Leveraging Your Resources for Investing with Aaron Pierce

Aaron Pierce: 00:00:00

So much of life, so much of this investment business that I find myself in. It's about the people and their willingness to go to work show up everyday work hard, and really be obsessed.

Matt Waller: 00:00:14

Excellence, professionalism, innovation and collegiality. These are the values the Sam M. Walton College of Business explores in education, business and the lives of people we meet every day, I'm Matt Waller, Dean of the Walton College and welcome to the Be Epic podcast. For next few episodes, I will share my conversations with capital allocators in the seed, venture and private equity space. They will discuss how their capital allocation works, and provide tips to entrepreneurs on how to stand out. I have with me today, Aaron Pierce, who is a partner at Perot Jain. He is also an alumnus of the Walton College, from 2014. And he's had tremendous success in finance and capital allocation at his very young age. And so, Aaron, thank you for joining us today. I appreciate it.

Aaron Pierce: 00:01:11

Matt. It's a pleasure being here. Thanks for having me.

Matt Waller: 00:01:14

Aaron, I would like to start since you're an alum of our program, and you've been very successful in finance. And you graduated only eight years ago. I would like you to tell us about your experience at the U of A, internships you did. I know you were a very involved student. And so I'd love to hear a little bit about your story.

Aaron Pierce: 00:01:42

Yeah, happy to share it with you. So you know, my background initially I grew up in a place called Rockwall or Heath, Texas, specifically just south of Rockwall here in the Dallas area. And I went to University of Arkansas and I always knew I wanted to study business. Finance specifically is what I ended up majoring in. But but there at the university, I was involved in a number of different things. And I from the business college perspective, you know, I was involved in SAKE, which is students acquiring knowledge through enterprise, which is the entrepreneurial class there, I worked in the Career Development Center as editing resumes for students that were looking to get prepared for jobs, which actually helped me a ton personally, you know, you learn so much through coaching. You know, I was I was involved in a I was a sigma nu on campus and the fraternity, and then internships or school, I spent one summer there in Bentonville working at Walmart's corporate headquarters in their finance department. And that was incredibly helpful. And I still have great memories of those days. In addition to that I was I worked a Summer on Capitol Hill for my congressman from back home in Heath in Rockwall, Fort District of Texas. And so, you know, I always had a general idea of the types of things that I might want to do. And so whether it be my interest in politics that led me to Capitol Hill, my interest in entrepreneurship that led me to do the SAKE or the students acquired knowledge through enterprise, which I'm not sure if it still has the same name today. But these are some of-

Matt Waller: 00:03:11

It Does

Aaron Pierce: 00:03:12

Okay, good. These are some of the things that I was involved with. And, and then of course, senior year, I was in Portfolio Management with Professor Rennie's portfolio management fixed income class, which was very meaningful that I was just thankful to be able to call myself a student in his class.

Matt Waller: 00:03:28

Well, I want to say, for all students listening, this is a really important point. Aaron was really engaged you, you know, you really get out of most anything in life, what you put into it, whether it's a job or going to school, or a marriage or anything. The more you put into it, the more you get out of it. And one of the reasons I think Aaron is so successful as he's like that, he puts a lot of effort into things and I know, you know, so Aaron, as he mentioned, was in the portfolio management class. He was also in the Arvest fixed income class. He was a credit and sector analyst for the Arvest fixed Income class, managing $5 million on behalf of Arvest. Regarding the portfolio class, the Rebsamen Trust, as we call it, he managed another 1.2 million directly, and more than 6 million indirectly, as a part of the portfolio management class. And Professor Rennie has said that he was one of the most- this was back in 2014, he was one of the most influential leaders that he's taught. He had the ability to engage and motivate team members. That's what Craig said. I think it's because you were ambitious. You were driven. You were serious about this. If you're a student listening to this and you want to be successful, these are things you need to do.

Aaron Pierce: 00:05:00

Well, wow, I, I appreciate those words, both from you and Dr. Rennie. I, that's, that's, that's a lot coming from both you and him with as many years as he's been teaching that class. And so that- very kind words. And, again, lucky to have been a part of the University of Arkansas, and at the Walton College specifically, and in those classes. So thank you for that.

Matt Waller: 00:05:23

-and I should mention, too, that, you know, Aaron is still involved here. He is on my Dean's Alumni Advisory Council. I think he's been on there for almost four years now, thank you for serving on that.

Aaron Pierce: 00:05:42

It's it's an honor to do it. And, you know, the University of Arkansas, as you, as you have heard, made a big impact on me both personally, professionally. And so it holds a special place in my heart any way that I can continue to contribute, give back, invest time, certainly with the students and make an impact on their journey. It's powerful to me, and I love to do it. So I'm looking for more ways to get involved.

Matt Waller: 00:06:07

Well, Aaron, I want to go back to your time here a little bit. I, I'm a huge proponent of internships. And even if you do something outside of your area, it's just huge. But you, you had experience. As a congressional intern, you had experience as a financial analyst intern at Walmart. These kinds of summer internships are invaluable. Would you mind speaking to that a little bit?

