Episode 328: Stonepeak Co-Founder and CEO Michael Dorrell

[music] Coming to you from Sonny Los Angeles, California. This is 30-minute mentors. Leaders to listen to. With Adam Mendeleur. Here is your host, Adam Mendeleur. Our guest today is in the top half of the Forbes 400. Michael Derell is the co-founder and CEO of Stompheak, a leading infrastructure investment firm with more than $80 billion in assets under management. Michael, thank you for joining us. Hey Adam, good morning. Great to be here. Thanks for having me. You grew up down under in a small farming city in rural Australia. Can you take listeners back to your early days? What early experiences and lessons shaped your worldview and shaped the trajectory of your success? That's a great question. So I did drop into country town, a little town called Griffiths, about six or seven hours drive southwestern Sydney. Sydney is on the east coast of Australia, beautiful city. I encourage you to go visit Sydney if you get the chance. I maybe wouldn't go to Griffiths. What have you been there? I love Griffiths. It's very down to earth. What you would expect, rural folks, love sport, love the outdoors. I'm the oldest of five. I had complete freedom of movement from a very young age. I would be an ex-bike to school from the time I was in third or fourth grade and it was quite a ride, probably half an hour ride, but I'd take it back. Maybe it's two miles to school. We go out with my buddies in the national park and just explore and rock climb and I basic stuff with a little kids, but complete freedom of movement. And I think that is incredibly shaping on who I am today. I'm living in New York City and you're over in LA. And I think this is true, maybe more of New York City, but it's true of all big cities. I think I grew up with four siblings. They're five of us all together, but I got five kids. I've repeated what I grew up with, I suppose. And so I think a lot about parenting in the city and there's so many great things to offer in New York City, but it's a very controlled existence. Everything my little kids do really needs to be organized by the parents or the parents need to be there. You can't just learn Rome wild. And so I look back at my childhood and look, you have some disadvantages being in a little country town. You don't have the culture and the education. You don't have everything that New York City or LA has to offer that my goodness, you've got complete freedom and you're self-directed and I think that's a huge shaping of where I am today. And I spent a lot of time thinking about how do I get my kids to be able to get that same experience of self-directing themselves from the young age. But that was very shaping on me. And I've had a journey in a job on Wall Street where no one from Griffith is doing the same thing or from anywhere near Griffith. And I thought that shaped my personality in somewhere over the unique way. But the more time I've spent around people who grew up in country in New South Wales, which is the rural area of the state where I grew up, I just have to realize that's who I am. That's where the core of my personality has come from. So anyway, that's where I've started. I love that. So much of our success is driven by our mindset, driven by our determination. And at a very early age, you realized I get to control so much of what I do and use the phrase self-directing in life. We get to choose, are we going to do this? Are we going to do that? I think there's a misnomer that the most important part of our brains are the academic part of our brain. And we really, intensively, more intensively than ever, play our kids in academic situations. We want them to excel academically as much as we can. And that's great. I'm a big supporter of traditional academic education, of course. But there's a whole other areas of the brain that I think we maybe don't play enough attention to. And I think the ability to work outside of structure and to just work it out is maybe the easiest way to put it. I don't know the traditional schooling does the best job of that. In my experience, some of the best hires, we've ever made it, my firm, are folks who grew up on farms. And they're almost inevitably not as well-educated in history or the arts or whatever it happens to be as folks who went through a more serious schooling. But I think because at a young age, they were going and collecting the eggs and that they're round up the sheep and put fences in. And they're just 11 and they run bikes around the farm, et cetera. They're just used to being on their own and coughing to work out what to do and how to fill up their time. And they, I find, have incredible executive function, incredible ability to just go out there and win over all sorts of different people because you look at the key driver of success in life. It's normally not how good you are at math or how good you are at writing or what have you. It's generally how good you are at winning over people and how good you are at navigating situations to get to the result you want. And I'm not sure that's training you get in a formal education. To me, that's more what you pick up along the way, hanging out with your buddies and doing stuff outside of school without adults maybe hovering over you to tell you what to do all the time. And so that observation has weighed pretty heavily on me over time. And it's something that I certainly am very aware of in my parenting and everyone's got their own parenting style. I'm not saying I've got all the answers, but I certainly have observed that there is something in as much unstructured, you might call it unstructured pie. Maybe it's the modern term we would use, but the parents who are out of there, the kids are out, often in nature doing what they want to do for hours. Not getting any trouble, obviously, but just they all did make their own decisions for hours. And anyway, that's one observation I would make