Aug 25, 2010

moving on

I probably should have mentioned this earlier as I've been getting lots of email to my personal account when attempts to email me at work get bounced. I have a new job. It's been in the works for a while and I've actually been working at my new job for almost a month now.  I thought I'd lay down my thoughts because I always find these changes quite pivotal and this one was particularly meaningful.

I change jobs a lot.  It's part of my career philosophy that I should try as many things as possible before I die and also part of my personality in that I get bored with things terribly quickly. 

Nevertheless, my decision to move on is an odd one for a couple of reasons.  First, when I landed my last job as an equity analyst it was in my mind a dream job.  I had always wanted to live in New York and work on Wall Street.  They just seemed like things I ought to do at some point in my life.  I first tried to get into Wall Street around 2000 but the market was a disaster.  In my mind I tabled the idea that I would ever make it out here.  So to say I was elated when I got a headhunter call to join an investment firm is an understatement.  I was over the moon. Second, if there is one thing I enjoy and that I'm good at, it is analyzing stuff.  And being an equity analyst is first and foremost an analytical game. At least with the fundamental approach to investing.  And for the first 4 years I loved the job.  So much so that I was pretty sure I'd do it until I retired.

And then something happened about 4 years ago.  A friend of mine asked me, "So have you figured it out."  I wasn't sure what he meant by this question and so I asked for clarification.  He asked the question again.  And I asked for clarification again.  And he said, "You always figure this stuff out.  Have you figured it out?"  And we left it at that.  3 years ago he asked me the same question. And at that point I started to understand what he meant.  He was really asking have I figured what is really important in investing.  How do you win at investing?  I hadn't really studied that question at a philosophical level because I was enjoying my job so much.  But that question kept lingering in my mind.

And as time went on I finally figured it out.  The answer is you get lucky.  Few on Wall Street will admit this because it's Nietschze-esqe; staring into the abyss and all that.  You are basically admitting that all the hard work and long hours you put in is for naught.  This is a hard realization to come to and it took me about a year to come to it myself.

Another friend at this time heard me go on about this and said (and I'm paraphrasing), "Why are you doing something that ultimately doesn't translate into value?"  It was a rhetorical question really.  And I responded because I enjoy the work.  That is not a satisfactory answer.  I thought it was but his question never left the back of my mind.  It kept pestering me.  And eventually I gave in to the idea that he was right.  All this effort was worthless.  And once I admitted that I no longer enjoyed my job.  And so for a long time now I've been trying to figure out what I really wanted to do.  I'm not sure I have really found the answer to that but I do know I like a few things.
  1. Technology - In the broadest sense.  Anything where scientific and mathematic knowledge is applied to improving people's lives.
  2. The startup environment - I founded a company back in 1999 and it was the most intense, exhaustive thing I've ever done; 100 hours weeks, no weekends, massive ups and downs.  It was also one of the happiest times of my life.  There is something to be said for doing useful work and in a startup everything is useful.  There's no time for dicking around.  In a big company 50% of what you do is bureaucracy.
  3. Analysis - I enjoy studying systems and trying to understand how they function and can be improved.
  4. Being useful - Thomas the Tank Engine was no dummy.
So with that in mind I'm kind of doing what I want to be doing now.  And what I am doing is working for a startup venture capital or private equity group that invests in late stage renewable energy technology.  By startup I mean the group itself is a startup.  I'm essentially the third guy.  The long hours are back.  But so is the motivation.  At my last job I had issues even lasting until 5pm the last few years.   It's a scrappy couple of guys.  They hired me without an interview and no personal connection other than a friend of a friend.  But they are both "deal" guys.  Hopelessly optimistic and always confident they can solve any issues.  These are not the type of guys who should be doing deal analysis.  That's where I come in.  The detail stickler, hopelessly pessimistic, critic.

So one guy sources funds.  Most of the money comes in from large strategic investors in emerging markets; primarily Saudi Arabia (royal family), India, and potentially China as well as a few other Middle Eastern countries.  The other guy sources renewable companies looking for cash to expand operations in a significant way.  And I'm in the middle trying to convince the strategic investors that the technologies are potentially lucrative.

Our first deal is with a solar company with an unusual and untested technology.  The downside of the technology is that it only works in large installations.  We're talking $100 million to $1 billion as a price tag for a completed plant.  Not the kind of money startups have lying around.  So these investors come in and offer money for ownership and also help them deploy the technology in the geographies they are based out of (the strategic part of strategic investor).

The business model is a fee for assets placed that looks like a hedge fund.  The so called 2/20 model.  If you place $100m you get $2m off the bat and 20% of the profits from that $100m equity ownership.  Which obviously could be a big fat zero.

Here's my top 10 list of what's awesome about this job.

  1. Working in renewable technology (I'm a big believer) and the power markets are fascinating
  2. Work with two cool guys who have no analytical capabilities and find me really useful (hat tip to Thomas the Engine) and leave me alone to do my work.
  3. Prospects for interesting travel.  Generally I hate travel but the Middle East would be fun.
  4. I can live anywhere for this job; the two guys realize we are living in a digital world.  One guy is in San Francisco.  The other in London.  Skype, Dropbox, gmail, etc are the only tools we need.  Leaves open the opportunity of moving back to the West Coast.
  5. No defined work hours.  I can take a nap at 2pm if I'm tired.
  6. No dress code.  And I mean none.  
  7. My office is located 2 blocks from my apartment.  I can pop home to have lunch with my kids anytime.
  8. My office is a one-person office (it's incredible what you can get done in a day when no one is there to bug you)
  9. My office is located next to a bar.  I don't mean the bar is across the street.  I mean it is next to my office.  Desk to bartop is about 20 paces.
  10. The bar has a killer beer selection; my poison of choice

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