How to Raise a Few Billion Dollars

Money moves at the speed of trust. Most people know how to get people's attention and get interest moving in a direction. That last unlock of trust actually is the magic key.

The inner game of fundraising is really about putting the person in the room at the center of all conversation. Mentalists do this. They get inside your head. Hypnotists do this. Psychologists do this. If they have no fear—in other words, if it's riskless—they will do it.

We were chatting before, and you said that if you were to rename your book, you had an idea of what you'd call it. How would you rename it?

As I wrote the book The Dao of Fundraising, I had this idea that I wanted to put something philosophical out in the world, because fundraising isn't just an idea of persuasion. It's actually a way of life. The actual interacting with people through the lens of them as the center of your conversation is a way of life, and that way of life requires a certain level of responsibility.

When you start to get good at understanding how people work, how people react, and how they will react to me, to you, or to other personas, you can actually use that for your own selfish needs, or you can use it for good. So, I called it The Dao of Fundraising. But, in the end, I don't know how many people actually care about that philosophy.

What most people want to know is, how do you get money? So, I think I probably would have just renamed it Money Moves at the Speed of Trust, because the entire book really is about that.

The entire book is about how money pools in areas, and people hold on to it as resources. We can put a lot of words around what actually motivates people to move in a direction. That's really important in making sure you say, “Hey, I want the money to move in this direction, not that direction.”

The real trick is that most people know how to get people's attention and get interest moving in a direction. That last unlock of trust actually is the magic key. So many people do such a good job of using logos, or logic, to actually get somebody to a yes, and they still say no because it's the difference between belief and trust.

I didn't write this in my book, and I wish it was the first chapter. Belief is like, “I believe you. Yes, what you're saying makes sense. I believe you.” Trust is very different. “But I don't have faith in it. I don't trust it.”

People say, “Well, how can you believe something and not trust it?” Have you ever gone skydiving? Or think of people who are terribly afraid of flying. Do you believe that the pilot is qualified? Of course you do.

People unfortunately just don't get to that last piece where they get people to believe that this is going to work. They believe it is the right thing, but they still trust that you're going to actually fulfill what they need. That's very complicated.

I want to go to the situation where I'm a person, I have an idea, and I want to do something that requires capital or resources of some kind. What should people understand about that starting state that you've learned, and where do people then tend to fall down?

One of the interesting messages that you and I have talked about before is that, of course, a good idea is important—a good product, a good whatever, the thing you're trying to build or sell or what have you. But people maybe underestimate the role that capital can play in making that thing happen. Therefore, this skill that you've learned a lot about and done a lot of work in is just unbelievably valuable, but no one really knows how to do it beyond the idea.

So, just at the very beginning, orient us around that combination of idea plus capital and the importance of the relationship.

1. Starting a Fundraise

First you have to look and say, “Okay, who are the people who trust you?” This is why they call it friends and family. What is friends and family?

I trust.

I don't think it's totally true. Friends and family are people who will give you money that they're not afraid to lose. Their tolerance for loss actually may be much, much worse, and that's just—so that's, I think, kind of an urban myth: “Oh, go to friends and family because they'll give you the money as charity.”

I think the most expensive money is borrowing money from your friends, because if you don't give the money back, your friendship is not the same anymore. But they trust you, and they want to see you do well. Their desire, minus fear—which is what we talked about with persuasion—their fear of losing money is subordinate to their desire for you to do well.

They know that in order for you to do well, you need resources you don't have. So, as an individual, first you need to find out who trusts you. Who are the people whose desire for your success is greater than their fear? Or, do they trust you're going to make money for them? They desire to make money, and they trust that you actually are going to make money, and they don't fear that you're going to lose it because they've seen you in action in other places.

That's where you have to start. Politicians call this the hard reelect number. The hard reelection number is some base number where, no matter what you do, they still will vote for you.

You first have to figure out, naturally, who would give me money. From there, you sort of multiply it. You say, “Well, if I think that my friends and family are going to give me, let's say, $1 million, then maybe my goal should be $2 million or $3 million, because from their trust I can leverage their trust to seed.”

Now, maybe you could do better than that, but you have to start from there. You're not going to raise $100 million off of friends and family of $1 million, but you should do better than $500,000. By the way, that tends to be my experience.