both from my own childhood, but just from observing folks that we've hired over time. - A really important lesson that you're sharing is as a leader as someone who is in a position to hire people when you're trying to figure out who you want to surround yourself with. Look beyond the traditional markers when we put so much emphasis on what school you went to, what company you work for, what your measurables are, we devalue what really matters, we devalue what you just talked about, your ability to win people over, your ability to navigate the most difficult situations, your ability to get things done. That's what matters. - The highest hit rate that you could have in hiring in what I do is finding someone who has changed the trajectory of their life. And just to give you a simple example, if someone went to public school or state school in a poor part of the city somewhere or rural town somewhere, and they managed to get themselves in a position where they genuinely are able to come and apply for job at our place. So somehow, rather than maneuver themselves to be a legitimate candidate for a job and a big private equity term on Wall Street, that person has a very, very high hit rate of succeed because they have shown just by virtue of what they've done, they've navigated from somewhere you wouldn't expect to see them here. And they managed to figure out how to get the right results at school, how to win over the right people. They've obviously had incredible internal ability to grind and slide and endure. Not many of their buddies have been on the same path, so they're doing a somewhat lonely path. That is a very, very high success rate. And I'm not saying you have to do it that way, we've got plenty of great people who did it the more traditional way. I'm just saying that when you start out at a disadvantage, you might call it, that absolutely can be turned into a huge, huge asset for you through perseverance and hard work. Because if you can start at a disadvantage position and end up in a role where you're competing with folks who had an easier start than you did, you're so much better equipped to win in that situation. And so I sometimes sit there and I hear politicians, for example, might talk about those who are disadvantaged and sub-baba-baba. I think there's a misnomer there that that's one of the greatest gifts you can have to start off in a little bit more of a difficult situation. Because it gives you the opportunity to fight your way through that and reach levels that if you didn't start that way, you can never reach. So maybe I'm saying that because I feel very fortunate to have started off myself in a slightly tougher situation than maybe others who have ended up in this role. But I look back at it as a huge gift to have been able to start in a little town, go to public schools, do that sort of thing. And it just makes you go quite a little bit harder to get to where you got to when I think that that is a blessing in the end. How did you get there? How did you go from the background that is not what anyone expects when you comprise a profile of candidate for a job at an elite Wall Street firm to where you are now, what were the key steps? What did you learn along the way? - So it was a serious little steps that spare to say, I didn't have any concept of what Wall Street was when I was a young, get my dad's a science teacher, mum was a social worker who became a psychologist over time, so not a business family at all. And so as a result of that, you never talking about business and I'm not around business people in my schooling either. But I always had an underlying pretty strong ambition and very, very strong work ethic. I can't really didn't work real hard at school up until 11th grade. And that's a little bit a product of how Australia where I'm from works in Australia to get into a great college. All that matters is your last two years at school, 11 and 12. And all that really matters in those two years are how you do in your very final exam. So it's a little more event driven, big exams at the end of the high school than here in the US, where it's measured may be much more over a longer period and based on grades earned over a longer period. So in any event, I didn't do a whole lot of school work, but I was incredibly engaged. Otherwise, I played a lot of sport, spent a lot of time with my buddies, et cetera. I've always been very energized. But then I got serious and knuckled down in 11 and 12 did very well in the end in those final exams. I talked about got into a great college and from there got into a great company in Australia. But there were a few pretty big steps along the way. So I went to a public school from seventh grade through 10th grade that I loved at great buddies there. And it was a good school for what it was, but it's fair to say that the ambition there was pretty low. No one was shooting for high grades at that school. I think that teachers were so used to kids not getting high grades that they didn't really expect or drive for high grades. And so it was pretty clear that I would not do that well academically how I started that public school. And so I sought to change schools for 11th grade and I ended up getting a scholarship to a boarding school in Sydney and that school was far far more ambitious and the kids were far more ambitious and that was a huge moment for me. And I got a very social guy. And so if none of my buddies are doing any school work, I'm not gonna do that independent. Whereas at boarding school, they just have everybody go off to the classrooms at 6.30 at night and you're studying for two hours, you'd have a fifth of a minute break then you're studying for another hour, then you get a bed. And because everyone was doing that, it's what you do. It feels very normal, you're sitting with all your buddies in a classroom at night studying. I love that. And so I worked very hard through that period. But I