What does it take to survive market crashes, rebuild broken portfolios, and double down when everyone else walks away?
In this episode, Donald Zilkha, investor, entrepreneur, and founder of Zilkha Capital Partners, unpacks 40+ years across M&A, venture capital, and constructive activist investing. He shares how he turned a failing dot-com fund into a 2x outcome, why investor psychology matters more than spreadsheets, and how collaborative (not combative) activism unlocks value in public companies. His core belief: people give up too soon and discipline, flexibility, and trust are the real edge in business.
Transcript
Maureen: Donald Zilkha is an experienced investor, entrepreneur, and strategic advisor with more than 40 years of experience across investment banking, private equity, venture capital, and constructive activist investing. His career began at JP Morgan in 1973, where he built early expertise in complex restructurings and M&A before becoming a senior member of the James D. Wolfenson’s pioneering investment banking boutique and a general partner at Wolfensohn Venture Partners. In 1986, he founded Zilkha and Company, advising major global corporations on strategic development and transactions exceeding 3.5 billion. He later launched Zilkha Capital Partners and Zilkha Venture Partners, leading investments in both biots and early stage technology companies. And in 2006, founded Zilkha Venture Partners, leading investments in both biots and early stage technology companies, and in 2006 founded Zilkha Partners to focus on value creation and small cap public companies. A graduate of Wesleyan University, Donald brings a rare combination of entrepreneurial vision, deal making, acumen, and multi-sector and investment experience to today’s conversation. Welcome to the Get Hired Up podcast, Donald.
Donald: Thank you, Maureen. I’m delighted to be here.
Maureen: Yes. And we met at the Hamptons Tech Week conference back in June. And you may not remember, but I remember after your presentation, I asked the question, what has surprised you most in your career so far? And this is a question we ask all of our guests. So the answer that you gave resonated with me and you said, I’m surprised that people give up too soon. So with that introduction, I’d love to ask you a few questions related to your career, and where you started your career. And we talked a little bit a few minutes ago in the pre call about technology companies. Let’s just start there. Why don’t you tell us a little bit about your career and how you land at where you are?
Donald: Certainly, that’s easy. So I graduated university, Wesleyan University, and I was hired by JP Morgan, who had in those days, and I’m sure they still do an extraordinary training program. I guess they sort of channel you through did they take a look at you and how you do and your various areas, how you react to certain subject matter that they give you. And they channeled me into a deal-making group to start with. So instead of the normal path, which would have been commercial banking, I was moved into a group called tax shelters. And in the old days, there were tax shelters which were means for wealthy individuals to be able to avoid paying large taxes or defer them for a period of time. And those covered so many different areas. It was fascinating to have as your first job, a job of looking at opportunities for high net worth individuals who are clients of the bank in cable television, in oil and gas, in cattle, in real estate. And it left me with quite an impression.
I understood how important the role of taxes were at that time in investing in businesses and also how taxes, or at least creating in a sense higher expenses, would actually hide huge values in businesses. So you know, take cable television company. Well that cable television company spends a fortune to set up the system and to acquire its customers. It would therefore show losses for an extended period of time, which the high net worth investors at the bank would take advantage of. But what was most interesting about it is once those companies got sold, despite the losses, got sold for huge amounts of money afterwards, I thought, ah, interesting. There’s no correlation between the losses in that type of a business and the value that it has because of the stickiness of the customers, because they put all the money up front. And it’s the same thing for a company like Coca-Cola. And that’s what Warren Buffett understood, is that the value in the business happened to be in the brand. So huge amounts went out in advertising and things like that, which put tremendous pressure on the results of the business. But the business was worth a fortune. And that was, you had to almost recreate the financial statements in order to really judge what the value was. So in any case, that was my first lesson. And, you know, unfortunately, I mean, it was also great because I got to meet some huge clients at the bank. I was able to at least impress them enough so, you know, I got a good sort of review from my bosses there. But within two years, the whole tax shelter market sort of was changed. There were tax reform acts. A lot of the benefits went away. And I was moved into restructuring.
