Marcus Shaw on Diversity in Wall Street and Finance

UM career and a focus these days. He really began as a traditional engineer slash finance person, working at IBM as a network engineer before he got his m b a at Duke and from there did the usual research and investment banking gigs throughout a lot of Wall Street before the opportunity came to help entrepreneurs develop and grow their businesses in places like Alabama and Tennessee, which ultimately led him uh to participate in the founding of of

a new firm called Old Finance, which was created by really a group of um for lack of a better word, of finance royalty. It's Howard Marks of oak Tree Capital. It's Tony Wrestler of Aries, Mark Rowan of Apollo Global. These three gentlemen said, we're lacking the ability to tap into a very rich, diverse talent pool, including historically black

colleges and universities, venture capital, private equity. Just we're not recruiting from those spaces, and so they stood up a firm called Old Finance, whose main purpose was to help alternative asset managers tap into that rich pool of potential hires UH. Marcus shaw works with them, and he's the

CEO of Ald Finance. I found this to be really a fascinating conversation about how to access the most skilled UH partners and and employees, what can be done to shake up a relatively stayed industry that has lagged behind its peers in terms of recruiting and other things, and and really how to help have a major impact UH in the world's of finance. And I found this conversation to be fascinating and I think you will also, so, with no further ado, my interview with Marcus shaw Berry.

Thank you so much for inviting me. I'm excited to chat with you. So let's talk a little bit about Wall Street and diversity. Wall Street has been pretty bad at recruiting black talent. It's been a stated objective for decades. Why is finance so bad at this? Barry? I think there it's a complex question, UM that requires actually a

complex solution and a multifacet solution. I would say the most general issue here is that folks don't have the networks and the access to careers in finance from across the country. Right, So, if you grow up in New York, yeah, you'll probably know some people that worked in the industry, and you may have some relationships, you may go to school with somebody, your parent may work there. And that's

whether you're white or black, all right. Um. But if you don't, if you grow up in a market where there's not an investment bank, there's nothing other than a branch bank for one of the multidimensional financials, then you're not really going to have an understanding of what that career looks like at a young age. And so as you get ready to go to college and you start thinking about what your career good look like, it's gonna

be primarily academic for you. Um. And so I think that's always a challenge that they're not a ton of people. They're in the seats they're getting access to, in this case, black students from across the country. They're giving them a look at this is what a career could look like for you, This is what an opportunity could look like for you. Here's what the real with possibilities is. And this primarily is how you get there. Here's a path

to get there. Um, that's the biggest challenge. So, so tell us about all Finance, what is its mission and why is this a better masse trap than the way things have been done before. So All Finance is focused on building diversity in the alternative investment industry. Alternatives being venture capital, private equity, anything else, private credit, real estate investing, hedge funds, um everything kind of outside of traditional stock

and bond investment. Right the things that are more private market driven often and so our goal is increased diversity in that space by working with partnerships at historically black colleges and universities, by providing students from HBCUs opportunities to have co curricular programming understanding you know exactly what you

need to know to be successful in that role. Also to provide mentors ship for students so that they're not operating in a vacuum, so that when they have questions there are people in the business, people that have experienced in the business that they can talk to. And also by working and partnering with schools to provide um financial support to help increase capacity not only for students, but

also for the institutions themselves. So let's talk a little bit about how old Finance was initially funded and created. You have Howard Marks of oak Tree Capital, Um, Mark Rowan of Apollo, Tony Wrestler of of Aries. These are like three heavy hitters at giant legendary firms. That's a heavy group to to work with. What led them to say, we need help accessing black talent and we're not getting it from anywhere else, we have to do it ourselves.

What I think all three gentlemen, and you know Howard, Mark and Tony all recognized is that relationships help drive value, and so you've got to have relationships with the schools and the places where there is a lot of black talent. And I think they saw HBC used as an opportunity

for that. I think what's important, though, and what's key, is that we found ourselves at a very interesting point in time in the wake of George Floyd, in the middle of COVID, and so I think everybody around the world, business leaders from across multiple industries, we're trying to think about how can we make the world a better place, How can we address um racial equity in a way that's specific to the businesses that we operate in and

I think that's the key, right. This was not just about you know, going out and being philanthropic, right and making one time gifts. This was about how can you be UM strategic in building partnerships over the long term they're going to have a systemic impact in the industry

in which you operate. And that's where I really think that that the three firms led by again Howard Tonian Mark really found something that was special and something that was, you know, a better solution to a question that Wall Street has been dealing with for years. So so is it safe to say that Wall Street in general, but alternatives like private equity and venture capital, we're not recruiting at historically black colleges and universities. Was that void out

there forever? I think that it was not systemic, right, There was no systemic recruiting UM at HBCUs in a way that was going to be sustainable, right, And I think that a lot of that was driven by needing to take some time and figure out how do we engage with these universities. We know we've got talent there, We've got density of talent, which is the important thing UM, And so I think giving us time to reflect on

what had happened over the past few years. Was a really strong case for let's go let's be direct and intentional. Let's work with presidents at these universities, Let's work with the deans, Let's work with the students to develop a strategy together that's going to rise the tide for everybody. So I want to get into the details of what

you guys actually do with students. But before I get there, you mentioned Tony, Howard and Mark what led them to say, Hey, let's stand up some entity so we can set up an institution to correct, uh, just a recruiting shortfall we've had for years and years Like that's an unusual group of guys to get together and say, let's see if

we can dent the universe a little bit. Yeah. Um, So, I think there are two factors, number one, and I think they both reflect strong leadership at the Firm's Number one, you had, you know, somewhat of a ground swell from within the firm, certainly a leadership that said we need to figure out a way to do something. And I think, as great leaders do, I think Howard and Tony and Mark were receptive to that and Also it was perfect timing because they were thinking, how can we drive impact?