certainly took away the lesson that it's much much easier to do well if you're surrounded by people who are likewise trying to do well and who are ambitious. It's very hard to do that on your own. And so living to that boarding school was incredibly important and impactful on me. And then similarly when I went to my college, I was with the top of the top students in Australia. I did a business and law degree at one of the top universities in Sydney. If you do very well at high school in Australia, you tend to either go into medicine or you go into business law. And so I didn't want to do medicine. I went into business law. And once again, I didn't work very hard through university academically. I'd go out a lot. I had a high time job. I spent a much time on, but I didn't work out academically. But I was with the group of kids who were very ambitious and very attuned to what job opportunities were out there in a way that I wasn't. And so because of that, you do start to learn about what a legal career is. You start to learn about what a banking career is. What a private equity career is. So once again, just being around a group of folks who are going places that you want to go, they almost carry you along in the stream. So if I hadn't gone to the boarding school and then hadn't got the grades to go to the top university, I went to, I think it'd be very hard to get to where I got to. So summarizing that, I've never set it this way before. But it's just shifting yourself to a group of folks who are running in the direction you want to run in because then they become your friends. And then all of a sudden, you're just doing it with your friends. And that's far easier to your friends going out all the time and doing their work and you try to do it on your own. I think that's a hard road to hoe. So that'd be one lesson from that part of my life. And then I was fortunate enough from my university to get into an investment bank called McQuarry. And that is a top, top place to work. And again, getting with a bunch of people who aren't entrepreneurial, at bishops, et cetera. Once again, there's early days at McQuarry where I was working straight out at university. That was some of the most thrilling in my life. I love working with those folks. You're in a pressure cooker together. We were regularly working 80, 90, 100 hour weeks. Often you had done nothing all day and then at six o'clock on a Thursday, your boss's come and say, "Hey, I need this presentation tomorrow morning and then you'd have to work all night and you'd think yourself too." He's like, "If you're given it to me this morning, I'd have it done by now." So you feel a bit hard done by, but that was just life. And it was tough, but I looked back at that and think, it's a little bit like, you look at what the Navy SEALs go through to become a Navy SEAL, they beat the hell out of them. And that's when investment banking was to me. They beat the hell out of me and they beat the hell out of my peers. And it toughens you up. It gets you very, very good on the detail. But I also thought it's wonderful friendships during that time because you're in it together. And then we'd all go out in a Friday night and we all let loose. And then Saturday and Sunday we'd be back at it. Usually doing six days a week, sometimes seven days a week, tough, tough going. But again, I just think at that age, you should be running so hard. And therefore you should be at a firm and in an environment where they challenge you to run that hard. And again, I'm not saying you can't do any of these things on your own, but it's very, very tough. And say if you're in the right environment, the right people, at the right place, it just happens a lot more easily for you. - Experience, Adam's insights and inspirational message by booking Adam to appear at your company on your campus or at your next event. Adam's key notes and workshops on leading in today's landscape, becoming your best self and lessons learned from America's top leaders leave audiences inspired and better equipped to excel personally and professionally. Visit adamindler.com to learn more and to bring Adam to your organization. - How did Stone Peak come together? What gave you the confidence to go out on your own and how did you build it into what it is today? - So I really had the opportunity to thrust upon me. I had been working in infrastructure for about a decade when it became a hot asset class on Wall Street. So in '06 and '07, we went from Macquarie being really the only private equity infrastructure investing firm in the US. Every major US Wall Street firm started an infrastructure fund. Goldman started one, Morgan Stanley started one city, quite a Swiss got together with GE and started a firm called GIP. So it was a time where I just happened to be expert in a area that was very sought after by investors and it was one of those moments where I had aspirations to be entrepreneurial for a long time and it struck me that if I was ever gonna exercise those aspirations or pull the trigger, it kinda now is the time. I felt a little bit young. Candidly at the time I was in '607, I would have been 33, 34, but it was just so obvious that here it was a time for me to be able to take advantage of this expertise. I had, so that's what the trigger was. I teamed up with another person at Macquarie Trent Vici who was a fantastic co-founder and off we went and started a firm together. For those who are less familiar with infrastructure investing, we go and find assets in really three categories. Its digital is energy and it is transportation and logistics. In the early days, it was a lot of airports and toll roads and over time it expanded a lot. So today, within transport, maybe its ports and other logistics assets within digital, its data centers, its cell phone towers, its fiber assets. And then with an energy asset, you've got both traditional energy. So it gets pipelines, oil