The bank deemed that my skills at dealmaking and negotiating were particularly useful in the restructuring. The bank deemed that my skills at deal making and negotiating were particularly useful in the restructuring area. And so I did that for a while until one gentleman, a man who I will always remember and think very fondly of, called Jack Kaff, who was the head of Morgan’s Mergers and Acquisitions Group, he would arrive at noon every day and stay till about nine in the evening. And I would arrive very early in the morning and I would leave probably round nine in the evening. Of course you did. You know, but not because I loved work, but because the salaries in those days were so low in investment banking. When I started it was $10,000 a year that the ability to be able to have breakfast, lunch and dinner at J.P. Morgan, you know, kept me there. So it created a workaholic sort of habit, just inadvertently through that. But he came by one day and said, boy, you’re here late. He said, I also hear you speak French fluently. I said, I do. He said, well, I’m doing a deal in Switzerland and I need a French speaker, I need an analyst. I said, if you can talk to my boss and if he’ll give me permission, I’ll go with you.
Maureen: What an opportunity!
Donald: That was the opportunity. I went over on a flavors and fragrances deal at the time. I worked very hard, I was there for four days. I mean, in the old days, if you were an analyst, you didn’t stay at anything. You traveled economy class and you didn’t stay at any major hotels or anything. And this guy, I met him at the bank. We went out to the airport. We were in a limousine. We went first class. I was staying at the Bauerloch Hotel in Zurich, I remember. And I thought, wow, this guy lives really well. That’s very different from the other things. And I worked very hard. And on the way back, he said, did you enjoy the experience? I said, absolutely. I thought it was fascinating. I’d love to be able to do things. He said, well, would you like to join the group? I said, I’d love to if my boss lets me. You just have to talk to my boss. And you know, in those days, we were very respectful. So my boss said, of course. I moved over and the bank gave me huge opportunities. I worked for them. I was sent to negotiate a license to buy a license for JP Morgan in Brazil, which we decided not to do. So I was there for four months. I was 26 years old. When I was 27, I moved to Paris and by 28 was co-heading Merchant Acquisitions for Southern Europe.
Then after that moved a year later to London to do it for Northern Europe. And then within a year, I joined Jim Wolfensohn. Jim started one of the first boutiques and his focus was, I’m not just going to do the transactional side. I’m going to provide strategic advisory, which I always loved because the idea of understanding the business and their needs was very important. And he was doing it with foreign companies. So they didn’t have a strategic development group. So I became their strategic development group. And we had a stable of about 10 clients, all of them huge companies, some like Daimler Benz, which you know, Mercedes Benz or some like Conroe Rio Tinto Zinc of Australia. And as a matter of fact, the day I joined them, I remember was January 4, 1982. I was immediately put on a deal, which was the acquisition of Kaiser Aluminum. It was a, you know, which was, you know, I’d never been involved in deals as large as that. So super exciting. Jim gave me huge opportunities in that. And then he decided to venture capital, which frankly, at the time, venture capital is very cyclical. In other words, you’ve got to get in at the right time. you’ve got to have the right team, you have to have access to the right deals.
Maureen: What’s the right time Donald?
Donald: The right time is sort of, I think once there’s a collapse in the cycle, probably within, usually goes, the cycle is usually about, between four and eight years. So during that period when it collapsed, or two years after the collapse, you can start raising money. He was raising money at a time where they were at the peak of the cycle. So easy to raise. And then things sort of fell apart. And so it becomes difficult not only to invest, even though you have all this money, because you’re overpaying, you’re competing, and you’re not really being wise about it, because you only have a certain amount of time to invest. And I thought the model was totally broken.
Maureen: But so the cycle, are you talking about the business cycle?
Donald: Well, the economic cycle. Within each of these, these groups, you know, whether it’s venture capital or private equity, there are cycles behind that, in other words. For instance, if you were involved in the dot-com boom, okay, going back, I think if you were involved in internet companies and dot-coms and everything that was going to disintermediate all businesses. Like, you know, DuPont would be disintermediated by this small dot com business, which would create trade at a much cheaper cost. You know, all those ideas were in their initial phase are very interesting, you know, as ideas, and they attract money and then more and more and more money. Then one of them goes public at some incredible multiple, and then more and more of them go public at some crazy multiples. And eventually somebody says, we’re never gonna get our money back on this. And the whole sort of environment crashes. And in those days, when I did my fund, which was 1999, it was at the peak of the dot-com boom. I could have raised as much money as I wanted, but I settled on a very small amount. I was dipping my toe in the water. And so I raised $25 million, which was inadequate at the time. I had great connections in Silicon Valley. I was part of the Sand Hill Angels through one of my partners who was a professor of high-tech and entrepreneurship at Stanford. So I had all the right entrees. And we looked at things. I’m used to doing a lot of diligence, and they weren’t. They just wanted to pull the trigger. And so I did diligence.
