April 12th was our seven-year Pier anniversary. As this date comes and goes each year, I find myself reflecting. This year, I feel immense gratitude for getting to work alongside a team that not only pushes me to be my best, but that I also like spending time with. I’ve held my breath with each hire because despite being a “HECK YES” for each person, I still am afraid someone new could dilute the level of talent or change the culture in a negative way. So far, our decision to hire each person has been the right one.
And if I reflect all the way back before Day One, the first “people” decision I had to make was deciding whether to partner with Conor. The original idea for Pier was Conor’s and he approached me about founding the firm together. It was a decision I had to make with little data -- we hadn’t worked together as fellow employees or even worked across the table on a deal. We did spend a decent amount of time together leading up to formally launching the business, but frankly, I think we got really lucky with how well the partnership has worked out. On Day One, the obvious element we saw that we believed would make us great partners: we had different areas of expertise and varied experiences that would be quite complementary for building an investment management firm in specialty finance. An important nuance being that we both actually enjoy doing different things for the firm. That’s important.
Also, we both bring different perspectives to the decision-making process. We bring different facts, concerns, and questions that facilitate spirited conversations. This is good – it helps us have a holistic view to identify risks and issues that we would not necessarily individually consider. When we analyze all of these factors, we can look at the information we know – and also assess the unknowns – and with whatever level of risk is there, we generally agree on whether to proceed. In reflecting over the past seven years, what I think has ultimately made this partnership seamless is that we have a similar risk tolerance. We rarely disagree on the ultimate path forward.
Cheers to another seven years working alongside highly intelligent, good people.
-Jillian
Most people think Specialty Finance is esoteric. In reality, there are hundreds of billions of dollars of private consumer loans, student loans, auto loans, and small business loans, receivables, and advances that all fit into this bucket.
However, there are assets that are truly esoteric in special finance. In the last few weeks, I've spent time in a variety of them, so I thought I'd give you a bit of flavor for my thoughts on each.
Music Royalties - I've been working on a new music royalties deal for the last two weeks and I'm always blown away at the amount of data available here. Each track has several to dozens of potential beneficiaries. The music is paid out differently depending on how it's used: concerts, streams, radio, movies, and more. Then, tracks are paid for every single stream, usually fractions of cents that may vary by artist, track, genre, etc. Now imagine that being different by country (hundreds) and platform (dozens: Spotify, Apple, etc.). The permutations are endless, but it can all be modeled and predicted...and financed. There are non-quantitative strategies for adding alpha as well, but we've yet to endeavor down that road.
Litigation Finance - Certain parts of Lit Fi are more advanced and efficient then others. But, funding cases or claims is all relatively new to financing. The most fascinating aspect is that lawyers and law firms have been funding this themselves forever and, on average, really have done a horrible job doing so. This is also an asset class where a single law firm may not have the data to know what best to do, but in bulk it becomes more obvious.
Sports Finance - My thoughts on the opportunities here seem to change on a monthly basis. That is how quickly the industry is evolving. One thing is clear to me...incentives are generally not aligned for everyone involved. Fixing that is wherein the opportunity lies. Also, sports finance is a long game where results can play out over careers or even generations.
Collections - If you borrow money and don't pay it back (or receive an invoice or judgement for a similar obligation), your debt may be sold to a debt buyer who collects on it themselves or hires a Collection Agency. I used to think this was one simple process. But, the nuance here is fascinating. Some Collection Agencies only focus on consumer collections and others on commercial. Even within auto, there are different repo experts depending on whether you're collecting on a car, truck, or motorcycle. We've talked to a firm who only specializes in collecting debt from bankrupt borrowers. And another who only collects on deceased borrowers. Talk about esoteric!
- Conor