How can we uh impact and effect change in our own way. And so it starts off with senior leaders at the firm, and you know, these heads of industry working together to figure out what can we do. Then you bring the relationships together. So Howard and Marcantoni have known each other, but also many of their senior leaders

have known each other as well. And so the main thing that you have to do is say, we want to take down any competitive barriers in which we operate during our standard business, and we recognize that what we're trying to solve for is bigger than our individual company. It's really about the industry. And if you can get to that point, which they did very quickly, I mind you, then you can instantly start to put together something as

powerful as all Finance. And that happened, um, And it happened fairly quickly, but I think it took a lot of time and a lot of vulnerability and a lot of transparency UM. And I think that's really symbolic of of what all Finance represents. So now let's drill down a little bit and talk about what you exactly do with students. Do you guys provide coaching or mentorship? What do you do to help kids who probably aren't all that familiar with what private credit is and put them

on a career path into alternative investments. So there's a framework that I use. I use it with entrepreneurs, I use it with with talent anywhere I see it. First, you identify really good talent, right, kids that have an interest in investing, although they may not know the nuance of what investing asset class that they're most interested in, or you know, they're young. They may not have the experience of understanding multicycles in the market, but they haven't

interest in investing. They have academic strength, right, some some real intellectual rigor and horsepower. And so you look at kids that perform well no matter what they do. I'm you know, the kid could be a philosophy major, that could be a finance major, but are they doing well in the pursuit that they're following um And then we look for for students that are coachable, right, Coachable. Coachable

is key. It's an apprentice model business. You know, there's nobody that comes into this business and comes in right out of college. As a partner. Even if they've got all the resources in the world, nobody's going to come in as a partner. By and large, most people start this business as an analyst and they work with associates, and those associates work with vps and principles and managing

directors and so forth. So you need people that are gonna be willing to work through the apprenticeship model, that are willing to come in, you know, well compensated, a great network of people that they're going to be around, but they're still gonna have to listen and be coached up um in order to benefit the team and the company. And so we look for those things. People that have an interest in vesting, people that have intellectual horsepower, and

people that are coachable. That's that's really intriguing. So it's not so much specific qualifications that are needed as qualities that will allow the students you select to succeed going forward. Yeah, I think, by and large, I mean I would say that those qualities, you know, we recognize them through qualifications, right, So I look for people who have strong g p a s and people they're taking some rigorous coursework, even

if that courseworks not in finance. I look for people that have done extracurricular work or you know, manage their own little portfolio, or have stock ideas or business ideas that they want to pitch. And then I look for people who also have references that say, you know what, this young man, this young woman has been really coachable in the time that I've had them in school. So, generally speaking, alternative assets, that's a tough gig to get into,

regardless of where you go to school. Private equity, venture capital, hedge funds, real estate, down the whole list, not not easy. How much harder is it to get into that space if you're coming from an HBCU. I think it can be difficult um and and not because of anything that's attributed to the student themselves. I think it can be difficult because no matter where you're coming from, you need

to know somebody to get into this business. And so the first key is how can you create networks that allow HBCU students to have mentors, to have advocates that are in the industry that learn and know them well, know their strengths, know their weaknesses, no you know their ambition and their aspirations, and can speak to that and help guide them to certain careers inside of alternatives where they can be successful. Really intriguing. Let's talk a little

bit about some of the work you've done. UH start with CEO of the Company Lab. What what was COLLABS mission and why Tennessee. My wife and I decided to move to Tennessee back in two thousand and sixteen. She joined a practice down there, and we had family in Tennessee, and it was really a unique opportunity to to move around. We've moved around a bunch and and have enjoyed all

the different places that we lived in the country. Chattanooga is a fascinating city UM really steeped in some rich history, but also a city that faces some challenges as they grow UM from a very small city to a more significant city in the U. S economy. UM I. When I moved down there, I was still working with MLT and then an opportunity came up to take a pretty significant role within the community UM as the CEO of

the Company Lab. The Company Lab was the entrepreneurship and Economic Development Center UM before Chattanooga and the surrounding areas which include North Georgia, North Alabama, and Southeast Tennessee. It was incredible to really focus on local opportunities for entrepreneurs, for investors, for economic development, and really see how the fabric of a city, UH with you know about a couple of hundred thousand people can develop when you have

people that are really dedicated to fostering that growth. It was just like a private public partnership. Tell us a little bit about the structure of that. It was a private public partnership UM. It was set up as a nonprofit that had funding coming some funding coming from the States, some funding coming from foundations UM, and then some funding coming from corporate entities that also found economic development in the region very important. What what some of the economic