I did it my way. They allocated a certain amount. And in 2001, the market crashed and everything got thrown out, the baby with the bath water on that. And so there I was in a position where my name was on the door, it was Zilkha Venture Partners. I had two other partners with me and both of them said, Donald, you know, everybody’s giving up the ship here. You know, everybody, you know, investors understand that, you know, the markets are bad and we lost money and they’re all big boys. They invested. So let’s just, you know, close the fund. It takes too much time. And I said, I just can’t do it. It says Zilkha Venture Partners. You know, my name’s on the door. I just, you know, I’ll never be able to do a fund again. And I think it’s a terrible way to go. And they said, well, look, you know, we’ve looked at these things and we have 23 investments. And you know, we don’t think say, you give up your interests, I’ll take your interests, whatever they may be. And they laughed and they said, it’s worth nothing, so go ahead. So you’re gonna waste your time. I said, okay, that’s fine. And I figured out that I had to fix it. So what I did is I took a unique approach. I went, I triaged our portfolio of 23 down to 6. I went to see the managements of these companies and said, look, we’re all sort of screwed here. We’re not going to get any more money in this. So do you think, A, you can squeeze your burn down to 10 cents on the dollar of what it is now? And then I went out and I said, OK, and if we can do that, can you put some money in? And if the answer to those two questions were yes, I said, well, then I’m going to try and find a way to fix this business or at least save it. And then I went to see the largest investors.
Now, I had maybe 500,000 or a million in one of these businesses, and the big guys had 25 million or 20 million million. And you know, the nature, you’ve got to also understand the psychology and the nature of these investment firms. So here they were, I went to let’s say whoever the head of that deal was and I’d say, look, this company is in a lot of trouble if you guys aren’t going to put up a significant amount of money. And well, you know, you win some, you lose some, et cetera, et cetera. I said, okay, well, that’s an approach. I said, I’ll make a deal where you’ve got $20 million in this. If you could get a final K1 for your investors saying they lost everything, you wouldn’t have to worry about this. And if I agreed to take on any contingent liabilities and deal with whatever mess, and whenever we put in more money at a much lower valuation, okay, this is off your plate. So I’ll pay you, in one case, $10,000, in another case, $100,000 for your $20 million. And if you give it to me, you’re free. You know, for a lot of these guys who are young guys on this who weren’t necessarily partners in their firms, this was a relief. Somebody was actually giving them and they had a big name behind them. So they could say, look, you know, XYZ, you know, first class firm. We didn’t do well on this one, but we’re going to get your money back on another deal. And that worked fine. And they went to their bosses and often said, look, I got this off the plate. The boss is okay. Smart guy. I don’t want to, I don’t want him to waste his time anyway. So it’s good he was able to do that.
Maureen: So you got an attaboy for that.
Donald: I got $20 million for $10,000, let’s say. And then I went back to the investors and said, okay, now we’re squeezing things down, you’re putting in money, I’m putting in a little more money, this whole thing. Now what are we going to do? Can we grow it or do we have to sort of fix it up for a sale? And so during, you know, from the 2001 to 2008 period, I triaged four out of these six companies because two I couldn’t do the deal on.
Maureen: What kind of companies were they Donald?
Donald: Some were in telecom. Some were in in medical devices, some more software and so there was one company actually that was Guitar Center, which had a Website and those there were a lot of subscribers to. And they’d get a guitar lick every day, or they’d get conversations here or there, et cetera. And so we sold that to a retailer. And we made three times our money. Another one was a diagnostics business on the medical side, which we bought for literally $10. We bought the position literally $10. You know, we bought the thing for the position for $10. We had invested 500,000 before. And we were able to, in a year and a half with the help of management, sell it for six times our money in the whole thing. So we ended up being able to show the investors that had been in our venture portfolio two times on their money by 2008 now the average for that period of time was about 50 cents on the dollar even for some of the better funds and so we look, you know was a heroic result a huge lift on my part basically because it was me and I had a young guy who was helping me on that.