pipelines, gas processing plants, power plants and then you've got renewables, wind and solar and batteries. So that's a bit of a taste for the spread of the types of businesses and assets that we go and invest in. And the interesting facet of those businesses is that they tend to have very high barriers to entry. They tend to be assets that will endure, will enter the future, really regardless of whether you manage them well or manage them poorly, which is very different from a normal business. So if you're running a typical business, you don't manage it very well. Someone will come along, they'll be more efficient, they'll run you out of business. But if you're the management team of an airport or an important toll road or the local electric utility or the local water utility or the local cell phone tower company, you know what, don't matter how badly you manage that asset, it's very very difficult to compete with that. And that's the key touchstone of what we invest in, trying to invest as like it. It's a relative to a typical business. It is a lower risk business operationally. It's just a business that will endure. Therefore, people pay more for it. And so that's really where we spend a lot of time analyzing, or one of the key risk we analyze is, despite it's being a great asset, how much can you pay for it? You bring up an interesting and important topic, which is the importance of understanding the barriers of entry to the industry that you're in. And if you're in an industry where there are low barriers to entry, you could have a great idea, a great business. And tomorrow someone comes in and next thing you know, you're fighting for your life. Where I'm going to say, if you're in a high barrier industry, you have a lot more breathing room. A barrier to entry that may be typical in a more competitive business would be, are you the low cost producer? If you're the low cost producer, that's a really nice moat to your business. So tech, Walmart, for example, Walmart's in a very, very competitive industry, but it's consistently been the low cost provider of supermarket and other goods, and that gives it its barrier to entry. But that's a very, very tough moat to keep up. You've got to meet an assistant excellent to be the low cost provider. So that's one way to go and invest another way years. Maybe you've got some technology that is just a period to anybody else. It's sometimes difficult to know how long that will endure. However, technology changes and advances, et cetera. And so what might be a fantastic investment for two or three or four or five years, it might not last forever. And we can all think of lots of companies whose the classic example everyone will always talk about is Kodak, which was the leading company of this day. And then we went to a different technology and Kodak pretty quickly got just about run out of business. So it's this almost impossibility of running these infrastructure businesses out of business that makes them so appealing. Can you talk a little bit more about your approach to investing? What else do you prioritize and what other advice do you have for anyone in the investment business? I think one of the really key metrics to look at is return on capital. And all I mean by that is if you go to the financial statements of a business and you look at all of the capital cost to build that business and then you look at the earnings of that business, what's that percentage return? That's a really, really good indicator of the quality of a business. So if I go and put a hundred million dollars building a factory and that factory produces me $20 million of earnings each year, that would be a 20% return on capital. And what you find is that for businesses being around for some time, if you can maintain a high return on capital, that suggests that you do have nice barriers to entry for that business. Because what will happen if you are in a highly competitive library to entry business just inevitably over time, you competitors will come into that industry, the price you can charge will go down, that return of capital percentage will get a lot lower over time. And I think a typical return on capital is maybe high single digits or very low double digits. So if you can get a high teens or something in the 20s or higher, that's an incredibly good indicator. So that's a metric we would look at, almost the first metric that we would look at. So that'd be one little bit of advice. But there's no magic to it. It's like anything in life. You've got to work incredibly hard at something to understand it. And so, you know, I've been doing the infrastructure and destined game for 25, 26, 27 years or so. It probably took me the better part of 20 of those years to really feel like I knew what I was doing. Even then, we still come across assets where I'm learning very frequently. We'll find assets that are just somewhat different from what I've looked at before. Now I've got a very good construct in my mind as to how to get on think about a new business because I've been doing it for so long. But I find I'm on a learning curve all the time on new businesses we look at. So there's no easy path to it. It's like anything in life that's working incredibly hard at it, incredibly consistently over a long period of time. There's no substitute for experience. There's no substitute for going out, doing the work, putting in the time, putting in the hours. In your case, putting in the decades. Experience and energy. I think energy is a good substitute. I'm a big fan of energized youth. I've got to say you get a lot out of that. If you can combine it with experience, even better, that's a challenge at everyone's career. I think we all start. Hopefully we start full of energy and running hard, et cetera. And one of the elements to success is how long can you keep that up? How long can you keep the passion up for it to just die? I'm unbelievably passionate about