UM sectors within within that area? What is Chattanooga known for? So, Chattanooga is known for a couple of things, right, key brands. Number one, Coca Cola Bottling is the the UM company that really helped to jump start the city. And so Jack Lupton was kind of the patriarch of of that company UM and sold that company back to Coca Cola

in the mid nineties. They were two separate companies at the So the yes, there were a number of bottling UM companies that would bottle Coca Cola product and distributed it throughout the country or throughout the region, and UM the one in Chattanooga, Coca Cola Bottling was one of the larger ones UM in the mid century. Again, it was sold back to Coca Cola as they consolidated those

businesses UM and left a pretty strong economic footprint in Chattanooga. UM. Chattanooga was also the home of Moonpie and Little Devi right, and a number of consumer products that are very familiar brands that we know about but did not know that they were from Chattanooga UM. And so what I saw in Chattanooga was a rich history around entrepreneurship that necessarily

hadn't found its way into the modern day. Right. We didn't see a lot of great companies coming out of Chattanooga in the late nineties during the tech bubble and and and so forth. So what did you accomplish when you were there? Do you feel like you move the

needle little, Well, we moved the needle tremendously. UM. You know, there were some companies that were there when I took the seat, companies like Bellhop that's a tremendous company UM and kind of operates in the uber of moving right, so you a fantastic moving company and a fantastic culture. UM there was a company, Freight Waves that has done

fantastic work. People kind of equated to the Bloomberg of trucking. UM. And so they've got a freight way Freight Waves, freight Waves Freight with W. A. V. E. S Um and Craig Fuller, who's the founder and CEO. Down there's a good friend but also a really strong business person who's done some great work. We brought Steve Case and Rise to the rest of Chattanooga and UM Freight Waves was actually the investment that they made in Chattanooga and has

done great work. The company has grown, They've employed hundreds of people at meaningful salaries. And that's what it takes to move the needle in a place like Chattanooga. And there are hundreds of cities like that around the child. So how do you go from Tennessee to Alabama and Montgomery Tech last, So, as I was leaving Collab in Tennessee, I saw what was going on in Montgomery, and I saw that Montgomery had great leadership. The mayor down there,

Stephen Reid, has done a fantastic job in Montgomery. I also saw that they had some really unique assets. They've got UM, a fantastic Air Force installation down there, They've got the state capital there in Montgomery, that got a really diverse population. And so what I really did was take the thesis that we were working with in Chattanooga

and adjusted so that it applied to Montgomery. UM. And so in a couple of years down there, we've been able to bring some really incredible companies to Montgomery to see the type of value that they have there. But we've also, in this most recent cohort UM and the team down there's an incredible job helped grow companies that are there in Montgomery, focusing on tech solutions and tech services to help them expand and recognize assets even outside

of the region. So you mentioned tech. I tend to think of the West Coast as the you know, the center of tech in the US. The northeast is the center of finance. The southeast. How should we think about that in terms of the business sectors that they should be known for. So I think there are a couple of things. UM Number one, manufacturing has been strong in the Southeast for a number of years, a lot of

car companies read a lot of car companies UM. There's a lot of pro business environment UM for companies with with big labor forces in the Southeast, you're able to operate UM at a more efficient standard of living in terms of cost, and so you see a lot of car manufacturers operating down there. Also transportation and logistics, Chattanooga UM was probably one of the biggest hubs for transportation

logistics in the country. Anything that's coming through the Southeast via truck is coming through either one or seventy five or twenty four. All of that comes through Chattanooga, and so that was something that we saw. You've got companies like US Express and Covenant that operate in chatted and FedEx or UPS have a big logistics center. So FedEx is out in Memphis, in Memphis, CNSE so on the other side of the state. But those trucks, again will

all come through through Chattanooga. And so when you think about you know the South, thing you think about industries that are moving UM, it continues to be manufacturing and logistics. Also, healthcare is really popping up. Nashville in Atlanta are two

very large health care hubs. UM. Some of that is due unfortunately to demand right where you have health outcomes that are probably a little more severe UM and some of the southeastern states in the United States, and so you need strong healthcare to meet the needs of the population. It's interesting we're talking about different parts of the country. UM. A lot of the bigger firms want to see the

end of remote work or hybrid work. But I would imagine that that creates opportunity ease for parts of the country like Chattanooga and Nashville and Montgomery, where there are a lot of big companies that may not be located there, but they want to tap the pool of talent that's there.

So we've seen that, and in talking with leaders in in a number of cities UM throughout the South and and even throughout other areas in the middle of the country UM that have not tremendous not traditionally had the type of talent there or the draw to those cities. UM. You definitely saw a surge of people, I would say during the COVID period that we're moving to cities where there was a lower cost of living but a strong

quality of living and they could work remote. And so I think there's been a benefit to those cities UM, and that you're getting people that are moving. You know, Nashville had a ton of people that were moving to Nashville, primarily from California, UM, and that really strengthened the work

or the labor force in Nashville. What you do see on the other side of the coin, though, is that for companies that are there locally, it can be a detriment because you have people that are there in the city and may take jobs outside of the region instead of taking jobs there in the region. And so there's a delicate balance right to the impact UM, particularly for small to mid size markets where you have a labor force that's needed in the market that's finding opportunities outside

of the market, even if they continue to live. Let's spend a little time going over some of your history. Your your families from Mississippi. But you grew up a little bit of a military Brad tell us tell us about those experiences. Yes, so, my my dad's actually from Mississippi. My mom was from North Carolina. My dad was a naval officer who retired shortly before I was born. So I spent most of my time growing up in Maryland, right outside of d C. So you didn't do the

whole army. Brad didn't do that. But I did hang out on military basis a lot. So all my friends would change every three years when the PCs. Right, So I had kind of the ob sit side of the travel, which is being the friend that was always left behind. Right. That's that's really Uh, that's really intriguing. What what did your dad, dad retire from doing? What was his So my dad, my dad had two careers in his life.