Or, if your first close is a billion dollars, you tend to tap out at two billion, because your first close almost always is your hard real life number. That has been my experience. How much money do I really think trusts me already? From there, let's build on it with a campaign. Then we can talk about the actual mechanics of doing a campaign.

Before we do that, I'd love you to dig deeper into this very simple idea of persuasion equals desire minus fear. It's an incredibly simplifying, elegant way of thinking about this. Why is that the reduction that you've arrived at versus some other one?

This is like a decade ago. I was talking to one of the masters of the universe, and I talked about it. I think it's desire minus fear. They said, “Hey, thanks, Mr. Obvious. Everything's greed—you know, greed and fear.”

I looked and I said, “Wow, that's actually not true.” The simplicity of it isn't the wisdom of the phrase. It's the nature of desire. It's the nature of the positive side. It's the invitation to say that people can be inspired by something that is not just self-serving.

Greed is self-serving. The human condition has so many things it desires. The ego has so many things it desires. Otherwise, we would never give money away. Otherwise, we would never do things that are generous for people. Otherwise, we wouldn't care about the environment, care about our children, or care about our desires.

When you're talking to somebody and trying to persuade them, too many people—and this is maybe one of the most important lessons that people seldom get right when they first start fundraising—in the alternatives world, an investing professional talks to somebody on the other side. They call them limited partners.

They are so passionate about how much money they're going to make for them and the returns, because the more money they make, the bigger the plane or whatever it is, because they're motivated that way. Of course, as a fiduciary, you're saying, “Well, this has to be what you care about.”

But the dirty secret to the relationship is that very few—some do, but very few—limited partners are actually compensated on the returns that the general partner makes. A very few are. Some are compensated on IRR.

It's hard, right? Because in the alternatives business, you have to wait for 10 years to see if it's something good or bad. So, it's really kind of an awkward alignment of interest. They'll say, “Okay, I'm going to pay you based on IRR, but we don't really know if this is really good.”

I could pay you a ton of money. The general partner could be juicing up the IRR, and there are lots of great tools to do that these days. That's a misalignment of interest if I'm giving you my money to actually manage.

Therefore, there are a lot of people who simply don't make money if you make money. In other words, there is no greed. So, there's got to be some other motivation. When you're trying to raise money, look for that motivation that they have, because they're in that spot for some reason.

The fear piece is also really important. Fear might as well be another way of saying trust. It's the antitrust. The way to inoculate yourself against fear is trust. In fact, the more fearful somebody is and the more trust you can develop, the less desire they need.

If they just trust me absolutely, then everything else will pale in comparison. If they have no fear—in other words, if it's riskless—they will do it.

This is one of the things that ties into what so many hedge fund professionals who appear on your podcast will talk about as well: risk-loving and risk aversion. I don't really think there's such a thing as risk-loving or risk aversion. I think there are only people who perceive there's no risk.

No one actually really invests with a lot of risk. I think people convince themselves that the risk is far less than what it really is in order to justify the risk they're taking so they can receive the reward. Where do we see this? Gambling. The casino.

2. How General Catalyst Built Consensus

It's part of the human condition that we rationalize away the risk. So, if somebody says, “I'm risk-loving,” no, you're not. You're just really good at rationalizing away the risk. Not to zero, but did you know your outcome is gigantic? You just have to rationalize the risk to half of what it really is, and you'll say yes. And that's where a lot of cognitive mistakes are made in investing, for sure.

A lot of this equation is applied—you've talked about applying it early to get going. I'm also very curious about applying some of these ideas much later on. So, if I think about your time at General Catalyst, you're on Fund 8 or whatever. You're established. People know who you are.

There's somewhere in the book you said, “The path of least resistance is often the money goes to stuff already in motion.” So, Fund 8, let's say, or Series D or whatever, you're already in motion. What have you learned about doing a really great job at that stage? What happens there that's distinct from just the early stuff of total uncertainty? We don't even know if you're any good. How would you do that, even? I'm even thinking literally about you sitting down: “Okay, we're going to go raise this thing.”

So, we basically set out on a campaign of consensus. One of the ways to get rid of fear is consensus. Consensus, by the way, is the hardest—maybe one of the most powerful—things to move entire markets, because consensus is a macro view, and by definition, if you have a macro view, you've influenced the macro world. You'll see this: Propaganda, in its best and worst forms, creates a consensus.

