In the summer of 2018, my investing seminar business, Kase Learning, was struggling.
My friend and former partner in the hedge-fund business, Glenn Tongue, and I were teaching great content and getting superb feedback, but we hadn’t figured out the marketing – we just didn’t have enough “butts in seats” to generate a profit. In a remarkable piece of good luck, my old friend Dan Ferris, who writes the Extreme Value newsletter for Stansberry Research, suggested that I talk to its founder, Porter Stansberry – a brilliant entrepreneur and marketing genius.
I remember our phone call in August 2018 like it was yesterday. I had no inkling at the time that we might become partners – I was just hoping for some good advice on how to better market Kase Learning. Here’s what he said to me:
I started Stansberry Research 20 years ago. It’s now an incredible business, but it wasn’t always. In fact, it took me 10 years to figure out the marketing, which is the key.
You’re a lot smarter than me, so maybe it’ll only take you eight years. But that means you’re going to spend another seven years beating your head against the wall and losing money.
Or, why don’t we partner up? I think you have the smarts, experience, and personality around which we could build a tremendous newsletter business.
It didn’t take me long to realize that he was right… in part because I had just returned from self-help guru Tony Robbins’ five-day Business Mastery program. It was a bit cult-like, but I enjoyed it and got some valuable things out of it.
The single biggest revelation during the week was when Robbins asked us whether we were managers/leaders (someone who runs a division of a big company), entrepreneurs (small business owners), or artists (creative types, often solo operators). Here are the descriptions of each:
- A manager/leader can manage, motivate, and lead people and is proficient at optimizing business systems and making sure everything runs efficiently.
- Entrepreneurs are willing to take substantial risks to get what they want and easily bounce back if their ideas don’t work out.
- An artist is a skilled expert who loves creating ideas/services/products/things and takes immense pride in serving a customer’s needs. Artists are very mission-driven and focus on continuous improvement.
“This is easy,” I thought to myself. “I don’t have an artistic bone in my body, I’m lousy at managing people, and I’ve been an entrepreneur for all but two years of my career, so of course that’s what I am.”
But as I continued to listen, it dawned on me that I was mistaken…
You see, I don’t like raising money, hiring and managing people, setting a budget and adhering to it, etc. Rather, I’m a creative person – just not in the traditional artistic sense. I like reading, thinking, talking to people, and coming up with big ideas – in the investing field and elsewhere. And I like communicating, persuading, and defending my ideas to others via writing and public speaking.
So, as Robbins explained each of the categories and we discussed them in our small group, I came to realize that I’m actually an artist. I love the process of investing, which is an incredibly creative endeavor. It involves a lot of reading and communicating with people.
It also requires sleuthing to find interesting ideas, and then a lot more work to decide if a stock is actually undervalued. Nothing gets me more excited than finding a situation in which I’m convinced that my in-depth research and analysis have led to an insight that’s contrary to the consensus view.
What I didn’t love – nor was I very good at – was the business of investment management, both from a managerial and entrepreneurial standpoint. I found it stressful to raise and then be responsible for other people’s money, manage a portfolio, and deal with employees, paperwork, compliance, etc.
If only I had realized this earlier in my career, I might never have started my own fund and instead become a senior analyst at a larger fund – where my only responsibility would have been to come up with a few great ideas each year. Or, had I gone out on my own, I might have hired a chief operating officer early on.
Most successful entrepreneurs aren’t risk-takers – at least, not reckless ones. Before making the entrepreneurial leap, they spend many years developing the skills, experience, judgment, relationships, and financial strength necessary to succeed.
Simply being great at a particular skill – whether it’s investing, accounting, law, surgery, etc. – doesn’t mean you have the entrepreneurial skills needed to successfully launch and build a business.
Successful entrepreneurs are strong and independent leaders with an extreme work ethic and the ability to manage high levels of stress. They’re able to deal with complex issues, multitask, have a high degree of self-confidence (tempered with humility), are excellent judges and managers of people, and are excellent salespeople.
This skillset is extremely rare, so the vast majority of people are better off developing and applying their skills within a larger organization rather than striking out on their own.
Think of it this way: Imagine that you’re an exceptionally talented cook, and you’ve decided that it’s your life’s calling. To pursue this passion full-time, you have two choices: you can open a restaurant or get a job at one.
If you open your own restaurant, you can cook… but you also have to raise money, choose a location, negotiate a lease, hire staff, manage and motivate them, find suppliers, set up marketing, decide on pricing, deliver excellent customer service, etc.
Therefore, only a small part of the job will be doing what you love: cooking.
Or you can be a chef at someone else’s restaurant. Here, you’ll spend 100% of your time doing what you love. You’ll work fixed hours and be able to relax when you’re not at work. On the other hand, you’ll be working for someone else… you could get fired… you won’t be able to control the success of the business… and you won’t own any upside if the business is successful. In this scenario, you’re a wage earner/employee, not an entrepreneur/owner.
What should you do?
There’s no easy answer. It depends on many factors, both logical and emotional. If you’re lucky, maybe you’ll find a middle ground – perhaps a joint venture in which someone else puts up the money and provides logistical support while you focus on what you like to do, and you can share the ownership and profits.
This is the agreement Porter and I struck to create Empire Financial Research. Other folks take care of everything behind the scenes, allowing me to focus nearly 100% of my time on two things that I love and am good at: coming up with great investment ideas and writing them up for my readers and subscribers. It’s perfect!