He grew up in Mississippi, his picking cotton believe it or not when he was seven years Oldways born in nine seven years old. Right, we talked about skipping generations. Um. He went into the Navy in nineteen and spent twenty seven years in the Navy. He retired and went to work at the Library of Congress and Personnel. Was able to get his undergrad master's PhD all through the g I bill while he was in the navy. Um. But I always say my father is a real hero of

mine because he truly did skip three generations in one lifetime. Um, that's really impressive. Was was mom working? Was she mother? My mother was a fifty year school teacher and uh, public school in d C for fifty years, um, and really was an inspiration for the way I think about learn eLearning and understanding the value of education. So let's talk a little bit about education. You went to Sidwell Friends School. That that's some rarefied company, isn't it. It's

some good people that have gone there. Yeah, who did you go to school with? Any famous names? Well, Marcus Shaw's one, um, But no I had. I had great great folks in my class. Bear Tune Day Thurston who may have heard of, author um and producer that spent time with the Daily Show, John bern Ball who's a great actor, Tommy Kale who was the director of Hamilton's and and some other big plays. But you know, everybody

in our class was was phenomenal. Um. Also folks like Chelsea Clinton and later the Obama girls went to said well, so some rarefied air indeed, But um, a great group of students and a great group of friends. So so you go from there to get a mathematics degree from Morehouse College, then onto Georgia Tech for an electrical engineering degree with little football mixed in. Tell us a little bit about your act ademic career in college. So when I went to more House. I was excited. I went

down there with a few friends. It was a great mix to be able to go to a school like said well and then go to an hvc U. UM as esteemed as more House was. Was really a great opportunity for me to have a bunch of different experiences. UM. My story around playing football is probably my great interview story. I UH was playing cards with a bunch of guys right at the beginning of the school year, and UH made a bet that I could kick a fifty yard

field goal. So we go out on the field. We jumped the fence, I line up, take about twenty steps back kick a field goal from fifty yards. One of the coaches comes out and yells at us to get off the field with trespassing. UM. As we're leaving, he tells me to come out to the walk on tryouts at the end of the week. How close did you come to a fifty yard field goal? Oh? I knocked it down. He made it, man. He he didn't want me to come out because I missed it. He wanted

to come out because I made it. And UM, you know, I went on to play four years and more House and had some some strong accolades there, But really even that experience was about building great friends, um, that I played football with, and many of those gentlemen have going on to do incredible things as well. What why is it not surprising that a math nerd is also a place kicker. It seems to be like, um, the field goal seems to be one of the most mathematical parts

of football. Well, it's pure geometry, right, So one point three seconds from the snapper to putting the ball down and getting the ball off the ground, the angle that has got to come up, you know, is is pretty significant in terms of your probability of making it. Um. So I already I looked at it as an exercise in physics, geometry, Um, you know a little bit of chemistry depending on on the texture of the football. So

I thought I was a natural. That's really intriguing. And then you go on get your masters at Duke School of Business. Uh, what led you in that direction? Given

the mathematics and electrical engineering undergraduate? So I went to IBM after my completing my undergrad degree at Georgia Tech and Electrical Engineering and had a great time there, learned a lot, but really wanted to understand the way that we were selling business right, understanding more about the business of IBM and how we thought about the products and

services that I was delivering as an engineer. UM not to mention one of my you know, very good friends that played football with me, A more House, was a year ahead of me in business school. He said, you're pretty smart. You should check out business school. And uh, fortunately enough, I had a great school in Duke that

was right there in Durham. My wife was in med school at U n C. And Uh, I didn't have to move to go to a great business school, which was really refreshing and it was a great experience and I learned a lot about business there and kicked off a new career from there. You end up going into a decade of equity research and investment banking at shops like Bank of America, Piedmont others. What led to that aspect of finance. So I always tell folks this is

one of the great turning points in my life. When I went to business school, I was pretty confident that I was going to come out of business school and go back to IBM. I was gonna stay an engineer. I wanted to learn more about marketing and you know,

some operations around technology. There was a point right before the start of my first year in business school, so this is two thousand three, I had an opportunity to go to a camp, two day camp at Goldman that was focused on providing insights in investment careers for people that did not have an investment background. And they, you know, they fly you up your smart kid, put you up

in a nice hotel. And I met a woman who covered enterprise software at Goldman, and she gave me really great insight into how I could leverage the industry knowledge that I had developed at IBM. And so really it was one person on an off conversation, you know, down on Broad Street twenty plus years ago that led to

my career. She said, Equity research is a great ace where if you know a lot about the business and you learn a lot about finance, you can be impactful, You can earn a good living, you can really understand the markets and meet great people. As opposed to the opposite, which is learning knowing a lot about finance and then

having to learn a whole industry from the outside. It's a very different perspective than starting with the industry knowledge from the inside and and that perspective is something that I think we've got to learn to embrace more because you know, finances challenging, but it's not difficult, right. It requires putting in work and getting reps um in order to start to understand patterns and be able to anticipate things that you will see in the market or things

that you'll see at a company. But really understanding that the core of industry is what makes a master of business, right. I mean, that's how you really start to hone the skills that you need in order to make a true alpha out there in the market as an investor. So tell us what you did at ups like Bank of America. What was your focus? So I covered telecom services at