There are a couple ways to go about it. You can argue that there's the classic innovator, early adopter, early majority, late majority, laggard, in which case you have to close the gap, and lots of people have written wonderful books about early adopter to early majority. Once you cross after that, all of a sudden consensus starts to happen, okay? That is a really powerful framing.

So I go, “Okay, great. So we know that the winner on the other side of that gap is actually winner-take-all. Therefore, it's worth it.”

The second way you can get at it is that big money tends to hide behind committees. If you've got a committee of 8 or 9 people and you have to vote, what then, by definition, is happening? You have a consensus decision. I have never seen a committee—a consensus decision-making process—make a contrarian bet, unless the group is designed to make contrarian bets. That's very hard to do, and that's why it's very hard to find good venture capital firms, because they tend to be contrarian firms.

How do you build consensus? You build it with consistency. Find people who you can do things for who are actually part of the group that you want consensus around: state pension plans, let's say; consultants; sovereign wealth funds. Do they care about co-investment? Do they care about fees? Do they care about access, transparency? Do they care about intellectual property? Do they care about just being entertained? Find it. Give it to them. They come back to you. Build.

Now you've got a sovereign wealth fund. Now you've got a pension plan. From there, you start to meet people and they say, “Hey, you realize that this state pension fund has invested in this?” Next thing you know, the next round, you end up doubling it, and that round, you end up doubling it.

And so, if you take a look at the experience, all of a sudden, General Catalyst and others are starting to become consensus. This is true for any of the other folks who have amassed capital. There's a consensus that they're the winners of the class. General Catalyst created a consensus, and so that was the whole goal.

But you had to do it. You didn't do it right away. You had to do it fund by fund by fund, but it was very intentional. By the way, here's the thing: You have to have the courage then to lose the people who actually were the people who invested with you because you were contrarian. In other words, you have to have the courage to get past the innovator's dilemma.

So, if there's a set of folks hiding out with family offices, endowments, or whatever it is, or small fund-of-funds that say, “Hey, you're now too big for me,” you're going to lose them. You have to have the courage to do that. The only way you're not going to succeed is if you actually want to have your cake and eat it, too.

Now, there is a truth to this: If your performance is so dynamic, you're so differentiated, then you'll be able to run the table. And there are firms that do that. You can't get into the fund because their performance, their track record, is so absurdly strong relative to the industry that you trust that they're going to actually develop these certain returns again.

I remember one of the partners at Benchmark. I asked them, “How do you fundraise?” And they said, “Well, we send an email on a Tuesday night, and the fund is closed on Wednesday morning.”

Right, right, right. So, in that case, let's talk about trust. The consistency, right? Because they consistently perform exceptionally well. The consensus is that they're actually one of the best funds in the world. And there's scarcity. You don't have to have experts, like a consultant, say, “Well, that's the best fund.” I already know consensus is there. They don't have to do anything for you. There's no reciprocity but returns.

And by “but returns,” again, that isn't everybody's desire. It's most people's desire because it makes them look good. But really, it's about the consensus and the scarcity that allow them to have the advantage and the privilege of keeping their funds small and keeping their fundraising energy and calories very, very low.

3. The Three Laws of Fundraising

You mentioned the word differentiation before. Can you explain your law of differentiation?

If anybody wants to learn three laws of physics that are the most important in fundraising: the law of differentiation, the law of tradeoffs, and the law of pipeline. Let's talk about the law of differentiation. This is the law, all right? This is your track record plus your differentiation, and you divide all that by the complexity of your story.

So, track record: That isn't just your returns, but how do you behave? If you're an official—if you're an elected official—your track record is your voting record, right? Or it's the way you show up in the media. It's your consistency.

Differentiation can be anything. It can be, “I can take contrarian bets.” It can be, “I only do 1 or 2 things, but when I do them, I'm highly operationally intense.” It can be, “I access this part of the market that no one else does.” It can be, “My GP commit is abnormally large.”

So, let's take those 2 positive features when you're trying to build a portfolio, because almost everybody at the institutional—the big money, not the small money, the big money—has a portfolio. So, you have a portfolio of diversified assets, and you try to have those assets not replicate what each other is doing, because if they're autocorrelated, then you didn't do a great job. So, you want people who are differentiated. And so, you're trying to add something that is additive to your portfolio somehow, some way.

