What The Marine Corps and Startup Investing Have In Common
Landon Thorne runs a private investment company, Midas Advisory Group, in South Carolina. Through that, Thorne currently oversees his family’s long-standing LP relationship at Greylock Partners, and he has been a Member of the Investment Panel at FundersClub since 2014. He’s an avid fly fisherman and was in the Marine Corps for 35 years, starting as an active duty enlistee and then as part of the reserves.
In this piece, Thorne offers a bevy of good insights and advice, but perhaps none is as compelling as a value he picked up in the Marine Corps, which happens to be one of the unit’s pillar ethos: actively watch for and nurture leaders. The Corps, unlike a startup or even a large company, doesn’t hire outside its ranks for leaders. Every principal is grown within the organization. If a vacancy opens at a high rank or a specialized position, the Corps has find a successor within its own members.
Failing to identify and properly rear leaders within the organization, then, can severely limit the Corps’ readiness. The organization’s excellence relies on growing its team from within—this is something that the best startups do with aplomb. Yes, they will hire from outside to fill keystone positions, but many of the most important people in the company, other than the founders, come from those seminal first few hires.
You’re acutely interested in companies and technologies, like blockchain, that could enable new systems and entities to usurp some of what we’ll call the hierarchical old guard of society—things like currencies, countries and big old companies, like hotel chains.
Yes, these are the kinds of companies weaving the new fabric of humankind as we move away from the old systems that have dominated how we manage our societies. We're seeing a new form of management as we globalize. Some people may not like globalization, but it doesn't matter at this stage. There's going to be a global connectivity that's just got to happen. It may not look like Brexit or may not look like the EU but it's going to happen.
As for companies that have been part of that, Greylock is in Airbnb. We weren’t in Uber but I am an avid user of Uber and in fact every time I take an Uber I always ask the driver how it's going and what's the up and down. I also believe that there are companies and opportunities that are enabled by these bigger successes like Uber. So when you get a huge unicorn like an Uber or an Airbnb in a particular space, there's also peripheral opportunities that come along to help participants manage their relationship with Uber or Airbnb.
One of the things that I've been really successful in is picking out those kinds of opportunities that aren't quite so obvious. One example of that, of course, was PayPal.We had the eBay marketplace, of course, but now people had to figure out how to pay and get paid efficiently.
The PayPal founders struggled for a bit but they got it done, of course. The first time I ever really had one of those great big moments of enlightenment was when e-commerce was just coming out of the box. I sat back and said, "Okay what's going to happen with e-commerce?" Obviously it was becoming easy for people to use a credit card online and to order something from Amazon or somebody else—but that merchandise has to get to them somehow. So I looked for opportunities there. UPS, FedEx, and Sealed Air Corporation turned out to be really good stocks because of the rise of ecommerce. It's those peripheral opportunities that can make a difference to an investor.
You’ve been an advisor and a consultant to dozens of companies. What do you say to a company who is losing the technology war, whose paradigm isn’t part of this new humankind fabric? How do you couch that to them?
Well, as somebody who became a United States Marine Colonel, I’m not that good at couching things. You don't advance to higher rank unless you can communicate clearly what you expect. People don't always have to agree with you, but if you have a perception of something in a setting like that, you should communicate it without being afraid that it may not be liked. I'm not talking about being bombastic or being abusive or being anything like that, but if you see a truth, tell it.
There’s a clarity of thought that the Marine Corps taught me at a pretty young age. It also humanized me in many ways because one doesn't experience combat and the death of young people, especially young people for whom you have leadership responsibility, without having to visit your soul periodically. In my communication, consulting and business advisory, or anything that I've ever done, I have always worked to be clear in my thinking about what I'm being asked about or what I'm trying to do.
So you just deliver the bad news straight up—this company is just about doomed?
Well, when you’re about to give a view that may not go over well, you should also run through a quick checklist: Is this correct? Is this the right thing? Should I be doing this? Am I free and open to talk to my partners and tell them how I'm feeling? To tell them the truth? Also, especially with clients who may have old school mentalities—they particularly need a sensitive but direct communication of why they're beating their heads against the wall and getting passed up by others.
This has been a particularly germane subject in Europe where I've had clients in countries like Italy and Spain where businesses are very hierarchical. There’s always a bunch of grey haired people in dark suits in big offices sitting at the top who are very restrictive of their younger cadres so that it’s really hard to unleash potential at these companies. They don’t understand finance. They don’t understand the kind of finance that venture and angel investing is so they try to build very complex constructs and spend excessive time doing it. They don’t understand agility.
I just came back from Italy two days ago or three days ago. I just had this big conversation with two companies at a major utility that you're just not going to get this project done if you don’t let these young people go at it and just stand back and let them do it. When you’re giving stark advice like that, you have to be direct, clear and you’ve got to be convinced of what you’re saying.
