Aoifinn Devitt: Why must we focus on results and not mission statements to really move the needle for diversity in investment? And what are the 3 types of capital that founders need to have a chance of success? Let’s find out next. I’m Aoifinn Devitt, and welcome to the 50 Faces Podcast, a podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. I’m joined today by Carrie Pickett, who has a long career in asset management and was recently a founder and principal of Blueprint Capital Advisors, having held a series of roles as controller, director of operations, and marketing and investor relations in other asset management firms. She’s a frequent contributor to the dialogue around the need for more diversity in the asset management industry. Welcome, Carrie. Thank you for joining me today.
Carrie Pickett: Thank you for having me, Aoifinn.
Aoifinn Devitt: Let’s start by talking about your journey into investment. Where did it start, and did it take any surprising turns along the way?
Carrie Pickett: You know, honestly, it’s all been a surprise. I didn’t plan on being in investments. I haven’t taken a traditional route. When I graduated, the majority of people around me were going into investment banking or consulting or going to work for a large bank. That wasn’t my path. When I graduated, I joined a family office and that family happened to be invested in alternative investments, in particular hedge funds, and were invested in sort of the industry titans of the day, call it the Cerberuses and Andors of the world, Pequot, Stark, etc. And that really was my introduction into alternatives. I had absolutely no idea that this world existed. I had no preconceived thoughts that, you know, that was going to be my path. And, you know, throughout college, obviously I was around a lot of people who knew exactly what they wanted to do. That was not me. I have you know, figured things out along the way and had a fun time doing it.
Aoifinn Devitt: What did you study at college and what aspects of your path in education have you found most useful in developing your career?
Carrie Pickett: So as I said, I wasn’t planning on being in finance. I actually was pre-med for 2 years and had every intention of going to medical school, you know, up until I realized that I really did not love blood and it wasn’t sort of the path for me, and so I decided to pivot. And ultimately I got a degree in economics and a minor in industrial and engineering. Both those things don’t necessarily lead you into finance, but what they do give you are quantitative and analytical skills, which I think are absolutely essential for investing and absolutely essential for finance because, you know, things are always evolving and having really strong quantitative skills really allows you to approach a problem and find a solution in a meaningful way. I’d also say though, know, you a lot of my education came from actually doing. And from being in roles where I had senior members of the team or the organization that really took time with me and explained how they were thinking about making an investment or explained various aspects of the industry along the way. And I think that You know, hedge funds, private equity, alternative assets, it’s really a bit of an apprenticeship business. You know, you learn from those around you and you learn from those that have done it before, but you really take, you know, their perspective. You have your expertise and then your lens that you apply to whatever the problem is. So I would you say, know, yes, the quantitative absolutely matters, but also learning on the job was big for me.
Aoifinn Devitt: That’s so true, and it’s funny, I’ve always found some courses on hedge fund or private equity investment to bear very little relation to what it’s like within the firm like that, or day-to-day what they do. So it is, as you mentioned, very much an on-the-job or apprenticeship training.
Carrie Pickett: Just to add to that, absolutely. And, you know, I can— I got a CAIA, so Chartered Alternative investment analyst. And one of the things that I remember thinking, just to your point, was, well, yeah, hypothetically or theoretically this makes sense, but this is not necessarily how I would see our portfolio manager deal with this, or I would see some investors think about our, you know, my hedge fund that I was pitching at the time, etc., think about this. So it’s absolutely, I think, you know, the practical experience matters and what happens day to day and the ebb and flow of information, because it is always evolving.
Aoifinn Devitt: You’ve launched a minority-owned firm, and earlier on you worked to build a business of a manager that was a female-owned credit manager. Can you tell us about that experience and how you believe the landscape is shifting for minority-owned firms today? Is it shifting for the better?