Bank of America UM. During my time at IBM, I had worked UM on several telecom networking projects and really understood the industry, things like spectrum and things like wireless that were coming of age at that time. I understood pretty deeply. And you know, through my understanding of finance, I was able to say, these are businesses that I think will do well, These are businesses that are positioned to do well, and once the market understands that the

socks will perform. Um. I had a great mentors at at a Bank of America, a great team that I worked with and really set me up for a great start in in finance. So you have a little bit of a health scare when you're relatively young, and it changes your career trajectory. Tell us what led you to stepping off of the merry go round? Yeah, um, it's an incredible story and um one that I think also

defines a lot of where my life has led. Um. So this is you know, I was at a firm in d C and UH covering tech, media, telecom, a bunch of regulated industries as well, and was having some chest pain and a bunch of traders had you know, what we call walking pneumonia. But it takes everything to get a trader off the desk, right, I mean, they'll the whole desk will get pneumonia before they leave. And um, I was pretty sure that's what I had And was coughing for a few days and had some pain in

my chest. Go to the hospital, they take an x ray, They see that I've got some swelling and a little bit of cloudiness there in my lungs, and they give me a Z pack and antibiotic. They think that I might have had pneumonia. My wife, who's a physicious, as I shared with you before you know, comes to the hospital to the emergency room. She asked me what they said. I said, you know, as an equity research guy, I think I know it all. I've got pneumonia. You know, they saw it on the X ray. What I did.

Let me see those those She's like, let me see what's going on exactly. She didn't buy it. Well, she didn't buy it because she's a doctor and she's very good at her job. Like I say all the time, I've got a great wife. But I've got the best doctor that anybody could have in their house. I had some leg pain earlier in the week, left side, left side, So we know what we know where this is going right there? You out thought it was a Charlie horse.

I played a little basketball with buddies. This was right at the end of a Thanksgiving holiday and I got a group of buddies, lifelong friends. We always played basketball together, and I thought it was a Charlie horse pain and the leg went away. A couple of days later, I'm having this pain in my chest, and I take myself to the hospital. She goes, did you tell them about your leg? And I said no. She goes into the

head of the emergency room's office. The guy comes back out and he says, how come you didn't tell me about your leg. I said, well, my leg doesn't hurt anymore. It's my chest. I got pneumonia. That's what that's raised. This is where equity research guys talk themselves into a hole. They think they know more than they do. I know a lot about telecom, I know no thing about healthcare, all right. Um, So the guy comes out and he says, well, we gotta do give you what we call a d dimer. Right,

there's a test for blood clots essentially. Um, they do the tests. I am at this point the second sickest person, highest priority in the emergency. They rolled me in, They give me an m R I. They see the blood clots in my lungs, they see some remnants in my leg. I'm immediately, um, you know, brought into the hospital and and I'm there for several days. They give me blood thinner.

They want to make sure that these clots don't pass or anything crazy like no, no, no, no, no, so what I had was was a blood clot, right, so I did not have a heart attack. Um, I'm in the Strokes Center there, the hospital in d C. And for me, it was really a point where you start thinking about your life in a different way. It had to be terrifying when your wife comes in and the head of the R e R says, stat, let's let's

let's get this guy taking care of immediately. It is, but not as scary until you realize what's really happening, and that you know, there's things that they called widow makers, which are these bilateral blood clots that you get across the aortic valve. And I mean you just go away,

you're done right. As somebody that's kind of steeped in mathematics, probabilities, investment, you always have you thinking about the future, and um, you know my great story from that is that I actually upgraded a stock Pandora media from the I see you in the hospital. Um, yeah, to which my wife responded, you know, if you die writing a research report, I'll kill you, right. Um. So this is where you start putting it together. You put a little bit of life together,

and you start thinking like an investor. And you start investing in yourself and thinking about you know, how are you going to measure the return in your life? And for me, I've done well UM as an analyst. You know, we we we did well. And I said, I really want to find ways that I can impact and help others with with the years that I have left, because it could have gone away right then and there. So

is that what led to Management Leadership for Tomorrow? And then old finance tell us about what took place when you get out of the hospital. Yeah, so I got out of the hospital. UM stuck around for a few more months at at the firm that I was working UM, and then decided to do some other things and and that included UM doing some work with small and medium sized businesses providing some outsourced CFO type of service UM to really understand how some of these small businesses worked.

An organization that I looked at doing some work with with Management Leadership for Tomorrow and John Rice and the team and MLT do a great job. UM. They have absolutely moved the needle and changed the trajectory for thousands of UM, Black, Latino and Native American students. Over twenty plus years, uh knew John a little bit and knew

about the work that he had done. I had written recommendations for or mintyes of mine into that program UM, and John asked me to come out and you know, can you help raise some money right running business development? And for me that was a step away from the

industry UM. And what I recognized is I got tremendous fulfillment out of seeing young people that were, you know, ten twenty years younger than myself, but helping them get to the next level, helping give them the opportunities that that woman gave me from Goldman when she said here's the path you should think about taking. Quite quite interesting. I'm Barry Ritults. You're listening to Masters in Business on

Bloomberg Radio. We're talking to Marcus Shaw. He is the CEO of alt Finance, a firm which seeks to increase diversity across alternative asset management firms. So we've been talking earlier about UM, the lack of recruiting and the lack of diversity historically on Wall Street, but let's talk about the other side. You you often speak to gups of smart college kids and you asked them, Hey, what do you guys know about private equity or credit or venture capital?

