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Michael Mazzeo: There’s No Such Thing as “Playing It Safe” With Investing We Practice Constant Vigilance

Eagle Global Holdings, Inc. (“EGH”) prides itself on four qualities: relentless focus, discipline, high standards, and commitment to excellence. We are a family investment office with a global reach and local feel. We enjoy working with entrepreneurs, operators, and investors spanning all phases of the investment life cycle in all areas of the world.

Tell us about yourself?

I like to think of myself as an entrepreneur first, a family office investor second, and an opportunist third. I always wanted to be financially independent and becoming an entrepreneur is the single best way to fulfill that goal. My career has been marked by success across a few industries and has most recently achieved notability within the global family office community.

With regard to the opportunist component, whether the situation I’m faced with is objectively good or bad I will always try to make the most of the hand I’m dealt and turn it in my favor. Finding opportunity in even the most unlikely of situations is an extremely important skill that almost all high performance people develop instinctively. Fortunately, that skill has served EGH well in some recent deals.

If you could give one piece of advice to other investors, what would it be?

Beware of cognitive bias in every single decision you make. The proverb, “seek and you shall find” captures this nicely. Often, we have a personal bias that unconsciously affects our decision making process – it’s important to control for that and evaluate everything in life and business as objectively and logically as possible before rushing to conclusions, accepting someone’s analysis, or worse, resorting to “self-confirmation” of your own beliefs.

I constantly ask myself, “what am I missing? What am I not seeing? What is my gut feeling and how am I going to control for that bias?” This ruthless approach to eliminate and avoid biases has saved us many costly errors. A corollary to becoming more intimately aware of bias is self-explanatory: never rush to judgment!

If you could give one piece of advice to startup founders looking to get funding from you, what would you say?

Figure out a way to change one billion plus lives with your product or service (for the better), then let’s have a conversation, there are far too many “me too” products out there creating a “race to the bottom” atmosphere in the global marketplace.

What do you look for in the founding team of the startups you invest in?

Persistence. There’s a famous quote from President Calvin Coolidge that was given to me as a child that now hangs in a marble plaque in my office, “Nothing in this world can take the place of persistence. Talent will not…Genius will not…Education will not…Persistence and determination alone are omnipotent.” I’ve found that statement to be true time and time again in every aspect of my life.

You don’t necessarily have to be the most brilliant person (although that helps) but you do have to be relentless, persuasive, and persistent, that’s how deals are closed. If you’re not tenacious it’s just not going to happen for you. It’s impossible to fake, some people have “it” but unfortunately most people don’t. I can usually tell in one in-person meeting with someone if they have “it,” it’s almost like a sixth sense I have honed over time, I really can feel it in a person’s presence. It’s a “Je ne sais quoi,” as the French would say.

Is there a trait you have noticed predicts success in your investments?

I’m going to be direct, we’re capitalists here and we look to generate positive returns where we can in both private and public markets, globally. We would love to solve the global warming problem, or be heavily involved in ESG, solve world hunger, and eradicate disease, but my skill set is not in those areas. We are expert in pattern recognition, creating algorithms to predict and account for public market swings, then execute time and time again to generate alpha in our algorithmic and electronic trading platform.

With regard to our long term holdings we know that big tech’s impact has changed the game forever and are very much looking for industries that are going to transform due to digitization in one way or another (like Netflix with media, Google for information, Amazon for shopping, Meta for communication, Tradeweb for the fixed income market, etc.). We have a team we work with that is specifically focused on hypergrowth investments so we can target 10x, 100x plus returns over the next decade.

It’s possible, and we rigorously scour new and existing companies and call management teams to find the next Meta, Microsoft, Apple, Netflix, Google, Amazon. Additionally, we are always happy to meet with new funds and entrepreneurs to entertain minority and majority positions in those opportunities. We stay away from low return areas like all of fixed income (municipal bonds, corporate bonds, mortgages, swaps, these products are just not for us), but we have substantial real estate investments to offset some of our more ambitious market plays. Our investment strategy is highly opportunistic, global, and constantly evolving with the ever-changing worldwide environment.

How has COVID impacted your investment strategy and existing investments?

COVID-19 has completely changed everyone’s life. With almost 1 million American lives lost, and nearly everyone’s work-life balance disrupted, COVID-19 has made us even more disciplined with the private companies we choose to invest with. We would rather put money in the public markets in highly profitable software and cloud-based technology businesses vs. taking a chance with some entrepreneur’s new product that will most likely be a burden to small businesses that are strapped for cash.

The landscape has undoubtedly changed, and depending on where we are with vaccination rates and further mutations and variants we may never go back to how things were pre-2020. We’ve seen an enormous amount of bankruptcies in a variety of industries that has given us more than enough reason to be extra-cautious, especially with new funds and new entrepreneurs. Our default position with new investments is a hard “no.” With that said, we pursue growth constantly and hold the mindset that if you’re not growing, you’re dying. Unfortunately, there’s no such thing as “playing it safe” with investing we practice constant vigilance.

What do you see as the emerging areas of technology that you are looking to invest in?

If I knew for sure we would have created those businesses already. But what I do know is the cloud has transformed the delivery of technology, software platforms have come into existence and dominance across almost every industry, and people will still need the essentials (food, clothing, transportation, etc.) so innovating on fundamental industries would be a good bet.

Tesla is a great example of innovation on a fundamental industry. We are seeing a lot of ancillary businesses grow as a result of electric cars (autonomous driving technology, LiDAR companies, many others).

How do you source new investment opportunities?

Nearly all of our investment opportunities come from our outbound proprietary sourcing strategy, and what doesn’t come to us from that approach comes to us via inbound means such as fund managers and investment bankers reaching out to us directly. LinkedIn is a great tool for us, we really are hyper-efficient with our approach and always prefer to drive things to simplicity rather than complexity.

For example, multi-platform deal sourcing engines, online marketplaces, and software that some other family offices use create more headaches than problems solved for a firm like ours. We’re “lean and mean,” and take a global, targeted approach, which seems to be working quite well.

How do people get involved/buy into your vision?

We like to interact with as many individuals and businesses in the investment ecosystem as possible and love to hear from entrepreneurs, management teams, and business owners located anywhere in the world.

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