Carrie Pickett: So not to be too cynical, but I really believe that the landscape has not shifted for the better. You know, I think that the business has become very institutional over the last 10 years, and because of that, it’s resulted resulted in a much more challenging environment to— for anyone, not even minorities, but for anyone to launch an asset management firm. And in particular for minorities and women because of a few things. And I think, you know, as I was in those various entrepreneurial situations, there’s sort of 3 things that have— that stood out to me. And one, the first would be the importance of capital. And what do I mean by that? So capital to me takes three forms. There’s the operating capital needed to grow the business. And right now, because the business is so institutional, the amount of operating capital that is required to build an institutionally viable business from day one, which is basically what the market is is saying it requires is significantly more than what it once was, just because of the regulatory environment, you know, the amount of people that you need to have to be institutional, etc. Then there’s the investment capital. So you need enough investment capital and to be able to attract capital in critical mass to build a sustainable business and to build a business that can scale. And that dollar amount, know, you when I sort of first entered the industry, people would say, oh, you know, breakeven is $50 million to $150 million. Now you it’s, know, significant multiples north of that, dependent upon your strategy. And then third would be the personal capital. And that, I think, is the capital conversation that people are most uncomfortable talking about. You hear less of, but it’s almost the most critical out of three. Even you though, know, I think operating and investment are both needed. But the personal capital and having enough runway for multiple years on your own while you are supporting the operating capital of the business is critical. And, you know, I think that you need It’s funny, when I was early on and at sort of one of my first sort of startup ventures, the PM was on the podium saying, you know, you need 2 times sort of your annual salary to support yourself. Okay, I would now say you need a good runway for 3 to 5 years. Include, you know, and also adding to the operating capital that you need. So for those three things from a capital perspective, I think have become significantly more challenging. The second thing that I would say that’s important as you sort of think about an entrepreneurial endeavor is relationships. Relationships matter in this business. And I know, you know, you hear conversations around relationships,. But as an entrepreneur, you really need to think about, do you have the relationships that you can tap to either help grow your asset base, help, help you from an operational You perspective? Know, there’s a concentration of capital going on in the overall industry, and that concentration of capital is with large institutional players and consultants. And As a new firm or a new entity, you absolutely have to have the relationships with those groups to attract the investment capital that you need. And I think, you know, I’ve had conversations with early-stage managers who were very excited about their strategy, very excited about growing business, but didn’t have the distribution relationships really required to build a scalable business. So, you know, relationships matter. And then the third and final thing that I’d say as it relates to, you know, growing your business and how the landscape has shifted, et cetera, and what’s important is edge matters. And, you know, the edge and how differentiated you are from a strategy perspective has always mattered, but it’s become increasingly difficult as markets have shifted and more competition has entered into the space to really stand out. And so, those three things are— there’s sort of ebbs and flows around them, but they’re really essential as you think about launching a business. And I think those things, capital, relationships, edge, for a variety of reasons have made the industry more difficult and it’s more difficult to launch something new.
Aoifinn Devitt: You’ve really mapped that out very comprehensively there. I mean, even the edge part, which is really all that established firms really have to worry about— they probably have the capital, they have somebody else developing the relationships— even the edge part is very volatile because it is— the markets can be hostile, and it’s very hard to hold on to an edge. So I think that that is hard enough on its own, right, never mind having to worry about the two other aspects. But are there any— obviously, there’s going to be no quick fix for any of this, but are there any techniques that you think can mitigate some of these challenges, such as some of the emerging manager programs or fund of funds or maybe incubation-style strategies that can create a cocoon maybe around the relationship or the capital point?
Carrie Pickett: So this is an interesting question. I think that Having a real commitment and a real sort of incubation platform. And what I mean by that is a real capital base to be allocated to smaller managers. Not $20 million, not $25 million, you know, real capital that they can manage perhaps under some level of risk metrics that’s, you know, the larger you institution, know, oversees, I think that could potentially impact the business in a huge way because it allows those that really have the investment aptitude and the ability to really focus on what ultimately all of us should be focused on, the alpha generation, allows those sort of budding entrepreneurs to focus on what matters and not get bogged down with the added extra concerns that they may have starting a new business. When you are an entrepreneur, the one thing that you do not have is an abundance of time, and you’re always trying to, you know, balance the, you know, the pull and strain on the portfolio versus the pulling strain from the business versus other sort of challenges that you have. You know, I don’t think all managers would say that to an investor, but that’s just the reality of the situation. And I think that, I think that having a level of sort of incubation platform and real capital commitment around incubation would really change the needle. I mean, you see it in venture capital, right? You have entrepreneurs in residence. That’s what they’re doing. But there really hasn’t been that in the alternative space, and I’m not quite sure why.
Aoifinn Devitt: So I’d just like to ask you about one of those points you made around the fact that these ecosystems and nurturing incubator environments seem to already exist in the tech sphere, but don’t yet exist in investing. Why do you think that is? And what would it look like if it were to exist in investing?
Carrie Pickett: I think that there have been institutional investors who have contemplated something similar. So institutional investors who typically would allocate their smaller manager allocation or emerging manager allocation to the fund of funds community to then deploy. Some have thought about reducing the number of managers that they interact with and potentially providing larger allocations to those managers. So for example, allocate $100 or $150 to an emerging manager, put some risk parameters over, over them, give them some guardrails in terms of how to manage the portfolio, but really let them manage meaningful amounts of capital early on. Meaningful for them from a business perspective, but also meaningful for the institution institutional an investor that has a very large portfolio where, you know, an allocation of $10 to $15 million, while wonderful, really has little impact on a multiple-billion-dollar portfolio.