What what sort of answer do you get when you ask those college students those questions. So, the most interesting thing that I've seen in assessing college students and talking to them is that students generally have very little knowledge of the companies that are operating in the private equity, private credit markets, real estate. They're knowing they know some of the venture capital firms, because I think venture capital has done a great job of pr over the past

ten years or so. I mean, everybody wants to be a venture capitalist and an entrepreneur. Um. I always attribute that to a low interest rate environment where oh no, go back to the nineties and venture capitalists were rock stars. That's right, that's right, right. Well, also, though you know a period there where you had the FED being a

little accommodative, right. I think that by nature and by design, many of the firms that operate in in the private equity and private credit space don't want to be known. But our students know many of the holding companies, right, And that's what's really interesting. That they know the publicly traded companies, they know the private companies, but they don't know the holding companies for the private companies. You use the example and I think it's fascinating. Rihanna partnered with

a private equity firm for her fashion line. The students know who Rihanna is and they know how wildly successful she's become, but they don't know who the financers are. That's right, and and how do you get them to look behind the curtain and or under the hood and see that that capital is what's driving the business. I think the key to that and we we we check for this when we're interviewing students for our program is intellectual curiosity, Right, That's the key to being an investor.

Are you always thinking about peeling back another layer to the onion? You go in a store, you see a great product? Mm hmm. Where's that product made? Who's the company that owns that? If there's several different pieces to the product, how many where are they getting the components from? Where they sourcing them from? Who owns that company? Who

finances those companies? That's the way we're teaching students to think because that brings about the type of intellectual curiosity that you need to have when ultimately you want to put some capital behind a company that you really like. So So let's go back to first principles. Why are companies interested in in diversity? What's in it for them? So I think they're There are a number of reasons

why companies are and should be interested in diversity. UM. We have hundred million students out here UM coming through you know, K through twelve and university system that are operating at a higher level than we were twenty years ago. Students are very smart, independent of their color, their background, their religion, their central owner Asian right. What we know is is that students are being educated at tremendous levels today.

There have so much more access that their intellectual curiosity is going to be UM really fueled by a lot more information that's delivered in a more equitable way. If I'm hiring for talent, I want access to all of that. I want to know the brightest kid from every corner of the country, boy, girl, gay, straight, black, white, it doesn't matter. I want to know that student because that

student can help me. That student can help me build and invest in find opportunities and generate alpha and bring more clients into my business. And so if I'm a senior leader at a company, I think that's the business operative, right, I've got to have the brightest talent. The talent that's most differentiated and intelligent is also helpful. I think the social part of this is that you know, a lot of these dollars are public dollars that that companies are managing.

My mother again, a fifty year school teacher who put money into her retirement for fifty years. It would benefit her and it would benefit the other teachers and firefighters and police officers. To represent diverse communities, to have people who are investing their money look like them as well, really interesting. So this is more than just a checkbox on any list. Companies are actually looking to expand their diversity and inclusion practices because they see a genuine benefit

to both their decision making process and their businesses. I think that's the obvious answer, um, and that's why with all finance, you know, this is a long term plan. We've got a tenure commitment from our three uh initial partner firms, and so this is not about checking the box. This is about changing the paradigm um for recruiting talent in this industry. So this industry has been notorously laggered when it comes to diversity, but there are lots of

other industries. Technology has been accused of having a diversity issue, medicine law, pretty much wherever you look. The United States has its own history with some of its dark pockets. What other sectors could benefit from an organization like ALD Finance, ALD DOT. What else can we focus on? Yeah, I think there are a number of sectors that could benefit from this strategy, even sectors like tech that have already

developed some strategies. I think again, we're focused around education, exposure, and experience, the three elements that are going into preparing students for careers. This is not just about scholarships. Right. You give us in the scholarship, but then you don't really give them access to the people at your firm that are going to help that student not only get a job at that firm, but feel a sense of belonging, right once they get to that firm, so that they

maximize their individual output. That's what you're trying to go for. Right. I'll tell you a story about a student. So we have a student in our program, and when you talk about counseling and coaching, it was a phenomenal story. A student, very bright student who had the ability to graduate in three years and worked last summer at at a fairly reputable consulting company. And I asked a student, I said, why are you in a hurry to graduate? You've got

a students, got a pretty good scholarship package. Student comes from a background where you know, he's having to support families still at home. I mean, you know, a tough situation, and he wanted to get out in the workplace where he can earn I said, trust me, if you stay for your full four years, you'll have the opportunity through this program to get access to a career in alternatives. You have a great opportunity. Last summer you'll come out. You could make two x, even three X if you

stay and pursue this opportun any alternatives. So the young man stayed, had multiple opportunities selected one. But here's here's the real power of the network. As he's making his decision to which role he's going to take, and you know, at one of three mega funds, he calls up his mentor, who is not at one of the firms that he has an offer from, and he says, well, what do you think I should do. In the course of that conversation,

not only does he get guides from the mentor. The mentor connects him with another gentleman who used to work at one of the firms in the same group that he was going to. Now he has a decision that he's made that's been informed by two people that he did not know a year ago dinner table, and we

will we will take those conversations for granted. If, especially someone grown up in a New York area where you know people who work in finance or people's parents were in finance, that network just doesn't develop elsewhere without focus exposure to it. That's right, that's really intriguing. So you were a Bank of America a decade ago, you let it uh, you had some important teams you worked with,

and you led some groups. How do you see Wall Street having changed over the past ten or twenty years? Were the signs on the on the road that things were getting better? Were they ripe for moving the right direction? Or is Wall Street just calcified and needed to really be shaken up? Well, Barry, I think that question really highlights something that's that's amazing to me. Number One, that I've been in this business, you know, a long time

