Prospector Partners Founder and Portfolio Manager John Gillespie learned some valuable lessons in the process of starting his own asset management firm. Many of those lessons revolved around building a strong team, culture and incentive structure, but these ideas also gave him a new perspective when it came to analyzing other companies as potential investment candidates.
In this third podcast, Mr. Gillespie sits down with Havener Capital Partners founder Stacy Havener to talk more about his entrepreneurial journey and some surprises he faced along the way.
This includes details on:
- Building and maintaining a winning culture
- Incentivizing and retaining high-caliber employees
- Advice for other entrepreneurs
- A bonus Q&A involving a classic rock band and Prospector’s investment approach
Click below to listen to the podcast: Entrepreneurship, Firm Culture and a Winning Team with John Gillespie or read the transcript below. (Previously Recorded in January 2020).
INTERESTED IN MORE PODCASTS FROM PROSPECTOR?
Episode #1: The Prospector Story with John Gillespie. Our Founder John Gillespie has always been fascinated by the stock market, but it was a combination of hard work and a bit of luck that led him to work with Jack Byrne, legendary CEO of GEICO.
Episode #2: John Gillespie on the Prospector Investment Approach. In this interview, John provides his personal insights on the prospector investment philosophy and approach.
INTERVIEW #3 – (FULL TRANSCRIPT) - Entrepreneurship, Firm Culture and a Winning Team with John Gillespie
John Gillespie, Founder & Portfolio Manager/Analyst at Prospector Partners
Stacy Havener, Founder & CEO, Havener Capital Partners
Stacy: Welcome back. Today, John gives us an inside look at life as an entrepreneur, including what has surprised him and what advice he has for other entrepreneurs. Oh, and spoiler alert—he also shares what song he’d want as his walkout anthem. You know, the song if you were about to perform in front of thousands of adoring fans that you walk out onto the stage and it’s playing behind you. It’s going to be good. Let’s rock it.
Okay John, you alluded to one of the things that you're most proud of in your career is actually becoming an entrepreneur and launching Prospector. So talk about that, what has surprised you most about that journey as an entrepreneur?
John: Sure. First of all, I would say there have been many surprises along the way. But I think that the most significant surprise for me was how being an entrepreneur has really helped me to become a better investor. I mean, the lessons that you learn from building a business are directly applicable to applying in the investment process. A great example would be all of the people issues and managing compensation, which is a very thorny, tricky issue where there is no one right philosophy, there is no one right program and it just has to be managed. And when you do it yourself for your own company, you gain quite a bit of appreciation for understanding how important it is as a motivational tool and a driver so we spend a lot of time analyzing the proxy statements of the companies that we're interested in. We’re looking for simple clues such as what triggers compensation? Is it growth or is it growth per share? Sounds very simple but has a powerful difference in terms of whether that management team is thinking like an owner or not. We also care a lot about what happens to managements in a change of control. Do they make two times their annual compensation or ten times their annual compensation? It's a powerful driver. And the appreciation for that really came from the experience that we’ve had building the business here. I've also been a little surprised at how much I've enjoyed sort of making the sausage behind the scenes and getting my hands a little dirty rather than just sort of sitting in the little bit of the ivory tower that a pure investor does where you're just taking in information and reading reports. It's been very helpful.
Stacy: That's great and along those lines, what would you say has been the best part of building your business so far?
John: Well, I think the best part by far has been the building and the fostering and the maintaining of a winning culture which is sort of reflective of our collective values as a group. I mean, that part is really fun. We've created a really good place to work and interestingly it's been a really good place to stay, as we’ve gotten to watch some of our younger associates who've been with us now, a few of them, for a couple of decades, decide to stay and make their career here. It's very gratifying.
Stacy: Yeah, you're finding your tribe.
Stacy: And what has been the biggest challenge?
John: This is an easy question because this has been marketing. We're really good analysts, we're really good at breaking down a company and we're really good at putting together a portfolio and generating risk adjusted returns. What we're less good at is getting the word out and we're not natural self-promotors here so for us that's been a challenge. But obviously, it's one that we're working on.
Stacy: Yeah. That's great and in an interesting way that's also finding your tribe, right? Just a different segment of it and I think the candor of that comment, there is not a lot of portfolio managers that are willing to admit that part. So thank you for sharing that. And let's close the entrepreneur section with some advice and of course as an entrepreneur myself I'm all ears here but what advice do you have for other entrepreneurs?
John: Well, it's pretty simple. If you really enjoy what you're doing and you have true passion for it, you're more likely to be good at it and you're more likely to be better than the average bear at it and excel. So if you can meet those preconditions of enjoyment and passion and put them together, well, then I would say you're in good shape to give it a go and I would follow the advice of Phil Knight at Nike and I would say, “Just do it.”
Stacy: Yeah, amen to that, that's great. Okay, so this is a little bit of a left field question but, you know at Havener we view our portfolio managers as rockstars, sort of our vibe here and I'm going to paint a picture for you and ask you to complete the sentence. So you're entering a stadium of cheering fans, right, you're in Connecticut, so let's say you're going into Madison Square Garden.
John: So it’s a fantasy.
Stacy: And you're backstage, we're backstage right now. We’re hyping it up and you're going to walk out on to the stage, what song are they playing, what's your walk out anthem?
John: Well, I could do a lot of research on this question, Stacy. But I think what I would choose is a song by the Allman Brothers called “Blue Sky.”
Stacy: Love it. I don't know if I can somehow weave that song into this podcast but it's a great choice. What's the rationale, why that song?
John: Well, first of all, it's a great tune with a great intro beat and of course if you're walking out on stage you need to keep the crowd humming or get the crowd humming so that'd be the first criteria. And secondly, I like the message. I mean, after all I'm an equity guy and equity guys are always optimistic and “Blue Sky” is nothing but an optimistic song, it's about hope, it’s about a sunny day and, you know, I'm glad to be here in the sunshine in the early morning, so that's why I picked it.
Stacy: Very, very well said. Well, thank you John, it has been such a pleasure talking with you today. I know our investors will enjoy this conversation as well. Thank you for being with us, thank you for your time.
John: Thank you, Stacy.
Stacy: Thank you to John Gillespie for a really special conversation. Hopefully, this gives investors a sense of the people behind the portfolios at Prospector, the stories that define them and the songs that inspire them. Here is to helping John and the Prospector team find their tribe.
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