Aoifinn Devitt: That’s very interesting. I think it’s— there’s a lot of food for thought there in terms of how this could look. So some of these learnings have obviously— you’ve derived from many years of experience in working with entrepreneurial ventures. Have there been setbacks and challenges over that time that have led you to learn lessons from them?
Carrie Pickett: So it’s funny, I always joke that my career is really more of a random walk than linear, right? And I can’t think of necessarily one particular setback. That said, you know, obviously I’ve had them, and the biggest thing I’ve learned from them is, you know, you face the lesson, you sit back and you think about what occurred, and take that lesson going forward. But you pivot and you keep it moving. You know, everyone’s going to make mistakes. Try not to make career-ending ones, but you really try to just keep it moving. That’s sort of been my mantra with things.
Aoifinn Devitt: Certainly, the ability to pivot has certainly been tested this year. And looking back at people, or key people, or key pieces of advice that you received, Was there anybody that was really instrumental in your journey or anything that they said that you now still live by?
Carrie Pickett: So not every relationship, right, is going to be a positive one, and not every interaction is going to be a positive one. And I, you know, at the first sign of conflict and adversity, I think a lot of people sort of question if the industry is for them. And, you know, maybe it’s not the first sign, but maybe the 15th or 20th time You start questioning really, is this for me? And you know, I’ve seen many friends and particularly people of color leave the industry over, over the years, you know, after a while just not wanting to deal with sort of the headaches. And thankfully I’ve developed relationships with senior leaders in the industry, mentors, who have kept me here and have kept encouraging me to keep moving on and keep moving forward when there definitely were times that I didn’t want to be And, here. You know, really did see sort of the added value that I was bringing to the table and helping me think through how you to, know, address any issue that may be in front of me at the time. In terms of specific advice, there’s probably a couple things that have been said to me that have stood out, and they both were said fairly early on in my career. And the first is, don’t bring me a problem, but bring me a solution. And, you know, it was— that was said to me by, you know, a senior sort of portfolio manager launching her own fund. You know, an entrepreneurial in her own right. And, you know, she entrusted me with building her operational infrastructure and back office, etc. And it made me realize, like, you know, you don’t have to have every single answer, right? Things are going to happen. There’s— the industry is always evolving. There’s always complications that come to you. But you want to be part of that solution, right? You want to at least provide people potential answers to the problems that come forward on a day-to-day basis. And, you know, as my career progressed and, you know, I’ve been an entrepreneur for the majority of my career, that really resonated because when you’re an entrepreneur, as I sort of mentioned earlier, you have things coming at you on a daily basis. It’s almost like drinking out of a fire hose, right? And when you have people on the team that come to you and say, hey, we’ve got this problem, but here’s how I’m thinking about it. Here are the possible solutions. That is extraordinarily valuable, and valuable from the time constraint perspective. And so, you know, I think that piece of advice has been really important. The second one I would say is always understand where you sit on the P&L. What do I mean by that? Are you a revenue generator or are you a cost center, right? You know, that has different implications in large institutions than it does in smaller institutions. You know, large institutions, if you are a revenue generator, it’s easier to sort of handle some of the political things that may occur. You know, in a startup situation, I think, and as an entrepreneur, that’s predominantly my experience, I think it’s really important for the team to analyze that sort of comment. Even if you are, you know, operationally focused and not really focused on the growth of the business, in an entrepreneurial setting everyone has to be focused on the growth of the business and everyone needs to focus on being a revenue generator. And so I think those two things have really stayed with me throughout my entire career and have served me well.
Aoifinn Devitt: And one phrase that came to mind— that’s a very interesting point you made about knowing where you sit on the P&L, and I’m sure this is a phrase you know well given your entrepreneurial roots— is “only the paranoid survive.” And when you mentioned that, I immediately started thinking that that might make one paranoid to think about, are you a cost center or a revenue generator? But maybe that’s no bad thing, especially when it comes to thinking about one’s survival either within a larger firm or within a smaller outfit. So I thank you for that food for thought there. When you look at the investment world, what is it that you like most about it?
Carrie Pickett: So what I like most about the investment world is that it is always changing, right? And that it is always evolving. And you just need to see the angles and figure out where you fit and figure out how to add value. And for me, you know, I have a tendency to get bored with life. So I love the fact that it’s ever-evolving and there’s always sort of a multitude of things that can happen. In a day, in a week, in a month, in a year. So for me, it’s the fact that it’s always evolving.
