Overview Effect

Like I could ever take a picture that good (all credit goes here).

I open my eyes. Maybe I should have closed the window next to my seat. Too awake, too late to turn back to dreamless sleep. 35,000 feet above sea level, gliding over faded green landscape, somewhere in between Austin and New York. There’s no map, no lines or markers to tell me where I am. Just roads and towns and people below.

Airplanes used to be a refuge from the now. It was once impossible to mainline the internet over an unreliable connection, but that’s changed. My phone’s overflowing with messages. It’s only 8:00 A.M.

Being in the office affords more time to write memos and answer emails, but less time to think deeply about anything. Maybe that’s the only benefit to being awake right now, making up for the fact that I got up at 3:30 A.M. to catch this flight. There’s some time to think uninterrupted.

35,000 feet isn’t just cruising altitude. It’s a phrase thrown away in meetings to describe where institutional investors ultimately sit in the world. Institutional investors provide capital to investment firms. They provide capital to their companies. Their companies provide capital to their employees who develop their products/services which are then sold to other companies or people. These companies then eventually return capital to the investment firms. The investment firms then return capital to the institutional investors. And the institutional investors finally return capital to their beneficiaries — who re-invest that capital, continually turning the gears of the global economic machine.

No one is really satisfied with their place in the chain though. Everyone at every level questions the decisions and motives of everyone else above, below, alongside, within. It’s a tense chain that eventually snaps. An institutional investors may change its target allocations, and choose to no longer partner with an investment firm. An investment firm may fire the management team of an underlying company. An underlying company may layoff its workforce.

But, new chains always form. An institutional investor may enter a new markets, and establish a new relationship with an investment firm. An investment firm finds a management team they respect, and commit capital. An underlying company goes on a hiring spree to prepare for future growth.

Capital will ebb and flow through markets, but these relationships are created and destroyed, quarter by quarter, year by year, on and on and on. The gears continues to move.

I’m no longer 35,000 feet above sea level. The New York to Boston route is nowhere near long enough for the plane to reach that height. Yellows, oranges, reds, browns paint the ground below. It’s fall down there. Austin’s fall won’t be for another several weeks.

The messages have stopped, but it’s really just a pause. I didn’t want to pay for internet access, but I’ll be on the ground in 30 minutes. Then the barrage will begin again.

I just spent all of 26 hours in New York, and will spend the next 28 in Boston. I’ve been bouncing from meeting to meeting to meeting, with people investing in strategies ranging from deep value industrials to late stage consumer internet to early stage enterprise software to healthcare buy-outs — then this brief respite up in the air before meeting about growth-stage enterprise software and private investments-in-public equities and early stage technology strategies. All with singular focus, while mine is clearly scattered.

By flying at “35,000 feet”, institutional investors should see the gears moving before anyone else. They should see new investment firms implementing different ways of finding companies and improving them. They should see how the best firms push the edge of where they invest further and further. They should see how the best investors move years before their competitors actually do.

But, institutional investors miss these signs. They’ll lose focus on what should be their core competency (identifying investor business models with the most alignment), and choose to do things outside of that (trying to predict how the macro environment will move five years into the future). They’ll get lost in the clouds up here.

When I re-entered the institutional investor world at the beginning of 2018 I would have considered that loss of focus a sin — however, it’s just a natural symptom of this role. We lose focus because there’s so much to focus on. It’s not only engaging with the existing relationships in our portfolio (23), we have to find that new new thing, taking every meeting (close to 300 this year) that could be just that. And, when you factor in the breadth of firms and strategies to consider, it sometimes does feel impossible.

I’m at ground-level. Well, several feet above it, aboard the last Amtrak from Boston back to New York City. The Connecticut countryside is a cellular dead zone — reception fades in and out, messages and emails slide through without any rhythm.

There’s one more meeting on this trip, then a plane ride back to Austin — and then I’ll do it all again next week with another flight back to New York City. It’s probably my final trip for 2018, but who knows what the final seven weeks will bring.

I spent this trip trying to be everywhere at once. I spent this year trying to be everywhere at once. Maybe I was too optimistic in thinking I could overcome all the constraints of being an institutional investor, of being one of a two person team, of being subject to time and space. And now I’m tired. Maybe it’s just the time — almost 10:00 P.M., still about an hour out from the City. Maybe I ought to close my eyes and sleep. Or, maybe I’ll take a look out the window and think of what’s to come.