goes by very fast, And Number two. How much things change, you know, in a fairly short amount of time. You know, when I started my career in finance, I was the only black person in in my group, in my division. Okay, Um, another young woman came shortly after. We had a great relationship. In fact, she's been a lifelong friend and I, you know, was a mentor to her. And um, was that something that was very consistent. You were the only black guy working at the other shops you worked at, or at

least the only person in the department. Well, um, for a couple for a couple of firms that I also did work at a minority own firm UM down in North Carolina, And and that was it was refreshing. I mean, I actually, you know, some of the brightest people that I ever worked with, and much of my investment philosophy and the thesis the way I think about investing was developed there amongst an incredibly diverse group of investors who had,

you know, tremendous experience and success. Really intriguing. So given that you were at some big firms early tens, you know, what what did you see? What was what was it that led Wall Street to finally being ripe to accept changes. I think there is an inevitable pressure from society that

helps drive change. And I think Wall Street, while we talk about it in this compartmentalized concept of it's Wall Street, it's in New York, it's you know, the bull down on Wall Street, right, and it's it's the movies that we see in reality, the funds that Wall Street is managing, the capital that it's managing, it's coming from all over the country. It's coming from people that look like me,

It's coming from people that look like you. It's coming from people that look like our parents and our children. So at the end of the day, and I think we saw this in two thousand and eight, I think we saw it again during COVID that the end of the day, these companies are accountable to the people, right and to the people that are their investors, their LPs and and entities that their LPs represent um in their clients.

And so I think that what we've evolved into is a more human Wall Street that is more inclusive by nature. And I do believe that what we're seeing now right, we will continue to see because we'll have people that come throughout finance, but also people more senior that are at the table and helping make decisions on where and how we invest in people, and where are we how

and where and how we invest in companies. So so that leads me to um a pretty straightforward question, which is, first, how do you measure your own success with all finance? And second, how do people like oak Tree, Apollo and aries. How did they ask you to track uh, your your progress? What metrics do they look at to say, hey, we're getting our our money's worth for standing up this company and giving them a decade long horizon. So I'll address

the ladder first, right. Number one, we had our first CYC in September. We started our first cohort of our fellowship in January. We now have the second coort. I've got seventy five students from eight hbs you use. There are now building relationships, getting education, getting exposure and ultimately getting experience to the alternative investment industry. That is fascinating.

We've got students in our program that have their first full time offer with alternative investment firms that will graduate in two thousand three and May. So we're already in a few months really hitting the cover off the ball. UM. That's the quantitative element. Right, those are the KPI s up on the dashboard that are saying, you know, how many students are are you getting to exposure to these jobs? How many students are getting these jobs? What I also measure,

and this is who the conversation with students? How many students are building confidence, skills and relationships that will help improve their wealth and economic mobility as they grow. How many students are having a conversation around the learning session that we do on interest rates and they're calling mom or dad at home and saying, you know, what is your credit card? You know what sort of interest rate on your credit card? Did you refile your house? How

should I think about my student loans? Right? That are really taking an active position and the way that they think about their personal finance, but also the way they think about investing. And I hear those conversations and have those conversations with students almost on a daily basis, and that's what fulfills me and lets me know we're moving in the right direction. When I look down the road in ten years, I believe that I will have hundreds

of students that are actively working in alternative investments. But I'll have thousands that are knowledgeable and have relationships with people in this business and are better off for it. So we've been talking a lot about alt investments. Are there parallel entities to old finance for traditional asset management, investing, banking, stocks, bonds,

I p o s, etcetera. It seems like there should be something similar to what you're doing for that space as well, which arguably is even bigger than alter finance. So I think there are some some organizations that have, um, you know, been active and in providing similar opportunities for students for traditional banking. Right. I mean when you think about what Reginald Lewis did you know almost thirty years ago um and and breaking grounds for for blacks and

investment banking. Um, I think that we're doing some of that today in the alternative space. Remember when I have we had our first group of fellows. We had thirty three fellows in our first cohort. So this is January two, This is just you know a few months ago, right, And I asked the students, all right, how many of you know Morning Stanley Goldman City Group. Everybody raises their hand. They all know what they see, the commercials, they get

the commercials on on the internet. I asked, how many of you know areas of Pollo oak Tree one student, so roughly three were sent. These students are brilliant, all high performers, all strong academic performers. I mean they will not fail to get a job. They could get a job doing anything. But they did not have the awareness of how the pathway to enter one of the most rewarding careers in investing. And that's that That's a key.

And so when I look at other industries and what other organizations are doing, we are squarely focused on helping move the needle and the alternative investment space, places where people can help do deals, be long term owners. It's not about you know, the transactional element of investment banking, right be an owner, a direct owner of a brand that you know, but you never knew who the holding company was. I have seventy five students now that can

answer that question of what's the pathway? How much larger can you expand this to be? So Barry, we will expand the fellowship program ultimately to be a round a hundred or a hundred and twenty students in you know,

each year about fourty or so in each class. We are also partnering with the Warden School of University of Pennsylvania to develop an institute, the Warden Alt Finance Institute, which will be an online community and platform providing AGAIN curriculum and content and community as well as resources to help students at any HBCU gain access to AGAIN education,

exposure and opportunities for experience in the space. And so through the institute will be able to scale some of the best parts of our fellowship, which is a real high touch part of our programming, but we'll be able to scale that to the students that are at HBC is that we don't partner with directly. Really really quite fascinating. I know I only have you for a couple of minutes.

