Stuart Miller
speaker
308 appearances
1 recordings
1 series
first heard Feb 2025
last heard Feb 2025
Stuart Miller’s voice in public audio — every appearance, attributed to the second.
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Appearances
But then he ended up running, call it a $10 billion plus fund. I was thinking, oh, that's a very interesting spread. Outside this container, the market as a whole would price him at $500 million to a billion. He's running a $12 billion plus fund. The founder of that firm who made that decision, that's that guy's arb. That's the bet. And it ended up being the correct bet.
I didn't necessarily see it at the time. I was thinking, whoa, that's a huge spread. And if he went outside, it would be so much smaller.
Adverse selection. And the moment you have to... I remember we were so careful about this, and my partners who now run Eastrock continue to be careful about this. If you have all the mentality of, I need to put assets out, it completely screws up the dynamic. I wouldn't trust myself if I had- You had a seed fund. Yes.
If I had $2 billion that's burning a hole in my pocket and I need to seed- Important point. The other thing that people do, I've noticed this, if you seed somebody, I was talking with a guy, I won't use the name of the fund, but he was at a very prestigious fund and somebody called him and offered him, it was a big seed, call it $200 million. And
My hypothesis, I remember talking to him, my hypothesis was if the guy hadn't called and given him the $200 million, he wouldn't have come up with it on his own. It's a very subtle, I forget, we've talked before about source dynamics, like workwithsource.com. It's a collection of information on this concept that I'm obsessed with.
But it's like the argument is this guy, Peter Koenig, and he had looked at all these startups in Europe, several hundred, and found that even when there were co-founders, there was really one person involved. who took the first risk, even if that was calling the other co-founder. And that you'd be really careful about that first risk and who's taking it and why they're taking it.
I remember meeting with a quant fund. And when I pulled the thread on the origin story, there was something about the energetic of the guy running the quant fund, which was that he was relating to it as a job, not his thing. It's like, that's so weird. And then I pulled the thread and it emerged that it happened to him. He'd been sitting at a fancy firm,
And a friend of his had said, let's do this thing. And the source dynamics were screwed up from the start. And this guy, Peter Koenig, has this argument that all organizational dysfunction can be traced back to disagreements about who is source or the actual source playing small or not fully owning being the source of the thing. And it totally fit my sample of hedge funds where
Our friend Diana Chapman has this analogy of the chick needs to peck through the eggshell and develop the strength through the pecking in order to make it once you're outside. If you break the shell for them, they will die. If you mess with the origin in any subtle way, it can affect the entire trajectory of the thing in ways you wouldn't think.
Yeah. Kind of up one level looking to back people and fit their circumstance and they were going to do the thing anyway.
In this language, I often think of it as who is the source and are they owning it? I mean, you see it a lot in succession. One of the arguments in this literature is that heading off source is extremely subtle and hard to do. Where else do you see it in the dynamics between co-founders?
Is there resentment on the part of the co-founder who's not source towards source because they don't want to be in that role? I feel like I see that a lot. And 80% of the time that's held in check, but then conditions can change and then it's not held in check anymore. They can go through a difficult period or extreme success can also lead to it.
I think it's because it's the skill set at the highest level. It's managing risk and being pragmatic and commercial, I think. And so, in general, those people tend to be older. I think giving a bunch of money to a kid... If you're running a family office, you need to do it in a way that there's room for them to screw up.
And there's something around like the people who I think would be good at managing a family office have taken risk with their own capital and other people's capital before. And I think ideally don't have identity. They have identity as being a moneymaker, but not as a specific thing.
And their EQ and social intelligence is high enough that when they're talking with other people, like Rainwater is the gold standard on this, they're okay expressing a bet through other people. I feel like that's a distinct skill set. And so retired hedge fund managers who were pretty high EQ are probably a pretty good pool if you could make it feel like it's their money.
Yeah. And that's why like setting up, figuring out why are they available? People screw up and they think it's like, oh, it's just a role. I'm going to hire for it. No, it's not. It's like... It's up one level or by definition, if the person's good, it needs to be a tricky setup.
Yeah. Your ego needs to be able to take somebody else having the successes and failures around it, I think. Because... If not, then if you want to be pretty involved or you have identity because I made a bunch of money and blah, blah, blah, and I want to keep making money and blah, blah, blah, and now I want you to do it for me.
Anybody commercial who's sitting in the front seat now has somebody telling them how to drive in the back seat. And unless the person in the back seat is extremely skilled, it's going to screw up the incentives of the whole thing.
Well, so I would say it's good taste in people from the perspective of the principal.
Yeah. It needs to overlap. Otherwise, they're not going to trust the agent's judgments and vice versa.
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