Aoifinn Devitt: I didn’t want to ask this as part of the same question, although sometimes I do, is what are your thoughts on the levels of diversity in it? And one sobering point that I saw today that I just want to bring into the conversation is I saw an article which is the most powerful women in finance by the American Banker, 25 women, and I don’t believe there was a single Black woman on the list, nor a single Latina. And in this day and age, that’s quite frankly shocking. But maybe it’s a sign of just how much work still needs to be done.
Carrie Pickett: So it’s interesting that you say that and you bring that to light. You know, over the years I’ve sat in many awards dinners, right? And you have awards dinners for diversity and spotlight on an institution that’s doing a fantastic job in diversity. And, you know, up on the podium accepting the award are Caucasian men and Caucasian women. And, you know, to your point exactly, it’s hard to think that that’s diversity in this day and age, that the industry cannot seem to address the issues around people of color, broadly speaking. And You know, the diversity conversation is not new. Been here, it’s been here my entire 20-year career. And, you know, given some of the things that are happening globally, it’s definitely in the forefront of everyone’s mind. But I, you know, personally am a little bit tired of the conversations, the dialogue, and the sort of panel discussions that we see And I would prefer to actually be discussing actual results and those who have moved the needle to address the issues that we have in the industry. You know, the industry is data-driven, as we were talking before, the quantitative necessity of your background. The industry is innovative, right? We figure out solutions to complex problems. We create new products on a daily basis, etc., to provide solutions to to our clients. But for some reason, we can’t seem to figure out how to have results around the diversity conversation. And, you know, there’s even data as it relates to diversity and the ability for diversity to increase alpha generation, whether it be within the portfolio or just broader in terms of companies. But for some reason, there is just no, you know, change and no real quantitative movement of the needle. And so, you know, I think it comes down to will. I think it comes down to do people actually want to change? And right now, you know, after my 20-year career, I’d say no.. And unfortunately, you know, I think there is a decent amount of lip service going on right now, but I’d like to see real change. And so, you know, I’ve had people ask, well, what do you think is going to happen? And I’d you say, know, let’s come back a year from George Floyd and let’s see how many of these companies who are out there talking about diversity talking about, you know, their commitment to change have really changed and have really moved the needle in terms of numbers. That would be a commitment I’d like to see.
Aoifinn Devitt: Yeah, it’s a sobering assessment, unfortunately, and I think part of it is where this ranks in terms of the firm’s priorities. I’ve seen— I’ve been in investment banking prior to various headcount cuts and to various downturns. And before that there would have been a lot of gestures towards creating more diversity, in fact improving work-life balance for all. As soon as a downturn comes and as costs are cut, these programs fall by the wayside, and I think because it’s clear that they were not really a priority after all. They were a nice-to-have, not a must-have. So I think you’re right, if we wait a year and let’s see whether these programs are still a must-have, or whether they’ve fallen by the wayside. So it is sobering to say that, but I think you’re right.
Carrie Pickett: Yeah, but I think it also goes back to even your comment on program, right? At the end of the day, I think people look at this as a social— as being something social, right? And not really impacting their bottom line and not really impacting the sort of growth and revenue generation of the company. Which in fact, there are studies that clearly state having diverse thought does impact the bottom line. So I also think it’s how even the conversation is being had and how the thoughts are being expressed. It really does matter you because, know, diversity does 100% impact the bottom line.
Aoifinn Devitt: Absolutely. And I would just encourage our listeners to look up your article you wrote in June on about the P&I this very point, because I think it came out in a very timely way, and I think it really hit at some of the issues that emerging managers face. And I think it also expressed an honesty around these issues, which is rare. So a great article, and I certainly recommend people look it up. My last question is around any advice you might have for your younger self before you maybe embarked on that long series of entrepreneurial ventures. Is there anything, any wisdom that you know now that you wish you had known then?
Carrie Pickett: Yeah, I mean, it’s probably somewhat intuitive, but, you know, I think it’s better to ask for forgiveness than permission. And it’s better to be, you know, forward thinking and try to find solutions and try to be additive as opposed to not finding the solutions and waiting on others to solve problems for you. And, you know, it’s a fine balance, but I think it’s really important to forge ahead and sort of be a trailblazer.
Aoifinn Devitt: Well, that is a great, bold message to end the podcast on. So thank you so much, Carrie. It’s been a pleasure speaking with you, and thank you for sharing your insights with us.
Carrie Pickett: Thank you so much for having me.
Aoifinn Devitt: I’m Aoifinn Devitt. Thank you for listening to the 50 Faces podcast. If you liked what you heard and would like to tune in to hear more inspiring investors and their personal journeys, please subscribe at Apple Podcasts or wherever you get your podcasts. This podcast is for informational purposes only and should not be construed as investment advice, and all views are personal and should not be attributed to the organizations and affiliations of the host or any guest.