Aaron Pierce: 00:06:39

Yeah, I'd love to. And even before I start on the summer internships I had, I'd like to say, in my time at the University of Arkansas, what I didn't mention was, I was a resident assistant. So I did that, and lived on campus in the northwest quad, which at the time was the athletic dorm. And I gotta tell you, from an ROI perspective, if you're paying for school, and you're trying to figure out how to keep the costs as low as possible, being able to have free rent, free room and board, and free food that was meaningful to a young guy trying to figure out his way to pay through school. So anyway, that's doing the calculus of the equation of how am I going to pay for this, I encourage you be an RA- resident assistant, you know, figure out how you can be a leader on campus. So that's one thing I didn't talk about. But I did that actually for a number of years. So instead of living off campus, or in the fraternity house, I was living in the dorm. And it was a it was a minor sacrifice, but totally worth it in the long run and meaningful relationships were made with many great athletes and folks that were involved on campus. And in that regard too

Matt Waller: 00:07:38

Well, you know,

Matt Waller: 00:07:38

your network is so important that you develop here. And so, one cool thing about what you're doing is you're developing your network, you know, in the Greek in Sigma Nu, but you're also developing it within the dorm. Most people don't have both of those going on the whole time. But I'm sure by being an RA, you probably learned a lot about dealing with people through that as well.

Aaron Pierce: 00:08:07

Oh, yes. And specifically around time, when rush would take place, there was a lot of, you know, excitement and emotion that was going into the process. And so just being there to, to give counsel or advice to people that were going through the process specifically after I'd already done it. I think that was an easy way to share life experience with people that were going through it for the first time. But I so so that was on the you know, an internship or a job I had on campus. But I was asked for my summer internships, so Walmart was one, I'm really thankful for this internship and and it felt like a very natural thing to do as a student of the Walton College of Business to go work for the company that he started. And it's grown over the course of many decades. And so I feel like I've really got the fullness of the Walton experience, being able to go to the Walton College and study finance, and spend time at Walmart there in Bentonville. And so, you know, I figured I could go get an internship at a number of different places. But working at the world's largest retailer and company at the time, by revenue, I thought that you can't go wrong in doing that. And I believe that's true. I can tell you a story about how I thought it may have been the wrong thing about a year later, when I was graduating, and I really wanted to get into a bulge bracket investment bank. But the fact that I didn't intern there, the years prior, affected my ability and my candidacy. And so I, at one point believed that I would regret my decision to go intern there. But I think what I learned through the process is there's a will there's a way and I was able to create some luck to sneak in the backdoor JP Morgan so-

Matt Waller: 00:09:45

And you were working in Dallas at JP Morgan?

Aaron Pierce: 00:09:47

That's correct. That's correct. So they send you to New York for a couple of months for their training program and then they send you back to my office was the Dallas office. So we're in Chase tower downtown and some of the best times best three years of my life. You know, I don't know that I slept too much. But the things that I learned and the people and the people that I met the relationships, I was able to forge there, JP Morgan, I think, you know, changed my life and continue to do so today.

Matt Waller: 00:10:11

That's, that's really great insight. I'd like to fast forward a little bit to Perot Jain, where you're working now. And one thing I would like to talk about is capital allocation, obviously. But tell us a little bit about Perot Jain, and what you do there?

Aaron Pierce: 00:10:30

Yeah, well, thank you for asking. Perot Jain is early stage investment firm backed by the family office of Ross Perot, Jr. and Anurag Jain here in Dallas. And so we were started in 2015. And it really started with Ross Perot, Jr. and Anurag Jain, my partners here at the firm opportunistically investing into companies that they believed in, founders that they wanted to support and big ideas that they thought could change the world. Over time, if you fast forward from when it was started, 2015, well, before I got here, to today, they've made over 100 investments, 66 active portfolio companies is the portfolio that I manage, with companies all over the nation, and really all over the globe. And so we've got partners, in Portugal, Estonia, India, Israel, just before this call, I was having a call with one of our Israeli partners. So the- the firm is global, in it's reach and in it's nature, and we look to invest in the best companies that are that are solving some of the world's biggest problems, regardless of where they're located. And so we typically are doing that in the seed and series A stage. And so think of this early stage as more of a VC type of investment platform, than private equity or or some other asset classes that your listeners may be familiar with. So earlier stage, finding companies, oftentimes we're the first dollars into these companies, and we really try to be more than just capital into their, into their company. So we have the great and unique ability to drive value through Ross Perot, Jr.'s operating company, which is Hillwood Development, as well as Anurag's operating company, which is Access Healthcare. And so we try to leverage both of these companies that they've run as CEO and chairman, to figure out how we can add strategic value to the companies we invest in. So that, you know, we're able to be a customer and not just a check into their business.

Matt Waller: 00:12:30

Wow, that's powerful. So that would be a big incentive for a company to want to take funding from you all versus another company, I would think.

Matt Waller: 00:12:42

Where is this development?

