Who are you and what’s your story?
The sky above Lagos – Nigeria’s largest city – was the color of television, tuned to a dead channel. It was the day I had lost a small fortune. Almost.
An introduction: my friends call me WMD, short for William Maximilian Digby – I’m named after my Great Grandfather: Colonel Maximilian. I’ve boxed professionally for money; fought in wars, founded several businesses, and invested across dozens of countries. Mostly in that order.
Nowadays, I’m a growth capital investor; a Partner, and Chief Investment Officer at Jameson Capital – a private equity fund based in Melbourne, Australia. We invest in smaller, profitable, tech-enabled businesses and take them to IPO. Or grow them to an attractive size for the larger private equity funds. Medical Tech., Fin. Tech., payments, platforms, and consumer finance are all fair game and good hunting in the Aussie market presently.
Australian investing hasn’t always been my calling. In 2012 I founded my first fund with a friend from business school – we opened up shop in an old residence on Piccadilly in Mayfair, London. It had been the headquarters of a successful hedge fund (they were so successful, they abandoned their lease to move into the iconic Gherkin Building, and left behind a fully furnished office for us in the process). My partner and I raised $50 million based on a straightforward thesis: to seek out and invest in businesses that have clear monopoly potential, in markets where an advantage can be gained through research and ability to originate. We took to emerging markets to find opportunities befitting this strategy.
My investing style is as much about understanding human behaviour, as it is the technical and strategic analysis. It mixes disciplines forged from time in the army special forces as a Green Beret Commando and fighting in Afghanistan, with the practical skills learned as a commerce and finance grad; and an MBA from Oxford.
Our little Mayfair fund generated compounding returns of just over 38% a year for its life, and returned a fraction under 5x money for our investors. It was also the source of some of my great investment stories.
To wit: Lagos, and the loss of a small fortune. No sooner had we settled on a land-for-equity deal in 2013 with intent to build the region’s first shopping mall, when I received a phone call from my local Nigerian team: ‘We’ve got a problem’. When people say: ‘it happened overnight’, they’re generally afforded some poetic licence. In this case, it was the literal use of the expression. Our newly acquired land had rapidly become a bustling, brimming, hotspot of local makeshift market and agricultural activity; our plot was, in the most densely packed way you can imagine, a veritable million-parts-per-million kaleidoscope of squatter activity. Overnight.
The flight from London to Lagos takes 7 hours. On the ground, initial meetings were cordial; the squatters were apologetic; the group had apparently no idea they were on private land, and no sooner were they informed, the chiefs among them intimated they would vacate with minimal delay. Sweeting brows were wiped. Heart rates subsided. But there was one request.
“Will, we will of course vacate this area, but we implore you to make us whole for the cashew nut trees we have planted in the last few days on your land”.
The most dangerous moments can often seem the most innocuous. I inspected the said plants – they were no more than 2 millimeters high, resembling a row of little herbs.
“No problem. Done.”
No sooner had I shaken hands with the local leader, did his cronies appear with their estimates of the ‘plantation’ value. For a traveling band of squatters, I had underestimated them. Laptops appeared. Microsoft Excel. Financial models. Macroeconomic forecasts. Cashew nut commodity pricings. Discounted Cash Flows. Futures prices. Currency hedging.
The leader spoke:
“Based on a 5-year growth period, a 10-year harvesting period, a discount reasonable rate and terminal value, our planted trees are worth not less than a present value of USD 9.8m.”
It was a dark day for me on the dark continent. The flight back felt a lot longer than 7 hours. Thankfully, we had excellent Nigerian legal counsel and not a dollar was paid (save for some legal bills!).
Walk us through your process of identifying and executing on investment opportunities?
Long is the way and hard, that out of diligence leads up to returns. And of those myriad things to consider; of those skills to acquire and hone; of the complexity in any given investment decision, process and transaction, several are the most important, here’s one I look for – in others and myself:
A capacity to originate high-quality, proprietary deal flow. A skillset highly valued and seldom taught.
This is how I do it:
First, find a broad investment thematic underpinned by some sensible data and analysis. Depending on your investment style, this might be the most popular and sexy sector right now (buy-now-pay-later; crypto; last-mile logistics; etc.); or it might be the least popular you can find, attracting little attention (bricks and mortar retail, hotels, aged care, etc.) – both approaches have merit and I am somewhere in the middle. For example, I’m convinced there will be future demand for medical technology and services in order to combat ageing demographics and a straining health system in Australia; efficiency through improved technology will be vital.
