Episode 30: The Psychology of Sales w/ Dr. Daniel Crosby and Stacy Havener | Why Typical Fund Managers Tell Terrible Stories (and How to Make Sure You Nail Your Narrative)
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Fund managers, buckle up! In Part 4 of 'The Scientist and The Storyteller' series, Dr. Daniel Crosby, a behavioral psychologist is back and ready to tell you the cold hard truth about why your brain might be sabotaging your storytelling game.
Listen in as he and Stacy discuss:
Why our brains cling to conformity, killing our chances of standing out
Why linear stories put people to sleep and how mastering the ‘peak-end’ rule will help
A sniff test that’ll help you determine if your story is snooze-worthy
A roadmap for spicing up your narrative, even when your brain screams 'No!'
..and so much more.
About Dr. Daniel Crosby:
Dr. Daniel Crosby is a psychologist, behavioral finance expert, and New York Times bestselling author who helps organizations understand the intersection of mind and markets.
He is also a father of 3, a fanatical follower of the St. Louis Cardinals, an explorer of the American South, and an amateur hot sauce chef.
TRANSCRIPT
Below is an AI-generated transcript and therefore it may contain errors.
Dr. Daniel Crosby: [00:00:00] From a psychological perspective, know that you are wired for conformity. This won't come easy for you. And if it doesn't hurt a little bit, if it doesn't feel a little risky or a little dangerous, that's probably a good reminder to you that your story is a little samey.
Stacy Havener: Hey, my name is Stacey Havener.
Stacy Havener: I'm obsessed with startups, stories, and sales. Storytelling has fueled my success as a female founder in the toughest boys club, Wall Street. I've raised over 8 billion that has led to 30 billion in follow on assets for investment boutiques. You could say against the odds. Yeah. Understatement. I share stories of the people behind the portfolios while teaching you how to use story to shape outcomes.
Stacy Havener: It's real talk here. Money, authenticity, growth, setbacks, sales, and marketing are all topics we discuss. Think of this as the capital raising class you wish you had in [00:01:00] college mixed with happy hour. Pull up a seat, grab your notebook and get ready to be inspired and challenged while you learn. This is the billion dollar backstory podcast.
Stacy Havener: So a scientist and a storyteller walk into a podcast studio. That's how the story goes, right? Well, that's how it goes here, my friends. I'm super excited for this four part miniseries with my B5 bestie, Dr. Daniel Crosby, Chief Behavioral Officer at Orion and the host of Standard Deviations podcast. This is not the first time Daniel and I are teaming up, but it may be the best yet.
Stacy Havener: I've been on his podcast, he's been on mine, and now we are joining forces. Because successful sales is art and science. It's right brain and left brain. [00:02:00] It's Daniel's unique ability, and it's mine, together. If you want to get good at selling, you've come to the right place. I don't know, it's kind of like two rappers in the studio freestyling.
Stacy Havener: At least that's what I'm telling myself. So, stop. Collaborate and listen. Here we go.
Dr. Daniel Crosby: Welcome to the fourth and final installment of the Scientist and the Storyteller, a joint production of Billion Dollar Backstory and the Standard Deviations Podcast. I am your host for today, Dr. Daniel Crosby, and I'm joined by my good friend and storytelling wizard, Stacey Havener.
Dr. Daniel Crosby: Welcome to the show,
Stacy Havener: Stacey. Thank you for having me. Can we just pause to talk about how this is the final installment? I'm
Dr. Daniel Crosby: sad. Well, the people are sad too, because they've learned a lot and they've had a great time doing it. Yeah. This has been, this has been a blast. I think it was, this was all props to you.
Dr. Daniel Crosby: This was your idea and it's been just [00:03:00] fantastic. So, well done.
Stacy Havener: I agree. I agree. And you know, we're here for Encore. Yeah. Performances, should anyone request that. That's right. So just. In case. That's right. What are we talking about
Dr. Daniel Crosby: today? Well, today we're going to the dark side, Stacey, uh, because we are not, we are not afraid.
Dr. Daniel Crosby: Uh, we are not afraid to use our knowledge of behavioral finance to go to the dark side. And one of the things that we know about human nature is. That people are two and a half times as motivated by loss as they are happy about a comfortably sized gain. So today, in previous episodes, we've been talking about how to make your story great.
Dr. Daniel Crosby: Now we're going to talk about how to make your story not suck. And we are doing this in honor of the late Charlie Munger who we lost just recently. Famous for popularizing the term invert, always invert. That's what we're going to do this week. We're going to invert the conversation. We're going to look at the [00:04:00] hallmarks of the worst stories and talk about some of the traps that people fall into when telling their stories.
Dr. Daniel Crosby: And we're going to make sure our good listeners don't fall into these traps. What do you think? I think it's brilliant. Okay. Let's do this. Well, I know, I know you're going to go to the dark side with me. So the first I pulled a couple of these, I read a bunch of articles, right? Super scientific. I read a bunch of articles on sort of the hallmarks of the worst stories.
Dr. Daniel Crosby: And then frankly, I just went and thought about the worst movies I've watched the worst books I've read, the worst pitches I've listened to, and really came up with a couple of these on my own. Okay. And yeah. You and I talked about this first one. We both hate this. The first reason your story may stink, we're tempering the language a bit.
Dr. Daniel Crosby: It's a family show.
Stacy Havener: Yeah. Okay. That's fine. It's a family show.
Dr. Daniel Crosby: It's too linear. It's too bullet pointy. It's too first this, then that. Talk to us about why do people go down this path and what's the problem with this approach? [00:05:00]
Stacy Havener: Okay. It's so true. This is, I love this whole vibe of inverting because It's so true because it's so easy to tell, especially your backstory in a linear way.