Maureen: It was just the two of you?
Donald: Just the two of us, because nobody else, I didn’t have any money to spend anymore. I had to, you know, sort of keep everything I could.
Maureen: Was this full time for you? Is this your full time?
Donald: This was full time. And as a matter of fact, I had been invited in 2000 to be one of three people on the Yale University incubator. And for that, I went up to Yale once a week. And I gave sort of I participated in their incubator. They, Yale University and we at Zilkha and Ventures and another firm put up each $100,000 to sort of promote deals in New Haven, which was in a lot of trouble as a city. It was like Newark at the time. They had lost a lot of jobs because major companies closed. And so Yale University was behind that. It was great for students as experience. And so we did three deals there. And I would come and teach. I’d wake up at like 5.30 in the morning and drive up and have breakfast at Clark’s in New Haven and then go on to the class. And what was superb about it is we did one deal that ended up being a billion dollar success. You know, we had obviously peanuts in the thing because you know, we had $300,000 raised in all, but everybody did well. It was actually the money that came off of that was the basis for the Yale Entrepreneurial Center.
So, I was doing all sorts of stuff like that. And so I decided at that point, two things, and that’s getting back to people give up too early. This was, you know, whenever things go to ashes, when everything burns down, there’s always something in there. The question is, is it worth your while finding it? Now, I don’t involve investors in any of my deals anymore. I invest in other people’s deals and things. I take active roles, but I don’t ask other people to invest with me. And the reason why is I felt a deep responsibility to those who trusted me when I did my fund. And I wouldn’t want to have that responsibility at this time for several reasons. One is because I’m not as young as I was. And so who’s going to do, who’s going to handle it if anything happens to me? You know, in a small organization, I kept my organization small because now I’m focused on publicly traded companies. So I don’t need a big team. I’m not doing strategic advisory. So I can keep the team very small. But now, you know, it comes to the point is when do you give up? Well, honestly, for my companies, if I’ve made a decision because I’m very careful what I invest in, I don’t have 20 companies. I have four companies I’m invested in. Generally speaking, I’m going to take these companies through the hard times because rare that you put it together and three years later you sell it for multiples of what you put in. It usually takes 8 to 15 years in the cycle of building a business. And sometimes you make your money back and sometimes you lose it and sometimes you make a lot of money.
And that’s it. So I focused on four companies that I’ll, you know, take to, I guess, a sale and they’re all doing all right. You know, some will be bigger successes than others and probably some that I thought would be the huger successes will be less successful. And that’s it. But this is the exciting side of my business. In other words, it’s the roller coaster side of my business. Mostly what I look for is good cash flow, businesses that are reliable, or that I can see a clear path to success success and that are in the publicly traded markets now. And that’s what I focus on.
Maureen: So that brings us to, so just to cap off this part of your career and the comment that people give up too soon. At that time Zilkha’s name was on the door and you didn’t want to give up. And we’ve just talked about 8 to 15 years to success. Was there any time between the time that you were on your own in that first eight year period where you thought you might want to give up or was it, you know, the grind, the entrepreneur’s journey?
Donald: No, it was daily I felt like giving up just about because it was so hard. Yeah, you know, being just me and and another guy, right on really, there were six companies before we were actively involved in. He was he was straight out of college. So he wasn’t really at that time, he still works with me. But at that time, he wasn’t experienced enough to provide, you know, go sit on the board or to understand, hey, where can we cut costs out here? What are you doing in terms of your sales initiatives, marketing initiatives?
Maureen: So you were going into these businesses and sitting around the management team’s table giving them advice?