All right, then the complications. Complications are usually the enemy of trust. The more I have to explain—my daughter comes back late at night, and I say, “Look, you're supposed to be back at midnight, but gosh, it's 2:00 a.m. Explain yourself.” And there's this long story of this and that. I don't trust this. My daughter's pretty smart. She knows, “Oh, Dad, you know what? I just blew past it. I was having fun.”

Sorry. Well, I trust her. Complications got you. They got you for 2 reasons. First, they got you because it ruins or just dilutes trust. But the second is really much more commercial, which is I've seen with my own eyes many times where people trust and want to do something, but they can't explain it to somebody else who is making the decision.

You better give them that phrase that they can repeat to somebody else, because that's how somebody else will then trust what they're saying. And that is truly one of the most famous examples of this: Of course, the O.J. Simpson trial. “If the glove doesn't fit, you must acquit.” One of the most famous lines in the history of the world. Well, do you really think that if you didn't have that, these folks would have actually been okay walking out of the courtroom finding him not guilty or being hung as a jury and having to explain to the media why they did that? No way. But he was smart enough to say, “Okay, guys, you’re going to have to defend yourself to everybody.” The why is very complicated. How are they going to defend themselves? They’re not going to want to hear about your civic duty to adjudicate the law. You say, “Look, I had no choice. The glove didn’t fit. I had to acquit.”

That changed my life when I saw that, by the way. I looked at it—wow, that’s what persuasion looks like. So, if you have complications, make sure you give them that phrase that allows you to cut through those complications, even if you have complications.

And so, when you were doing a fundraiser, would you literally go through these 3 variables and try to improve each one systematically?

Very much so. Religiously. Track record plus differentiation divided by complexity of thought: you’re constantly trying to make the track record look better in their eyes, you’re constantly trying to make your differentiation look better, and you’re constantly trying to reduce your complications.

The differentiation piece gets back to the question you asked me about General Catalyst. What do people do when they get to that level? There are 2 kinds of people who sustain. There are those who find their why—why are we this big? Why do we exist? And there are those who just say, “Now I’ve got the money. I’m now big, and I’m going to continue to push forward.” Those who do that actually get small again.

Those who find their why ask, “Why do we need to be this big? Why is this size helping us? And why is this helping you?” The why can’t be a branding. Every why has a cost. Every differentiation has a cost. Great differentiation requires great sacrifice.

If you’re willing to say, “I am never going to invest in weapons,” then you’re going to miss out on a generational amount of investing that’s happening right now in the venture community. Take a look. You can go back to 2019, and the vast majority of venture capital firms said, “We will never invest in weapons.” It’s the hottest area right now. The same people who said they would never invest in weapons are actually now leading the weapons charge. It’s unbelievable.

Great differentiation requires great sacrifice. They will never be differentiated for what they say. They’ve lost their consistency. In the long run, everybody remembers. They’ll remember, “Hey, you said you’re never going to do this. Now you are doing it.” You lost your why. You lost your why because you were doing it because it was just branding.

As a great advisor, as a fundraiser, you’re always trying to say, “Hey, you’ve got to have the courage to stay disciplined in your differentiation.” Because if you don’t, that’s not differentiation, and people will see through it ultimately.

Then, one of the other 2 laws, just really quickly, is the law of trade-offs: size, speed, and terms. I cannot tell you how obvious it is and how no one believes this.

And is it as simple as—you hear this about quality, cost, and speed in building a house or something—you get to pick 2? Is it kind of the same?

Yeah, you get to pick 2. Right. The difference here, though, Patrick, is that it gets back to “money moves at the speed of trust.” Size and terms really trade off for each other. Speed actually is trust. That’s the part where it drives me crazy when I try to explain to somebody, “No, no, this isn’t just a discussion of mechanics.”

Okay, let’s use scarcity. I take my size, I shrink it up to the scarcity—a real scarcity. People will move faster. Let’s say I don’t have scarcity. Now, geometrically, they’re going to move slower. That’s straightforward.

Back to your example of a venture capital firm saying, “Look, I just sent it out, and the next week they bring it in.” Scarcity—that’s very scarce. Money moves fast. Okay, great. But let’s say you don’t have scarcity. Now, money’s going to move very, very slowly. It’s going to move at the speed of trust.

Then there are the terms. Lowering the terms actually may make the person move a little faster, but they’re going to move faster because they think that you won’t have capacity for them. You’ve now come to this tipping point where, “Oh, my God, if I don’t move, I’m going to miss out, and I was here early.” That’s how it moves faster.

