Don’t always try to assign blame for outcomes, whether to yourself or others. Sometimes failure comes from good work and good decisions. Sometimes good outcomes come from poor decisions.
Ram Lee is a Partner at Seven Bridges Advisors, a registered investment advisory firm in New York. Ram grew up in Golden, Colorado and attended Swarthmore College and Yale University. Subsequent to graduating from the Honors Program at Swarthmore, Ram worked at overseas oriented non-profits, with international experience in Peru, Cambodia, Vietnam and the Philippines. After earning his MBA at Yale, Ram joined the investment team at the UPenn investment office, which managed the endowment. He left UPenn in 2004 to join the investment office of the Howard Hughes Medicate Institute, one of the most endowed non-profits in the nation, becoming the youngest Managing Director at HHMI. After nine years at HHMI, Ram became a partner and owner a Seven Bridges Advisors in 2013, a newly formed investment firm. Ram has five children and serves as the outside member of the investment committee for the NFL Players Association.
Where did the idea for Seven Bridges Advisors come from?
The main idea behind Seven Bridges Advisors is to bring the resources and investment rigor of the largest endowment investment offices to the management of family and small endowment clients. So many wealth families are so poorly serviced by large institutions, who have a myriad of conflicts, and interact mostly with client relationship people who are not really investors. The largest endowments have investment office’s filled with real investor who understand market, strategies, and can really evaluation all manner of investment managers. Seven Bridges Advisors seeks to bridge the world of endowment management and family office investing for wealthy families and smaller endowments, who have all the investing needs of the very large endowments, but not all of the resources to create their own office. In this way, Seven Bridges acts as the Outsourced Investment Office for clients.
What does your typical day look like and how do you make it productive?
The vast majority of my and the rest of the investment team’s day is focused on evaluating managers across all manner of investment strategies. What makes each day interesting is that in one day I could be discussing stocks in China, real estate in Virginia, pipelines in Texas, and small cap stocks in Norway. With the myriad of strategies under consideration all the time, prioritization is imperative. The one thing that helps with deciding between investment strategies and managers is consistent communication and writing down our reasons for investing and not investing.
How do you bring ideas to life?
The most important aspect of deciding to do anything in business is what I call the ‘blank sheet of paper’ test. Also known as the ‘if we weren’t already doing it this way, would we start doing it this way.’ In investing, that means making sure that you not only make decisions about where to invest, but where to no longer invest. That is, what investments do you currently have, that if you had to make them today, you would not make. So many portfolios are simply a result of history, rather than the product of deliberate decisions. I make decisions after lots of consultation with my team and my partner. It’s a very iterative process that involves much discussion, writing down pros and cons, and ultimately making a judgment call with my business partner regarding the risk/reward of one investment versus another.
What’s one trend that excites you?
In regard to investing, we have to pay attention to the huge trend of passive investing. That means just buying a market weighted index and not trying to pick stocks. That style of investing, just buying the S&P 500 for example, has been hard to beat the past many years. The value of most stock pickers is questionable, and buying the index is a way to guarantee an investor gets the overall market return. The downside to that is that you own exactly what everyone owns and as certain stocks go up, you own more of them, even if those stocks are getting expensive. I think there is some value in having a talented investment manager picking and monitoring a portfolio of stocks that seems attractive to that manager. But that manager has to be talented and that is what is hard to find. Especially for smaller investors who do not have the time, knowledge, or access to evaluate investment managers in depth. So while for many smaller investors, who do not have direct access to evaluate investment managers, passive investing makes sense. For professional investors, however, I still believe that having a talented stock-picker evaluating businesses and valuations and deciding what to own both provides the opportunity to outperform and help manage the risk of owning more of what has done well recently.
What is one habit of yours that makes you more productive as an entrepreneur?
I read old newspapers. I do not read the newspaper every day. I get news online and generally stay abreast. I have a stack of newspapers in my office going back 18 or more months and one the days I sit down to lunch alone (rather than in a meeting), I pull out an old newspaper. It’s usually been yellowed from the sun, and is normally at least six months old. The benefit of reading an old newspaper is you get to see what everyone was so concerned about a year or so ago, while knowing what actually happened. This helps provide great perspective on current news and issues and concerns. It helps me remember that whatever seems like a big issue or major concern today, will very likely have faded into the woodwork in only six months time. Most news is noise, not signal. This practice helps me remember and apply that.
What advice would you give your younger self?
