Can you sell Ice to an Eskimo (II)?
As a continuation of our previous discussion — be a friend and invest in relationships
(ii) Relationships: Relationships are built by your alignment being tested
Imagine you’re on the deal team that is on the doorstep of signing a transaction and your banker urges you to put the process on pause as he / she believes you can get more value at a later date. You (the Sponsor) would be very surprised, as most bankers are in the transaction for a fee, and here would be someone who is delaying gratification. You might even sell the business away from him / her after your contract exclusivity expires. But this would build incredible trust that this individual values the relationship over the fee, that he / she sincerely has your best interest at heart and is playing the long game. This likely would have a profound impact on your relationship on a go-forward basis, you’ll entrust that individual with even greater things.
The biggest example of this is Byron Trott, famous for being known as Warren Buffett’s banker. To quote Warren, “He understands Berkshire far better than any investment banker with whom we have talked and — it hurts me to say this — earns his fee. I’m looking forward to deal number four (as, I am sure, is he).”
In the same way, focus on relationships where your counterparties have your best interest at heart. Seek to (a) listen / understand their concerns, (b) problem solve to find constructive / creative solutions and (c) seek alignment — don’t fight for the last dollar, do what’s fair for you / your firm / your investors but also what’s fair to your counterparty so that no one is left feeling cheated
Yes, there likely will be many individuals who seek to maximize every dollar but in the context of a career that will last multi decades that individual likely will be destroying his / her own career.
(i) Vision: Once we have established a trusting relationship, helping the other individual achieve self actualization is the single most valuable sale
I’ll return to Byron and Warren’s relationship — this has to be among the most mutually reinforcing relationships in history. Warren’s compliment to Byron (obviously well deserved) served to pave the way for Byron to be anointed as the Sellside banker of choice for family-owned businesses which provides supply to Berkshire Hathaway’s ever growing war chest / elephant hunt. Their shared vision, providing liquidity / partnership for family-owned businesses has many forums for cross pollination. BDT Capital (which has no website) traffics in significantly smaller opportunities vs. Berkshire so they’re rarely in competition. Byron can refer large transactions upstream while Warren can do the same for smaller transactions
This relationship was not developed overnight, it was created over decades and yes, you can’t replicate it today — but you can start the clock today.
So pick up the phone, call your industry banker (ideally video chat) and start building that relationship!
Many thanks to Adam (much of which I plagiarized the below from) who helpfully reminded me that relationships are much more than just career success, but also a sense of personal fulfillment and points of connection. It’s “easier” and “less tedious” to network and build relationships if you view people less so as “assets” (that sounds bad but somewhat true) but also as opportunities to learn, connect, cultivate compassion and love, etc. Connecting on a personal level can lead down paths you never thought might have been there, and acting out of genuine curiosity and without the intention of “what can this person do for me” can be a great way to build deeper relationships
Thanks to James Qian for the kind edits!