My last blog started with one of Warren’s great one liners.
“It’s only when the tide goes out that you discover who’s been swimming naked”
Given the events of the past fortnight, I probably should have saved it for this week. Or maybe I’ll just start every blog post with the same quote. Because it seems that nowadays, skinny dipping is a global pastime.
The top nudists from the past two weeks have included former billionaire and computer game enthusiast Sam Bankman-Fried. And also Elon, who seems determined to twitter away some of his hard earned Tesla cash, and his reputation too.
For those of you who are wondering what I’m on about, I’ll give you the least brief rundown ever.
Some years ago I was invited to a charity breakfast where Sir Michael Moritz was the guest speaker. And what a speaker he was. In my line of work I get to meet a lot of smart and successful people. But here was a man who had gone from being the child of parents who had fled Nazi Germany, to a Knight of the British Empire.
And also, along the way, the wealthiest man in Wales, and a forty year veteran of one of the US’s best known venture capital firms, Sequoia.
A venture capital firm who have just written off around $200m. Which was not only more than their entire 2021 revenue ($192m), but also doesn’t happen to them very often.
Their alumni include some pretty familiar names. Apple, Google, LinkedIn and PayPal, to name a few. The list goes on, and on…and on.
Anyway, a couple of weeks ago I was on the Sequoia website when I happened upon a now removed article about Sam Bankman-Fried, and his company, FTX. It described how during his first pitch to Sequoia, held over Zoom, he was also playing League of Legends, an online video game.
As it turns out, playing video games during the most important meeting of your life doesn’t make you a genius, it makes you a red flag.
But ok. Sequoia are in the business of betting on early stage founders and their ideas. Which by its nature is risky. Sequoia’s ratio of investment to exit stands at just over 20%. So eight out of ten investments go south, and the other two make up for it.
It wasn’t just them though. Amongst other high profile investors, the Ontario Teachers Pension Plan lost $75m. Which maybe they’ll put down as a lesson learned.
All of which got me thinking. About trust. But before you wonder if this is going to turn into a diatribe about why the general public don’t trust estate agents, it isn’t. I’ve done that one before. Possibly more than once.
The psychology behind why we trust people is complex. Sometimes it’s a feeling, and sometimes it’s our experience of them personally. It might be what they say, but it’s also non-verbal.
You can’t buy more of it, you have to earn it. You can’t sell it either, but that doesn’t mean it’s a bad investment, because it compounds over time. Abuse it, and it will go to zero pretty quickly.
The partners at Sequoia trusted Sam Bankman-Fried. And they were wrong. Or maybe they didn’t entirely trust him, but they did think he could make them money. And those two things got blurred.
Because in the venture capital world, bigger, faster and more also mean better. More investments, more deals, more profit, more fame.
Maybe they’re in so much of a rush, that they do things that they really shouldn’t. Like trusting someone who thinks that they’re so smart that they don’t need to really pay attention. And it’s only later that you realise that maybe it wasn’t just the meetings that Sam only had half an eye on.
Of course growth is important. Personal growth, business growth, becoming better at what you do, and better known for it. But none of this works without trust.
This year, I’ve been fortunate enough to work with the type of people who I’ve been looking for since reading this, back in January 2019.
“Treasure honourable people who will treat you well, even when you’re not looking”
Management consultants get paid by the hour, but estate agents live and die by the success of our strategies. And on nearly every occasion, based on results only.
So really, trust is a two way street. Because good work sometimes takes time to come to fruition.
Especially if you’re trying to reach desirable outcomes in spite of politicians, the global economy and millennial prodigies that could probably do with a haircut and a good talking to.
Which brings me on to my final point. Thanks for bearing with me.
“The smallest viable market gives you the freedom to pick those you seek to serve. And those people are seeking a certain symbol. It’s likely, if you’ve chosen the market well, that the symbol they seek is quite different from one that would work for a larger audience”
Choosing the people I want to work with, and having them choose me, has meant two things. Not only have I done work that I’m proud of, but I’ve also done from a place of mutual trust.
Not just more, but better. Better clients, better relationships, better work. And better outcomes for everyone.
“Taking its name from the eighteenth century clay brickfields which once lay at the northern end of the street, the pretty, pastel coloured mews houses which make up Pottery Lane now form part of one of London’s most desirable neighbourhoods, Notting Hill”
You can view the details of my latest listing on Pottery Lane, Notting Hill here.
Things I’ve Been Paying Attention To This Week
If you want to read the now deleted article from Sequoia’s website, you can still do so, thanks to the magic of the internet time machine.
The link is here.
“In 2017, when he was merely 25, SBF collapsed the so-called kimchi premium, an anomalous delta between the price of Bitcoin in much of Asia and its price in the rest of the world. It was a daring feat of arbitrage—SBF is the only trader known to have pulled this off in any meaningful way—one which quickly made him a billionaire and achieved the status of legend.”