Stacy Havener: Why is that? Because we typically want to start at the beginning and the easiest place for us in a professional setting to start is like the beginning of our careers. And so what ends up happening is the story becomes a resume. I worked here, I did this, then I went here, I did that, and now I'm here, and I do this over here.
Stacy Havener: And nobody's vibing with that story. Because here, and, and again, going back to previous conversations we've had. Why aren't they vibing? There's no tension. It's not interesting. There's no villain. Where are we going? Where are we? We started here. Where are we trying to get to? Like it just leaves out all of the [00:06:00] components that make a story powerful.
Stacy Havener: You've just, you've taken the opportunity to tell a story and then you made it a bad one. So bullet point. So a story is not a resume. A story is not a resume. And I think, because especially in the investment industry, people are uncomfortable talking about themselves with any kind of authenticity or vulnerability.
Stacy Havener: The default is I'm going to go to a very surface place. A very fact oriented place and I'm just gonna tell you My resume and I'm gonna call it a backstory and there we go. And it's a bomb.
Dr. Daniel Crosby: So I remember Because how could I forget I remember the first time you were on my podcast back in the solo days when you were on my podcast and you started talking about your story and you said something to the effect of like Well, it all started on the soccer pitch or something, you know, something like that.
Dr. Daniel Crosby: And I'm like, here's [00:07:00] this champion for boutique asset managers and you immediately have my attention because it's like, well, how did she get from, you know, the soccer pitch to the boardroom? So to, so to speak. And it is a bit of that, you know, Record scratch, freeze frame, like, yep, that's me. I bet you're wondering how I got here, trope.
Dr. Daniel Crosby: Yeah,
Stacy Havener: totally. From the movies, right? Totally. And I think we were chatting about this the other day. I think the challenge, there's a couple challenges around story. One is, what's the story? Okay. Then the second piece is, how are you going to tell it? And you have to get both of them right. I mean, the bullet point thing, you haven't even got the story down.
Stacy Havener: What compounds the problem is that now you're telling it in a way that just is stinking up the joint. So you've got a bad story and a bad delivery and that's just a recipe for a disaster. [00:08:00] So the example that you just gave is helpful if you find yourself defaulting to bullet points and boring.
Stacy Havener: Challenge yourself to start at a different place other than the beginning. What if you started at the end? And then went backwards and then built up to the end again, right? That has a nice structure and delivery to it. What if you started in the messy middle? Like, it's 2008. The markets are collapsing.
Stacy Havener: Like, I mean, you could start in, like, the messiest part of your story and kind of build that intrigue and all those things. So, I think there's a real art to not just crafting the story, but to telling it. And the bullet point thing is not it. Yeah,
Dr. Daniel Crosby: you know, bringing in a little bit of psychology like we do on this joint show, there's something we've talked about a bit in previous episodes called the peak in rule, where people have the best memory for sort of the [00:09:00] most emotional.
Dr. Daniel Crosby: I mean, it could be best or worst, like the most emotional part of an exchange and then and then how it is. Right. And so I think in this linear kind of stinky way that we're talking about, it's just bullet point, bullet point, bullet point. And then here we are today. And like the ending is like the end, right?
Dr. Daniel Crosby: There's no, there's no real peak. The ending is boring as can be. And so I love the idea of starting in that messy middle, like the point of max conflict, or even starting again, like movies do find that emotional peak, begin with that. And then tighten up the ending to make it just as memorable, because that peak and the end are what people are going to remember, and there's no peak end sophistication to an enumeration of a bunch of bullet points.
Stacy Havener: No. And you know, you, so I love when we combine science and story, obviously, hence we're here, but what's so great about that is one of the best pieces of advice that I've received around storytelling [00:10:00] has to do with memorizing. And maybe this will come back because memorizing your story or memorizing your presentation is also a horrible way of telling of delivery, right?
Stacy Havener: That's not a good way to do it. However, For people, especially again in our industry where, you know, you want to have your notes and your script and all this stuff, the advice was nail the beginning and nail the end. Those are like the 2 things that you can memorize and really make sure you hit and then in the middle just.
Stacy Havener: You know, you don't memorize and that helps the story have a powerful start and a powerful end, which you just said from a psychology perspective, a science perspective, that's what matters. And then in the middle, it's just as real. So I love that.
Dr. Daniel Crosby: Yeah. I'm a big, uh, I watched shark tank with my kids. It's like the one show we can all agree on.
Dr. Daniel Crosby: Right. And so we watch shark tank together sometimes, and you'll see people here on the [00:11:00] biggest stage of their life. And because they've memorized their presentation down to a tee, like one of the sharks will interject or make a joke or something. And they're thrown so thoroughly that they can't even continue.
Dr. Daniel Crosby: And it's like, yeah, you should be fluent, right? Like you should know the material, you should have fluency with the material, but that's different than the sort of rote memorization that. To you if you forget it for a second. Um, okay. Did you just drop an f
Stacy Havener: bomb? Buck!
Dr. Daniel Crosby: Come on now! Family show! I was
Stacy Havener: like, this family show just really took a turn!
Dr. Daniel Crosby: No, I went from sucky to stinky! Buck, it's a horse! It's a horse analogy, I'm from Alabama, come on.
Stacy Havener: Okay, sorry.
Dr. Daniel Crosby: Okay, second one. You, now this is you, you just fell prey to this. We're gonna make you an example. You don't know the audience, Stacey.
