December 2018 was my first time writing a New Year Letter. I meant to write one going into 2020 before the tick tock of the clock, but vacation got in the way. Now better late than never.
My 2018 letter was spurred by a realization that holiday cards of yore – often with a folded up long-form letter inside – had devolved to simple family images, most without context for what’s behind the smiles and loving embraces. This year, I noticed a new trend. There is a correlation between card stock thickness and net worth! None of this is to say I don’t like receiving Shutterstock cards – keep them coming.
This year, I will look behind and ahead as I did last, through three lenses – Family, Profession and Context (the broader world we live and work in). For most, the interesting part will be “Context”. Feel free to jump there.
Family – reading fuels curiosity, and a year of sweat
Ashley and my two kids Skye (7) and Winter (6), while not quite Irish twins, have reached a whole new level of twinsiness. Especially after a long vacation, Ashley and I find them inseparable and increasingly self-sufficient when together. I certainly never played Monopoly with my sister for three hours – bless their young hearts! They are not without the occasional fight but usually treat each other with care and respect (for their ages). The big change for Skye and Winter in 2019 is a shared acceleration and passion for reading, which serves as both a call and answer in their voracious cycles of curiosity. Skye is now into chapter books, and Winter is into long comics.
Ashley too had a big year. She beat her personal best at the Chicago Marathon, shaving 4 minutes to hit 3:10. Dang. She also went on strike with the Chicago Teachers’ Union – an experiential history lesson in the roots, consequences and realities of collective bargaining for our whole family. I am proud of the impact she has on her students and in awe of her patience with them and everyone she touches – including me. Ashley and I continue to have a lot of fun with each other. Though we’ve been married for nearly 14 years, I still find myself surprised she picked me and am thrilled with the flow of our partnership. We had our first true weekend away together since the kids were born, leaving them with my amazing MIL in VT and driving to Montreal for two days. Mon dieu!
In 2019, I self-indulged in much personal reflection. I turned 39 – close enough to being over the hill that I am realizing the fleetingness of life, while also feeling lucky to register this when there is yet much ahead of me. Oddly, this is not unlike a venture fund where the weight of every marginal decision becomes heavier the further you are through deploying the capital. Not that it should… it’s just that we are only human.
So what do I want to spend my time on personally and professionally? What should I do now that will be harder or impossible later? Ideas continue to swirl, but in 2019 I channeled these questions into endurance athletics. I have never been athletic – more of a drama club, choir guy. But I have a talent that has gone under-appreciated until now… I can eat almost anything any time. It turns out this is pretty helpful for endurance events. So I bought a wetsuit, a road bike and signed up for a full 140.6 mile Ironman in Louisville. The Louisville swim got cancelled, so it became more of a training day, and I become an Ironman* (emphasis on the asterisk). To eschew the asterisk, I signed up for another Ironman three weeks later in Panama City, FL and got it done… with the swim. We’ll see what happens this year.
Profession – a new fund at HPVP
I and the whole Hyde Park Venture Partners team were thrilled to raise our third fund in 2019, totaling $100M. We did this through the hard-earned successes of entrepreneurs we invest in and with the confidence of a tremendous group of investors, many returning and some new. I liken our new fund to a “Series B”. Just like a Series B stage company, we’re doing many of the right things and have hit some nice milestones, but there is yet much to prove.
Our first $25M fund took us about 30 months to raise, our second $65M fund 18 months, and this one 12. This shortening trend is going in the right direction, though I’m reminded each time we do it that raising capital informs our own empathy for entrepreneurs’ fundraising travails. It is also a pleasure to reconnect with existing investors and meeting new ones. We are lucky to have many accomplished entrepreneurs, professional investors and executives among our investor base, and we learn something new from each in every meeting. The more I speak with these people, the more I realize how much I don’t know or haven’t experienced (back to the opportunity cost of life). Would that I had a month to shadow each like an intern!
HPVP also expanded its team by three people in 2019. That’s not a large absolute number, but still the 50% increase brings fresh thought and energy to everything we do. Our expanding team challenges us to break out of the ruts we’re used to driving, though damn we can be stubborn!
Above all, we’ve continued to partner with many top entrepreneurs, investing more with existing partners and backing new teams in 2019. It’s been a particular pleasure for me in 2019 to spend much of my time with several highly experienced founders/executives, whom I mostly try to stay out of the way of, learn from and help when I can!
