Podcast Summary
From education to building a successful firm: Belief in abilities and importance of education contribute to success. Building trust and maintaining consistency with investors is crucial for raising funds.
Successful individuals, like Mark Lasry, often attribute their achievements to a strong belief in their abilities and the importance of education instilled in them from a young age. Tigus, a unified research platform for fundamental investors, aims to help investors focus on analysis rather than data aggregation, allowing them to make informed decisions more efficiently. Mark Lasry, a pioneer in distressed debt investing and CEO of Avenue Capital Group, shares his journey of building a successful firm and investing in various industries, including sports. His confidence and competence were not fueled by self-doubt but rather a strong belief in his abilities and the importance of education. The story of raising his first fund demonstrates the importance of building trust and maintaining consistency with investors.
The Power and Complexity of Sports Investing: Sports teams' value is underestimated due to complexities like media deals and sponsorships, but investing with the right knowledge and mindset can lead to significant returns.
Sports can be a powerful and misunderstood area for investment. The speaker shares his experience of owning the Milwaukee Bucks and the unique way it brought people together. He explains that the value of sports teams is often underestimated due to the complexities of the industry, such as media deals and sponsorships. The speaker also mentions that the Bucks presented a unique opportunity, as the price paid was significantly lower than the potential return on investment. However, the actual media deal turned out to be three times the expected amount, leading to a significant increase in the team's value and profitability. The speaker emphasizes that in the world of sports investing, it's essential to understand the economics and be prepared to spend money to win. Overall, sports can be a unifying force and a lucrative investment opportunity if approached with the right knowledge and mindset.
The importance of winning in sports team ownership: Winning increases a sports team's value and brings joy to fans, but timing is crucial for maximum profit. Owners have a responsibility to try to win, and ticket pricing, sponsorship, and advertising contribute to potential profits.
Owning a sports team, such as the Milwaukee Bucks, involves a significant investment with the hope of increasing value and winning. The speaker emphasizes the importance of winning, as it increases the value of the team and brings joy to the fans. However, timing is crucial, as the highest value is often realized after a win, making it essential to sell at the right moment. The speaker also mentions the importance of luck in winning and the belief that the value of a team will continue to rise, making it an economic play rather than a vanity asset. Additionally, the owner feels a responsibility to the fans to try to win, and ticket pricing, sponsorship, and advertising are factors contributing to potential profits. The speaker's experience with the Bucks was unique, and while he felt a stewardship of the asset, he ultimately decided to sell when he believed the price was right.
Investing in emerging assets with proven audience interest: Identifying and investing in assets or industries with proven audience appeal can lead to significant returns, as demonstrated by the growth in viewership for bull riding and women's NCAA basketball.
Identifying and investing in emerging assets or industries with proven audience interest can lead to significant returns. The example given is the investment in bull riding, which went from having no media deal to having a viewership comparable to that of the NBA within three years. This trend was driven by the increasing value of media rights, as evidenced by the exponential increase in viewership for the women's NCAA basketball final in just a few years. Similarly, Larry Ellison's investment in sailing, despite his own lack of interest in the sport, was driven by the belief in its potential audience appeal and the subsequent increase in viewership. These investments demonstrate the importance of recognizing and capitalizing on existing audience interest, as the value of these assets is likely to increase in the future.
Investing in niche sports with large fan bases: Identifying and investing in lesser-known sports with large fan bases can lead to high returns due to increasing demand for media rights deals. Focus on top competitors for maximum viewership.
Identifying and investing in niche sports with a large fan base can lead to significant returns due to the increasing demand for media rights deals. The popularity of seemingly unusual sports, such as slapping or angled ping pong, can be surprising but profitable if a large audience exists. Investors should focus on finding the best competitors in these niches, as people are drawn to watching the best in the world excel in their chosen field. Basic supply and demand principles apply, as the number of teams is limited, but the number of potential investors is growing. In the coming years, more institutional investors are expected to enter the sports investing scene, making it a more competitive market. Gambling also plays a role in the sports industry, but its exact impact on investing remains to be seen.
