When I was a kid I played baseball and my favorite game days were when we got to play a double header. I think that was because it gave me an excuse, if not a reason, to spend the entire day doing something I truly enjoyed.

I think about this whenever I start to draft an investment memo. See, we’ve iterated into a process at Permanent Equity whereby the investing team circulates a full-blown analysis to the diligence and operating teams before we start diligence. The reason is that we want everyone to understand what it is we think we are investing in and then empower anyone to throw a flag if they come across anything that runs counter to that thesis. That can be in the numbers, the people, the opportunities, or the risks. 

But the point about fun is that that’s what I want to have as I write the memo. If it’s not fun to write about an investment, it’s not going to be fun to hold it for 27 years. Because if you’re not passionate about the numbers, the people, the opportunities, and the risks, it will be brutal to endure all of the volatility that will happen along the way.

The other week Mark and I went to visit a prospective partner. We spent a couple of hours together and at the end of it he said, “That was fun. You guys should have planned to stay for dinner.”

We replied half-jokingly, “Well, we give people a couple of hours first. And if that goes well, a day or two. And then we jump to 27 years.”

But it’s true that if you’re going to do something for a long time, you have to enjoy doing it. So even though it’s completely a non-financial question, it’s entirely credible to ask before making any kind of investment, “Is this going to be fun?”

– By Tim Hanson

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