Tom Steyer became a billionaire by solving puzzles.
That wasn't his technical job description — he actually founded Farallon Capital, a hedge fund in San Francisco, 30 years ago. As an investor, two signature moves stand out: One, he got his alma mater, Yale, to invest a portion of its endowment with him; the success of that arrangement sparked a trend. Two, he often made his own luck by investing deeply in countries and industries.
As Steyer scouted unusual investments in unexpected places, he followed some basic rules. Now that Steyer has set his sights on politics and policy — he's rumored to be considering a run for California governor — I sat down with him for Fortt Knox. He gave me some of his best insights on how to succeed, and why he's fighting the new administration in Washington, D.C.
Steyer has a different take on dealmaking than fellow billionaire President Donald Trump. In his experience, building an investment giant from scratch, it's important not to push your advantage too far.
"I don't want to take advantage of you. I really don't. Because you're smart. And so if we do something together and I get 80 percent of the value and you get 20 percent, why would you ever deal with me again? What I want to do, is do 25 things together where we each go 50-50, and we don't have to fight each other. We each spend all of our time trying to make the whole pie as big as possible, and no time fighting about how to slice it up."
I point out that Trump seems to have done just fine treating people the way he does; Steyer's response is thought-provoking.
These days, the culture tells us we're supposed to have a long-term plan for everything. Steyer's experience gives another point of view. Rather than always trying to devise the perfect roadmap for life, which is bound to change anyway, we should focus on getting the most out of the opportunity in front of us.
"I went to Yale College. Why did I go? Not sure. … I went because I thought it was a good school, and what that meant, I'm not sure I knew. Because it was sort of famous. And so I thought, I'll go to a school that has a reputation for being a great school. And I don't think it was that much more complicated," Steyer says. "I wished I'd gotten recruited to play sports. And I played sports all through college. I was the captain of the Yale soccer team. But I walked on to the Yale soccer team. And you know, I thought — I love sports. I'm playing sports because this is super, super fun, and I love doing this."
Strategy is still important. But the biggest wins often come in un-plannable moments.
At a certain point — after tens of millions of dollars in earnings, one imagines — Steyer's wife pointed out that he didn't have to keep working. Their family goal, he says, was to sock away enough to have a house, pay for healthcare, and fund retirement. Anything you do from here on out, she said, you should do because you love it. Steyer agreed — and he kept investing. Why?
"I love puzzles. I love figuring things out. I'm someone who really is interested in how companies work, and how industries work, and figuring out — that's the biggest puzzle in the world! How do you think about a Saab dealership in South Africa?" he says.
Curiosity is a prized attribute in an investor, but it applies to other fields, too. It not only helps to keep the work interesting, but also pushes us beyond what's been done before.