Jeremy Giffon - Special Situations in Private Markets

**Patrick O'Shaughnessy** (0:00)
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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** (1:47)
Patrick O'Shaughnessy is the CEO and founding partner of PositiveSum and the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of PositiveSum or O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of PositiveSum or O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (2:20)
My guest today is Jeremy Giffon. I spend all my time trying to find people who have some singularity to them, people who seem like they can do an N of one something.
Having spent many days with Jeremy recently, he strikes me as one of those people. He was the first employee and general partner at private equity firm slash holding company Tiny, which buys and holds internet and technology focused businesses. Prior to that, he was on the founding team of MediaCore, which was acquired by Workday.
The focus for our discussion is about esoteric opportunities that exist in private markets, how misaligned incentives and coordination problems create special situations for people like Jeremy to invest in. The rest of the conversation is wide ranging and covers everything from compensation advice to meeting your heroes. Please enjoy my discussion with Jeremy Giffon. All right, Jeremy, so we're going to talk a ton about all sorts of different topics. You wrote an essay that I don't think you've published, but it's about the nature of a perfect business in your mind. Can you describe some of the elements of what you would view to be like the perfect canonical business?

**Jeremy Giffon** (3:19)
Yeah, the perfect business for me is getting paid a tremendous amount of money for your words, just your advice.
I really do think the old school merchant banks and M&A boutiques like Lazard and Allen & Co. and some of these places are pretty close to the perfect business where someone has decided that your wisdom is so worthy that they're just going to give you hundreds of millions of dollars for it. These businesses require no capital, they're hugely cash flow creative, you can generally build equity by investing in the deals that you're advising on.
And for the best ones, there's also this idea where the organizations are either selection effects or treatment effects. And so, a selection effect would be Harvard or a modeling agency where most of the prestige comes from picking the people, whereas the seals or something like that, to some extent, will have a treatment effect. You become a different person by going through this program. And I think the best organizations do both. By virtue of being selected by the company, it really helps you for your entire career and it gives you something. Like, I really admire certain organizations where you can just tell someone been at a consulting shop or something or been at a really good bank and just the way they write emails or the way they think or whatever. And that's obviously double-edged sword. But I really like this idea of you can just tell the Polish and obviously same with military people. Maybe there's a path to becoming a principal. I don't actually think you need that necessarily, but you should be certainly be clear about it. There's nothing worse than all these VCs that have never promoted from within to a partner. But then you ask associates and analysts there and they're like, oh, I'm gonna be a partner with it. It's like, no, you're totally wasting your time.