At the beginning of October 2019, we had the chance for a series of interviews with Guy Spier of Aquamarine (www.aquamarinefund.com and www.guyspier.com) in Zurich. In this part of the interview, you can advise young managers.
Guy Spier’s advice for young managers.
[00:00:00] Tilman Versch: Hello YouTube. We just had an interview with Guy Spier on his recommendations for young managers, so enjoy it and subscribe to our channel. Thank you!
[00:00:18] Tilman Versch: Hello Guy. Welcome back to an interview. It is nice to have you here now on the terrace, in Zurich. I want to start with the question, what would be your advice for young managers?
[00:00:30] Guy Spier: I think that you are entering into the investment world in a far more difficult environment than the one that I entered 20 years ago. There is an enormous amount of competition and this time, not just from humans, but also from machines, from index funds and from the phenomenon of these ultra-low interest rates and a rapidly changing landscape, but I guess you know that.
I think that my number one piece of advice is that I still believe that this is a great business to go into and to be in. Think for the long term. Think that you are going to be investing, if you are starting now, you are going to be investing for the next 10 to 15 years minimum. It is only in the next 20 to 25 years that you will be reaping the rewards of your investments. So, invest in yourself, invest in your relationships, and invest in your good reputation, even when it appears that there is going to be no return. Find a way to live through those lean years. Count on 20 years and be grateful for every year that it is shorter than 20 years.
So, invest in yourself, invest in your relationships, and invest in your good reputation, even when it appears that there is going to be no return.
Investing might be taking educational courses yourself. Anything that appears to be useful at the time, whether that is an MBA, a CFA, or a short management course, or even a course on something that may be unrelated to investment but you think enhances your skills, may be worth it.
Find quality people when they are going through a rough patch and develop a relationship with them. Let them know that you think they are smart and you will find that you will have better friends.
Then in terms of investing in relationships. Find quality people when they are going through a rough patch and develop a relationship with them. Let them know that you think they are smart and you will find that you will have better friends. People that are successful have a lot of people around them. When they are going through a rough patch, they have fewer people around them. So, you can value and invest in relationships with people in the industry and outside the industry, because I think that ultimately your success will come from the quality of those relationships and the number of people who are grateful that you are in the world. I will just leave this little, long answer to a short question. A short way of answering, saying everything that I just said is, to start making sure now that in 20 years’ time you deserve the success that you get. If you plan on being successful, plan on also having people say, “wow, he/she really deserves that success”. Start earning that now.
Fee structure in 10 years?
[00:03:20] Tilman Versch: Where do you see the fee structures of funds in 10 years?
[00:03:25] Guy Spier: Yeah, as you know I am a big fan of not charging a management fee. I think it is hard to do. I profoundly underestimated the impact that that would have on my environment. I have a much better, happier, healthier, relaxed relationship with my investors because I do not charge a management fee. It was very interesting, Charles Schwab just said they would not charge a brokerage fee. Zero trading commissions, which is a huge move. It made their own share price drop. I would like to believe that they will go down. So, if you ask me to bet, I will say that they will go down, but we will see. It is not something that I have a particularly high conviction on.
I have a much better, happier, healthier, relaxed relationship with my investors because I do not charge a management fee.
The marketing of young managers
[00:04:16] Tilman Versch: What kind of marketing would you recommend for young investors?
I think that one of the guiding lights for me in “marketing”, if you want to call it that, is delivering genuine value to the communities that you participate in.
[00:04:20] Guy Spier: You know the well-known thing is that half the marketing they do is not useful and if they just knew what was useful, they would do that. I think that one of the guiding lights for me in “marketing”, if you want to call it that, is delivering genuine value to the communities that you participate in. Ultimately, you could argue that for somebody like me who missed Amazon 20 years ago, and 15 years ago, and 10 years ago, and 5 years ago, there are many lessons we can apply from Jeff Bezos. In a world where everything is changing, focus on the things that are not changing.
The kind of marketing that I think is the most valuable, is to deliver genuine value to people. If you find a way, if I find a way, if we find a way to deliver genuine value, then people will find a way to your door. What does that mean? That means work on reducing the costs to them for investing, both explicit as in management fees, but implicit in terms of how much time it takes to fill out their documentation, what work they must do to keep their tabs on what you are up to. So, reducing their costs, but also delivering value in other ways. If you have genuine things to educate people about, then educate them. Deliver value in terms of helping people to learn stuff that you have already learned. In terms of client base, there are various types of value that one can provide. I just described taking costs away from them, reducing their costs of doing business, of living.
The other thing you can do is deliver unique experiences, so write a good letter, provide them with access to people that they may not be able to get access to without you. So, there are many ways to deliver value. The good news about doing that, is that it takes marketing away from being something fluffy and something that people do not have a lot of respect for, to being something that makes the world a better place. I like that kind of marketing because even if it does not let us say, win me new business, at least I left the world a little better than I found it, which I think is a good thing.
The other thing you can do is deliver unique experiences, so write a good letter, provide them with access to people that they may not be able to get access to without you.
More and more marketers, Tilman, are being exposed for being pure marketers in that that just does not work anymore. Putting out some BS for the sake of getting attention when everybody either, right away or over time figures out that it is BS, is not going to work. Being genuine will always win the day and genuine value will always win the day, I think.
Guy tells us more about the long-term impact of writing a book.
[00:07:13] Tilman Versch: What is the long-term impact of writing a book?
[00:07:17] Guy Spier: So, a lot of lessons there. That could be a subject of a good, long interview. They are not all positive. Obviously, the positive is that a whole bunch of people know exactly who I am, because I wrote about it in the book, and that is a good thing, or that ought to be a good thing. I do not mind that people know who I am, but to the extent that it has made me well known in people’s minds. It means that I am no longer anonymous to many people. In many ways, anonymity is a much better thing to have, I have now discovered. Why? Because when you are anonymous, an example that I gave, is Siddhartha who dressed up in disguise, he could now discover what people really think, because they told him what they really think. Whereas, if they know who you are, they might be telling you what you want to hear and so that is something to perhaps be avoided and is a cost associated with having a book out there. I think that one of the ways in which I have adjusted is that I used to put myself out there because I felt that was marketing the book. Now I want to try and not get myself out there as much and try to do things that are genuine.
In many ways, anonymity is a much better thing to have, I have now discovered.
If you asked me whether a manager starting out should write a book, I think that this a very good test. Do not write the book because you think that it will help your business. Write the book because it is a genuine way of figuring out your thoughts. So, in a certain way, write the book for yourself. That should be your motivation. If at the end of that, you decide that the book is worth publishing, then you can go ahead and publish it. When you write it with motivation in mind, I think that will be a useful book. I think that that is what comes through in the book. I wrote for the foreword for Gautam Baid’s book. You can clearly see that he was keeping a diary for himself of things that he wanted to remember. So, it really comes down to the motivation you have for writing the book. Just have the right motivation.
Write the book because it is a genuine way of figuring out your thoughts.
[00:09:27] Tilman Versch: Thank you very much for these insights.
[00:09:31] Guy Spier: Thank you.