Opportunities in Sports and Gambling Industry: Increased betting leads to higher media deals and revenue, extending beyond sports betting to real estate, food services, and marketing. However, consider hurdle rates and expected returns due to high opportunity costs.
The sports and gambling industry presents significant opportunities for media and investment due to increased engagement and viewership. The speaker emphasizes that while they don't make money from gambling itself, the more people who bet on a game means more viewers, leading to higher media deals and revenue. The industry's potential opportunities extend beyond sports betting, including real estate, food services, and marketing. However, the high opportunity costs require careful consideration of hurdle rates and expected returns. The speaker also shares admiration for the Bass family tree in investing, attributing its success to the availability of capital that attracted top talent.
The evolution of distressed investing: The industry has become more competitive and litigious, requiring large firms with strong credit and restructuring capabilities.
The evolution of distressed investing as an asset class has seen significant changes, including the streamlining of bankruptcy processes, increased capital, and a shift towards more litigation and fighting among larger firms. Looking back at the distressed investing scene in the past, understanding law and numbers were crucial due to lengthy bankruptcy processes. However, these processes have been shortened, making the industry more competitive and litigious. Additionally, the need for firms to be large and capable of handling credit and restructuring issues has become essential. Reflecting on the past, an amusing anecdote involves meeting Putin with President Clinton at Davos, showcasing Clinton's ability to make things happen despite seemingly minor concerns. Throughout his career, the speaker has been drawn to varied experiences, but the common thread is a fascination with meeting new people and learning from them.
Mother's advice to learn led to missed opportunities in firm growth: Prioritizing returns over firm growth can limit expansion and hiring of valuable team members. Building a strong team and diversifying offerings are essential for long-term success.
Focusing solely on returns and ignoring the building of a firm can have consequences. The speaker shares a personal anecdote about his mother's encouragement to learn and absorb knowledge, which has stayed with him throughout his life. In the context of building a successful investing firm, he admits that he initially prioritized returns over firm growth. However, looking back, he realizes that he missed opportunities to expand into new areas and build a larger team. He emphasizes the importance of hiring team players who can contribute to the firm's success, rather than just focusing on individual talent. The speaker also acknowledges that making the right trade-offs and being adaptable are essential for long-term success. While the focus on returns is crucial, it should not come at the expense of building a strong and capable team and diversifying the firm's offerings.
Building trust in relationships is crucial in the investment industry: Maintain trust by having a strong team, clear hierarchy, admitting mistakes, and reevaluating investment theses
Building strong relationships based on trust is crucial in the investment industry, whether it's within a firm or with external investors. The speaker emphasizes the importance of having a team that works together and making tough decisions, such as letting go of difficult or underperforming team members. In sports and investing, having a clear hierarchy and decision-maker is essential. The speaker also shares valuable lessons learned from past investments, including the importance of not being too stubborn and admitting mistakes, as well as the importance of constantly reevaluating and refreshing investment theses. Ultimately, trust is the foundation of successful relationships in the investment world, and transparency and admitting mistakes are key components of maintaining that trust.
Building trust and strong relationships in family businesses: Focus on trust, complementary skills, and a close relationship for success in family businesses. Remember the hard work and positives amidst complexities.
Trust and strong relationships are essential for success in business, especially when working with family members. The speaker, who started a business with her sister and has employed her children, emphasizes the importance of trust, complementary skill sets, and a close relationship. While it's not always easy to navigate the complexities of financial success, the speaker encourages focusing on the positives and remembering the hard work that led to that success. Additionally, having a strong foundation of trust and relationships can lead to unique experiences and opportunities, such as interactions with presidents and championship wins.
Winning the NBA championship: Unexpected challenges and joys: Winning the NBA championship brought unexpected challenges, like NBA's rules on trophy touching, and joys, like champagne celebration and sharing the moment with team.