Aoifinn Devitt: Why must we focus on results and not mission statements to really move the needle for diversity in investment? And what are the 3 types of capital that founders need to have a chance of success? Let’s find out next. I’m Aoifinn Devitt, and welcome to the 50 Faces Podcast, a podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. I’m joined today by Carrie Pickett, who has a long career in asset management and was recently a founder and principal of Blueprint Capital Advisors, having held a series of roles as controller, director of operations, and marketing and investor relations in other asset management firms. She’s a frequent contributor to the dialogue around the need for more diversity in the asset management industry. Welcome, Carrie. Thank you for joining me today.
Carrie Pickett: Thank you for having me, Aoifinn.
Aoifinn Devitt: Let’s start by talking about your journey into investment. Where did it start, and did it take any surprising turns along the way?
Carrie Pickett: You know, honestly, it’s all been a surprise. I didn’t plan on being in investments. I haven’t taken a traditional route. When I graduated, the majority of people around me were going into investment banking or consulting or going to work for a large bank. That wasn’t my path. When I graduated, I joined a family office and that family happened to be invested in alternative investments, in particular hedge funds, and were invested in sort of the industry titans of the day, call it the Cerberuses and Andors of the world, Pequot, Stark, etc. And that really was my introduction into alternatives. I had absolutely no idea that this world existed. I had no preconceived thoughts that, you know, that was going to be my path. And, you know, throughout college, obviously I was around a lot of people who knew exactly what they wanted to do. That was not me. I have you know, figured things out along the way and had a fun time doing it.
Aoifinn Devitt: What did you study at college and what aspects of your path in education have you found most useful in developing your career?
Carrie Pickett: So as I said, I wasn’t planning on being in finance. I actually was pre-med for 2 years and had every intention of going to medical school, you know, up until I realized that I really did not love blood and it wasn’t sort of the path for me, and so I decided to pivot. And ultimately I got a degree in economics and a minor in industrial and engineering. Both those things don’t necessarily lead you into finance, but what they do give you are quantitative and analytical skills, which I think are absolutely essential for investing and absolutely essential for finance because, you know, things are always evolving and having really strong quantitative skills really allows you to approach a problem and find a solution in a meaningful way. I’d also say though, know, you a lot of my education came from actually doing. And from being in roles where I had senior members of the team or the organization that really took time with me and explained how they were thinking about making an investment or explained various aspects of the industry along the way. And I think that You know, hedge funds, private equity, alternative assets, it’s really a bit of an apprenticeship business. You know, you learn from those around you and you learn from those that have done it before, but you really take, you know, their perspective. You have your expertise and then your lens that you apply to whatever the problem is. So I would you say, know, yes, the quantitative absolutely matters, but also learning on the job was big for me.
Aoifinn Devitt: That’s so true, and it’s funny, I’ve always found some courses on hedge fund or private equity investment to bear very little relation to what it’s like within the firm like that, or day-to-day what they do. So it is, as you mentioned, very much an on-the-job or apprenticeship training.
Carrie Pickett: Just to add to that, absolutely. And, you know, I can— I got a CAIA, so Chartered Alternative investment analyst. And one of the things that I remember thinking, just to your point, was, well, yeah, hypothetically or theoretically this makes sense, but this is not necessarily how I would see our portfolio manager deal with this, or I would see some investors think about our, you know, my hedge fund that I was pitching at the time, etc., think about this. So it’s absolutely, I think, you know, the practical experience matters and what happens day to day and the ebb and flow of information, because it is always evolving.
Aoifinn Devitt: You’ve launched a minority-owned firm, and earlier on you worked to build a business of a manager that was a female-owned credit manager. Can you tell us about that experience and how you believe the landscape is shifting for minority-owned firms today? Is it shifting for the better?
