Missionaries and Mercenaries

June 12, 2021 by Ted Seides

Alex Rodriguez described selecting investment partners as searching for missionaries and not mercenaries. His partner on the Minnesota Timberwolves purchase and VCP Fund, Mark Lorie, used the same expression on Guy Raz’s How I Built This to describe how he felt after selling Jet.com to Walmart (a missionary) and diapers.com to Amazon (a mercenary).

That got me thinking about how to uncover the difference between missionaries and mercenaries among investment managers. In a few situations, it’s fairly easy.

  • Missionary. David Swensen was the ultimate missionary. An evangelist for his espoused investment principles and an unwavering belief in the importance of managing capital to serve non-profits.
  • Mercenary. Many players are in it to make money for themselves and exit. With that incentive, they look for ways to bend the rules in their favor. The examples through time become debris after blow-ups, from Metallgesellschaft AG in the commodities markets in 1993 to the Bear Stearns mortgage funds in 2008.

More often, however, the distinction is nuanced.

  • Missionary individual vs. missionary team. Some investment organizations are led by a missionary, but the entire team may not fall in line.
  • Well-aligned mercenaries. While reasonable to expect a fair amount of mercenary activity in money management, proper alignment between the manager and client can mitigate some of the issues mercenary behavior creates.
  • Missionaries who become mercenaries. Missionaries may not be not steadfast over time. As I described the difference between missionaries and mercenaries with my wife, she shared a story of a hairstylist who used to be a missionary but became a mercenary. Once positive, bubbly, and taking pride in her work, the stylist now complains relentlessly and does a half-ass job. Similarly, asset managers may evolve. The young and hungry missionary may fade in into working for the money.
  • Mercenaries who become missionaries. Alex loved baseball from the time he was a kid, but his mistakes caught up with him and may cost him the Hall of Fame. He now discusses the importance of the quality of people around him and exudes a passion for business that is far beyond profit. Investment managers may begin with dollar signs in their eyes and evolve to an appreciation and love of the work as the most important reward.

The more I thought about this concept, the more intrigued I’ve become. I look back at my career and see periods of time when I was on each end of the seesaw.  For now, I feel the excitement of being a missionary and am looking forward to aligning with more of them in our upcoming investment vehicle.