Next: seek out and cultivate a network of consultants who have had significant careers in that sector – independent lone-wolf type consultants are my optimum choice. There is frankly no better source of proprietary deal flow. Consultants can answer the following questions with ease in their given space:
- What are the 3 best companies you have consulted to, and which one would you buy and why?
- Which companies have you consulted to where you made great recommendations, but they were not implemented (or couldn’t implement on account of lacking funding, etc.)?
- Can and will you introduce me to the CEO, management and implement your own recommendations, etc.
Align your consultant on the buy-side; it’s like having an inside track with someone who has already taken a deep objective look at the company (in a way you could never hope to).
Since you first started, what have you learned that has had the biggest impact on your success and the growth of your portfolio?
In 2015 I walked through the door of a business in Lahore, Pakistan after an exhaustive search of the world’s best real estate property websites. I’d visited and met with many dozens of companies – in many dozens of countries. I had finally found what I was looking for.
The team was great; outstanding in fact. The business was established and growing quickly. Pakistan is not for the faint of heart, but you don’t get paid to be comfortable all the time when investing.
The business model was clear and well understood by me – it was the same business model used the world over by real estate property portals: free for users to use; and a subscription for estate agents to list properties.
I invested USD 10M, and after two years of doubling revenues each year, management proposed a very different, novel, and potentially controversial change to the business plan. Keep the current business model, but also become an estate agent, selling new properties via the online platform for commission directly from developers.
I was resistant to change the strategy; I sighted textbook examples of cannibalising the businesses own customers; diluting management focus; diverting from core to non-core skills sets.
As an investor in a private company, you wield a lot of power – sometimes an inordinate amount relative to your direct experience in a particular business. Ultimately we went ahead with management’s ideas – and the lesson was ultimately one of humility on my side: that business continues to double nearly every year; it was recently valued at $1.1 billion; operates in 18 countries and represents a 10x return.
Find great management teams who are smarter than you, give them what they need to succeed, including your support and humility.
What books, platforms or resources have you found useful?
Keep two books in your pocket, one to read, one to write in. I owe much of my success to reading: https://williamdigby.com/best-investment-books
What advice would you give to someone who’s just starting?
Forget your passion; follow your talent.
Successful people tend to seed young minds to follow their passion and not focus on money. This is nonsense. Achieving economic security requires hard work, talent, and a tremendous focus on money. On occasion, an individual’s genius will be enough to overwhelm a lack of focus and discipline. Assume you are not that person.
This is how to get rich.
First, money is just a construct. It is a way to express and aid an ever more complex system of bargaining and bartering. In life, you are forever bargaining what it is you can do for someone and what it is they can do for you. Basic economic theory tells us that if you want something that’s both rare and valuable – a great job that earns you millions of dollars – you need something rare and valuable to trade in return. Before you work out how to bargain, figure yourself out. You need to understand what it is that you can offer other people. If what you are offering is not enough, you need to cultivate yourself; figure out what you can become. Once you know what this is, you can make your way toward wealth.
Defining rich. Many people make a huge amount of money for themselves, but few people are rich. Financially rich is having a passive income greater than your burn. People on a path to money focus on their earnings; people on a path to wealth and being rich also focus on their burn. It’s not one’s income but one’s income-to-expense ratio that determines if you’re rich. It takes brains and discipline to hold onto money.
To be a successful investor, you will need capital. In my experience, there are five key factors to wealth—Focus, serendipity, stoicism, diversification, and time.
A lack of focus is often conflated with a lack of talent. The strongest signals of future success are perseverance and resilience. And unless you are supremely disciplined, you will have to do something that gives you some enjoyment. Just do not mistake focus for passion.
Those who tell you to follow your passion are generally already rich. Instead, follow your talent. Passion comes later. The benefits of being great at something will make you passionate about whatever you do—admiration, camaraderie, money, power, satisfaction. Focus on positioning yourself to be financially successful. Get certified. Get accredited. Get trained. Get experienced. Then get passionate.
The sector you choose will have a significant multiplier effect on your talent. This is an awful reality. Someone of average talent at Google has done better over the last decade than someone outstanding at Ford or Philip Morris. Look for the best wave to ride. Any opportunity you have when you are young to choose among different paths is a profound blessing.
Focus on relationships. The most impactful economic decision you make will be who you decide to partner with. Especially who you decide to have kids with. Married people grow their net worth 75 percent more than single people. Marry the right person, and then invest in that relationship every day. If you’re married, you’ve already bet 50 percent of your net worth on that partnership. Bring forgiveness, humility, generosity, and engagement: show up.