Dr. Daniel Crosby: You don't know who you're [00:12:00] talking to. Wholesome, wholesome guy that I am. Right, the second one is you, you know, I'll liken it to, uh, my first job out of my PhD program. Was doing a pre employment assessment. So I would come into an organization and help them hire good people. And one of the things that I always found in dysfunctional organizations.
Dr. Daniel Crosby: Is that these people had hired a hundred clones of themselves, right? So we tend to see the world through our own lens. Psychology is very clear in stating that we tend to like people who are like us. And so when we're telling a story. I think sometimes we can under research the person sitting across the table from us and tell a story that we think is cool or emphasize points that that we think are important that may have little relevance to them.
Dr. Daniel Crosby: Talk to us about knowing our audience. Yes.
Stacy Havener: Oh, my gosh. Well, I think it applies in [00:13:00] so many different forms because so if I take it to the industry that we're in knowing your audience. Yes. Even before that, knowing the audience that you want to be speaking to is super important because if I'm a new fund and I, and we've talked about this before on other podcasts, if I'm a new fund, and I'm like, huh, I just broke out of this big firm.
Stacy Havener: And this huge, uh, consultant had, you know, clients that had a billion dollars with us. So I'm going to call that consultant first at my new co with no money, no track record. So the first problem with the audience is, you know, you get to pick your target audience when in this biz, and a lot of times you pick the wrong one.
Stacy Havener: Then you try to tell a story to them that you think they want to hear, but you can't do it because it's that the story you are actually living is not the story they want to hear. And then I don't care how good of a storyteller is. You can't spin [00:14:00] it. Okay. So the 1st thing is like, kind of know who your target market is.
Stacy Havener: The 2nd piece, which is what you described is okay. Now you have a meeting with somebody. And you just assume somebody said assume aside to me today and I was like, Oh, that's really interesting term. You just assume that they're going to want to geek out on this stuff that you're going to want to geek out.
Stacy Havener: Let's talk about how that shows up. I'm a fund manager. I love the market. I love all the nuance or I'm a quant and I love all the Greeks and all that stuff. And so now I come to a meeting with a family office and I'm thinking we are going to geek out on markets and numbers and data. And do you know what the family office is doing?
Stacy Havener: Tuning you out because they don't vibe on that. That is really common and really [00:15:00] challenging for fund managers to break. They just assume that the stuff that lights them up, their unique ability is what the investors want to talk about. The reality is, you know, what people want to talk about. Then they want to talk about them and the things that are important to them and the things that light them up.
Stacy Havener: And if you come into the conversation talking about you and what lights you up, that's. a recipe for disaster. We'll be back in a moment after a word from our premier brand partner, Ultimis Fund Solutions.
Stacy Havener: Since our founding in 1989, we believe that alternative investments are integral part of client portfolios. Unfortunately, delivering high quality hedge funds and private market exposures has always been a challenge for the wealth management industry. These type of alternative investments introduce unique [00:16:00] challenges related to taxes, qualifications, paperwork, and reporting.
Stacy Havener: As a result, high net worth investors tend to be significantly under allocated to both hedge funds and private markets relative to institutional investors. That's Stephanie Lang, Chief Investment Officer from Homeric Berg, an 11 billion RIA headquartered in Atlanta, Georgia, that serves over 2, 700 clients in 46 states.
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Stacy Havener: Hall McBurg created a 3C1 fund in January 1999 to provide their high net worth. and institutional investors with ready access to a [00:17:00] diversified portfolio of hedge funds. As interest in the fund grew and the constraint of the 100 investor rule loomed, HB began exploring ways to continue expanding the investor pool without negatively affecting existing shareholders.
Stacy Havener: We'll hear more about the creative fund conversion work that made it possible later in the show. Now, back to
Dr. Daniel Crosby: the program.
Dr. Daniel Crosby: I have a great Story from a previous employer, we won't share any identifying information, but one of the advisors that we served was in line for a huge piece of business, hundreds of millions of dollars, this investor had had a massive exit, sold the business, and it was down to two final advisors. Who are they going to work with?
Dr. Daniel Crosby: So our advisor was on the young side, and I think they felt a little insecure. And again, I want to be clear, this was before I was working with them. So they, they [00:18:00] go into this presentation with all the Greeks, right? They're a little young, they're feeling a little insecure, and they're like, here's how I'm going to take your, you know, quarter of a billion dollars that you've just earned, and how I'm going to compound it at a clip that is, you know, above and beyond what anyone else can can do.
Dr. Daniel Crosby: Right? Here's how I'm the smartest person in the room, and I'm going to get you the biggest ROI on this 250, 250 million. Well, the other advisor took a very different approach and won the business. Because the client, all they were worried about, right? They're like 250, like put it in treasuries. Who cares?
Dr. Daniel Crosby: Like, what are we, like, you can't, like, you can't spend that much money. You know what I mean? Like 250 million. Like, what am I going to do with that? They had young children and they're like, our only concern is how do we help our kids? Be high functioning, productive, generous, kind, capable members of [00:19:00] society when they are growing up from a young age with life changing wealth, like how do I let these kids not be leeches and just, you know, it bombs when they realize that they don't have to really do anything ever and they'll still have an extraordinary level of comfort and our advisor just went a totally different direction, assuming Climbing flag That, you know, these big money clients were going to make big money.
Dr. Daniel Crosby: They didn't care a bit, right? They wanted to just do a 50 50 index, let it ride and take care of their kids, right? And they launched a life changing piece of business because they didn't know the audience. They didn't know the story.
Stacy Havener: Yeah. Okay. So here, can we talk about here's how you can fix that really quick?
