ADVICE FOR GETTING INTO PRIVATE EQUITY – Market Mondays w/ Ian Dunlap

[Music] If you were getting into private equity In 2023 uh what would be the differences In your strategy in 2023 versus when you Began in your career I was starting inflation was not a Factor Um and certain things were not available Then today I would good thing in 2023 Would be by distressed debt distressed Debt is when you're buying debt that our Company that's not doing that well and You buy the you know 50 cents on a Dollar and probably will come back to a Dollar if you know what you're doing and It's a good deal so I would buy a lot of The stress debt I would look at things That are going to be um uh important in Certain areas of the future one of them Would be uh things like uh Quantum Computing another thing would be Computational biology and other ones Things would be crispr which is uh Gene Splitting Um another kind of area that I think uh It would be good to be healthy food uh Food that's healthy for you that's going To be a big Trend as well so I look for Things that in the future that are going To be good trends that people want to Buy things into and you get there ahead Of them Yeah so for obviously for 2023 you said The Outlook is it was a recession but in

These type of environments uh you Mentioned some say are there other Sectors that retail investors definitely Should be looking at I know you said Maybe indexes we should start but other Sectors yeah on the retail side that we Should be looking at well yeah all right For example uh Healthcare when I worked In the white house before you were born Were any of you born in 19 uh 77 any of You alive then no no no okay all right So I was working for President Carter in The White House at that time the GDP of The United States was seven percent in The health care area seven percent today It's about 22 so that means we are Spending much more money on health care Because people are wealthier and they Want to live longer and so what they do Is they spend money on Health Care Telemedicine all kinds of pharmaceutical Things you can buy so I think healthcare Is going to be one of the great Continuous growth sectors in our country But people outside the United States They want to live a long time too so as People get wealthier outside the United States they want to spend more money on Medical treatment health care and so That's going to be be one of the great Growth areas I think in our country And around the world so in the name of Your new book is how to invest masters Of The Craft so along the lines of that

I definitely want you to talk about the Book but um what are some keys to Becoming a great investor One uh do reasonably well in school uh Two keep reading always read stuff you Never know when it's going to be helpful Three uh be willing to go against the Conventional wisdom four surround Yourself with smart people next maintain Some humility next make sure when you Make a mistake it own up to it share the The credit and be willing to take the Blame and also I think in the end if you Make a fair amount of money be Philanthropic I think it's very helpful For sure Um you've done incredibly well in your Career like what drives you to continue Going and how many hours a day are you Putting into mass in your Craft Um I am old now I'm 73 years old so when Ronald Reagan was 69 and running for for Uh election against Jimmy Carter I told Carter look Reagan is so old he can't Get out of bed in the morning he's 69 Years old now I'm 73 so you know I'm old But um what motivates me is I want to You know I came from very very modest Circumstances my parents didn't grow Graduate from high school I I was the Only child my father made seven thousand Dollars a year so I wanted to work hard And get somewhere and make something of Myself and make my parents proud of what

They had produced so I worked hard and You know it's a hard work generally pays Off and I got lucky a lot of luck so What motivates me now is to kind of be a Role model for other people but also my Own children I have three children and I Don't want them to think that their old Man is basically sloughing off and not Doing anything and doing you know I want Them to think I'm doing something Productive for the country and so that's What motivates me in your book how to Invest you got you got the opportunity To interview some of the greatest Investors in in the history of the United States of America a lot of Success stories were told but I'm Interested in seeing what were some of The mistakes that some of these Investors need right because we hear the Glory stories but obviously they had to Go through some trials and tribulations To get to that point what are some of Some of the mistakes that you can share Well they all made mistakes everybody's Made mistakes uh Ken Griffin now one of The greatest investors now very wealthy Guy um his company almost went bankrupt This company almost went bankrupt in the Great Recession uh the guy that runs the Biggest hedge fund of all time and the Most successful hedge fund of all time Is Ray dalio Um he invested one way when he was early

Out of business school and he lost all His money he had to go to his father to Borrow four thousand dollars he was Broke so you know he also made a mistake Of punching his boss in the face one Time that's probably not a good idea so Um people always make mistakes Warren Buffett made mistakes they all make Mistakes you just have to pick yourself Up off the ground and learn from your Mistakes that's the key if you'd find Somebody that never made a mistake You've got to be careful because that Person has too big an ego And telling people how great you are is Not a good thing you know there may be Some people are presence of the United States who tell people how great they Are but generally I don't think that's a Good idea Um you know can you imagine Abraham Lincoln saying I won the Civil War by Myself No it wouldn't happen you want somebody That's humble and great investors have a Certain amount of humility they've made Mistakes but they've learned from it So um guys uh you guys seem like you're In sports as well you've got these those Tennis shoes behind you are you great Athletes also no that's objective Definitely love sports yeah background As well Well I am I'm a terrible athlete but

I'll show you this just This is uh from Coach K uh we won the National Championship when I was uh the Chairman of the board at Duke uh I was Sending in plays from him by hand Signals and he said that was the key is Those hand signal plays that's how he Won yes Coach K the legend of himself Uh let me ask you this 98.5 Of asset management firms which includes Private Equity VC and Investment Management firms 98.5 are run by white Men Obviously a lack of diversity is an Understatement do you do you have a Problem with that what's your what's Your thoughts on that Well if you read my book it wasn't 98.5 Of the people in the book were white men So I had a fair number of people who Were women and and uh minorities because I thought it was important to show that While there has been a bias towards White men and it's been a white male Society Um it's it's uh it's changing a bit Um you know I don't think it's a great Situation you have a the the the this Country is going to be a minority uh White country uh in my lifetime uh right Now probably the the country is about 60 58 white but I suspect uh if I live long