what I do, almost more passionate today than when I started perhaps. And I think a little bit of that is because my job has evolved over time. And so I get new challenges and different problems to solve all the time. I've never got to a point where I feel I'm repeating the same thing again and again. And that's probably a little bit of a recipe for boredom. And I will say this as well that it's not like every day as I was coming through my career. I was banging down the door of the office to get to my desk. Some days I was like that. Other days it was a drag, particularly in the middle part of my career, well before it's time peak, there were days I just didn't feel like walking through that door. And you just do, you just keep going and you keep slogging at it. And over time, you keep on so much knowledge and hopefully you get good at your area of expertise. You start to enjoy it more. That was certainly my experience over time. As Coleman says, there's just something to consistently working hard over time. It just accumulates to a good spot. What does a typical day look like for you and are there little things, little habits that you've found add up to make a really big difference? For me personally, I work better with structure in my life. If I go right back to my childhood, I've lived in an unstructured life and I've spent time living a structured life. Instructure just works a lot, lot better. For me, there's that famous Einstein quote that life was like a bike. You got to keep going forward or you'll fall over. That's how I find I need to feel like I'm going forward. Exercise has been a huge thing for me. I'd say life changing for me. It may not be for everybody, but almost every day I do find time to go and work out. It changes every time. It's what I do. Maybe I'll ride a bike sometimes, go to the gym sometimes. I used to do a lot of running. I don't do much of that anymore sadly, but I love running when I was doing it. I walk quite a bit. I find exercise incredibly important. I find getting up early for me very important. For some reason, I just noticed my mindset is different. If I get up at 6am versus getting up at 8am to take maybe two extremes of when I would get up. Again, I know people are programmed. Definitely some people are nighttime people. Others are morning people, but for me, getting up early is really important. Heating well is really important. I just need to feel like I'm together. If I feel like I've got my fitness and my health and my family life together, I find I'm more effective at work. That's something I discovered over time. It's not like we come with a manual that we read that tells us how we all function better, but over time, I've worked out for me. It's those elements that make me function a lot better. I remember earlier in my career, I read Lance Armstrong's book, It's Not About the Bike, which I look back at that book and it was full of a lot of bullshit really because all the drug stuff come out afterwards. Nevertheless, I still took a bit away from that book. Two things struck me. I still remember this to this day, but one was, if you find yourself feeling sorry for yourself or down at a dumpster or whatever it is, just pick yourself up. There's no point in life being that way. Essentially, stop complaining. Stop complaining. If you find yourself complaining all the time, I can't change it. If you get a complain and keep doing the same thing, then that's a little bit your own fault. That struck me because I was a little bit of a complainer back in the day. I found myself complaining about this complaining about that. That struck me and stuck with me. The other one made me more so, which was something like this, that we all suffer. You can never escape suffering. We all suffer. Armstrong said he'd rather suffer on his own terms. Suffering for him was on the bike. He'd got it and he punished himself on the bike and that was his suffering. That really resonated with me, that expression. For me, at least, I found a lot of truth in that. I don't think you can escape suffering in your life in some form or fashion. I have bound, again, talking for me, the reason it ability to do that on your own terms. I find I do that to a large degree in the gym through my exercise. It's not the only way to do it. I found out if I suffer in the gym, I don't find myself suffering really very much elsewhere in life. That also stuck with me. There's a couple of little sayings, maybe a dozen or so over time that have built up in my little repertoire, but those two were maybe the first two and probably being the most impactful on me over time. I love that. A huge part of your responsibility as a leader, as an investor, revolves around making decisions, making big decisions, making small decisions, but you're making a lot of decisions. What is your approach to decision making? What is your best advice on the topic of decision making? You get the best decisions when you get a group of smart people who have an interwishly honest debate with you. That will get you to the best decision most of the time. That's what we try and foster here, because we do make a lot of decisions. Some more important than others. The most important decisions we make would be investment decisions and I put hiring decisions pretty high on that list as well. From an investment decision perspective, that's what we do. We have a group of people who go and review all the materials and then we debate out in a very robust fashion, the merits and risks etc of the particular investment. We'd be in huge pains to make sure the culture feels supportive, because if you're in a room of supportive people, you'll have an honest debate. If you criticize someone's point or challenge someone's point, they won't take it personally. They'll take that as a legitimate intellectual exercise to debate that out. Whereas if you've got a roomful of folks who feel unsupported and there's heated