Stacy Havener: Like, let's say that you did not have time to prepare. You're in the meeting. And you don't know anything about the person you're talking to. You want to know how you flip the script? You ask a [00:20:00] question. I think there's all this pressure on you, like we'll use your example as the advisor, to pitch. And you don't have to do that.
Stacy Havener: Nobody said you have to walk in and start talking and not stop until the meeting's over. You can walk in. And get them talking. And you know what that does? Well, A, they love the meeting now because it's about, they're talking. It's about them. You also can ask questions and find out through discovery what is important to them.
Stacy Havener: Like, hey, if we're sitting here three years from now, what does success look like to you? Get them talking about how did they, how did they, what their business, how did they build this wealth? Just get them talking. Because you're going to get so many clues that will inform whatever stories or whatever narrative or whatever sales pitch you're going to deliver can be informed by what they say to you right there in the meeting.
Stacy Havener: Let them go first. Ask questions. [00:21:00] Story listening is just as valuable as storytelling.
Dr. Daniel Crosby: So, there's, by some accounts, Time of possession. If you think about two people who have just met conversational time of possession, by some measures is the best predictor of how much those two people will like each other when they, when they part ways, and the more you can let someone talk, the more they're going to like you, right?
Dr. Daniel Crosby: The more you let someone talk, the more they're going to leave that inner interaction and go, Hey, I really, I really like her. She's great. And it's because you got to talk about yourself the whole time. So going back to what you said earlier. You really, I think we feel too much pressure to, to perform, to pitch, to fill every silent moment.
Dr. Daniel Crosby: And there's so much value to be had in just. Asking a question
Stacy Havener: and you know what, do you consider yourself an introvert? No. Okay. I would agree with that. However, I think this is one of the [00:22:00] reasons why introverts are really good salespeople because as an introvert myself, which no one ever believes, but maybe I'm an introvert, whatever.
Stacy Havener: The thing that makes me most comfortable as an introvert is not talking. And so I am very happy to ask questions because the spotlight is not on me. And I love hearing people's stories. And even though I am a good storyteller, I wonder how much of that just that helped me raise so much money. Because naturally, I did not want the spotlight.
Stacy Havener: And I asked a ton of questions and genuinely enjoyed. Learning about these people.
Dr. Daniel Crosby: Yeah, it's a great point. People confuse, uh, social skills with introversion and extroversion. Right? Someone like you, very socially skilled, that's not the same thing as where you get your energy from. So, folks are smart to look [00:23:00] out for that too.
Dr. Daniel Crosby: Okay, number three, the third reason why it may stink because this is a family. Is your concept your concept is to to say me, right? So you work with you work with asset managers, right? There's now more etfs and hedge funds than there are individual securities On my side of the of the world. I work primarily with advisors There's 300, 000 advisors in the U.
Dr. Daniel Crosby: S., right? 300, that's like a, that's like a nice sized city full of advisors. If you're one of the whatever, 10, 000 hedge funds or 300, 000 financial advisors, you cannot afford to be samey. And yet so often I think we're all speaking the same language. Whether it's, you know, value and growth or whether it's, you know, your outsource CIO or wherever it is, like, we're all sort of speaking the same language.
Dr. Daniel Crosby: How can we stand apart in such [00:24:00] a crowded room?
Stacy Havener: Yeah, well, it's great. I mean, it's let's stay in the, in the sort of the negative, right? The inverse for a second before we give them advice, because I think. Why people do that is they're scared because even though, like, if I put a quote out on social and I was like, why blend in when you're born to stand out?
Stacy Havener: Everyone would be like, like, heart. Heck. Yeah. You know, all the things, but let's just unpack that for a second. Human nature is actually not to stand out, right? Like just for survival, we are sort of in it. It's in our nature to want to fit in. So while intellectually we know standing out is the way to win business, or just live a life that means something to you, all the things.
Stacy Havener: We don't really, at our core, want to do it. [00:25:00] And so what we, so how that shows up when you're in a meeting or, you know, crafting your website language. is you sound like everybody else. Cause it's safe, and it's comfortable, and you think people will like you because they like other people who say those things, so you should just copy that.
Stacy Havener: Standing out is scary. It's lonely. People may not like what you're saying you're all about. And I think as humans, well I defer to you, like it's, that, that is not easy for a human to do. Yeah.
Dr. Daniel Crosby: So I have a couple of chapters about this in the behavioral investor, but you know, a quick, a quick point that always stood out to me value investors.
Dr. Daniel Crosby: There was research on value investors can true, like deeply contrarian value investors suffer physical pain. As a [00:26:00] consequence of those positions, it's literally physically painful to swim upstream of the rest of humanity. And we are, I mean, you, you've all know a Harari, the guy who wrote sapiens, he argues that our greatest.
Dr. Daniel Crosby: Our greatest human trait is our ability to work together, right? That's what separates us from the rest of the animal kingdom. That's why, you know, we can build cultures and civilizations and governments and religions and whatever. It's because we can work together towards a common goal. And it's painful to stand out from that.
Dr. Daniel Crosby: So that's point number one. We are wired for conformity. Psychological point number two is that we dramatically overestimate our own degree of uniqueness, right? So how many times, like Twitter, Twitter and LinkedIn are amazing for this, you know, they're like bit of a hot take here, like unironically, right?
Dr. Daniel Crosby: Here comes a Call me a contrarian, but, and [00:27:00] then it's the most bland thing you've ever heard. It's like, call me a, this is a bit of a hot take, but pizza is delicious or something. And you're like, wait, what? Everyone agrees with that. Yeah. Everyone thinks that. And so I think, you know. From a psychological perspective, know that you are wired for conformity.