Carrie Pickett: So not to be too cynical, but I really believe that the landscape has not shifted for the better. You know, I think that the business has become very institutional over the last 10 years, and because of that, it’s resulted resulted in a much more challenging environment to— for anyone, not even minorities, but for anyone to launch an asset management firm. And in particular for minorities and women because of a few things. And I think, you know, as I was in those various entrepreneurial situations, there’s sort of 3 things that have— that stood out to me. And one, the first would be the importance of capital. And what do I mean by that? So capital to me takes three forms. There’s the operating capital needed to grow the business. And right now, because the business is so institutional, the amount of operating capital that is required to build an institutionally viable business from day one, which is basically what the market is is saying it requires is significantly more than what it once was, just because of the regulatory environment, you know, the amount of people that you need to have to be institutional, etc. Then there’s the investment capital. So you need enough investment capital and to be able to attract capital in critical mass to build a sustainable business and to build a business that can scale. And that dollar amount, know, you when I sort of first entered the industry, people would say, oh, you know, breakeven is $50 million to $150 million. Now you it’s, know, significant multiples north of that, dependent upon your strategy. And then third would be the personal capital. And that, I think, is the capital conversation that people are most uncomfortable talking about. You hear less of, but it’s almost the most critical out of three. Even you though, know, I think operating and investment are both needed. But the personal capital and having enough runway for multiple years on your own while you are supporting the operating capital of the business is critical. And, you know, I think that you need It’s funny, when I was early on and at sort of one of my first sort of startup ventures, the PM was on the podium saying, you know, you need 2 times sort of your annual salary to support yourself. Okay, I would now say you need a good runway for 3 to 5 years. Include, you know, and also adding to the operating capital that you need. So for those three things from a capital perspective, I think have become significantly more challenging. The second thing that I would say that’s important as you sort of think about an entrepreneurial endeavor is relationships. Relationships matter in this business. And I know, you know, you hear conversations around relationships,. But as an entrepreneur, you really need to think about, do you have the relationships that you can tap to either help grow your asset base, help, help you from an operational You perspective? Know, there’s a concentration of capital going on in the overall industry, and that concentration of capital is with large institutional players and consultants. And As a new firm or a new entity, you absolutely have to have the relationships with those groups to attract the investment capital that you need. And I think, you know, I’ve had conversations with early-stage managers who were very excited about their strategy, very excited about growing business, but didn’t have the distribution relationships really required to build a scalable business. So, you know, relationships matter. And then the third and final thing that I’d say as it relates to, you know, growing your business and how the landscape has shifted, et cetera, and what’s important is edge matters. And, you know, the edge and how differentiated you are from a strategy perspective has always mattered, but it’s become increasingly difficult as markets have shifted and more competition has entered into the space to really stand out. And so, those three things are— there’s sort of ebbs and flows around them, but they’re really essential as you think about launching a business. And I think those things, capital, relationships, edge, for a variety of reasons have made the industry more difficult and it’s more difficult to launch something new.
Aoifinn Devitt: You’ve really mapped that out very comprehensively there. I mean, even the edge part, which is really all that established firms really have to worry about— they probably have the capital, they have somebody else developing the relationships— even the edge part is very volatile because it is— the markets can be hostile, and it’s very hard to hold on to an edge. So I think that that is hard enough on its own, right, never mind having to worry about the two other aspects. But are there any— obviously, there’s going to be no quick fix for any of this, but are there any techniques that you think can mitigate some of these challenges, such as some of the emerging manager programs or fund of funds or maybe incubation-style strategies that can create a cocoon maybe around the relationship or the capital point?
Carrie Pickett: So this is an interesting question. I think that Having a real commitment and a real sort of incubation platform. And what I mean by that is a real capital base to be allocated to smaller managers. Not $20 million, not $25 million, you know, real capital that they can manage perhaps under some level of risk metrics that’s, you know, the larger you institution, know, oversees, I think that could potentially impact the business in a huge way because it allows those that really have the investment aptitude and the ability to really focus on what ultimately all of us should be focused on, the alpha generation, allows those sort of budding entrepreneurs to focus on what matters and not get bogged down with the added extra concerns that they may have starting a new business. When you are an entrepreneur, the one thing that you do not have is an abundance of time, and you’re always trying to, you know, balance the, you know, the pull and strain on the portfolio versus the pulling strain from the business versus other sort of challenges that you have. You know, I don’t think all managers would say that to an investor, but that’s just the reality of the situation. And I think that, I think that having a level of sort of incubation platform and real capital commitment around incubation would really change the needle. I mean, you see it in venture capital, right? You have entrepreneurs in residence. That’s what they’re doing. But there really hasn’t been that in the alternative space, and I’m not quite sure why.
Aoifinn Devitt: So I’d just like to ask you about one of those points you made around the fact that these ecosystems and nurturing incubator environments seem to already exist in the tech sphere, but don’t yet exist in investing. Why do you think that is? And what would it look like if it were to exist in investing?
Carrie Pickett: I think that there have been institutional investors who have contemplated something similar. So institutional investors who typically would allocate their smaller manager allocation or emerging manager allocation to the fund of funds community to then deploy. Some have thought about reducing the number of managers that they interact with and potentially providing larger allocations to those managers. So for example, allocate $100 or $150 to an emerging manager, put some risk parameters over, over them, give them some guardrails in terms of how to manage the portfolio, but really let them manage meaningful amounts of capital early on. Meaningful for them from a business perspective, but also meaningful for the institution institutional an investor that has a very large portfolio where, you know, an allocation of $10 to $15 million, while wonderful, really has little impact on a multiple-billion-dollar portfolio.