Donald: I get very actively involved sometimes. And I’m usually unwelcome once the company is sort of off the ground a little bit and going. You know, they basically, I’m too involved. And that’s been true of all my experiences from the first business that I bought into, which was Colt’s Manufacturing, a firearms company. That it, you know, I love the name Colt. It was one of the great, you know, great business successes or ups and downs, but it was one of the great brand names of all time. Sam Colt really created modern day manufacturing. You know, Ford’s, you know, assembly line manufacturing followed a lot of the tenets put forth by Sam Colt and his really COO, I guess, or, you know, or chief manufacturing officer, which was Root, you know, from Elihu Root. And so it was a great privilege, but a great slog, turning that company around, mainly because firearms aren’t exactly the preferred sort of product of the day. You know, and I wasn’t necessarily, you know, crazy about firearms. I was crazy about the history and the importance of the man. I came to respect, you know, the firearms culture. Those were truly, you know, lovers of the the antique firearms and things like that, or and I and I had respect for those who believed in Second Amendment rights. But with all that, you also have crazy people. And so it’s difficult to embrace it, you know, on a full level that way. But, you know, it’s part of our country. And it’s part of our culture. And I hope that don’t lose that side of it.
Maureen: What you’re saying is that when it comes to the companies that you’re invested in, you really are a strategic advisor coming in and helping the CEO, the team to make it to next payroll or whatever it might be.
Donald: Ff it’s that and when it’s when it’s private things usually, because I never had the luxury of buying, you know, you know, one of the great industrial powerhouses, we didn’t have billions to invest. You know, we always had to put it together with a group of friends. And we’ve done very well. I mean, you know, we, we produced 20 times people’s money in Colt, and the deals that we did, we produced 20 times people’s money in Colt. And the deals that we did, we never lost on any of our specific private deals. And you know, in the end, you know, we did okay on the venture portfolio. You know, when we started our publicly traded, we took that same approach. When we looked at publicly traded companies, we said, if we were buying this entire company, what would we do and what would we see? And the reason why we pivoted away from private deals is we found that the internet by 2006 was so robust in terms of getting information on businesses and what was on, you know, page 100 of Google on that specific business, if you were willing to dig that far, that you could pretty much piece a picture together of a publicly traded company that was very detailed and not obvious to people who were taking a cursory look or just a look at the financials as they came out on a quarterly basis.
So we began to sort of develop, you know, extensive books and extensive work, you know, on these individual companies. So when we launched, we launched as a special purpose vehicle fund. In other words, there were four families who agreed to work with us and they were all invested in the venture fund with us. And they were absolutely astonished at what we were able to produce and the fact that we didn’t give up. So sort of this encouragement, okay, what are you doing next? I’m doing this. Okay, we’ll work with you. And these, they were four very high net worth families in my family. And so they didn’t want to be part of a fund. They wanted to be on specific deals. So the first deal we did, we did a massive analysis of the hospice industry. And there were three publicly traded companies.
Maureen: So Donald, just so that I’m clear here. So is this going into constructive activist investing? Is that where we’re going now?
Donald: It is. It is. It’s constructive activism. That’s where we moved away from all privately traded investments we made. The decision was, you know, at that time, do I want to be involved in raising and managing another fund, which eventually is a 12 to 15 year program.
Maureen: Right. So for our listeners who may not be familiar, and I could use some education as well, can you define constructive activist investing?
Donald: Sure. The way we see constructive activists is we bring to the party our experience, our network of people in tangential businesses or industries. And so we’ll identify a target. We’ll say, quantitatively, in terms of the financials, this business looks cheap, one. Secondly, we then say, where does it fit in sort of the universe of companies that compete in this space? What’s its edge? Does it have an edge? So cheap is not enough, but does the company have an edge? If it has an edge, what is that edge? And because that’ll be, and then why is the market penalizing it? Why is it not recognizing that value? So we’ll do our financial analysis. We’ll then do a more of a qualitative analysis of what do prior employees think, what do existing employees think, and then we’ll go and find somebody through our network who comes from the industry. Because what I learned in most of my private equity deals is people from the industry have a very good idea of how you’re doing and what you’re doing wrong. And so I’ll find somebody like that and talk to them. I bring them into our group if they want to be as we go forward on this. And we’ll develop our initial book on the business, which is between 60 and 100 pages long. And we’ll go see the initially the institutional investor guy, the man who, the IR guy, the guy who interacts. And we’ll come talk to him and we’ll ask to speak to at least the CFO, because the CEO is not usually available at first meeting, until they obviously see our book. So they take a look at our book, they go through it, we say we just want to make sure we understand the business. And you know, and yes, we’ll go through it and we’ll go through it painstakingly, we’ll go to specific pages. The CFO usually says, why did you do this much work on this? And how much money do you have invested? And you know, it’ll be typically initially, you know, $5 million, nothing much. And then they’ll go in and say, wow, you know, it looks like a takeover sort of an analysis. I said, well, it could be used that way. That’s not the purpose. We think your company is the subject of a takeover because we think that your messaging is wrong. In other words, your business isn’t in trouble fundamentally. What you’re communicating to the investment public is just not getting the message across right.