Dr. Daniel Crosby: This won't come easy for you. And if it doesn't hurt a little bit, if it doesn't feel a little risky, or a little dangerous, that's probably a good reminder to you that your story is a little samey. And then the second thing is just know that you're overestimating, almost inevitably, you're overestimating the degree to which you're
Stacy Havener: unique.
Stacy Havener: Yeah. So I just love when like what I feel in the wild and real, in real world has like, you know, you're like, yes, actually, that's a thing. I'm always like, God, that's so great how the world works, science and all. I wanted to add to that. So again, so that's what you're going to, you're wired to do. So how do you combat that?
Stacy Havener: [00:28:00] Well, two ways that we advise our clients to do this one is ask. So instead of saying what you stand for, talk about what you stand against. Talk about all like my peers do this and I, Don't agree with those things. I do that over here. Like, you know, I'm here's where I'm different from them. Almost like a point counterpoint and something about that exercise field.
Stacy Havener: It's easier to talk about what you don't do than it is to talk about what you do do. That's unique, right? So, like, going in the inverse kind of our theme today actually will get you to differentiators quicker than if you try to talk about, here's what I stand for and what we believe in and and the hallmarks of what we do at our firm.
Stacy Havener: Like, that's not going to get you there. So that's 1 exercise you could do. The other exercise, I totally forgot what I was going to say. So we're just going to leave you with that exercise to [00:29:00] get to what you don't do that makes you different because I cannot pull forward the other
Dr. Daniel Crosby: one. It's fine. We're on the invert, always invert thing today.
Dr. Daniel Crosby: Your brain inverted for a moment. My brain inverted. I'm going to forget his name. I'm just trying to make you feel better. I didn't forget his name. The politician from Texas, the politician from Texas a few years ago, and he's like, well there's three, there's three branches of government, or no, sorry, there's three departments that I'd like to get rid of.
Dr. Daniel Crosby: And he's like, it's this, this, and then, I forgot the third one. You want to get rid of a governmental department that you can't remember the name of? That was the end of his political career, Stacey, and probably the end of yours.
Stacy Havener: This might be the end of mine. It came back. It came back. Okay. It came back.
Stacy Havener: Thank gosh. Okay. Wow. The other, I lost [00:30:00] it again. You know, this is what happens. This is what happens. We're going to have to edit this all out because I, wait. So you were saying that it was the end of his, oh, I got it. Quick. Um, if, so when you go, when you say something, when there's something that you want to put on your website or something you want to say, and you're like, okay, this is going to be my, this is my jam.
Stacy Havener: This is what makes me different. Ask yourself this question. Could another company that does what you do put this on their website and it be true? That's great If it can, not good enough. If that can be used for another company, it is not unique.
Dr. Daniel Crosby: I like that. So I've never heard it used in that regard. I've heard it used with mission, vision, and value statements.
Dr. Daniel Crosby: We used to help people, again, early days right out of college. That was, I was a consultant. That was one of the things we did. And sometimes you'd be working with, you know, a boutique asset manager and they have their [00:31:00] mission, vision, and values. And you're like, well, this would also work for an oil change company, right?
Dr. Daniel Crosby: I don't know. And so I'm not sure. I'm not sure how germane to what you do. This is. I love that. Right? So invert, figure out what you stand against and figure out if anyone else could make a similar claim. You got there. You got there.
Stacy Havener: That's right there. I did. Thank you for the help. It's it's, you know, it isn't easy
Dr. Daniel Crosby: cases are penultimate reason.
Dr. Daniel Crosby: Your story may stink is that the plot is too complicated. Kind of like the word penultimate. Right. So let's,
Dr. Daniel Crosby: so I run into this all the time with, with movies. I'm watching a movie. I'm halfway on my phone and I'm like, wait, who is that again? Right. So talk about the power of simplicity. Why do we need to keep the plot of our story simple and
Stacy Havener: streamlined? Yes, that's great, and it happens in books to me all the time.
Stacy Havener: It's like, you've just introduced so many characters, I have to go back, like, could you [00:32:00] have like a family tree or something? Like, I can't even keep this straight. So, well, before I talk, I actually have a question for you. Is our brain wired not to want to deal with all that complexity? Like, I feel like my brain actually can't comprehend it.
Stacy Havener: Like, when you give me too many characters, my brain just shuts down. Maybe that's my brain because it's been shutting down during this conversation, but is that a thing?
Dr. Daniel Crosby: You know, it, it absolutely is. It's called chunking. We can hold like seven chunks of information. And if you even think about like how a phone number is, is sort of laid out, you know, it'll be like five, five, five, you know, one, two, three.
Dr. Daniel Crosby: 4567. And it's not, it's not if it were 10 sequential numbers with no pause, right? No brackets. People couldn't remember that because that would be 10 chunks of data. But if you chunk it into 33 smaller chunks, people have an easier time remembering that. So again, [00:33:00] right? If you think about our brain counts for 2 to 3 percent of our body weight, but 20 to 25 percent of all the calories that we burn in a day are from thinking.
Dr. Daniel Crosby: Um, And so your brain is always trying to go into energy saver mode, right? And one of the ways that we need to do this is to streamline things. And so we have a real negative, real aversive reaction to just trying to do too much or having things be. Complicated. We tend to just kind of shut down.
Stacy Havener: We'll be back in a moment after a word from our premier brand partner, Ultimis Fund Solutions.