Context – signs of accountability
In my Dec 2018 letter, though loathe to do so, I crossed the business/politics divide and spoke about Trump’s extreme shortcomings as a leader and the political and business risks that result. I will cross that divide again this year. Unfortunately, the administration’s heliotropic tendencies make Trump such a dominant factor in considering the context of our economic and societal state.
Interestingly, Trump’s special brand of economic protectionism and antagonism is not quite (yet) the undoing of our economy that escalating tariff wars had many, including me, predicting a year ago. Unemployment remains low, and output is still healthy though slowing a bit. Certainly in the venture/startup world hiring remains tight and there is access to capital, though the “flight to quality” that we saw begin in 2017 continues. More capital continues going to larger rounds for the most proven companies.
Perhaps this is indicative of the larger reality of our economy – a stark juxtaposition in position and opportunities between haves and have nots. For example, while the tariffs have not yet dragged the overall economy down, they have caused extreme pain for farmers, commodity producers and the communities that surround them. This is sadly ironic given ag state voting patterns in 2016 and upsetting to see a constituency fleeced by political con jobs and storytelling. More on that below.
As a city dweller, it’s easy to look around and think everything is going well for everyone. Most major cities are late in extended periods of growth in population, housing and wages. As a Midwest investor, however, I spend a lot of time driving through small towns, ones not even large enough for a Walmart. These are multi-generational home-town cultures now being re-cast around Dollar General. With ag down and other opportunities so limited in these places, it’s no wonder why their voters rolled the dice on Trump in 2016. We shouldn’t forget that, especially as we look ahead to 2020.
The point here is that even three years in, it’s easy to be shocked and upset about Trump in lieu of understanding the why behind his rise. Adolescents in the US are primarily taught about the righteousness of our elected democracy, its role in leading other countries to the same and its success in vanquishing the horrors of monarchy, fascism and communism. In this, we often overlook the imperfections of our own founding, but moreover we are misled to believe that representative democracy rooted in a literate citizenry is the human equilibrium. In fact, the equilibrium is probably the reverse: power, money and education in the hands of a very few as lords over the rest – whether this be monarchy, fascism or today’s kleptocratic version of communism in Russian and China. Some version of this was the standard for most of human history.
In Nicholas Wade’s Before the Dawn and Yuval Harari’s Sapiens the correlation between organized society and the development of speech are explored deeply. One causal hypothesis for the correlation is that speech was premise for humans to organize beyond family clans because storytelling was the necessary skill for a leader to unite followers that weren’t kin. In other words, aspiring leaders have to talk their way to the top in one way or another. The word “story” is an innocuous and harmless noun here, but the distance from truth to history to myth to lie is a short one, traveled for millennia by human leaders. Trump simply re-paved the faster lanes of this road, journeying along the dividing lines between haves and have nots. We see this in the business world too. Adam Neumann did something similar at WeWork, taking everyone for a ride.
Fortunately, while we can’t take democracy for granted, there is some robustness. As I said in 2018, “our nation is beginning to reject Trump like the body’s protective sack around a splinter, pushed back through the skin.” This is culminating – almost in a literal sense – with the impeachment process. While Trump is not likely to actually be removed (even I can buy arguments why at this point we should leave it to the election), impeachment proves that there is indeed some accountability for leaders who lie or otherwise pursue their own interests. This is important, not just for our politics but for our society. If for most of human history we were in the pre-truth storytelling era, will the “post-truth era” reign after a short few centuries of more enlightened human experience? I don’t think so. Trump’s impeachment is proof that we can still be grounded, and this political leadership accountability trickles down to broader society.
In fact, there is a good argument that 2019 was ubiquitously the Year of Accountability. In the broader economy, 2019 was a record breaker for public company CEOs stepping down, more leaving than in the financial crisis. While some of these departures were generational cash-outs after a long bull run, many resulted from boards enforcing business or moral accountability, as at Boeing and McDonalds respectively. In the startup world we saw several spectacular events of accountability with the cratering of WeWork and fraud charges at Outcome Health. It’s the sign of a healthy system when specific problems can be rooted out without the tide having to go out completely to bare the naked swimmers at the expense of the modest, as happened in 2008.
There is hope. Have a terrific 2020!