Aoifinn Devitt: That’s very interesting. I think it’s— there’s a lot of food for thought there in terms of how this could look. So some of these learnings have obviously— you’ve derived from many years of experience in working with entrepreneurial ventures. Have there been setbacks and challenges over that time that have led you to learn lessons from them?
Carrie Pickett: So it’s funny, I always joke that my career is really more of a random walk than linear, right? And I can’t think of necessarily one particular setback. That said, you know, obviously I’ve had them, and the biggest thing I’ve learned from them is, you know, you face the lesson, you sit back and you think about what occurred, and take that lesson going forward. But you pivot and you keep it moving. You know, everyone’s going to make mistakes. Try not to make career-ending ones, but you really try to just keep it moving. That’s sort of been my mantra with things.
Aoifinn Devitt: Certainly, the ability to pivot has certainly been tested this year. And looking back at people, or key people, or key pieces of advice that you received, Was there anybody that was really instrumental in your journey or anything that they said that you now still live by?
Carrie Pickett: So not every relationship, right, is going to be a positive one, and not every interaction is going to be a positive one. And I, you know, at the first sign of conflict and adversity, I think a lot of people sort of question if the industry is for them. And, you know, maybe it’s not the first sign, but maybe the 15th or 20th time You start questioning really, is this for me? And you know, I’ve seen many friends and particularly people of color leave the industry over, over the years, you know, after a while just not wanting to deal with sort of the headaches. And thankfully I’ve developed relationships with senior leaders in the industry, mentors, who have kept me here and have kept encouraging me to keep moving on and keep moving forward when there definitely were times that I didn’t want to be And, here. You know, really did see sort of the added value that I was bringing to the table and helping me think through how you to, know, address any issue that may be in front of me at the time. In terms of specific advice, there’s probably a couple things that have been said to me that have stood out, and they both were said fairly early on in my career. And the first is, don’t bring me a problem, but bring me a solution. And, you know, it was— that was said to me by, you know, a senior sort of portfolio manager launching her own fund. You know, an entrepreneurial in her own right. And, you know, she entrusted me with building her operational infrastructure and back office, etc. And it made me realize, like, you know, you don’t have to have every single answer, right? Things are going to happen. There’s— the industry is always evolving. There’s always complications that come to you. But you want to be part of that solution, right? You want to at least provide people potential answers to the problems that come forward on a day-to-day basis. And, you know, as my career progressed and, you know, I’ve been an entrepreneur for the majority of my career, that really resonated because when you’re an entrepreneur, as I sort of mentioned earlier, you have things coming at you on a daily basis. It’s almost like drinking out of a fire hose, right? And when you have people on the team that come to you and say, hey, we’ve got this problem, but here’s how I’m thinking about it. Here are the possible solutions. That is extraordinarily valuable, and valuable from the time constraint perspective. And so, you know, I think that piece of advice has been really important. The second one I would say is always understand where you sit on the P&L. What do I mean by that? Are you a revenue generator or are you a cost center, right? You know, that has different implications in large institutions than it does in smaller institutions. You know, large institutions, if you are a revenue generator, it’s easier to sort of handle some of the political things that may occur. You know, in a startup situation, I think, and as an entrepreneur, that’s predominantly my experience, I think it’s really important for the team to analyze that sort of comment. Even if you are, you know, operationally focused and not really focused on the growth of the business, in an entrepreneurial setting everyone has to be focused on the growth of the business and everyone needs to focus on being a revenue generator. And so I think those two things have really stayed with me throughout my entire career and have served me well.
Aoifinn Devitt: And one phrase that came to mind— that’s a very interesting point you made about knowing where you sit on the P&L, and I’m sure this is a phrase you know well given your entrepreneurial roots— is “only the paranoid survive.” And when you mentioned that, I immediately started thinking that that might make one paranoid to think about, are you a cost center or a revenue generator? But maybe that’s no bad thing, especially when it comes to thinking about one’s survival either within a larger firm or within a smaller outfit. So I thank you for that food for thought there. When you look at the investment world, what is it that you like most about it?
Carrie Pickett: So what I like most about the investment world is that it is always changing, right? And that it is always evolving. And you just need to see the angles and figure out where you fit and figure out how to add value. And for me, you know, I have a tendency to get bored with life. So I love the fact that it’s ever-evolving and there’s always sort of a multitude of things that can happen. In a day, in a week, in a month, in a year. So for me, it’s the fact that it’s always evolving.