Maureen: What was the message?
Donald: It depends. It depends on the business. For instance, in the case of Mattel, which we were involved in, in terms of when we made an investment prior to COVID, we basically said, most of these companies have gone digital. In other words, the Hasbros, et cetera. You’re very, very analog in the way you do things. You don’t interact on the internet at all. You haven’t brought back some of your old brands. You’ve got one of the best portfolio of brands of anybody we know. There’s this and your debt’s fine, and it’s workable. So it’s not something that you can’t do. Your messaging is wrong. In other words, take advantage that you’ve got so many things. You’ve got American Doll you can do this with. And so the initial meeting was, wow, that’s a pretty detailed and deep look at the business. And we said, well, we were going to make the tweaks, what you’ve suggested we make as tweaks, et cetera, et cetera, we’re going to do. We actually talked to somebody, our expert in that was somebody who had worked with Lego in working on their systems and everything like that. So we had some insights of how these toy companies work. And when we eventually came back to them, we had breakdowns of sort of by each of their brands and each of the activities or business things within their brands, what we wanted to understand they were doing and what of the activities or business things within their brands, what we wanted to understand they were doing and what may be improved or not improved. So we got deeper and deeper into the business. We had bought into the stock at nine and sold it at 25 because even though we thought the valuation would eventually get to 40, we thought the easy money had been made after 18 months. And in that case, our goal had been initially to get on the board of the business. We needed to raise more than, you know, $50 million to really be significant.
Maureen: And how would you do that? How would you get onto the board of the organization?
Donald: So if you, if we represented, let’s say $300 million out of maybe a market capitalization of $2 billion, we’re significant, we have 15% of the company. Even if we had $100 million involved in the thing, you could start having discussions. They needed a board person from the outside. They could fill that spot. With our attention to management and over a year or more than a year of speaking to them, where you build a rapport, you’re actually somebody they want on the board. You’re not criticizing them openly. You’re not, you’re always, you’re having an advisory type of a discussion. And in many cases, a lot of the things we bring up are great fodder for if they are going to basically hire a consulting firm to come in and look at a certain aspect of the business. We may have sort of pointed to certain things they may want to highlight. So it’s very collaborative. What we do is highly collaborative. And eventually, if we can’t get the value up, then, you know, there’s a discussion we can have with them of saying, look, maybe other people don’t see the value of this. Why don’t we take the company private? That’s where ultimately we would love to go in some of these cases. But as we were doing these special purpose vehicles, most of them, you know, within a year or sometimes up to four years, prices doubled. It was time for us to get out or they did better than a double. Our SPV portfolio produced 22.4% net from 2010, 2009 to 2021. When we shifted everything over to a fund format, we decided that was the way we wanted to run it. It made more sense at that time. So we stopped the pure SPVs and went into a much more generalized small to mid-cap US liquid publicly traded. We’re once again now as we look at things, we’re going back to the SPV format but in a different way. It’s a special purpose vehicle without a single name, but looking at a fun concept. In other words, we think, for instance, that software as a service companies have been very much impacted and pressured on the downward side by AI, where we think that there’s a lot of symbiosis between them. We think that SaaS companies need the AI and that AI companies need SaaS because they need infrastructure. I mean, you know, the fact is, you know, SaaS is interesting because there’s industry specific functionality and there’s data infrastructure and security, all that’s been built in over time. And you know, AI provides them with efficiencies. You know, it makes us companies become smarter, and more efficient and more valuable. AI is an enabler not a not a replacer. So, we’re now in the process of looking at that side of it.