Cultivate discipline. Our consumer-based society manipulates our natural impulse to spend more money and consume. An entire generation of brilliant people have graduated from the best technical schools in the world, migrated to Silicon Valley, and invest their considerable talent in finding ways to serve you more advertisements so you can consume more goods. The upgrade from economy to premium to business to first-class to private jet can seem like an investment in yourself — it’s not. The most powerful forward-looking indicator of your financial freedom is not how much you earn but how much you save.
Investing. Bull markets cause humans to conflate luck with talent and dopamine with investing. Trading — as distinct from investing — can feel like work and productivity. It’s not. It’s gambling — but with worse odds and no free drinks. Only 5 per cent of active retail traders make any profit over the long term. The high accessibility to trading — such as eToro and Robinhood, with their dopamine-triggering confetti and 24-hour-a-day, volatile crypto trading — are the new drugs of choice.
Be of good character. Succeeding in life is much easier if other people want you to succeed. Economic security is in the agency of others, and you want others to want you to win. Get the engines of success and fulfilment firing on all cylinders. Do it immediately. Time is the fire in which we burn. Don’t think of compounding as only a force for financial gains directly. Consider the effect of someone who has been compounding their reputation as trustworthy, reliable, consistent and disciplined over decades. That cannot be replicated.
Find your talent; your passion will follow.
What investment opportunities are you excited about at the moment?
Many great investments are found at the nexus of businesses that are highly boring and highly complex—a disproportionate number of great investments in-fact. Everything in the universe is a supply and demand curve. Because there is an insufficient supply of entrepreneurs focused on the highly boring but highly complex, the investment returns are elevated.
Compare the three alternates: ‘boring and simple’; ‘complex and simple’. It is just too hard to get differentiation without enough complexity. This lends itself to commoditisation.
‘Interesting and complex’: this attracts the most brilliant and gifted entrepreneurs; as well as fierce competition. Space tech, electric vehicles, self-driving, and artificial intelligence, are good examples in this area of innovation. Brimming with brilliant, passionate geniuses who love their work and seek both financial and spiritual return on their efforts.
Now consider ‘boring and complex’. Seldom boasted about at dinner parties are the trials and tribulations of audit software startups and regulation technology disruptors. People want to sit next to the SpaceX employees and the social media founders. Because there are fewer entrepreneurs in the boring and complex space, the chance of having entrepreneurs succeeded is significantly higher.
Where I’m looking today for new businesses to buy:
- Software businesses – preferably SaaS – where the customer (the software user) is handling significant amounts of financial related data (accounting, ERP, accounts payable, accounts receivable, high-value POS, medical practice management, etc.) and where these businesses are not yet monetising the fact that they could be offering payments, reconciliation, supply-chain-finance, invoice factoring, etc.
- Medical tech. businesses operating at the nexus of large insurers, government, medical corporates, solving complex problems and extracting value in a way that is scalable
Look for people solving highly complex, highly boring problems.
How do you think someone becomes a billionaire?
So to start, forget about what you want. Instead: get intensely interested in what the world wants – or better, needs. Find a ten-billion dollar problem. And solve it. Value capture is the name of the game.
Disciple, determination, grit, and unrelenting hard work: these are all minimum requirements. Bare. Minimum.
With a curiosity for what the world needs, query your potential and what it is you can offer that is so compelling, so attractive, so useful that no machine can imitate you; no process can emulate you; no product can best you (or best your product). Then cultivate that potential.
Master something, ‘Gladwell’ style. Then master something else. Marry your dual mastery and make beautiful idea babies: physics & finance, engineering & economics, dentistry & design, manufacturing & mathematics, etc. – integrators will inherit the earth.
Sheer desire won’t be enough. Membership to the nine-zero club will be exchanged for something that the world perceives to be of equal or greater value: something that alters culture changes how people think, or how they work, how they live their lives, or how they see their future. You need to be in the business of solving problems that others have not, or cannot.
By this definition, there is no blueprint; embrace delusion in the short term – the father of a most respectable family, comprising enthusiasm, affection, faith, hope, charity and many other goodly sons and daughters.
Accept the role of luck. Some are born into families that encourage education; others not. Some are born into flourishing economies encouraging of entrepreneurship; others are born into war and destitution. Not all success is due to hard work, and not all poverty is due to laziness – only a portion of where you end up is completely up to you. Keep this in mind when judging people, including yourself.
Have courage. Don’t think with your legs in an emergency, and remember: if it all goes badly and blows up – make a crater, a big one, and make sure they name it after you!