Aoifinn Devitt: I didn’t want to ask this as part of the same question, although sometimes I do, is what are your thoughts on the levels of diversity in it? And one sobering point that I saw today that I just want to bring into the conversation is I saw an article which is the most powerful women in finance by the American Banker, 25 women, and I don’t believe there was a single Black woman on the list, nor a single Latina. And in this day and age, that’s quite frankly shocking. But maybe it’s a sign of just how much work still needs to be done.
Carrie Pickett: So it’s interesting that you say that and you bring that to light. You know, over the years I’ve sat in many awards dinners, right? And you have awards dinners for diversity and spotlight on an institution that’s doing a fantastic job in diversity. And, you know, up on the podium accepting the award are Caucasian men and Caucasian women. And, you know, to your point exactly, it’s hard to think that that’s diversity in this day and age, that the industry cannot seem to address the issues around people of color, broadly speaking. And You know, the diversity conversation is not new. Been here, it’s been here my entire 20-year career. And, you know, given some of the things that are happening globally, it’s definitely in the forefront of everyone’s mind. But I, you know, personally am a little bit tired of the conversations, the dialogue, and the sort of panel discussions that we see And I would prefer to actually be discussing actual results and those who have moved the needle to address the issues that we have in the industry. You know, the industry is data-driven, as we were talking before, the quantitative necessity of your background. The industry is innovative, right? We figure out solutions to complex problems. We create new products on a daily basis, etc., to provide solutions to to our clients. But for some reason, we can’t seem to figure out how to have results around the diversity conversation. And, you know, there’s even data as it relates to diversity and the ability for diversity to increase alpha generation, whether it be within the portfolio or just broader in terms of companies. But for some reason, there is just no, you know, change and no real quantitative movement of the needle. And so, you know, I think it comes down to will. I think it comes down to do people actually want to change? And right now, you know, after my 20-year career, I’d say no.. And unfortunately, you know, I think there is a decent amount of lip service going on right now, but I’d like to see real change. And so, you know, I’ve had people ask, well, what do you think is going to happen? And I’d you say, know, let’s come back a year from George Floyd and let’s see how many of these companies who are out there talking about diversity talking about, you know, their commitment to change have really changed and have really moved the needle in terms of numbers. That would be a commitment I’d like to see.
Aoifinn Devitt: Yeah, it’s a sobering assessment, unfortunately, and I think part of it is where this ranks in terms of the firm’s priorities. I’ve seen— I’ve been in investment banking prior to various headcount cuts and to various downturns. And before that there would have been a lot of gestures towards creating more diversity, in fact improving work-life balance for all. As soon as a downturn comes and as costs are cut, these programs fall by the wayside, and I think because it’s clear that they were not really a priority after all. They were a nice-to-have, not a must-have. So I think you’re right, if we wait a year and let’s see whether these programs are still a must-have, or whether they’ve fallen by the wayside. So it is sobering to say that, but I think you’re right.
Carrie Pickett: Yeah, but I think it also goes back to even your comment on program, right? At the end of the day, I think people look at this as a social— as being something social, right? And not really impacting their bottom line and not really impacting the sort of growth and revenue generation of the company. Which in fact, there are studies that clearly state having diverse thought does impact the bottom line. So I also think it’s how even the conversation is being had and how the thoughts are being expressed. It really does matter you because, know, diversity does 100% impact the bottom line.
Aoifinn Devitt: Absolutely. And I would just encourage our listeners to look up your article you wrote in June on about the P&I this very point, because I think it came out in a very timely way, and I think it really hit at some of the issues that emerging managers face. And I think it also expressed an honesty around these issues, which is rare. So a great article, and I certainly recommend people look it up. My last question is around any advice you might have for your younger self before you maybe embarked on that long series of entrepreneurial ventures. Is there anything, any wisdom that you know now that you wish you had known then?
Carrie Pickett: Yeah, I mean, it’s probably somewhat intuitive, but, you know, I think it’s better to ask for forgiveness than permission. And it’s better to be, you know, forward thinking and try to find solutions and try to be additive as opposed to not finding the solutions and waiting on others to solve problems for you. And, you know, it’s a fine balance, but I think it’s really important to forge ahead and sort of be a trailblazer.
Aoifinn Devitt: Well, that is a great, bold message to end the podcast on. So thank you so much, Carrie. It’s been a pleasure speaking with you, and thank you for sharing your insights with us.
Carrie Pickett: Thank you so much for having me.
Aoifinn Devitt: I’m Aoifinn Devitt. Thank you for listening to the 50 Faces podcast. If you liked what you heard and would like to tune in to hear more inspiring investors and their personal journeys, please subscribe at Apple Podcasts or wherever you get your podcasts. This podcast is for informational purposes only and should not be construed as investment advice, and all views are personal and should not be attributed to the organizations and affiliations of the host or any guest.
