December 3, 2020

Market and Financial News Aggregator

From mentorship to friendship to love: What I learned from three investing giants

9 min read

If you are fortunate, you’ll seek and find great people in your life. Sometimes they find you. I’m one of those who’s been blessed to have found such people, in the form of three notable, incredibly successful figures who have helped me build my own private equity career. Together, they invested their money, expertise, and reputations into relationships with a young man whom they really had no reason to give the time of day. And thanks to them, I can do the same today.

During these challenging times of racial strife and political division I am often asked, by genuine, well-meaning people, “What can I do?” The truth is that each of us can lead by helping and serving others. The person who approaches us for help or advice might not have all the polish, might not have gone to the best schools, or might not belong to the finest country club. But if you think you see talent in people, proactively extend a hand to help, as they might not be secure enough to approach you or recognize they should. By looking beyond the categories and approaching people as people, each of us can make an extraordinary difference in the lives of others.

Thirty years ago, I was an emergency room doctor in Dallas. I was very successful in my chosen field; I had earned respect and was becoming a pillar in the community. I was pleased with my life and the trajectory of where it was taking me. 

Through my political involvement, I got a call one day in the emergency room from Don Williams, CEO of the real estate developer Trammell Crow, whom I didn’t know. Williams told me that he was going to the same meeting I was going to in Austin—and since we both lived in Dallas, why didn’t we just go together? I said, “Sure, what Southwest Airlines flight do you want to take?” He politely demurred and said: No, he had his own jet, and I could just fly with him. 

That first private jet ride transformed my idea of the possibilities of working in business and, ultimately, private equity. I recognized that no matter how successful I was at practicing medicine, I couldn’t have the impact in that profession that I could in business. Oftentimes I was stitching people up and sending them back into the same challenging environments. With more resources, I could actually help change those environments.

I had never considered a career in business. Growing up, all I knew was doctor, lawyer, teacher, or preacher. But my encounter with Williams opened my eyes, and I became obsessed with learning as much as I could. 

As I read about the investment world, I kept coming across one prominent name: Richard Rainwater. This was the early 1990s, and Richard had cut his teeth working for the Bass family, creating wealth and a legend for himself by identifying great talent and making brilliant deals. I saw Rainwater one day at a big function in Dallas. I went up to him and said, “I want to be like you when I grow up, Mr. Rainwater.” He said, “Come by and see me.” Fueled by that invitation and my own persistence, I made my way to Fort Worth. Richard opened up the investment world to me, introducing me to prominent figures including Ken Hersh of the energy-focused private equity firm NGP, who showed me my first business plan; to his own accomplished wife, businesswoman Darla Moore; to John Goff of Crescent Real Estate Equities; and to Alan Frazier of Frazier Healthcare Partners, to name a few. 

Introduced to a brave new world

It was a brave new world for me. And I was being introduced to extraordinary people by someone who gave me credibility, but also confidence that I could succeed in this new realm. Richard taught me to think big, because a big deal is as much work as a small deal and easier to manage. And as I came to understand through Richard, relationships are an important foundation of credibility and success. Richard remained a mentor and friend until his untimely death in 2015 from a neurological disease. 

Given that I was married with six kids, all in private schools, I knew I couldn’t afford to take a traditional route to finance by quitting medicine, getting an MBA, and working on Wall Street. And I hardly fit the white, Ivy League model that Wall Street was used to nurturing. Therefore, I looked for the largest pool of money in my home state, the Teacher Retirement System of Texas (currently $170 billion) and maneuvered to be appointed to the board. (I was appointed by Gov. Ann Richards and confirmed by then-Gov. George W. Bush, who was a friend and partner of Richard Rainwater, which helped.) My thinking was, get next to money and I could figure it out from there. 

It was the late 1990s by then, and that’s when I met my second great mentor. David (Bondo) Bonderman was a legend, having made a 10x return on his daring move to buy Continental Airlines out of bankruptcy. Through his investment firm, TPG, which now manages over $83 billion, he would go on to do multiple legendary deals, involving companies from Burger King to Ryanair to power company Texas Genco. I met Bondo through a fellow institutional investor who was an investor in TPG. I met him at his ranch in Aspen and told him of my interest in private equity. Bondo interviewed me, met my partners, and decided to invest with us. 

Bonderman’s decision to invest capital, and more importantly his reputation, helped launch me on what is now a 20-plus-year career as a private equity investor. When other investors saw that David supported me, they were more willing to trust their own assets with a relative unknown like me. Of the incredible string of amazing people who broadened my horizons throughout my career, none were more impactful than David—who helped me when I was truly new to the game. 