Stacy Havener: When we first launched our internal fund to funds as a limited partnership, it was a great option for us to be able to provide a hundred of our accredited and qualified purchaser clients with access to a diversified portfolio of hedge fund strategies. However, our Fast forward to 2016, our firm had grown to manage over [00:34:00] 4 billion and serve over 1, 000 clients of various sizes, accreditations, and tax situations.
Stacy Havener: We still firmly believe that high quality hedge fund exposure is important to client portfolios. It provides stability, To client portfolios and generates a return stream that was not available in public and equity and fixed income markets. Unfortunately, the 3C1 structure with its slot limitations, high minimums and K1 reporting was no longer ideal solution for our growing.
Stacy Havener: and complex client base. We looked at various alternative options with third party hedge fund managers, liquid hedge mutual funds, but also discovered that we had an opportunity to register our fund with the SEC, preserve its extensive track record, and solve all of the issues that the 3C1 structure was creating for our business and clients.
Stacy Havener: That's when we teamed up with Ultimis to begin the process of registering our legacy fund. With the SEC and [00:35:00] converting it to a tender offer fund. We'll hear more later in the show now, back to the program.
Stacy Havener: Okay. So that's what it feels like, obviously when you're reading a complicated book. So it's good to know that that's actually happening. I think the reason so. What I typically see in the wild with fund managers is instead of staying right down the middle of the fairway when they are talking about what they do, for instance, they feel compelled to talk about all the anomalies of when they don't do the thing that they typically do.
Stacy Havener: Okay. And again, it's because they're very smart. So they're like, well, and it happens on the fly. So they start out fine. It's like, well, you know, these are the types of things I look for when I invest in a company. And then they remember, except for that one time, [00:36:00] and then they feel they have to tell that one time.
Stacy Havener: So it's like, but sometimes I do this. And then, well, actually there was another time when I didn't even do that. I did this other thing over here. And you're kind of like, what's happening? Because now I feel like you don't have a process. And so, I guess, what I would say, and then when I have asked people, like, why did you just do that?
Stacy Havener: Why did you just start talking about all the times that the thing you typically do, you don't do it? And they're like, well, because I want to be transparent. And it's like, okay, well, okay, those aren't the same thing. Like, when you say this is our process, and this is what we typically do, that's enough.
Stacy Havener: Just then talk about what you typically do. If the person wants to go deeper, or wants to know about times when you don't do that, they'll ask you. You don't have to offer up all [00:37:00] the, uh, one off situations that could possibly occur. Because when you do, you make the whole thing complicated, and the person leaves that meeting and goes, I actually don't know what they do.
Stacy Havener: I don't know what their process is because it's basically one huge it depends. It depends is the worst. Statement to me if I ask you a question and you answer with it depends. I'm like, I already hate this conversation Just give me an answer Even if it's not what if even if it's not what you do a hundred percent of the time Just tell me what 80 of the time is true.
Dr. Daniel Crosby: Yeah, it it depends doesn't instill confidence so I wrote about a process for managing money in the behavioral investor and It was uber simple, right? It's basically breaks down to sort of a combo value, quality, momentum, set of value, quality, momentum screens. And one day I'm going to work with Stacy and we're going to bring these to the world.
Dr. Daniel Crosby: And Stacy and I are going to [00:38:00] celebrate with lots on a yacht one day. But until then, I found that people thought it was almost too simple though. And you know, it puts me in mind of okay. This thing in psychology called the Ikea effect, right? So the Ikea effect is this understanding that that people will pay more for furniture if they helped put it together, right?
Dr. Daniel Crosby: So it's like you want it to be a little complicated, right? A little complicated. The my favorite story about this was Betty Crocker rolling out just add water cake mixes. And parents who were making brownies or cakes for their kids actually didn't like it because it didn't feel homemade enough. It didn't feel like they were doing, it wasn't complicated enough.
Dr. Daniel Crosby: And so they said, well, hey, you can add some oil and an egg and some water to it. Like, oh, now I made it, right? We know, [00:39:00] we know that, we know that super complicated is going to cause people to shut down, but super simple, I think, can, can cause the same thing. There's probably a sweet spot there somewhere in the middle.
Dr. Daniel Crosby: Any idea on some sort of markers for what that sweet spot might be? What, what are we looking for to know?
Stacy Havener: Well, gosh, what a great anecdote. It reminds me of, and then I'll try to come back to a marker, but it reminds me of The 60 40 allocation. Okay. It reminds me of the 60 40 specifically when you get into like big institutional clients and I have a lot of friends who are consultants and some of them will say, like, the best thing we could recommend for a client is pretty simple.
Stacy Havener: However, it's too simple and remember that the client is paying this consultant to come up with, you know, an asset allocation [00:40:00] model and certain strategies that they should include and then find managers that could execute that strategy. And I don't know if it's complexity bias or what it is, but like, you can't just say 60, 40.
Stacy Havener: Index, and then a bank account. Because people go, what? I mean, what? Like, no, I can't, I can't do that. That's way too simple. That's way too simple. I'm not paying you for that advice. I am more unique than that. And so I think you're right. There is a sweet spot. What I would say is, I'm a big three and five type of person, which makes sense because you, you described the chunking component.
Stacy Havener: I think that when you're talking about process or kind of philosophy, you know, to really practice what are the 3 most important, meaning most different things I could tell someone about My firm, [00:41:00] me, our process, any of those things, like challenge yourself to come up with those three things. Now, to your point, they, I don't think they can be three things that are so incredibly different than everybody else.
Stacy Havener: One of them should definitely be different. The other two could be a little bit of same sy to go back to a previous thing, like, you know, a lot of value managers look at this metric and this metric. I do too. The difference is I look at this one over here as well. Right? So you're kind of saying I'm similar.