Maureen: Can we go back for just a moment to the publicly traded, you’ve created a book of 60 to 100 pages. That’s all research and financial analysis. Is that correct?
Donald: It’s correct. We do that. And then, and also input from the industry expert that we usually bring on to our team or who’s been willing to talk to us. And you know, sometimes we’ll miss the whole business because it takes us about three months, six months to do that. We found ourselves n a position where companies have taken off in the meantime. And therefore the the juice was out of the orange.
Maureen: Yeah, that’s right. So I’m thinking about the people who often listen to this podcast, and we have everyone from early career to mid career, late career. I’m curious what your advice would be to the early stage, say, finance major who’s just graduated from Columbia, for example, and then someone in mid-career who is maybe they’re thinking of, you know what, I’m going to leave corporate, I’m going to start a business of my own. So the early stage career person is looking to get his or her toehold in the industry and the second person has had a really successful career and now they want to transition out of the quote-unquote corporate sector. What advice would you have for those two cohorts?
Donald: So the market for those graduating from either college or business school is very different now. So the key thing I can say there is get a job first because it’s hard. It’s not easy. I see it, you know, that way. So hopefully you worked incredibly hard and you were among the top students. If you weren’t, get a job in whether it’s an investment bank, commercial bank, whatever it is, consulting firm, get the job, get in there, work as hard as you can, get as much experience as you can. And if the hours are long, deal with it. It’s just the nature of thing, nothing is easy. I say to my sons, business is hard, and you’re gonna have disappointments, you know, business is hard, you know, and you’re going to have disappointments, you’re going to have crises, and you have to be able to deal with it, especially when you’re young and you’re not used to these things. I had my youngest yesterday who sells caviar and he got his first huge corporate or famous chef who might, you know, who was interested in using his product because he happened to know the guy’s son. And it had to be shipped to the Northwest. And so he got everything set, he got it shipped, and UPS didn’t deliver. So, you know, what does he do? You know, I said, well, you can’t drive it there. It’s not like you could pick up and if it’s not in Boston, it’s way out west. And so call them up, tell well, you can’t drive it there. It’s not like you could pick up, if it’s not in Boston, it’s way out West.
And so call them up, tell them, you know, it’s beyond your control, but you’ll give them the same thing if they can do it, if they can use it tomorrow, you’re happy to at your expense and, you know, ship it, you time, let them pick the shipper. You don’t pick the shipper and let them pay for it. You know, I said, that’s lesson number one, because you took on a responsibility you didn’t need to take on. It messes up your business. So it’s dealing with the, for a young person, understand you’re going to have faced massive challenges. Understand that you’re going to get as far as possible if you’re a team player, and if your boss begins to rely on you. It goes back to, I used to study philosophy, one of the things I studied in college, and there was the dialectic, the idea of who is really the master, the master of the slave. And if the master relied on the slave to a major, major extent, then it really was the slave who was the master relied on the slave to a major, major extent, then it really was the slave who was the master. So that’s the thing I try and convey to the young people, to my kids.
One, make sure that you work so hard that they depend on you. Number two, the most important thing, make sure people like you. Because if people like you, they could trust you. And if they trust you, you’re going gonna have more responsibility and you will rise. And those are the two things to the young people. To those who are in business, et cetera, if you wanna get out, I understand it’s exciting to get out, et cetera. It’s also very scary. There are several things you have to, A, the most important thing is, what are you going to sell that’s going to be unique enough that people are going to move away from what they’re currently buying in that sector that you want to service that makes it better? And if you really have something, I mean in some of the tech fields, somebody clearly could have that. And how revolutionary is, or is it a nice to have, not a must have? You know, so if you have a must have, then it’s a question of how you put together your presentation, and sort of to convince people to get behind it. Can you also get investors who are going to be useful, you know, beyond your family and friends, which is your first seed round, or, you know, you know, or founders round, you’re going to need, is this the type of a business that’s got a huge enough ham, total addressable market, that you’re very quickly going to be able to get the larger venture capital firms interested in? Because they will give you huge help. They know how to scale these businesses and grow these businesses. And are you open to that?
