The 4 Steps to Become a Fund Manager

I'm now doing exactly what I want to be doing with my life. Can you say the same thing? When I was in high school, senior year, I was chatting with a buddy about what the heck I was going to do with my life. We were just sitting down and we were throwing out different ideas. And, you know, I said, do you know what would be cool is I would love to work on the NFL sidelines one day. Wouldn't it be fun to be a trainer or a referee or a PT? And before my buddy could even respond, I like cut myself off and I was like, but that's not really realistic. That's not gonna happen. That's not in the cards. And my buddy kind of looks at me and he's like, Lincoln, what are you talking about, man? You're one of the most hardworking, ambitious people I know. Somebody's gotta do that job. Why not you? I've looked back on that conversation countless times over my life. Obviously, I'm not working on the NFL sidelines. And why? Because my desires changed, right? What I wanted out of my life, you know, just dramatically changed over the years. When I got educated, I learned about finance, and I learned about this corner of finance, alternative investments, and a corner of alternative investments, emerging managers. I don't realize that I want to be working with emerging asset managers. So I can tell you with confidence, I'm now doing exactly what I want to be doing with my life. And I want to ask you the same question today. Can you say the same thing? So a lot of emerging managers, when you're just getting started, you go through these what I call the Your psychological stages of emerging managers. Again, I've worked with thousands of you, and I can just see it, right? It's palpable within talking with you guys in ten minutes. I can understand which one of these four stages that you're in. I think if you better understand that where you're at and where you need to go next, it's going to increase your likelihood of success. So let's break down the four psychological stages of emerging managers. As I told you in my story, my desires changed, right? When I was just starting out, and that's truly the first stage that emerging fund managers go. Through when they're starting a fund. I mean, you guys have got to want it. I don't care why you want to be an emerging fund manager. I just care that you want to be in this game. Some of you might want to be in it because you think private equity or venture capital is sexy. That's great. Some of you just maybe want to make a ton of money and you think that a fund is a way to do that. I mean, it is. It's an extremely lucrative vehicle. Some of you guys are just really committed to an industry, asset class, or sector, and you want to just be the best you can in that industry. And a fund is the way to do that. Again, you just have to have the desire. There's so many excuses that you can come up with as you're starting down this journey, and there's so many what-ifs that'll come into your head. But I'm not qualified, or I don't have the experience, or I don't have this. And that's okay, that's, that's totally normal, but you just have to push past that. I'm willing to bet that I'm preaching to the choir here because you guys are watching this video. So where do we go next? Well, the second stage that a lot of you go through when you're starting a fund is belief. You need belief in your Ability more specifically, and if I were to expand on that, I would say you need to have belief in your ability to be a good asset manager. You need to have belief in your ability to run a team. You need to have belief in your ability to raise money. All these things will come over time, but I think the more important question is: Well, how do I get to that point where I even believe that I can do this? And I think that comes primarily through education. So that's the actionable step in there to get from desire to belief. Go educate yourself. I would just encourage you again that as you're starting off, get to that point where you just have belief in your ability. Now, what comes next? The third stage or the third step in this process is you need conviction. And what even is conviction? Well, it's simply a confidence in your beliefs. But how do you get there? This one's a little— requires a little more effort. You have to actually have experience. Your belief is a theory. It's a thesis. It's a projection of your capability. But conviction comes from, you know, retrospectively saying, hey, I thought that A plus B equals C. And guess what? I did it. I validated my proof of concept. A plus B does equal C. So a lot of you gain conviction through either syndicating a deal, running an incubator hedge fund, and developing a track record. That'll really give you conviction in your ability to be a good asset manager. Because when you guys are going out to market and you're raising money, you might start to question yourself. A lot of you guys think that you're an inconvenience when you're going to raise money. But if you truly believe that you're a good asset manager and you have conviction in what you're doing, you know that you're providing a valuable service to the marketplace, right? Like, let me put this in other terms. If I was a plumber and your basement was flooding, would I come to you and would I be apologetic for bothering you about, hey, I'm sorry, like, you know, I can come help you out and help you, you know, fix your broken pipes? No, right? Like, you'd be super grateful that I was coming, right? You'd be happy to pay me money for a service. And guess what? As asset managers, you are providing a needed service in the marketplace. Okay, I don't know about you guys, but like for myself, if I have money on the sidelines, I get anxious, right? Like I'm like, gosh, it's being eaten away by inflation. I'm losing money. I need to put my money to work. And the majority of sophisticated investors understand that. You need to know as an emerging manager that you are providing a valuable service to the marketplace. Investors need good managers like you to manage their money. So quit coming at it from a scarcity mindset, right? Come at this from an abundance mindset that there's, there's so much money that needs to be managed. Why not you, right? Somebody's got to do that job. Again, you need conviction. Life hack on conviction— I've seen people do this before. If you haven't done the experience yet, if you haven't done the deal, I've seen people go and borrow somebody else's conviction. And it's totally possible. If you're a younger individual, go partner with somebody who's done this. Bring them onto your team and leverage their conviction, because it'll come through as, you know, they sit in on investor meetings with you. Conviction will raise money itself. But it's got to be on your team somewhere. The last step in this psychological journey that I see emerging managers go through is commitment. How do you become committed? It's actually pretty simple. For those of you that have conviction in your strategy already and you want to be committed, all you have to do is make a decision that you are committed. Decision is an interesting word. It comes from the Latin origin of incision, which means to cut, and you throw a D in front of it. It means to cut off. When you are making a decision, you're cutting off all other possibilities of other outcomes because you've selected the journey, right? When you're committed to something, it's very similar. You're just making the same decision every day that, hey, I'm going to be a successful fund manager. I'm committed to this outcome. And then you're excluding all other possibilities. So all those, you know, what-ifs or buts, or I don't have experience, or I don't have— they're gone because you have commitment. So as a quick refresher, you know, to go through these steps again, all of you have desire. I think, I believe because you're watching this video. If you have desire, that's great. You need to graduate that to belief. You gain belief by education. Go be investors, go learn everything you possibly can. You're in the right spot right now. And as soon as you believe in your ability, that's when you need to go get conviction. And you get that through experience. So go take down a few deals, go take down proof of concept. Doesn't have to be anything crazy. It can be $47 grand, right? But you're gonna gain conviction in your ability to be a good asset manager. And then once you're there, you just need to decide that you're committed. Guys, I'm convinced that if you follow these steps, there should be Nothing that gets in your way as you're starting your first fund. There's going to be all these excuses or what-ifs or buts on the sidelines, but just focus on your psychological frameworks, and I have no doubt that you're going to be successful. Guys, there are trillions of dollars that needs to be managed. I know you can do it. I've seen thousands of people launch funds. I know it's possible. Somebody's got to do this job, you guys. Like, why not you? Thanks. We'll talk to you guys soon.