rivalries and emotion in the room, it won't be taken as an intellectually honest debate. It'll be more of a personal attack and that doesn't work at all. So creating a very supportive culture and a culture of very honest debate is very important. And then there are certain decisions I can't debate. There are certain decisions that maybe they're personal decisions that I just have to make. And for those on the big believer in, do you have a bunch of research on the decision or thinking about a lot, but then getting some distance as well. And awful lot of the thorny problems that I think about a result on a run or on a bike ride or in the gym or on the walk-on, wherever it happens to be. But they're resolved at a time. I've got a little bit of distance from the office and generally I'm doing something. For me, it's generally something to revolve, to exercise. And also I'd be a believer, this one's from my mom, if you're tired or you're down, that's the worst time to make a decision. Go and sleep on it. Be aware when you're not in the best frame of mind to make a decision. And don't make it. Go, I sleep on it. Wake up in the morning. And often something that was confounding to you the night before is obvious to you the next morning. Mikey shared a lot of great advice. Sometimes the most important thing to do when you're tasked with making a decision is to understand that now is not the right time to make the decision. Not because you're indecisive, not because you're not capable of making a decision, but because you're not in the right frame of mind. You're too tired, you're too distracted. How do you do your best thinking? For each of us it's going to be a little bit different. In your case, Mike gets by moving around doing something physical. For someone else, it could be doing the exact opposite. It could be in a meditative state. But however you do your best thinking, get to that place. I got a comment on your meditative comment. So I would count myself as a huge skeptic. Or would have counted myself as a huge skeptic of meditation. If we'd had this conversation three months ago. But I was convinced by someone to go and try it. And so I did. Try it very skeptically. And from the very first time I tried it, and it's just 10 minutes, I couldn't believe the impact that had on me. The calming effect that had on me. I cannot recommend it highly enough if you haven't tried it before. I strive to do it 10 minutes a day. I don't always get there. I find for me it's best in the morning when I'm a little bit more alert. But in any event, I just needed to comment on that. Just given the initial skepticism, but then the experience I've had doing it. So I highly encourage folks to give that a try. I appreciate you sharing that not only because you're recommending a habit that might be helpful to people, but because of the broader point, which is that there are plenty of things out there that we're probably not doing, that we might think are a waste of time that we're in some ways repel by. But if we give them a chance, they could actually be things that we enjoy. They could actually be things that enhance how we perform, enhance our life, enhance our wellbeing. I think so. I also think it's surprising how many hours in the day you find you can have when you start putting these things in. You think I haven't got time for the gym. I haven't got time for meditation. I haven't got time for this and that. But once you start it, you realize that in fact, you're so much more effective in the other times of your day. No problem. It pays for itself with time in my experience. What is your approach to leadership? What do you believe are the keys to effective leadership? And what can anyone do to become a better leader? I use a comment from my dad. My dad said, "Any coach can look great when they've got great players." And it's probably not that dissimilar to what I say about my leadership. I've got the most incredible team here. I don't think anyone could go wrong with the people I've got. So having the right people can make you look like an excellent leader. I've seen lots of different styles. I've seen people with styles completely opposite to mine be highly successful. So look, I think lots of different styles work. But for me, I'm a huge believer in getting very smart people, putting them on the front lines and putting a lot of decision-making in their hands. So that the folks who are in the fray are able to make decisions based on everything they're seeing in real time. A little bit like, they talk about how the US military operates relative to say the Russian military. Russian military is the folks at the top make calls and all of troops on the front line. It's very difficult for them to make quick decisions or change the way they're doing things because they've got to go back to the bosses back in headquarters before they can make a change. Whereas in the US, it's a lot more decentralized decision-making and the people on the front lines are giving a lot more leeway to change strategy and change tactics, etc. I'm much more of the US military style, decentralized leadership. I think it's very empowering for the people on the front lines. I think that you get frankly better decisions because these are the folks who are responsible for getting the results and so you've got to empower them with some decision-making ability. I know when I was coming through the ranks, I didn't want to be told what to do all the time. I wanted a lot of leeway as to how I ran a transaction. And then you determine which decisions are important enough that they have to be centralized. And so for us, it's the big investment decisions and maybe they'd be high as they're the two that are pretty decentralized. But everything else, the way you run a transaction, the way you sit your model up, the way you communicate with your counterpart, which deals you want to pursue, which industries you want to