It doesn’t move faster because, well, I lowered the terms. Why are they coming in faster? No, the state pension plan still has to go through its 4 months of diligence and this and that. People miss that trade-off versus quality, speed, and cost. They actually truly do trade off for each other.

You can have speed if you have scarcity, but very few people I know will actually legitimately use scarcity. Benchmark does, wonderfully. Most people lie their way through scarcity: “Oh, well, if we have room.” The investor 100% knows that they’re lying, and you immediately lose credibility.

I never let my candidates, the people I represent, play that game because they see through it and you lose trust. As you lose trust, you lose the velocity of money. If you take a look at the law of pipeline, you need to run a campaign where you have a pipeline, you have to shove it through a conversion ratio, and there’s a bite size. The only thing you care about is your conversion ratio. The only thing. Why?

If you know your conversion ratio is 20%, then you know it’s just a matter of effort. You know your bite size is going to be a certain amount, just plus or minus on a bell curve, and you know your conversion ratio is this. Then all you do is say, “Okay, cancel Christmas, cancel Easter, cancel Valentine’s Day. I’m just going on the road, and I’m going to meet people.”

By the way, who figured this out? Just the largest asset managers in the world. They’re just like, “Look, we’re just pushing our product through a conversion ratio, and our levers that we get to pull are: how do we improve that conversion ratio?”

You can do it by having better performance, you can do it by having better differentiation, and you can do it by reducing the complexity of your story. Now all of it ties together. I appreciate you have to get past the hard, real-life number because that conversion ratio is artificially high.

Once you get past your hard, real-life number and you start getting in the market, you’re like, “Wow, 1 in 10 people are saying yes.” Then it’s just really a matter of, “Hey, how much do you want it? What do you want to get to?” So it’s literally just pipeline times conversion ratio times bite size. That literally is the only math that is important for a fundraise.

I really like the simplicity of thinking through—you’re raising money for a company or for a fund or whatever—starting with the law of differentiation, then thinking about these trade-offs, being deliberate and intentional about what you’re going to care about. Then it’s just the actual motion of going to do it, where conversion ratio is the thing that allows us to come all the way back now to this idea of the drama triangle.

You’re in meetings now. We’ve gotten through the, “Okay, here’s my value proposition, here’s how I’m thinking about what I want, and here’s the equation that’s going to determine if I’m successful.” You actually literally just go sit and do meetings. Describe this idea of the drama triangle and personas, because I think it’s a really useful frame if you’re doing 100 meetings. It’s a helpful thing to know.

4. The Psychology of Every Sales Meeting

There is a psychological framework called the Karpman drama triangle. The idea is that we as people have a hard time accepting that we have agency in our lives. Therefore, we have a victim consciousness. When something bad happens, it happened to us. Life happens to us. When life happens to you, you’re a victim. When bad things happen, you’re a victim. You’re not responsible for it happening.

When you’re a victim, you’re looking for a villain. Usually, you’re also looking for a hero. In a sales pitch, if you already know that this person is feeling victimized or feeling that something, somehow, is happening to them, if you can find out what that is, it’s very easy to craft a story that allows you to alleviate that pain. If you can do that, then you become heroic.

For instance, somebody’s complaining about the fees. Rather than saying, “Hate the game, not the player,” which isn’t so useful, you can talk about how you can mitigate fees if that will help them say yes. It’s your choice. You can do that. That allows them to say, “Okay, I’ve found a hero for my problem. I’ve found a solution for my problem.” Right? That’s really what they’re looking for: a solution. That’s a heroic idea.

If you can’t be a solution, then you look at the villain and you just have deep empathy for the villain that exists. Then you’re just moving into therapist mode. I’ve never met somebody who isn’t better off by being empathetic to that problem. I’ve never met the person who has been shunned because they’re overly empathetic to somebody’s real problem that they’ve discovered. In fact, it’s quite the opposite. You learn to trust them.

It’s a very simple way to manage a meeting: find out what the drama is. Is there drama in this person or these people? Do I have the ability to be a solution to that drama? If I cannot be a solution to that drama, can I empathize with that drama so they’re listening to my solution as something that is useful?

In its own way, that’s almost as much as you need to make sure that almost every sales call goes well, if you can find a wavelength with the person where they actually feel comfortable with you.