Stacy Havener: Yet different and that to me feels very like I get it. I understand it. When I walk out of that meeting, I can articulate the 1 thing that really makes you different in that particular area of your business or narrative. So that's kind of how I would combat it.
Dr. Daniel Crosby: You know, it's so tricky. I have a friend who is a fantastic advisor, but who [00:42:00] swears by three ETF Vanguard portfolios, it's like us X, U S and a bond fund.
Dr. Daniel Crosby: And he does a great, he is a wonderful advisor and he loses so many clients during that pitch. Because he's espousing what is a completely sensible, completely, you know, uh, an evidence based, sensible approach, that they can't stick with, and sometimes I think they're driven into the arms of a less scrupulous advisor, who's gonna sell them, you know, 28 flavors of the S& P 500, in, you know, in, in some expensive wrapper, you And it's, it's almost even hard to talk about because the best advice has two things in common, I think, and it has to be sensible, right?
Dr. Daniel Crosby: It has to be good. It has to be wholesome, evidence based, but it also has to be implementable. [00:43:00] And sometimes I think simplifying things to such a degree that people can't even hear it is. I think we die on that hill unnecessarily sometimes. So thinking about your process, what are the three to five, and where does it sit along that simplicity to excessive complexity continuum?
Dr. Daniel Crosby: So, I want to get to one last one. Yeah. It's, while we still have a minute, and it's, it's timely, because it's about, it's about your, your pitch being too long or boring, right? So, average human attention span is 12 minutes, which is fun for me. Uh, because I'm routinely asked to speak for 50, but, you know,
Dr. Daniel Crosby: How do we keep things tight and keep things pithy when a lot of times we're going to be shoehorned into 30 minutes or an hour or two hours or whatever it may be? Yeah.
Stacy Havener: So, I don't want to reuse this [00:44:00] playbook, but I'm going to. Okay, wait, before we solve it, I always want to go to the solution first. Let's talk about what, like, how this shows up.
Stacy Havener: So again, I think when different when you're presenting, presenting is different. If you have to speak for an hour, like, that's it. You have to speak for an hour. So you can all of a sudden start asking the audience questions for half that time. It's just not going to work. Yeah. Yeah. So, but if you're in a meeting, Okay.
Stacy Havener: Especially a one on one meeting with an RAA, a potential client, whatever it is. What happens is you feel like it's your show. You have to pitch to win the business. That's what pitching has shown up as. It's a presentation, not a conversation. It is dog and pony. I am doing it. Like I'm up there. I'm going to walk you through my boring ass.
Stacy Havener: Oops, cease to be a family show a boring slide deck. And I'm going to point to a bunch of charts that you can't even read and it's just going to be miserable. And that is what the [00:45:00] industry has taught us. Is a good meeting. The reality is the person in that meeting hates the meeting. They are looking at their phone.
Stacy Havener: They're thinking about what they're going to have for dinner. They're looking out the window. They're, you know, they're doing everything but listening to you. And so how can we change that? Well, there's certain, you know, like we said, there's certain times where you can't sort of make it. Of a conversation instead of a presentation, but if you can do it because again, it's going to make that 12 to 15 minutes that you talk more powerful.
Stacy Havener: If you let the other person talk 1st and you ask them questions and you understand what their asset allocation looks like, you understand the problems or challenges that they're having. Then you save. The 12 to 15 or 20 minutes of that meeting to be really special and unique as opposed to just blathering on and pointing at stuff that doesn't matter.[00:46:00]
Stacy Havener: So, I think it's super challenge. It's really, really challenging, especially in this industry to. Not blather on, or not drag it on, or, or to actually make it a conversation and not a presentation. But the, if you somehow measured success rate of meetings and maybe you do by whether or not someone invests with you, your, if your metric would go through the roof, if you stop talking, stop talking.
Stacy Havener: Like when I coach my salespeople, I'm like saying these three things and then stop talking and don't talk until the other person talks. Because we're, we, we can't even stand silence. We have to just fill it. I
Dr. Daniel Crosby: went to a, an, an asset manager, an asset manager I really respect and like and have a lot of faith in.
Dr. Daniel Crosby: Uh, they were in town in the past couple of years and I went to trying to keep it high level here. And I went to their, I went to their lunch, their presentation. And they're so brilliant. They're so smart. But it was a 90 minute lunch and they [00:47:00] went over and it was wall to wall, it was wall to wall data, like it was wall to wall presentation and it felt like everyone was held hostage the minute they finally like shut it down again, past the 90 minutes, everyone was out of there like a rocket and it's like if you had spoken for 30 minutes, Made all of the same points, or most of the same points, and then spent that hour meeting with, shaking hands with, answering questions from the advisors that were in the room, it would have been a wholly different thing.
Dr. Daniel Crosby: It was sad to me, because I know these folks are good. I know their product is good. And, It was just tough to watch them sort of misapprehend what really moves the needle on human behavior. So keep it, keep it punchy,
Stacy Havener: right? Keep it punchy. And I love the idea [00:48:00] of, of even in a presentation, keeping it short and then taking questions.
Stacy Havener: I think that's a fabulous way to get it to be more conversational and, you know, more of a conversation and less of a presentation. I wanted to. I mentioned this to you before we, um, hopped in the studio that I'm watching this documentary. I've just started it and it's called Dying Laughing or something like that.
Stacy Havener: So it's basically a documentary about stand up comedy and it's like all your favorite stand up comedians and they're talking. It's really interesting. I Have long believed that like improv and sort of stand up is a really interesting skill set for sales training and not that any salesperson would subject themselves to that.