pursue, there's a lot of leeway for folks in that. People should be able to decide where they spend their time. And if they're getting results, they'll be successful. They're not getting results. That tells you another thing. So that's the way I go about it. But look, I've seen the reverse work as well. I've seen more heavily structured organizations. I prefer a light touch personally. Again, that probably comes back to what I wanted when I was under folks. And look, I think that works. If your staff are highly motivated and very capable, it might not work so well if your staff are a bit less motivated and a bit less capable. But anyway, that's been my philosophy and my experience. You've had enormous success over the course of your career. What's been the most significant failure and what did you learn from it? For the time I left McCquarry to the time I raised my first fund was six years. So I had plenty of failure over that time. I left McCquarry just as the global financial crisis was kicking off. And so we had two years in the wilderness really trying to raise a fund and it was nigh impossible even for a seasoned privately firm to raise money in that time. So I came to realize how precious capital was when you do get to raise it as a result of that. And then nothing focuses the mind like either a bad hire or more than anything a bad investment. Nothing focuses the mind like that. So that's where your biggest learnings come from. Again, he's another saying I quite like. It's from a German fellow. I can't think of his name. But he said something like you don't learn from your own mistakes. You want to learn from other people's mistakes. And that's very, very good advice. But it doesn't always work that way. Sometimes you find your brain is on higher alert when it's your own mistake that you're learning from. And so that's happened a few times with us. Not too often, fortunately. But it has happened a few times. And that's how you learn very, very quickly. You struggle raising capital initially, but you've raised a lot of it. What are the keys to raising capital successfully? Persistence would be one. We are at a long, long time. People got to trust you. I think one of the hardest jobs out there are the folks at pension funds and insurance companies and sovereign wealth funds who are giving their money over to a group of people to go and invest it. It's got some similarities to what I do. But it's quite different. Well, I'm going and finding a company. I've got an earnings track record and I'm making a judgment call based on very, very specific data on a very specific investment. Whereas you're being a pension funder and insurance company and you're allocating to a private equity firm, can I make you a general bet on a team? And ironically, I think the more structure and restrictions and specifics you try and put on that team, almost the tougher. You make it for that team to be successful. Can I get this if I was a pension fund? I don't want to know very specifically what this team was going to go on do. Are they going to put them into the power sector or are they putting into the oil and gas sector? Or is it going into the toll road sector or the airport sector? Or I don't know quite specifically, but what you find is that over time, the attractiveness of opportunities cycles a lot between sectors. And so I think there's a happy place somewhere between just car blush, going invested in anything versus a very, very specific mandate. You want something in the middle such that you give your GP quite a bit of discretion but at the same time, it's not like they're going to do anything. But all I'm saying is that it's a big trust equation between these pension funds and us because of that dynamic, because they don't exactly know what we're going to do. It's a bet on a team. And that trust just takes time to build up. In some ways, it was lucky that it took all this time to first raise the capital because it meant that I'd known these investors for, in most cases, at least half a decade. In some of them, I'd known that for a decade before we did raise any capital. And so that's the key to this, is building up great trust with the investor. And there's no great secret to that. It's time. It's when you're going to speak to them. You've got to your materials together. You look like you know what you're talking about. You got surrounded by good people. It's no magic to it. It's turning up, but in the time, it's quite arduous. We flew all over the globe for years. And in those days, we were just flying economy all over the globe. So like you come to New York City and every pension fund is here, they tend to be in the US, in the capital cities. And often, those are not particularly major places and they're scattered all over the country, obviously. And the same is pretty much true of Europe and other places around the globe. So you're going everywhere. So it's not for the faint of heart. You get a lot of nose when you're raising that first fund. You may get, I mean, in my case, I got several hundred nose before you got a yes. Well, you can't take it as rejection. You can't take it personally, but that's what you've got to get you. used to you, they get used to the fact that these folks are bombarded every day with dozens of folks wanting capital from them. And so it's difficult to get access to them and then they're just, they go say no, most of the time and that's just like you just keep plotting along, plotting along, plotting along. So I know that's not a magic simple answer or a silver bullet or anything like that, but that's just how it is. I do think going and lining up transactions helps a lot in that process. So if you could turn up and you've got some deals that you've done that they can look at, that's tremendously helpful. That's obviously a chicken egg problem though, of course, because you need the money to do the transactions. And so that takes quite a bit