times - are these investors the kind who would pull their support because they're not in for the long-run?" I am proud of the fact that I was able to partner with investors who posses a truly unique combination of genuine goodness, capability, intelligence, and hard-working nature.

I am confident that when I find a business with a owner ready to take a step back, that the partners I've selected will grant me the freedom to take an equally long-term view of how we can create value. I don't really believe in "get rich quick" schemes. Ultimately, I think the people who create wealth in the world posses intellect, experience, and discipline in conjunction with hard work - not in that order. I consider myself very lucky that I was able to persuade investors to join with me on this journey who possess those characteristics - and lucky that they will let me continue to invest in growing an organization rather than asking for short-term returns. And while I'm not naive and believe I will exhibit the characteristic capability to invest every last penny for potential growth opportunities at the expense of profitable growth, I know where I'll err when choosing between the two. As the oft-quoted John Heywood stated,

"Rome wasn't built in a day"

But, it certainly was worked on every day.

I had the opportunity to work for a man whom I hold in the deepest esteem. He never put conditions on what I was doing - if I had questions, he sought to answer them, if I had problems, he tried to fix them, and he offered compliments even when I felt my work fell short. I asked him to invest with me and there wasn't even moment of questioning - he simply said absolutely and let me set the terms. I can only imagine that this kind of model of support and investing pays the biggest dividends over the long run because it generates the strongest ambition to succeed to repay and pay forward goodwill.

I can't imagine I will ever enjoy the the success that Jeff Bezos and Warren Buffet saw in their professional lives, but as models for aspiration - I am striving to follow their long-term perspectives and believe my investors are a large part of the journey.