The Corps has clearly been something of a guidepost for you in life. How did you get started with the Marines? Looking at the dates on your LinkedIn profile, I assume you went to Vietnam?
I did. At that time I was one of those happy college graduates that was graduating from undergraduate right in the middle of the largest draft call because they hadn’t put the lottery in yet. Your choices were get married to somebody you didn’t like, go to Canada, or try to get into graduate school. I wasn’t smart enough for the last option, because everybody getting into grad school at that time had almost perfect grades. So it was just one of those things where you hold your nose like you do when you jump into a cold pool and say, ‘You know what, live or die, I got to do this and I’m going to go do it.’
Then I made it a passage, just move through it and if all goes well I’ll survive but it’s better than wrapping yourself around a life that doesn’t make any sense to you. Anyway, I went in and then through a series of circumstances I wound up staying in the reserves. Then by the time the 90s rolled around the reserve became a completely integrated part of this Total Force for things like Desert Storm. We got mobilized for Desert Storm and then I commanded a special operation in Africa in the mid-90s around the Somalia conflict.
Note for reader: Landon says he wasn’t smart enough to go to grad school but he didn’t mention that he graduated from Yale.
You have a background with deep experiences in disparate things—something we probably all wish we had. Tell us how one of those things in particular, three and a half decades in the marines, has helped you in life.
There’s a couple of very, very important themes in the Marine Corps culture that are actually valuable in any context. It’s not all about ‘oorah’ and big muscles and stuff like that. One of the underlying tenets of being a good marine leader is to always nurture rising leadership. Every marine has the opportunity to advance into a leadership position. And Marine leaders lead by example. By doing your job right, you set the example so that people follow you willingly. As you do this, you keep an eye out over your shoulder so that as you see leaders emerging you do everything you can to nurture them because they’re the future of your Corps.
Accountability is also huge in the Marine Corps. In other words you accept your failures, you remain accountable for your men and women and equipment. If you make a mistake or you see something happening, you report it early so that its effects are limited. You do not cover things up. Nobody is perfect and mistakes do happen.
The Marine Corps also instills you with the value of loyalty. We are a band of brothers and sisters. If you give loyalty, you get loyalty back, and if you betray loyalty then you’re betraying the essence of trust. That’s one of the overarching principles of the Marines and even our motto—Always Faithful—is a very strong thread that runs through the DNA of people that are committed to be Marines.
You mentioned how exciting Bitcoin is—but you’ve also been something of a banker your entire life. I would think that most bankers gave Bitcoin short shrift early on.
You're absolutely right. My demographic age group is such that I try to seek much younger companions. My wife is considerably younger than I am and so I socialize way out of what you'd call my demographic age group. I find that when I sit down with my age contemporaries the word Bitcoin comes up and they immediately think, drug dealer crime, internet criminality, cross-border thuggery or something. That's because they're reading about it in their own mind, so to speak, and they don't understand it. They don't understand what the future looks like, they just measure it against the past.
I can't have long conversations with many of my contemporaries. It's like talking to a brick wall. I find myself in a generational conflict, it's kind of weird. That being said, I find that I just have to communicate differently because I’m in a different head space that much of my generation is in.
Speaking of new school ethos, some tech people like to talk up the value of failure, which I think is something of a newer value compared with traditional business ethos. Do you value founders who have failed or is it all the same to you?
Yes, I do, if they fail honestly. I myself have had things that didn't work. But how did you fail? Did you run from your investors? Do you hide, or did you figure out exactly what toe you shot yourself in and explain why? In that case, you’re wiser and you’ll learn from it. I've never had an investor reject or sue or get mad at an honestly and forthrightly described failure because that failure could become the platform for the next success.
As a banker this must be an interesting time, as the Brexit vote just occurred.
Yes, it is. I think about topics like that, like democracy, a lot.
We're seeing all these movements in the world today ranging from Bernie Sanders to Trump to Brexit to even Bitcoin where people are trying to bring some sort of a democratic enterprise and energy to things that might normally be intractable and stuck.
It doesn't matter which end of the political spectrum you are at. I think there's a populism or there's an energy that's just waiting to be released. Particularly in the Middle East where most of the news is about people shooting each other and blowing things up. There's also a huge amount of energy being released into creative entrepreneurship in that part of the world.
We've got highly developed incubators here in this country but there are only emerging incubators in that part of the world, but there's a lot of creative energy coming out of there—that’s actually something I’m looking to help release. I'm a believer that enterprise and opportunity will build the next generation of solid citizens and connected enterprise. Rather than people feeling disenfranchised and trying to beat each other up, their energies can go into these enterprises.