When I ask you who the great masters that you've encountered of building real trust are, who comes to mind, and what is it that they're doing so effectively?

Oprah Winfrey. I would call Oprah's game a promotion of goodness. People wanted that in society at that time, and frankly, I think people want it today.

What I mean by goodness is the combination of kindness plus conviction. You can be kind but not have any conviction. You can have conviction and not be kind. I think that whenever you saw Oprah open her mouth or whenever she presented something, there was a kindness to her, but there was also a conviction that she stood for something, that she meant something.

In some ways, she preceded the podcaster in that she had a conviction of what she wanted to get out of the person for the rest of the world to hear. Sometimes it was about pain. Sometimes it was about inspiration. Usually, it was about inspiration. In terms of engendering trust, she did a wonderful, wonderful job of engendering trust with a bigger audience.

She exhibited more institutional trust-building, like reciprocity, in that she would give gifts to the audience. But she also created consensus. She had Oprah's Book Club. That was the mother of all consensus: “Hey, the idea that this book club or these books are the best books for people to read.” She became as powerful as, or I would argue more powerful than, any of the bestseller lists—the consensus idea of who wants to read these things.

Authority. She was able to use and recruit people with authority to talk about issues in our society that otherwise wouldn't have a stage. That's the podcaster's sort of zone of influence today. She was able to create liking, which is a way of creating trust: I like you, you like me.

Imagine how incredible this is in a population in which she is an African American woman. She's able to sit there, and she's a beloved individual in the Midwest, which tends to skew differently demographically. She's able to engender liking, and she's incredibly empathetic.

She's very consistent with the way she brings people onstage, what she says, what she believes, and how she was always able to give somebody something inspirational in a conversation. You never left a conversation with Oprah thinking, “Well, that was a downer.” It just never happened.

So if you know, consistently, “I'm going to turn on the channel, I'm going to see Oprah, and I'm going to be inspired,” then that's her brand. The last one is scarcity. She had a scarcity about her in that she really didn't show up anywhere else but Oprah. You didn't see her in a lot of advertisements. You didn't see her doing other talk shows. You didn't see her doing anything else. She just was Oprah, and that's all she did. So if you wanted to see Oprah, you had to tune in to that. And that creates trust.

Of what we've laid out, what are the most common mistakes that you see people make?

The most common mistake is super easy: people over-index on logic. It blows me away. Logos, ethos, pathos, right? Logic, emotions, and values.

Simon Sinek talks about the question “Why?”, which is actually your emotional and your value, or your intuitive engine that actually makes you make decisions, and the frontal lobe is what puts meaning to all of the feelings. As it turns out, that's generally true.

There are 2 ways I get people to remember this. I don't confuse them with, “Here's the logic of why you need to do it.” Usually, the logic is, “My returns are so great. I do such a great job.” It's table stakes.

I always remind people of 2 things. First, I say, “Well, back to the difference between belief and trust: you can win the beliefs. Like, yes, this plane is not going to crash. I'm still scared. Money's not going to move.” In other words, you've got to get them past the fear. People don't address the fear.

The biggest mistake is that they stay on logic. They don't address the person in the room; they address the fiduciary objectives in the room.

Second, the way that I get them to remember it is the phrase “-ization.” It literally means to create a condition. If you think of civilization, it means to take something that is hedonistic or brutish and make it civilized. You create civilization, but it does not start out as civil.

To create organization, you take something that's chaotic and dispersed and create something that is now organized from something that's not naturally in that state. Then what is a rationalization? A rationalization is taking something that is not rational and forcing it into becoming something that it is not, which is rational.

In other words, rationalization is just the thing that we make up in our heads to explain why we feel the way we feel. The most important thing to remember is that if you want to get to yes, it's desire minus fear. But desire and fear are both emotional states. They're both ethical states.

You have to win the hearts and bodies of the people and get them to a place where they are not instinctively scared to trust you, and they have an emotional desire or ethical desire to do this. Then the logic will follow, and the logic just helps define or justify the decision they want to make. The first mistake that everybody makes is that they think the logic is where you're winning it. The logic is actually an output of a successful sales pitch, not the input.

If I try to take that very helpful insight and put it in terms of what you said earlier, is it fair to say that in your equation of differentiation, fear is complications, track record is rationalization, and differentiation is really the remainder—it's all this desire stuff?