Stacy Havener: But maybe they should. So anyway, they were talking about this and they were talking about if you can imagine what it's like to be a stand up comedian and how just, you know, awkward and. Nerve wracking and all the things that [00:49:00] that kind of go into that and 1 of the things that they said was it kind of summarizes everything we've talked about here.
Stacy Havener: Most of the comedians said when they prepared their whole skit or sketch or whatever you call it, whatever the set, and they memorized all the jokes and they did all that, they bombed. No one thought it was funny. The moments of laughter happened when it was real and off the cuff and engaging and authentic and all the things that you can't script.
Stacy Havener: And so if we took a page out of that book, how would our presentations change? And I think about the example you just gave, if they, if they had to be more off the cuff, if they only were able to show five slides. And the rest of the time they just had to figure it out and talk, what would they have done and how much better would that launch of that and how much [00:50:00] better would it have been if they made people laugh?
Stacy Havener: Yeah,
Dr. Daniel Crosby: there's, um, I'm going to forget. I'm going to forget the name of it. It's like the 5 obstructions or something like that. It was, um, it was a documentary film about Lars von Trier, this sort of famous filmmaker and. It was on putting constraints on his filmmaking. Like he hates animation. And so this person came in and said, Hey, you have to make a short movie using animation that you love.
Dr. Daniel Crosby: And I think sometimes, and then, you know, he, he comes up with these five different films and they're brilliant, of course. And he talks about the growth that occurs when we put limitations on ourselves, right? So I think there's power in saying, look, maybe I have a 90 minute steak dinner here, but let's not.
Dr. Daniel Crosby: Like what's the most I could do with 15 minutes or like most most I could do with 20 minutes and I think there's growth in limitation, [00:51:00] which is kind of a funny thing to think about. But I think it's I think it's a powerful
Stacy Havener: thing and it really ties to our theme of inversion, doesn't it? It does. It's it turns this whole idea of like you have 90 minutes and you typically would do this.
Stacy Havener: But what if
Dr. Daniel Crosby: you didn't? Yeah, well, let's take some of our own medicine here and and and stop here. I think we've given folks a lot to think about. Yeah, Stacey, just, uh, we joke around a lot, but a sincere note of thanks to you. This has been such a joy. You're brilliant. And I've loved combining your observations from the wild with my nerdery.
Dr. Daniel Crosby: It's been for really fun conversation. So I appreciate it. You and all you do in our industry.
Stacy Havener: Oh, gosh, right back at you. I can't, I can't think of a better way to say that it is for me. I said it this morning. I said, I just keep thinking that if. Daniel Crosby, Dr. Daniel Crosby, was a salesperson, he would crush it.
Stacy Havener: And then that makes me think [00:52:00] about when you said, yes, except salespeople have really low IQs, maybe a low point in the conversation we had, except that as I was playing this out, I thought, yeah, but if he was really brave. He'd be the one salesperson who had the high IQ. And I think there's so much magic, literally my LinkedIn post today was about raising money, isn't the skill.
Stacy Havener: The skill is understanding human behavior. And I mean that like. In my heart of hearts. So you are a gift to every fund manager, every financial advisor, and anyone doing sales, myself included.
Dr. Daniel Crosby: Well, go back and listen to the episodes. So you can know that I didn't actually say that sales people. Casey, you're wonderful.
Dr. Daniel Crosby: for doing this. And, uh, yeah, thanks. It's
Stacy Havener: been a joy. If you know a fund manager or a founder in the investment world with a great [00:53:00] story, drop a note to Stacey at Stacey Havener. com and tell me about it till next time. I'm Stacey Havener. Thanks for listening. And now a final word from our premier brand partner, Ultimis Fund Solutions.
Dr. Daniel Crosby: The conversion of
Stacy Havener: Omric Berg's LP into an integral fund,
Dr. Daniel Crosby: empowered them to grow the fund from 90 million to over 200
Stacy Havener: million and expand the reach from 100 investors to nearly 700 new investors and continues to grow today. By pursuing the conversion it, Homer Berg was able to lower minimums to 25, 000 welcome accredited investors.
Stacy Havener: In addition to qualified purchasers, the entire conversion process was highly efficient because Homer Berg chose to partner with Ultimis and other partners with a proven track record in this type of structure to structure product transition. The headlines are often too focused on new interval funds from pedigree providers, this new fund from this cool, big firm, et [00:54:00] cetera, maximizing a fund's potential through conversion can be a powerful too, as we see in the story of Hallmark Berg, traditional investment management and alternative investment management are conversion.
Stacy Havener: More retail investors are
Dr. Daniel Crosby: demanding access to non correlated strategies in illiquid asset classes to complement or supplement public markets
Stacy Havener: exposure. Interval and tender offer funds offer managers a flexible wrapper that combines many of the benefits of both 1940 Act and private fund structures.
Stacy Havener: Interest in these products has increased significantly in the past decade, and we anticipate the volume of both new launches and structure conversions to continue well
Dr. Daniel Crosby: into the future.
Stacy Havener: This podcast is for informational purposes only and should not be [00:55:00] relied upon as a basis for investment decisions. The information is not an offer, solicitation, or recommendation of any of the funds, services, or products or to adopt any investment strategy. Investment values may fluctuate and past performance is not a guide to future performance.
Stacy Havener: All opinions expressed by guests on the show are solely their own opinion and do not necessarily reflect those at their Manager's appearance on the show does not constitute an endorsement by Stacey Havener or Havener Capital Partners.
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