David Bonderman, founding partner of TPG Capital.
(Photo by Horacio Villalobos – Corbis/Getty Images)

Bondo showed me his generous character early on, when he invited my wife and me on a trip to the South Pacific to enjoy the beauty and serenity of this remote part of the world with his wife, Laurie, and four other couples. It’s no surprise that David had convened us in a location surrounded by so many natural wonders; he is a staunch advocate for environmental protection and conservation. Just as important, when we arrived, he made us feel welcome. Even though his other guests had been his friends for decades, he accepted me as a peer and friend even though I had done nothing yet to earn the honor. 

Over the years, I would call upon David for advice and counsel, and no matter where he was in the world, no matter what he was doing, he took the time to return a phone call, respond to an email, or meet. While I have never achieved the financial success that David has, I have been successful and impactful beyond what I could have ever imagined as a doctor—and I owe a lot of it to his help.

David’s investment helped propel my pivot into finance. And in doing so, he impacted not only my life and my family’s life (my kids have been fortunate to attend Harvard, Yale, Princeton, and Stanford) but the Black community at large, given my pay-it-forward efforts to invest money, time, and reputation back into my community. For example, I support and participate in the Black Economic Alliance, which is a not-for-profit founded by Black businessmen and women professionals seeking to address the issues of work, wages, and wealth in the Black community. In addition, through helping establish the Center for Black Entrepreneurship at Spelman College and Morehouse College, two historically black colleges/universities looking to expose, educate, mentor, and fund Black women and men entrepreneurs.

Moreover, David has taught me about being there for people through good times and bad, taking risks on people, and being open to new ideas. He believes you should never stop learning, never stop challenging yourself, and never stop living life to its fullest in work and in having fun. David is the ultimate rock and roll fanatic, serving on the board of the Rock and Roll Hall of Fame and having built personal relationships with some of the 20thcentury’s most iconic artists. He’s been a “Burning Man” regular for years. 

David’s penchant for fun can be seen in one of his most recent projects: leading the group that is bringing Seattle its first NHL team. Despite the fanfare, David kept a low profile throughout the process, preferring to quietly use his network and resources to win the league’s and the city’s support while allowing the fans and the team enjoy all the excitement. From business to philanthropy, David takes this approach in most ventures, and it clearly illustrates his desire to be impactful and supportive, even when no one is watching. 

Because of David, I set aside time each month to mentor people, young and old. I try to always be responsive to emails, calls, and outreach from people all over the world. I try to be action-oriented: If I can help, I make the call to try and do it right away. If I can’t help, I try not to lead people into false expectations. I continue to think big and look for transformative opportunities in business and in life. 

Finally, I have been fortunate to have gotten to know Michael Milken, one of the most brilliant minds in finance. We met at a conference of Black corporate directors where he spoke. During the conference, he rotated to various tables to introduce himself, and when we met, he asked me a series of questions and he suggested I attend the Milken Global Conference, which was coming up in a few months. I attended and was blown away by the caliber of content and people. Subsequently, I encouraged many of my friends to attend and participate. Through this outreach to Black and Brown professionals in the investment world, a community with which Michael had not been familiar, Michael and I developed a close bond. He, too, became a mentor, friend, and investor.

I admire Michael’s prodigious work ethic. No one I have met before or since works as hard and as thoroughly as Michael. Observing him has taught me the humbling lesson that I can always do more and be more.

In the beginning, as a student of private equity, I was in awe of my mentors. Later we became friends, as we served on boards of companies together and invested in deals together. Finally, the relationship became about love. These men gave of themselves when they had no reason other than they wanted to be helpful. Their willingness to give time, more than anything else, transformed my life and my family’s lives. While they may have lost a physical step, whenever I see them, I am inspired.

Unfortunately, far too often those of us from disadvantaged communities are called upon to be perfect, to fit exactly in the right box, to be Jackie Robinson. The truth is, if we were perfect, we wouldn’t need each other.

So today, I’m sharing the lessons I’ve learned from the people I’ve leaned on. We should take advantage of the wisdom of others, within and outside of our communities. We shouldn’t let guilt or victimhood drive our efforts, but should be motivated instead by personal responsibility for ourselves and our fellow man and woman. Never take yourself out of the game because you think people will be unaccepting. People may not only be accepting—they may learn from you and be better for knowing you.

Kneeland Youngblood is founding partner and chairman of Pharos Capital Group, a health care–focused private equity firm. Its Fund III has invested in companies that have 5,360 employees, 73% of whom are women, and the majority of whom are Black or other people of color.

More opinion from Fortune:

  • Why we shouldn’t give up on bipartisanship, even now
  • A blueprint for whoever wins the presidential election to fix America’s health care mess
  • Why surveying the American public can help us change capitalism
  • The government’s hidden superpower: “Unrules”
  • A plan for facing the long COVID winter

matthewheimer


2020-11-10 13:00:00


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