Well, that's pretty good, actually. I think that actually gets you to quite a great description. I love this. I've spent maybe 15 or 20 years talking about track record plus differentiation divided by complexity of thought. It's a trinity. It's just like any other trinity: size, speed, and terms; logos, ethos, pathos. And, yeah, it does fit in that.

5. The Secretary of State Model

After doing this in so many different interesting ways, is there anything we've left on the table about the process and purpose of really good fundraising in a business that I haven't asked about?

The tactical part is: what kind of person are you, and what kind of person do you want to represent you? Are you looking for a salesman, a service provider, or a secretary of state?

What is a secretary of state? The secretary of state is one of the most powerful people in the cabinet. It's the one department where you don't have control over the constituents. As a president, you have control over the Treasury. You do have control over energy. You do have control over Health and Human Services. You do have control over national security. Because you control budgets, you control influence.

You do not have control over China. You do not have control over the UK. Therefore, you have to have a secretary of state who allows you to interact with them, helps you create that, and can represent you when you're not there. That's what a great fundraiser is.

When you can send that person in and say, “Ah, this person's here. I know you speak for the president,” that's really hard to do. It's fascinating how many people get this wrong.

It's fascinating how many people ask me, “Well, what kind of secretary of state am I looking for?” I always say to them, “Well, what is the first impression you want people to have when you're not in the room?”

If you think about presidents of the United States, President Nixon had Kissinger, with that kind of look and feel of realpolitik. You take a look at President Clinton: he had Madeleine Albright, a policy wonk of the highest order, United Nations ambassador, with an incredible reputation for having the deepest international policy experience ever. Exactly the image that President Clinton wanted.

Then you take a look at Barack Obama. He looks and says, “Well, you know what? I want to be change that you can believe in. I want to be inspirational.” He also had very little foreign experience. So he hires his opponent to show that he can cross the bridge, and she also happens to be one of the most experienced people ever to sit in that chair: Hillary Clinton.

It's just a hard sell: who do I want you to see? Who do I want you to see? That person has to be of the industry.

When I meet somebody who says, “Well, the reason why I could be such a great fundraiser as an investment banker, as an ex-deal partner, is because I understand the system,” I look and go, “That's exactly the wrong person.”

The person that you want as secretary of state is someone who actually understands the language and what's going on. If you do not understand what's going on in the Middle East as secretary of state, but you understand policy and the president's thinking, that's not so helpful. If you don't understand what's going on in Asia and how all that dynamic works in the culture and the politics, it's not so helpful to the president.

But you understand what the president wants? Great. You have to understand what they want. That intersection—what they want, who they are, and what you are—is what makes a great investor relations professional.

So now, speaking to the people who want to go be the Secretary of State—not the people who want to hire them, but the people who could be that representative—what should they look for in a leader to go work for you?

It depends on what your ambition is. In the end, the easy way to think about it is: What kind of candidate do you want to support? There are people in the world—and I'm not judgmental about this—who say, “Look, I just want to be on a winning team.” And there are candidates who are really strong candidates who aren't necessarily people who, if you give them substantial sums of resources, are going to do great in this world. But they're great candidates, and great candidates allow you to get elected. When you're elected, there are benefits to being Secretary of State. Period.

In other words, the more powerful your candidate, the more powerful the Secretary of State. In some ways, for many people who have these fundraising jobs, myself included, one of the humiliations that we need to commit to is that we really are only as great as the people we represent. When I was at my peak as a fundraiser, I was still representing somebody else's greatness. That's really important.

So you have to then say, “Is it worth it to make the sacrifice and the ego deprivation for this candidate?” At different stages of your career, different stages of your life, and different stages of your egoic development, you'll make different decisions. You'll say, “Look, I want to make a lot of money for me and my family, so I'm going to find the best candidate who I can monetize.” I want to be in a powerful place.

There are other places where you say, “Look, I really actually want to try to attract resources to this individual because this individual is a candidate who I really believe in. I'm okay if we only have a small amount of resources, because I'm doing something that I believe in.” If you can find both, then you hit the jackpot.

It's a little bit like marriage or careers in general. Why does everybody get married when 50% or more of people don't stay married? Actually, maybe 75% of people shouldn't be. It's because when it works out, it's one of the most magnificent things that life can possibly give you. The payout's great.