Enough it's going to be less than 50 Percent and that should be reflected in The investment management and other Things so I put a number of African-American leaders in the book in The investment World Um and I've interviewed many others as Well one in the book is a guy named John Rogers John Rogers built the aerial Capital One is the largest African-American owned Um investment firms in the in the Country I've interviewed on my TV show Melody Hobson who you may know Melody Hopson is married to uh George Lucas but In her own right she's built uh with Aerial Capital into a really successful Investment career so I I think it's if It's 98.5 I wouldn't I wouldn't dispute Your number but I would say it's Changing Um I have a quick uh two-parter um what Is your day-to-day schedule look like And who has been your favorite guest on The show over the last few years and What was the biggest lesson you learned From them My favorite guest was I guess which of My children is my favorite I don't ever Tell people but I would say a guest that I thought was really good was Jeff Bezos Because what makes a guest work well is He has a sense of humor sense of Humility plays along with some jokes I

Might give and he also it's good to do This in front of a live audience because If you have a live audience that it Makes it makes the uh interviewee uh Play to the audience a little bit and Makes it more interesting if you're just Doing it with nobody in the audience it Sometimes can fall flat not be as Interesting yeah Jeff Bezos was great Oprah Winfrey was one of the best uh Bill Clinton and George Bush together Were really great Um I just interviewed uh not long ago uh Uh Sam bankman freed and that was we Discussed a little unusual I am Scheduled interviewing soon I hope to be Interviewing very soon uh Mike Tyson and Alex Rodriguez Um Mike Tyson I'm gonna see whether Mike Tyson uh you know can beat me in an arm Wrestling match or something You you mentioned uh your children your Three children uh and obviously you Messaged them as you know being great Guests I wonder did they take an Interest in your career path as well I Know you wanted to do law because of What your parents said what what was the Interest in your kids as as you were Going through your career I was building my firm I was running Around the world raising money and doing Stuff that I I so they didn't probably Know what I was doing when they were

Younger they just had no clue it now Turns out that all three of my children Are in private equity and they have Their own funds So now they call me up and ask me if I Can introduce them to an investor or I Can help them and analyze a deal so in That way it's good but my kids all were Well educated they went to really good Schools And uh but I didn't push her to do uh Any of these things they kind of came to It eventually I don't know why but they Did Yeah before we leave I wanted to ask you This question what do you personally Look for in Investments it could be an Investment in a company investment in Stocks like what's important to you to Say okay I feel comfortable making it When we're looking at an investment in a Private company we're looking for a Management team that's pretty uh strong Committed to it they've got a lot of Their own net worth tied up into it you Want to make sure the company has um the Ability to uh survive downturns make Sure the capital structure works uh make Sure it's a product that is likely to be Popular in the future not just now uh But in the end you're looking for the Right price you know you can have the Greatest company in the world but if you Pay too much for it it's not going to

Work so you've got to pay at the right Price and make sure that you're not Overpaying for these things Uh one of the biggest things that I find Men have a struggle with is balance Um you have any advice for men that are Running businesses but are also trying To have a good healthy work-life balance Or do you think that's a fallacy Well that's the great conundrum in the World I mean can you really build a Great business and have a healthy Personal life and have a good balance in Life some people figure it out you know Obviously it's not it's not perfect it's Not easy to do Um you know some of the wealthiest People in the world that you've read About recently they've become divorced So you know you could say that's you Know maybe because they work so hard who Knows I'm divorced because maybe I work So hard but Jeff Bezos Bill Gates a lot Of uh Entrepreneurs uh maybe they put too much Time into their business so uh a healthy Life work balance is not is easy to talk About it's hard to do yeah very hard to Do because you're driven if you're a Driven person you want to make your Company work so well and you measure Your company's and success every day by Various metrics you don't measure how Good you're doing your job as a husband

Or as a uh wife or as a a parent every Day so you can you can Slough off that Because you don't have a metric every Day but I I think it's it's not as easy To do as as talk about for sure if you Can do it again would you do anything Differently If I had to do anything differently what I would do is I wouldn't have gone to Law school probably I would have gone to Business school that would have been Good uh secondly I wouldn't have spent Four years in the Carter white house Because I you know maybe I would have Been better for the country if I didn't Do that and I came out and practiced law For five years after I left the White House that was a waste of my time Um but in the end I probably would have Given away more money uh by uh earlier I've given away you know well over a Billion dollars in cash Um to lots of things around the country And I probably wish I had worked harder Made more money and given away more and Started earlier but on the whole Um you know I'm at 73 when you're 73 you Read the obituary pages every day to see Who your age is dead and uh you guys are Too young you don't leave the obituaries I'm sure but no doubt you must have Known somebody in your life who died When you thought it was earlier than They should have died so I'm always you

Know thankful I'm still alive and trying To do things that make sure I don't you Know die prematurely [Music] I know they can't stand it