Erik Serrano - Investing in Investment Firms

**Patrick O'Shaughnessy** (0:00)
This episode is brought to you by Tegas, the modern research platform for leading investors and the provider of Canalyst. Tired of calculating fully diluted shares outstanding? Access every publicly reported data point and industry-specific KPI through their database of over 4, drivable global models, hand-built by a team of sector-focused analysts, 35-plus industry comp sheets and Excel add-ins that let you use their industry-leading data in your own spreadsheets. Tegas' models automatically update each quarter, including hard-to-calculate KPIs like stock-based comp and organic growth rates, empowering investors to bypass the friction of sourcing, building and updating models. Make efficiency your competitive advantage and take back your time today. As a listener, you can trial Canalyst by Tegas for free by visiting tegas.co. I'm endlessly fascinated by people who are doing their life's work and David Senra gets about as close as you can in his crafting of the Founders podcast. Each week, David gives you ideas you can use in your work revealed by the life stories of history's greatest entrepreneurs. He connects the legacies of the likes of Kobe Bryant to Estee Lauder to Winston Churchill and the list goes on. He recently put out a new favorite episode on Anna Wintour. Founders podcast will undoubtedly light a spark of ambition and aid all of us in our quest towards our life's work.
David isn't stopping anytime soon. In fact, if you ask him, he's just begun.
I'm proud that Founders is part of the Colossus Network and you can find a link to this treasure trove in the show notes.
Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories and strategies that will help you better invest both your time and your money. Invest Like the Best is part of the Colossus family of podcasts and you can access all our podcasts including edited transcripts, show notes and other resources to keep learning at joincolossus.com.

**SPEAKER_2** (1:55)
Patrick O'Shaughnessy is the CEO of PositiveSum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of PositiveSum.
This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of PositiveSum may maintain positions in the securities discussed in this podcast. To learn more, visit PSUMVC.

**Patrick O'Shaughnessy** (2:24)
My guest today is Erik Serrano. Erik is the CEO of Stable Asset Management, which he started 14 years ago in his early 20s and has scaled to over $3 billion of assets under management. Stable Strategy focuses on other investing firms. They look to back the Blackstones of tomorrow and provide those founders with capital and support so their time is spent doing what they do best, which is typically investing. We discussed the commonalities among promising founders in this sector, how Stable serves as a full resource to their companies, and some harsh truths learned from building and investing business. Please enjoy my conversation with Erik Serrano.
So Erik, what a fun opportunity this is to talk to someone that probably has looked at investing firms as a class of founders, just like I would look at startups as a class of founders more than anybody else, even use that word founder.
What got you so interested in investing in investing firms in the same way that I would think about investing in a technology business with lots of the same process? What was it about this that originally got your interest back when you were, I think, 23 when you started doing this?

**Erik Serrano** (3:30)
I'm still amazed at how in the business of investing, most of the focus is on the investment strategy, how you make returns, but people don't think about what is the machine or the platform or the process that enables you to generate those returns. There's a Spanish saying which is the cobbler's son has no shoes. And I think it's a really neat concept that the people that are dedicated to their craft often overlook that same craft when applied to themselves. And you find this in a lot of investment or professional services that you meet investors who spend their time maximizing their craft of returns, but when you ask them about what they do with their own money or do they give advice to their friends, they just don't apply it to themselves.
And so yeah, when I was that young, I was working at Bain and I really wanted to set up my own private equity firm.
But for me, I wanted to be a student of what's the best firm that I can set up. And because I wanted to start my own private equity firm, I went around asking people kind of how they got started. And that got me thinking about seeding, acceleration and investigating the history of how do people start investment firms?