Will Empathy Make Us Better Investors?Paul Winterowd
Does anyone else feel like we’re about 17 months into 2020 even though we’re only at the mid-July point???
The events of the last couple of months have been heavy, this year has been heavy, and I for one am feeling the weight. No need to rehash why, I know we’re all aware.
I started listening to an audiobook titled Principles by Ray Dalio a couple weeks ago. Admittedly it isn’t the lightest of reads either, but it’s been brilliant. I have since purchased the hard copy because there is just too much good stuff in there not to have, and use it as a reference.
I’ve since learned (not from the book) that Ray Dalio built one of the most successful hedge funds (Bridgewater Associates) of all time, and his estimated net worth is $18 billion – all self-made. Given that context of his immense success as an investor, I figured there may a thing or two we could all learn from the guy.
In musing about everything we’ve experienced over the last couple of months, and in asking myself what I can hopefully learn and take away from this all – a single word has emerged for me.
Dictionary.com defines the noun empathy as: “the psychological identification with or vicarious experiencing of the feelings, thoughts, or attitudes of another.”
There’s a growing movement about the importance of empathy for our overall well-being as human beings. Despite that movement per se – had we as a collective society been able to exercise more empathy over the couple hundred years – I dare say the riots and social unrest would have been prevented.
And I’ll argue all day long it’s not only relevant in our personal lives, but very material to our long-term success as real estate investors. As we’re able to ‘walk in someone else’s shoes’, our cumulative results become better. Commercial Real Estate is a team sport, and having the skills to internalize how a number of different providers, partners, and investors see the world, will only bring us more success.
I don’t remember a lot of keynote addresses from conferences I’ve attended, however I do recall quite vividly one from the Mortgage Bankers Association a couple years ago. The speech addressed the ever-growing technological advancements and emergence of A.I. (Artificial Intelligence). There are so many things machines are able to do, and will be able to do in the future, but we’re a long way off from them being able to produce true empathy.
The main point of the keynote was the key factor of my success as a mortgage banker will be to have, and to feel empathy for my clients. To put myself in their shoes and walk a mile with them.
It applies to all of us. We’ll be a better society collectively and we’ll be better operators, syndicators and investors of multifamily real estate if we cultivate and embrace the habit of empathy.
I recently read an article in The Harvard Business Review titled “Empathy Starts with Curiosity”. Valuable in that it’s a quick read and it tells us how to start developing this habit of empathy through curiosity. Curiosity is easier for me to wrap my head around than “having empathy”. Which brings me back to my new friend Ray Dalio and his ‘Principles’…
He shares about a nearly career-ending mistake he made early on as an investment manager where he risked both his, and his clients’ money, based on his ego-driven assessment of where a particular market was headed. He was absolutely convinced he had it right and he went all in.
Turns out he was wasn’t necessarily wrong, but the markets didn’t react the way he anticipated. In fact, it went the opposite direction and he lost just about everything. Ray is, and remains a very confident individual, but through this experience, he developed a robust sense of humility he was able to merge with his self-confidence.
One key principles he discusses is to “Be Radically Open-Minded”. He explains the importance of questioning your own beliefs, seeking out expert opinions from a number of relevant professionals, and really refusing to rely solely on your own interpretation and understanding of situations we are presented with.
This radical open-mindedness leads to collaboration and ultimately better results. There is obviously more to it than we have time for here, but my hope is, that as we adopt a curiosity for the world we live and invest in – that we will internalize an approach of open-mindedness and empathy.
I’m convinced we’ll have better results because of it.
And we all want great results as investors and owners of multifamily real estate. This mindset will further that cause I have no doubt. But more importantly, as citizens of the world and brothers and sisters of this one human family – we need more love for each other.
We all need it.
It will grow through our curiosity and open-mindedness about who we are and what is important to us. That will ultimately lead to empathy and where empathy exists, I’m convinced results will flourish.