How do you know when to take a risk in the dealmaking space? I get this question all the time.
This past September, I attended Delivering Alpha in New York City. The event, one of the most influential investor conferences in the world, was presented by Institutional Investor & CNBC. While there, Steve Schwarzman, chairman and CEO of the Blackstone Group, said something that grabbed my attention. He stated: “There are no brave old people in finance.”
I laughed and thought to myself, “I’m glad I’m not old yet!” But what he said, upon reflection, goes deeper than that. As an entrepreneur and business owner, it got me thinking about the perception of risk in the dealmaking space. For me, one of the most challenging things when making a deal at any level is finding the problem. It’s hard to do this, especially when you get as excited and passionate as I do. But I always ask myself the following questions: Is there a problem? Can it be fixed? How quickly can it be fixed? I always remind myself that it's the thing you don’t see on the surface that should be your barometer for decision making. I guess what I’m saying is, there is a nuance between being brave and being calculated.
Fifteen years ago I started my own business, LeafFilter, out of my basement. Now, in 2019, we will do over $500 million in top-line revenue. But like many entrepreneurs, it all started when I left a stable job to go out on my own. A lot of people thought that decision was crazy. And, trust me, during the course of the first few years, I had those thoughts too. But here is the difference: The decision I made wasn’t risky. It wasn’t brave. The decision was calm and calculated. So calculated, that it didn’t feel like a risk at all. Before starting LeafFilter, I did extensive analysis of our product, marketing, sales team and our field of competitors. What I saw was a unique product with a ripe opportunity for growth. The perception was that I took a big risk, but it was actually just a smart play.
Maybe my process for making decisions links back to when I used to play football. As a quarterback, you have to analyze the field in front of you. You survey the defense, analyze your passing reads and make a play that gives you the best chance to win. And you do all of this while in constant motion.
Steve Schwarzman could be right. Maybe there are no old brave people in finance. But perhaps if you learn to analyze risk like a calculated veteran quarterback, you don’t have to be brave. You may unintentionally acquire another attribute we all strive for.
Matt Kaulig is executive chairman at Kaulig Cos. Ltd. where he leads the single-member family office for him and his direct family. The office operates brands in five different verticals: sports and entertainment, marketing and event management, finance and financial services, consumer products and philanthropy. He is also founder of LeafFilter, which has now grown into Leaf Home Solutions, one of the largest direct-to-consumer home products companies in the U.S. and Canada. You can follow Matt on Twitter at @MattKaulig