You know, you may find that they’ll sideline you, you know, after because they’ll believe that you’ve sort of Peter-principled yourself out by XYZ stage in the investment. Maybe you’re great for the first 10 million in revenues or 100 million in revenues. And you’ve got to be comfortable with that and just be happy that, just make sure you have enough so it was worth your while. And maybe you get into an executive chairman position if you have to vacate the CEO spot. So ego, there’s no place for ego. That’s what I’d say to the more experienced person. There’s no place for ego in business. You’re in business to make money. And therefore, as long as you think that the path that’s being suggested makes sense, then go with the flow. And if not, then find somebody who you can convince that whatever advice is being given, whatever pressure is being given is wrong and they should come in and take the place of that venture capitalist.
Maureen: Donald, this has been extraordinary. I have a couple more questions.
This is one I asked at the conference, but I’m going to ask it again. What has surprised
Donald: What surprised me is that people will often do things that are not to their advantage, because they’re not willing to be zen about this, or they’re not willing to think it through. They take positions sometimes that really are driven by ego, as I was saying before, and that don’t stand them in the best stead. So beyond not giving up, you know, be flexible to outside views, be flexible to, you know, to advice. Don’t necessarily take it, but at least take it in.
Maureen: Right. I say to people in my world, make sure the advice you get is qualified, and if you’re not sure, get more than one opinion. I’ve seen people’s careers derailed significantly because of probably well-intentioned but ill-executed advice. So I think that that’s definitely very, very good advice.
What is your favorite restaurant? I can’t wait to hear this answer.
Donald: It’s really hard. It’s hard for me to give you a favorite restaurant because I’m very involved in not only cooking, but also with chefs. And I love so many chefs in New York, and there are probably tons that I haven’t met or that I think are wonders at this time. So it’s hard to just say one. And each of them have their strengths and their personalities. And a lot of them have taught me so much. So it’s hard to give them.
Maureen: Maybe rather than a favorite restaurant, maybe you could give us your, I don’t know, what’s your favorite meal?
Donald: My favorite meal. So I love game. I think, you know, and this is the season now, you know, things like pheasant and duck can be prepared in such incredible ways. Wild boar, deer, things of that nature for this season. You can do so much. I’ll give you a meal. I cook a lot at home. To be absolutely neutral in Switzerland about it, I should say my favorite restaurant is home. So think of if you prepare a duck, you can do it in so many ways in so many things. You can start by you know, creating a duck consomme. Imagine doing that that takes hours, but it’s so good. And so it’s hearty, but it’s not heavy, you know, and so as a starter, imagine if you take the breasts and you serve that in a lacquered way, the way the Chinese do it, you know, with certain sort of things like lychee nuts and things in a sauce, you know, that could be done, that’d be delicious, you know, and then you could take the legs and you do confit of the legs, which are there, they’re served with, with salt and other spices and cooked at low temperature for an extended period of time, and then given a broil, etc. And so that’s a different thing than the cheeses of this time of the year. So all that goes around with fall. And there are great things in the spring too. Those are my two favorite seasons. But game is definitely something that I adore. Now, for those who are non-meat eaters, who are vegetarians, my favorite season then becomes summer. And it becomes tomatoes because there’s so much you can do around those, from soups to begin with, like gazpacho, to meals involving pasta or vegetables around that, like a ratatouille. And then you can close it up, and you can actually take a tomato and turn it into a sweet by cooking it for a long period of time with sugar and spices. And it’s almost unidentifiable as a tomato afterwards. So there’s an exam. I love wines and your wines go with all of that.
Maureen: Oh, yes, indeed. Absolutely. So Donald, how can people get in touch with you?
Donald: So you can get in touch with me by sending me an email. And I’m happy to respond. D as in Donald, Zilkha, Z-I-L-K-H-A, @ Zilkha investments with an S, one word, .com.
Maureen: Awesome. Donald, it’s been an absolute pleasure speaking with you today. It’s been such an interesting conversation. And it was so lovely to see you at Hampton’s Tech Week and maybe we’ll see you again there next year.
Donald: I look forward to seeing you. Thanks Maureen, for doing this!