It's a little bit like jobs. When you find that candidate who is magnificent in their ability to attract capital and develop relationships, and they happen to be somebody who you ethically and emotionally just adore and want to see do well, that's like winning the lottery. But unlike a bad marriage, it's not a binary experience.

My experience is that being Secretary of State or being head of investor relations can have many powerful benefits and great intrinsic joys. The flip side of it is that if you enjoy the job, you do like your job. You enjoy the joy of curiosity, meeting people, and learning. If you like traveling a lot, and frankly, if you like interacting with people and playing the game of discovering the person, this is about as good a job as exists, because you get to explore people every minute of every day.

So when you're Secretary of State or you're head of investor relations and you're meeting all these people, you sometimes get some great intellectual stimulation, but you always get an opportunity to engage at the coalface of the human condition. It's amazing what you get to experience.

I'd say that this is true for anybody who's done this job for a long time, or the job that I used to do for a long time: You make some incredible friendships. By definition, you spent all this time trying to get to the other side of trust. What is the other dividend? It's not the money that you were actually able to attract. It's that you actually became friends with the person. It cannot be any other way. If you're authentically developing trust, then you're authentically creating a friendship.

6. The Inner Game of Fundraising

If you think about your whole set of experiences doing stuff like this, you were talking about this idea of inner games before we started recording. You're interested in the inner game of interesting, exceptional people. How do you describe your own version of that? What has the inner game been like for you across this period?

The inner game of fundraising is really about putting the person in the room at the center of all conversation. I actually don't exist but for the fact that I'm in your mind at this moment in time. I actually am just an object in your mind, and that object in your mind is being processed by all the stuff that is Patrick O'Shaughnessy.

Now that I'm living in your mind, what can I do to, in this case, make myself interesting, make myself compelling, make myself somebody you want to meet again, and make myself somebody that you are satisfied you actually invited onto your podcast? I'm inside your mind, thinking about what is going on inside of there. When I look at you, I see such a deep curiosity. I see incredible patience as well. You're allowing me to have these long-form explanations.

When I'm talking to you, I really don't even exist over here as much as I exist inside your head. That's the inner game of, I think, the highest level of persuasion. Mentalists do this. They get inside your head. Hypnotists do this. Psychologists do this.

Anybody who is engaged in a mental discussion, if they're really good, isn't just saying, “Here's what I am.” They're asking, “Who are you, and how do I address you in a way that actually is satisfying to you?” I hope I've done that in today's podcast.

I think you know my traditional closing question for everyone. What is the kindest thing that anyone's ever done for you?

First of all, thank you for asking it, because it opens up such a cornucopia of gratitude in my life. There's no way I'd be where I am today without the charity of others. The hardest part was finding that one moment.

When I thought about the nicest thing, I thought, “You know what? It's actually the body of work of niceness. That has to be my wife.” The body of work of things that she does for me that are kind and nice has to be my answer.

The nicest thing she's done for me is support me in all of the lunacy that is connected to being a fundraiser, and how hard it is and how physically difficult it is. But I'll tell you the one story about my wife.

I'm 58 years old, and 8 years ago I had my 50th birthday. I was born in 1967, and I grew up loving '80s and '70s rock bands. My favorite rock band is a band called Styx. On my 50th birthday—and I happen to play guitar—I happened to be able to play several Styx songs on my guitar. They called me up on stage and said, “Well, it's your 50th birthday. Why don't we have John come up and play one of his favorite Styx songs?”

They opened up the guitar case, and my wife got me an autographed guitar from every band member of Styx. Inside there were tickets to the next show, and she got me backstage passes so I could meet the band.

Amazing.

Oh, amazing. It's the nicest thing to this day that anybody's ever done for me. It was incredible because not only was it such a rare gift to give somebody, but she had to go figure this out, and she had to have the resources to go do this.

By the way, just so you know, not only did she get me on stage to play a Styx song with this band, but my younger brother, who's 5 years older than me, plays piano. She got him to learn the song on piano, which was “Come Sail Away.” My brother gets on stage, starts playing the piano, and I'm laughing, like, “Oh my God, my brother's a very busy guy. Wow, I'm sorry that you had to learn this.”

The whole thing was an expression of love, but it was an identity of me. It was a celebration of me, and you can't ever take that away.

Beautiful. Wonderful place to close. You've taught us a lot today. Thanks so much for your time.

Well, thank you. It was great to be here.