Winning the NBA championship was an unforgettable experience filled with unexpected challenges and joyful moments for Gary Day. One of his favorite moments was lifting the trophy, but he was surprised by the NBA's strict rules about touching it before the ceremony. The sensation of champagne on his eyes during the celebration was also a surprise, as was the influx of congratulatory texts from old friends. Another interesting experience was sharing the moment with the team and dealing with unexpected visitors in the locker room. When reflecting on the experience, Gary noted that being in a room with NBA owners revealed the vastly different ways people had made their fortunes and the impact of age on their perspectives. Overall, the championship run was a unique and memorable experience that tested his abilities and brought unexpected joys.
Building relationships with talented individuals in the industry: Successful investing requires both intelligence and strong interpersonal skills. Building relationships with talented individuals can lead to valuable opportunities. Consider focusing on industries like sports or real estate where people skills are crucial.
Successful investing requires not only intelligence but also strong interpersonal skills. The speaker emphasizes the importance of building relationships with talented individuals in the industry, such as David Blitzer, Josh Harris, Mark Rowan, Matt Perlman, Alex, Boaz Weinstein, Jason Mudrick, Steve Ross, and Ross Stevens. These individuals stand out not only for their intellect but also for their ability to connect with people. If the speaker were not an investor, they would consider building a business in sports or real estate, where they could leverage their people skills to bring people together. In the sports industry, they would focus on women's sports, which they believe is poised for growth. In the real estate industry, they would aim to build beautiful structures that people would want to live or work in. The speaker also mentions that Europe is typically 5-10 years behind the US in terms of opportunities.
Investing in sports industries and constant investment to avoid relegation: Success in long-term investing requires constant investment, especially in sports industries with relegation and promotion. A good mentor is essential, and external risks can lead to significant losses.
In sports industries like Europe and Asia, where relegation and promotion are significant factors, constant investment is required to avoid being demoted. This creates opportunities for those who can capitalize on the passion and dedication of fans. A good mentor in investing is someone who genuinely cares about your success and wants to help you achieve it, rather than just benefiting from it themselves. The biggest risks in long exposure to credit, equities, and sports come from uncontrollable external events, which often result in negative consequences. The success of an airline fund, for instance, relies on the leasing of planes, and significant downturns can occur when travel is disrupted, leading to significant losses. The decision to invest in Avenue Capital was based on the affordability of buying distressed assets or planes at discounted prices.
Identifying unique investment opportunities: Successful investing involves finding overlooked opportunities, building a strong team, maintaining a good reputation, and understanding the nuances of different sports and fan bases.
Successful investing often requires identifying unique opportunities that others may overlook due to scale or perceived effort. An example given was the purchase of trade claims under bankruptcy, which offered a significant return on investment despite the work involved. Another key point discussed was the importance of building a strong team in private equity and maintaining a good reputation in business dealings. Additionally, the speaker shared his preference for sports franchises like the Knicks or Giants/Jets due to their large revenue potential and the opportunity to be deeply involved in the fan experience. Lastly, he emphasized the importance of understanding the nuances of different sports and their fan bases, as well as maintaining a deal-making philosophy that prioritizes fairness and long-term relationships.
Scholarships and Kindness in the Speaker's Career: Recognize and appreciate the people and opportunities that have positively influenced your life, even if their impact is not immediately apparent.
Kindness and the help of others have played significant roles in the speaker's successful career in investing. He shared that receiving a scholarship to attend college was a pivotal moment in his life, allowing him to pursue higher education and eventually enter the field of law and investing. He also expressed gratitude towards the girls who went on dates with him in high school, acknowledging their kindness towards him during a time when he may have felt unwanted or overlooked. The speaker emphasized the importance of recognizing and appreciating the people who have positively influenced our lives, even if their impact is not always immediately apparent. He closed by encouraging listeners to consider the kindnesses and influences that have shaped their own journeys and to express gratitude for them.
