Steven M. Adams was a founding Partner and General Counsel of Wayzata Investment Partners ("Wayzata"), an investment manager located in Wayzata, Minnesota with approximately $8 billion under management. Prior to that, he was a Senior Attorney in the Law Department of Cargill, Inc. and an Associate at Dorsey & Whitney in Minneapolis. He was also Chairman of the Board at Arrow Sheds LLC in Wayne, New Jersey and at Special Devices, Inc. in Mesa, Arizona until 2012 when that company was successfully sold. Listen to Steven Adams as he gives insight on the world of private equity.
Bobby: Thanks for joining us today Steve. You have a lot to tell us about. Go for it.
Steven Adams: Yes. I went to Stanford law, worked for Dorsey & Whitney, then went in-house at Cargill. I worked there with the financial market division. Learned lots about commodities trading and other securities. I got to work with a group at Cargill that worked with distressed companies. We pretty much turned into a private equity group within Cargill. We then eventually bought the business as a management buyout from Cargill. It was seven of us who bought it to form Wayzata Investment Partners. At that point, I was a founding partner of the firm. Then in June 2008 we got out. I then became a private equity consultant and professor.
Bobby: How do you go from working for Cargill to buying yourselves from Cargill?
Steven Adams: Yeah. We had a business at Cargill already with one investment fund and management fees coming in. We had streams of revenue. The seven of us had about 27 employees. When we were buying the group, we asked our employees if they’d like to buy the company with us. I think it was 24 of the employees joined us.
Bobby: So in layman’s terms, explain to us what private equity is and what Wayzata Investment Partners did.
Steven Adams: It is structuring a private investment fund. Kind of like a mutual fund but it’s private. There are specific standards to invest in it and you are in a different regulatory universe than other funds. A private investment fund can pursue much more creative investment strategies. Private equity is intended to have “sticky money”; the firm is given 5-8 years to manage a fund and get a return over a longer horizon.
Bobby: So what about your firm?
Steven Adams: From Cargill experience, we had a lot of knowledge in industrials, commodities. We were always biased towards taking control positions. We would make large investments. We would allocate $50-$150 million per position.
Bobby: What is the hardest thing about private equity?
Steven Adams: It’s kind of stressful. Managing $8 billion of other people’s money can be stressful. They expect some high returns, but that’s also part of the fun. Also, it is really hard to raise the money nowadays. It’s a crowded space today, making it more difficult to raise money from institutional investors. I think one thing that Wayzata Investments Partners did well was having some humor. It made things less stressful and a lot more enjoyable. You always need to have a sense of humor in the workplace.
[More discussion on Private Equity]
Bobby: So time for the questions we ask all of our guests. This first one is the random one. If you could wedgie a historical figure, who would you wedgie?
Steven Adams: I love Alexander Hamilton. Jeez, that’s an awesome question! The way Jefferson treated Hamilton, I’d love to give him a wedgie. I mean Hamilton’s financial plans were critical to the development of this country, so I would love to wedgie his opponents.
Bobby: What skills does a young professional need to have out of college?
Steven Adams: Curiosity. We are in a changing world and you have to have curiosity about those things changing. You cannot be intimidated by that. Knowing how good young people are at accessing information makes me think that a curious young individual who knows how to leverage technology is actually at an advantage over older professionals.
Bobby: What do you have to give up for success?
Steven Adams: I would say this. Do not sacrifice family. But with that being said, things worth doing are worth doing well. And there will be times when you no longer have as much control over your time. This is especially true when you’re young; if you want to truly learn it and get good at it, be willing to accept the amount of time you’ll have to put in.
Bobby: Last question: What is one life hack that listeners can do this week to become successful?
Steven Adams: Mine is a mindset. One’s mindset is very important, especially for young professionals. When you’re in your first or second job out of school, your mindset has to be all about learning things and gaining connections. You want to gain skills and industry experience. That’s what’s important in your early years as a professional. In fact, over the course of your career, the relationships you gain during the early years of your career is much more important than any money you will receive. These relationships can sustain the rest of your career.
So, this week, think about developing the right mindset. If you do not have a job that gives you the experience you need for future success as well as the relationships, then you need to quit your job. Step back and develop that mindset.
Some reminders from this podcast:
1. Have a sense of humor. Find laughter in the good times and the bad.
2. THIS WEEK: When you’re in your first or second job out of school, your mindset has to be all about learning and relationships. Develop and internalize this mindset this week.