How To Deal With A Legendary Investor

December 13, 2020

One of the best parts of my job is that I have spent decades dealing with many of the most Legendary Investors (LI) of our time, many of whom I now consider close friends. Someone recently asked me if I would share some advice for a salesperson or management team about how best to deal with the smartest, savviest, most experienced and oftentimes difficult Legendary Investors (LI) in the world. By the way, if you can succeed with these amazing people, you can also succeed with everyone else.

Don’t be intimidated. When dealing with a Legendary Investor (LI), remember that person is a human being and puts their socks and shoes on just like you do.
Realize that despite the LI’s questions, tone, response and reactions, s/he is actually looking for reasons TO INVEST. They rarely waste their time when they are not interested. S/he often wants to be an important part of what you are building, and it may be easy to lose track of this in the heat of the moment. Relax and fall back to this truism when you start to squirm.
Listen to the LI’s entire question before answering. It might be multi-parts and have multi-layers. It’s only possible to understand this if you spend quality time listening to the entire question. Don’t try to jump in, anticipate or rush to a conclusion. Every LI will have read all of the material and be very prepared. You better be too.
Do not ramble. Once the question is answered, stop. If LI’s don’t like the answer, s/he will ask you for more clarification.
LI’s believe execution of the business plan is always critical to success and harder than anticipated. You will need the best and most experienced management team to convince a LI. If you calmly address all concerns with concrete answers based on management’s historical practical experience, this will be best to alleviate the LI’s concerns about likelihood of execution success.
If the LI says something or has an assumption that you know to not be true, politely call her/him on it and be prepared to back your viewpoint up with specific facts and knowledge. LI’s have no problem when this happens and are always eager to learn. That said, you better be right when you tell a LI they are wrong and be able to prove it.
When getting questioned, try to use the skill of empathy. You need to stop being a technician or “answer-person” and realize that you are using all of your experience to get into the investors shoes and help them make their decision. Investors want to first know how to strategically assess and minimize every risk. Only once the downside is quantified and accepted will the LI look for the upside potential. It’s as simple as that. The smartest technician isn’t the one who wins here. The person who has the facts but can help an investor get comfortable based on the truth and substance of downside/upside, business model and execution risk is the winner. You must understand “why” the LI is asking the specific question(s).
LI’s have access to a lot of information and people that you don’t have or know. S/he may be more informed on things than you are, even if you are an expert. That is ok. If you don’t know the answer or if something doesn’t make sense, it is ok to say you don’t know or to ask for clarification.
What isn’t ok is “winging it” or hoping s/he won’t connect all the dots. Every LI will connect every single dot (and some you don’t see) and if s/he feels they are being “sold” versus “educated,” it will instantly backfire, as it should. One small white lie or misleading string of words and it is over.
Have fun with the meeting. LI’s are remarkable. They are often surrounded by other extremely talented people on the call or in the meeting. Treat each of them as they too are a LI as really smart people don’t surround themselves with people they don’t respect. It is also always ok when dealing with a LI to not just focus on the financial opportunity and execution of the investment, but also the big picture vision of why this endeavor is important to the management team personally, solves critical problems, and/or improves the human condition in the world. Mission based management teams and companies generally win. LI want to be part of something important that will change/improve the world, as well as make great returns within the right risk parameters.

Best

Rich

RICH HANDLER
CEO, Jefferies Financial Group
1.212.284.2555
[email protected]
@handlerrich Twitter | Instagram
Pronouns: he, him, his