A few weeks ago, on a dark, frigid morning, I sat in my car and watched as guys trickled into the Brazilian jiu-jitsu gym where I train.

I didn’t want to be there.

I didn’t want to go inside.

I wanted to go home.

I wanted to hang it all up.

I was so tired … from work, from kids, from a million aggravating and enervating pinpricks that I felt like quitting more than jiu-jitsu.

And in that moment, I thought about the fine line between stamina and stupidity.

It’s right to praise persistence, but shouldn’t we persist in things worth doing?

* * *

Most of the founders who read this newsletter probably started 2020 by defining their goals for the year; and they’re probably throwing themselves at their work with commitment, ingenuity, and optimism.

Honestly, I’ve been stuck in the starting blocks. The near- and long-term objectives are inchoate, and after several years of optimism, the entrepreneurial journey is feeling like a merciless slog through the Sahara. I suspect I’m not alone.

Yes, Portico’s still here, and we’re busy fielding inbound demand. The data suggest we’re on the right track, with visitors to our website growing at a CAGR of 88% since year one, and our audience expanding from 35 to 93 countries.

But still, the azimuth toward a recurring revenue model remains unknown, and the odds of bootstrapping to scale seem long indeed. There’s no discernible Portico Pivot™ on the horizon.

Some people illustrate the benefits of persistence as an exponential growth curve — small efforts compound over time, leading to large returns at time t. As if our lives are money-market funds.

It’s an intuitive concept when applied to one’s own knowledge and capabilities: put in the work, get in the reps, enjoy the gains.

However, it misses the context of industry or market conditions. The latter can dictate the shape and slope of the curve.

For example, you can buy the best surfboard, learn from the best instructors, and have supreme balance and fitness, but there’s no point in surfing on a pond. You need waves.

The tide has been out for a long time in EM private markets. The surf conditions have been poor. I’m scanning the horizon for signs of a swell.

The industry needs an upcycle.

* * *

My dad once gave me framed copies of a prayer and a poem. The prayer was General Douglas MacArthur’s “Build Me a Son” and the poem was John Greenleaf Whittier’s “Don’t Quit.”

Their words become more meaningful as the years tick by and the cinders burn hotter in the furnace of adversity.

My dad injured himself pretty badly when he went through Marine Corps Officer Candidates School. He tried to persist through the program, but he fell during one of the evolutions, tearing most of the ligaments and tendons in his ankle. It was about 10 days before graduation.

He was given a choice: return to civilian life, or wait for the next OCS class and start over from the beginning.

He chose to start over.

One time, he let me in on a secret.

“Buddy, sometimes you have to take it a day at a time, sometimes it’s a meal at a time, and sometimes it’s a step at a time. Just keep taking the next step.”

So, on that cold morning, with an aching body and melancholy in the ascendant, I turned off the ignition, opened the car door, and took the next step.

Alla prossima,


J.P. Morgan

The U.S. International Development Finance Corporation (DFC) became a reality on January 2nd.

It was a big moment, long in the making. DFC’s investment cap was set at $60 billion — doubling OPIC’s capacity — and it was granted equity authority. Now, the U.S. Government can invest in funds on the same basis as all the other DFIs.

And then this happened:

New York, January 21, 2020

J.P. Morgan (NYSE: JPM) today announced the creation of the J.P. Morgan Development Finance Institution (DFI) to expand its development-oriented financing activities in emerging markets. In consultation with leading development institutions, J.P. Morgan has created rules-based criteria to help identify business activities and opportunities that generate both financial and developmental returns …

With its newly-launched Development Finance Institution, J.P. Morgan expects to attract additional investment into emerging economies — including connecting philanthropic or concessional funds with private capital to spur investment through blended finance models … The DFI estimates that J.P. Morgan will be able to finance development activities valued at more than $100 billion annually from investment banking transactions alone, with additional contributions from its markets businesses.

Also, “the JPM DFI will seek to originate assets for the purpose of distribution to market participants with the aim of mobilizing capital and formalizing development finance as a traded asset class.”

This seems big. Like paradigm shift big.

Did Jim Yong Kim blow it?

Is J.P. Morgan going to be the new IFC?

Or is that thinking too small?


Hony Capital

The FT ran a profile of Hony Capital that focuses on several recent cross-border deals that have gone wrong (e.g., PizzaExpress, WeWork).

Hony was a pathbreaking PE firm that excelled in its early years with a strategy focused on SOE + shareholder restructurings, at a time when the central government was fostering private sector activity.

In broad strokes, it subsequently embraced a cross-border approach, initially “going out” and purchasing companies abroad that could benefit from access to the Chinese marke (see, for example, its work with Zoomlion). And then it migrated to consumer plays, some of which are the Western brands that were being “imported” to China (see, for example, the FT article).

I’m not keen to delve into the specific case of Hony, but there’s an important question swimming beneath the surface of this article: how persistent is past performance in rapidly growing, and rapidly transforming economies?

(See also: China and Chasing Profits).


Bia, Part II

Last July, this newsletter featured a story on the astonishing volumes of beer consumption in Vietnam. There was reference to an FT Confidential Research survey of university students that revealed 20% of respondents had driven drunk in the prior 12 months.

“Some of the statistics in the FT piece are shocking, and they scream for regulation,” said I.

Well. The authorities have spoken and have banned drunk driving, with the blood alcohol limit set at zero. Violators face steep fines.

The FT reports that Heineken’s sales in Vietnam have dropped by at least 25% since the law went into effect. Remarkable.


The Cost of Being Too Patient

Two Paolas — Giuliano (UCLA – Anderson) and Sapienza (Northwestern – Kellogg) — have conducted a study to determine the cost of being too patient on happiness.

Paola2 find that most people are impatient. (No surprise there).

But Paola2 also find:

The relationship between patience and various measures of subjective and experienced well-being is hump-shaped: there exists an optimal amount of patience that maximizes happiness. Beyond this optimal level, higher levels of patience have a negative impact on well-being.

Unfortunately, Paola2 did not determine what time t is.


The Porticos of Bologna


The porticos of Bologna — inspiration for our company name — have been submitted to UNESCO as a candidate for a World Heritage site. Our fingers are crossed. Andiamo, Bologna.


From the Bookshelf

… the splendid achievements of Alexander are the clearest possible proof that neither strength of body, nor noble blood, nor success in war even greater than Alexander’s own — not even the realization of his dream of circumnavigating Libya and Asia and adding them both to his empire, together with Europe too — that none of these things, I say, can make a man happy, unless he can win one more victory in addition to those the world thinks so great — the victory over himself.

— Arrian, The Campaigns of Alexander (Penguin Classics: 1976)

# # #

Haven’t signed up for our newsletter yet? Sign up now.

# # #

The information presented in this newsletter is for informational purposes only. Portico Advisers does not undertake to update this material and the opinions and conclusions contained herein may change without notice. Portico Advisers does not make any warranty that the information in this newsletter is error-free, omission-free, complete, accurate, or reliable. Nothing contained in this newsletter should be construed as legal, tax, securities, or investment advice.

Copyright © by Portico Advisers, LLC 2020, all rights reserved.