Take more risks, be more afraid to fail. Try more things that were speculative, but interesting. Few would consider me very risk-averse, but I think most people could go adventuring more, especially early in their business careers, and not play it as safe.
Tell us something that’s true that almost nobody agrees with you on.
Quality of outcomes tell us very little about the quality of decisions. People give lip service to this idea, but few actually apply it when a bad outcome happens. Most people want to assign blame for any poor outcome; they want a story and a villain, whether in business or their personal life. Oftentimes a good decision still leads to a bad outcome.
As an entrepreneur, what is the one thing you do over and over and recommend everyone else do?
As much as I can discipline myself and my team I strive to write down what we are doing and why we are doing what we are doing. That provides some accountability and a touchstone to understand how we got to where we are in the business, without seeing the past through today’s lens. Success has many fathers, but failure is an orphan. Writing down things in the moment makes us more honest in the future.
What is one strategy that has helped you grow your business?
For an investment firm, the best way to grow is to have good performance for the risks you take. Too many in my business focus on gathering assets and managing client’s expectations to retain business. It’s a lot harder, but more rewarding to be able to provide real added value to clients through real performance. This is true for many businesses. If you focus on providing clear value to customers or clients, it’s both a lot easier to retain current ones and add new ones. Ultimately I judge myself on my performance for clients, not the performance of the business.
What is one failure you had as an entrepreneur, and how did you overcome it?
The main failures I have had relate to not reacting to organizational change fast enough. I don’t mean firing a manager because of change, but paying very, very close attention when there are changes, especially in people. At times in the past, I have thought I knew what changes were meaningful and which ones were not. Now, if there is a change, of people or strategy, I am inclined to immediately put that investment on watch and to pay much closer attention to it, over the next 6-12 months. Even if I think the change is not likely to have any adverse effects, I now believe any meaningful change should put an investment on watch.
What is one business idea that you’re willing to give away to our readers?
In the investing world, it is actually quite hard to get good exposure to various factors and sectors via easy to trade ETFs (exchange traded funds). Most of the sector funds and the like run by the major players do not really provide the exposure many investors want or need. I believe there is a good business for someone willing to create effective sector and factor (value/growth, momentum, low beta, etc.) ETFs for the marketplace. ETF investing is a high growth business right now and the current providers do not provide a good suite of products.
What is the best $100 you recently spent? What and why?
Well, it didn’t quite cost $100, but I recently paid for a premium subscription to Protonmail.com for completely and totally private and encrypted email. Proton Mail is a newer competitor to Gmail, based in Switzerland. While Gmail “reads” email (automatically) before the user even sees it, Proton Mail is unable to read your mail due the manner and level of encryption. The downside, of course, is that if you truly lose access to your Proton Mail, even the company cannot retrieve it for you. I’m not overly concerned about AI or technology encroachment on our lives, but seems like having truly private email is a worthwhile thing and eventually I think more and more people will move to it. Obviously, be being an early adopter of a service, you get a better choice of email handles.
What is one piece of software or a web service that helps you be productive?
It may sound surprising, or pedestrian, but Yahoo’s finance website and app is the easiest and most accessible service for stock information I have found. You wouldn’t think something as old as Yahoo would be the most useful service for stock information, but no one else has a simple freely accessible service with the most relevant current and historical information on stocks. I use it almost everyday to look up historical stock prices, see current valuation metrics and even get very quick snapshots of historical financial statement information on any publicly traded stock in the world.
What is the one book that you recommend our community should read and why?
Mindset. We bought a few years ago for everyone in the firm. Helps identify how to think about success, failure, growth and the natural desire to protect one’s reputation, which can get in the way of growth. It’s also very good for considering how to praise people for their successes, especially children.
What is your favorite quote?
Success has many fathers, but failure is an orphan.
- Try to avoid recency bias: don’t anchor on current process or current news.
- Write down what your strategy is, what decisions you made, and why you did them. It will keep you honest in the future about the past.
- Make sure you clearly understand and believe in the value your business adds to customers/clients.
- Prioritize. Be willing to let some things fall by the wayside. Be happy you did the most important things.
- Don’t always try to assign blame for outcomes, whether to yourself or others. Sometimes failure comes from good work and good decisions. Sometimes good outcomes come from poor decisions.
Steve (Stefan) Junge hails from Germany and helps with the day-to-day publishing of interviews on IdeaMensch. While he and Mario don’t share a favorite soccer club, their enthusiasm to help entrepreneurs is a shared passion.