Weekly Thoughts


The Tyranny of Options

It’s graduation season, which means it’s also commencement speech season.  While Admiral McRaven’s “If You Want to Change the World, Make Your Bed” speech will always be our favorite, we recently stumbled across a wonderful speech Matthew McConaughey gave at the University of Houston in 2016.  In the speech, McConaughey, along with his trademark southern drawl, greasy hair, and half-unbuttoned shirt, told the graduates:  

“You graduated.  Now, I’m not here to be a downer on that.  Let’s get that straight. But I am here to talk brass tacks.  I want to skip the flattery and the attaboys.  Because I do know this. The sooner that we become less impressed with our life, with our accomplishments, with our career, with whatever that prospect is in front of us, the sooner we become less impressed and more involved with that and these things, the sooner we get a whole lot better at doing it.  So I’m going to talk to you about some things I’ve learned in my journey.  Most from experience, some of them I heard in passing, many of them I’m still practicing, but all of them I do believe are true.

Amen. The speech covers a lot of ground and we recommend listening to it in its entirety (and yes, he does say “alright, alright, alright”).  However, lesson number five resonated from a Chenmark perspective.  From the speech: 

“Look, the first step that leads to our identity in life is usually not, I know who I am. I know who I am. That’s not the first step. The first step is usually, I know who I am not. Process of elimination. Defining ourselves by what we are not is the first step that leads us to really knowing who we are…. Trust me, too many options. I promise you, the too many options will make a tyrant of us all. So get rid of the excess, the wasted time. Decrease your options. If you do this, you will have accidentally, almost innocently put in front of you what is important to you by process of elimination. Knowing who we are is hard. It’s hard. So give yourself a break. Eliminate who you are not, first, and you’re going to find yourself where you need to be.”

Back in 2014, we had an idea to 1) buy cash-flowing small businesses for reasonable valuations and 2) use the cash flows to purchase more cash-flowing small businesses for reasonable valuations.  That idea is still the playbook we are executing almost 10 years later.  Unfortunately, while we had the big picture “figured out”, the devil was in the details.  We’ll admit it took us a while to have strong conviction in our approach.  In the first couple of years, we looked at a lot of opportunities in addition to meat and potatoes cash-flowing small business opportunities: real estate, distressed companies, start-ups, high growth/low-profit companies, minority investments, high-tech businesses, government-dependant companies, credit opportunities, etc. 

As McConaughey suggests, in those early years, it was critical for us to discern what we do not do.  Through a sometimes painful process of trial and error, we narrowed our focus and became more disciplined.  Today, we know that we don’t do real estate.  We stay away from distressed companies.  We do not invest in start-ups, nor do we invest in breakeven companies, regardless of the growth profile.  We only do majority (ideally 100%) investments.  We avoid tech-based businesses and companies with a lot of regulatory risk.  We don’t extend credit.  As McConaughey notes, narrowing our focus gave us the conviction to focus on executing in the world of cash-flowing “boring” small businesses.  Of course, as Chenmark evolves, we might adapt to our circumstances.  For the moment, however, we’re happy to avoid the tyranny of options.

Have a great week,

Your Chenmark Team

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