More So before I let you go, I want to ask uh the standard questions that I ask all of my guests, starting with what have you been streaming these days? What's been keeping you entertained a post lockdown? Yeah, so Barry, I would say, I tend to read a lot and follow a lot obviously in news channels, UM on finance, on podcasts. I mean, I love Howard marks the memo and I read his his memos that he puts out. But I love what he's doing in the podcast format

that he's developed. But I listened to a lot of sports. I'm a huge Jalen and Jacoby fan. Um. I love what those guys are doing in terms of sports and entertainment and so, uh, you know, probably not as heady as some of the other answers you get, UM, but I I love sports talk radio. That's interesting. Tell us about some of your early mentors who helped shape your career.

So you know a couple of the mentors that I had, Um, there was a woman named Stacy Gorn who hired me actually too IBM, And it's amazing to think this is over twenty years ago. Um. Stacy was a long term executive at IBM and has now moved to an resulting firm. But what she really helped me focus on early in my career was continuous improvement. Right. You think about it as an engineer a lot, right, kind of the causing principle right that Toyota used, but personal improvement of yourself? Right,

how do you continue to develop as a person? If you're strong technically, how do you develop into a person that people feel comfortable managing? Others and feel comfortable being managed by um. And so as I developed into an executive and the CEO, I always reflect on those lessons that she gave me early on about being vulnerable and being coachable, even being coached up right. So having somebody that reports to you have the ability to coach you up on things where you can be more helpful for

your organization. Uh. You mentioned books and you like to do a lot of reading. Tell us what some of your favorites are and what are you're reading now? Yeah? So, Um, you know a book that I go too often and I you know you read this, you know, probably once every couple of years, is uh Peter Burnsteins against the Gods?

Um kind of. It's just it's it's fascinating to think about this concept of risk and how it's affected us since the very beginning of time, right, and then really how we have taken risk from something that was deified right kind of this religious concept and turned it into an economic tool that we can arbitrage for for personal gain. Unbelievable. Um, well written. I love the historical context and bringing it

into the future. And so that's one um that I that I go too often I'll tell you a book that that I want to pick up and um, the title here, it's John Max's new book. And I thought it's interesting because you know, John is somebody, um that I don't know personally, but I've always respected kind of the way that he organized and ran businesses. And you know, it's a note that um, he's dealing. You know, I think has talked publicly about the aging process that he

is going through himself. And uh, I found that particularly endearing because it's something that that I've dealt with in my family and to recognize that, you know, in this business, we're still human and we're not excluded from the human process. And so that's a book. John max new book is one that I certainly want to pick up up close and all. In life Lessons from a Wall Street Warrior is that is? That's a hell of a title. Hell of a guy. Um, what sort of advice would you

give to a recent college grad? This is kind of a funny question because I asked this to everybody, but essentially I'm asking you a question, which is what old finance does. But I'll ask it anyway. What advice do you give to a recent college grad who was interested in a career in either investments or alternative finance. So there are two things that I tell all of our students. UM. Number one is a bigger picture and probably pretty simple.

You've got to have intellectual curiosity. You can never run out of questions. I mean you you run incredible podcasts. You can never run out of questions. You've always got to have something that you're thinking about in terms of what's the next layer. How can I think about it in a different perspective, How can I put myself in somebody else's shoes and think about it? And how does that change the value of what I'm looking at right?

I think it's that's critical to being successful as an investor. Number two is something that somebody shared with me and essentually John Rice, who runs m LT and is a partner and a great friend and and really one of the great leaders in the D and I space. Um, when you're young and you're bright, you've got to take risk early in your career, and in fact act not taking risk is actually the riskiest thing you can do. It's a little bit of a parable, right, but when

you're young, you can recover from failure. You don't have that same luxury when you're older. It's so hard to appreciate that when you're you know, twenty or twenty one, when you're you're afraid of failure, When you're afraid of failure, when you should actually be seeking failure. Right. You should not be doing anything when you're twenty two or twenty or twenty one that you can't fail it right. Playing it safe is risky. It is risky. That's really interesting.

And our final question, what do you know about the world of investing and old finance today? You wish you knew twenty or so years ago when you were really exploring the field in its early days. So the biggest thing I would say procedurally that that that I see in the investment hiring cycle is that you got be ready for the gig before you get it, which means that the recruiting process for alternative investments may start. Even if you're going to investment banking as an analyst, it

may start before you actually start that job. There may be people that are reaching out to you trying to assess your interests in what you're gonna do after banking, and that was you know, I say one of the secrets of the industry that you know. I was well into my career before I knew that's how people were getting recruited into the industry. And so you gotta have

your ear to the ground right. You got to know who's who, where the players are, who you should be expecting emails and calls from, and when you get those emails and calls, you gotta be ready for it. Really really interesting answer. We have been speaking to Marcus Shaw, CEO of ult Finance. If you enjoy this conversation, well, be sure and check out any of the previous four hundreds or so we've done over the past eight and a half years. You can find those at iTunes, Spotify, YouTube,

wherever you get your podcast from. We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. Sign up for my daily reading list at rihults dot com. Follow me on Twitter at dhults. I would be remiss if I did not thank the crack team that helps put this conversation together each week. Justin Milner is my audio engineer. Attica val Bron is our project manager. Paris Wold is my producer. Sean Russo

is my researcher. I'm Barry Rihults. You've been listening to Masters and Business on Bloomberg radioa