of skill to be able to juggle having a bunch of deals lined up, but not yet having the capital. But again, that's the skill that you just got to learn over time. Maybe you start a lot smaller, maybe you start with the high net worth channel. So for instance, I've got a brother who started a private equity firm and that's how he started. And then the partner went around the high net worth circuit in Texas, which is where they were located and they raised $30 million or so that way. And they started small, but over time, it's Stobles. They started to build up a track record. They started with a very specific business idea, which was to go on by pool cleaning businesses. Literally the folks who come and clean the leaves out of your pool. It was a very smart idea because there, once that was that if we go and have a whole network of pool cleaning services, then we can be much more efficient than a one or two man band because you think if I'm a one person cleaning pools in Austin, Texas, I might have one job in the east of the city in the morning and then my next job is in the west and they'll go together the north and then so I might get to four or five pools a day because I'm traveling all over the place. Whereas if my business covers all of Austin, I'll just send one person to all the adjacent jobs and the other person to all the adjacent jobs and I can be a lot more efficient that way. And so that's the concept and they very successfully raised money for that. They're very successful. Executed on that. They'll make a huge multiple of their money on that business and on the back of that. They've turned that into more of an institutional business over time. So that's another way to go at it. But I do think that you've got to start somewhere and starting small is easier, but it's Stobles over time. But that also says to you, maybe start a bit younger because if it's going to snowball and it's starting at $30 million, if you want to get it to $80 billion, which is where we've gotten to, you probably want to start that in your 30s. You leave it to your in your 50s. You just don't have the runway to get to the size business that you might want to create. Make what can anyone listen to this conversation due to become more successful personally and professionally? Get a good spouse. That's number one. I really mean that. I'm not the first person to say that, but that is so, so, so important. And you can have all the money in the world. But if you don't have a great home life, I'm borrowing this expression from someone else, but it rungs so true. Life is a series of stresses if you do not have a good home life. And I'm lucky. I have got the most wonderful wife in the world. And that is very, very high on a list. And then I was talking about someone about this today, actually. It's your health. The health of you and the health of your family that's first and is daylight second in terms of your quality of life. And that's very easy to forget. I've always been a sports person. I remember very clearly. I was at McCwory maybe 12 months in and I caught a look at myself in a mirror in daylight. I don't know. Yeah, mirrors in daylight are a little bit rougher than a mirror in maybe in your home. And I thought, "Holy smokes. I've become a that bastard." I was horrified. That's when I started to work out because when you're younger, you're placed, soccer and football and baseball and whatnot, but you maybe don't go running and riding. But I realized at that point, I got to start doing something. So that's when I started running and cycling, etc. But it's once to decide family and health first, first and first, so, so important. And you'll say, "Shit, Mike, you're very wealthy. It's easy for you to say money. It's not the most important thing out there. But I'm just telling you now, I've got so much more joy at it. I know those things are anything else. That is really, really important. Putting those aside, I mean, it's straightforward. It's hard work. It is just hard work. And it's whatever you're doing, it doesn't matter. Just strive to be the best at it, whether it's an instructor in the gym or you're a DJ or you're doing podcasts, whatever it is. There's no point in doing anything but trying to be excellent at that. And the great thing about the US is it's so big. There's so many people here that you can point to someone in virtually any single career or industry that has killed it. That's not true of many countries. I'm not sure if it's true of any other country than the US. Maybe China can say the same, but the US is quite unique in that sense. And what you'll also find is that if you're doing very well in whatever you're doing, for some reason, opportunities just tend to come your way. And it maybe involves a career change. Maybe it doesn't. But opportunities come to the folks that do the work. So I don't think there's many sequels to that. And it's never too late to start. I didn't get great college results. I had a couple of good school results here and there, but I wasn't consistently good at school. But I absolutely worked my butt off from the day I started my career. Absolutely loved it. And I worked my butt off. And I don't think it's ever too late to start doing that. And it comes a little bit back to that Einstein quite a bit of bicycle. Once you start to move forward, life is just better. It gets it's only momentum. And then before you know it, you'll look back. You think holy smokes. I was here and now I'm here. And then you'll be next time and you'll be here. And it's quite remarkable. It's a little bit of gain each day adds up to a lot of gain over time. Mike, thank you for all the great advice and thank you for being a part of 30-minute mentors. I hope you listened to a lot of that. Adam got to go work on. You speak my language. Awesome. Great to chat to you. Thank you for listening to 30-minute mentors. 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