Aaron Pierce: 00:12:42

it is it's, it's advantageous in a lot of ways. So like, if you take so Hillwood, the company that Ross oversees as chairman, they their flagship property is a 27,000 acre master planned development, which is hailed as one of the best mixed use developments in the nation. And so what you have in that 27,000 acres is everything from commercial, residential communities, whether that's single family homes or multifamily. You also have industrial warehouse, Hillwood actually is one of the the biggest developers of Amazon warehouses. Little known fact and so and so what we're able to do and how we're able to leverage Alliance Texas, which is the name of the 27,000 acre development is serve as a sandbox for companies that are addressing problems in a couple of different areas. So for instance, supply chain and logistics, or mobility or the movement of things, we're able to say, look, come come to Alliance, let us let us be your sandbox and incubate you, use your technology and your solution with our customers. Whether that's BNSF, Walmart, FedEx, Amazon, you name it, you know, they are they are working in and around our large industrial complex. And so I think the ability to be able to offer not just, you know, a million dollars or half a million dollars to a company but say, look, we want you to come here, and we want to work with you, we want to have our executives, if you would help you to solve the biggest problems in our operating businesses. So it allows us to add value to the company, but also we're accelerating our own investment, which is unique, and I think it's a competitive advantage in the landscape.

Aaron Pierce: 00:13:01

So it's north of Fort Worth. So if you know if from from the middle of Dallas, you would go west, and you would go north. And so Alliance, Texas, and it actually, you know, they- we work very closely with the city of Fort Worth, we actually operate an industrial airport for the city. And so there's a very close relationship with Alliance, Texas and Fort Worth, the city, which many of your listeners are probably familiar of if they're from the Texas area.

Matt Waller: 00:15:08

So imagine there's an entrepreneur listening to this podcast, and they have a new venture, fairly new, early stage, and they need to raise a million dollars. There may be several firms out there willing to provide a million dollars. What are you going- What should that entrepreneur be thinking of? In terms of or- does it matter? I mean, if you, if you can get a million dollars from Firm A versus a million dollars from Firm B does it matter?

Aaron Pierce: 00:15:41

Yeah, I'd be happy to answer that. And I think I've got unique perspective on it. So that the short answer is, it matters a ton. So So imagine you are an entrepreneur, you need a million dollars, and maybe you're doing some revenue today. But with a million dollars, you could be doing a lot more, and you go out and you say we're raising a million dollars, right. So if you're, if you're growing, and you're showing commercial traction in the marketplace, it's likely you're going to have investors that are interested. And so then you have to do this equation well, who- who would be the best investor for our business. And there's a number of different ways you could think about it. But the important thing to think about is, if you take money from an investor, that is a partnership, in a marriage, that is longer than temporary, right? So so however long it is for you to, you know, get get from where you're going to, you know, an ultimate exit, that is people that you're going to be interacting with, spending time with, and ultimately, you're going to be stewarding their capital. And so I think aligning yourself with people who share the same values, and that are aligned on where you want to go is of utmost importance. So I think, you know, it'd be the same advice I gave somebody as they were thinking about an actual marriage to say, You want somebody who's going to be a good partner, and they're going to act in an appropriate way, in good times and bad, right. And, and so you don't want a wildcard who you don't know much about, and you don't know much about their background, and you don't know how they're going to act in certain ways. So I think you're just doing diligence, if you're a founder on the investors of which that you're going to accepting capital from, I think that's wise, but you know, in my career, and certainly at Perot Jain, we try to be the strategic partner that they can come to, if they're having times where, you know, the company is struggling, or there's a pivot that's taking place, right, and they're saying, look, we thought our technology, our solution was going to work for this in market. And what we found is, in fact, it doesn't, we're considering pivoting, which is going to require another six, nine months of work. You know, these are tough conversations to have with investors. But if you make yourself open, and you align yourself with your entrepreneur, and you really want to be a strategic advisor to them, I think that there's a lot of value that founders appreciate. And I don't know that that's in the DNA of every firm perhaps. And so I think, you know, if you're a founder raising a million dollars, and you've got a number of different people, that you may be able to take the money from a, you're in a really good spot. So congratulations to you. The next thing you should be thinking about is are these people going to be able to be more than just capital. And if that's the case, I think that that is the best case scenario for an entrepreneur that's looking to shorten their path to success when it comes to raising capital. So I hope that answers your question.

Matt Waller: 00:18:33

Yes. So Aaron, when you're looking at companies to invest in what are you looking for, in particular?

Aaron Pierce: 00:18:42

There are so many things that you can look at, when looking at a business, you can look at their revenue, you can look at their gross margin, you can look at the traction that they're having, you can look at their contracts and the value of those contracts. And all those things are actually quite important in the process. But if I had to answer your question, most simply, it's really finding a founder and a management team that's absolutely obsessed with the problem that they're solving. And if you can find that, that guy, that gal who is so passionate about the work they're doing and the problem that they're solving, whether they solve it with their first solution, or second, the likelihood of them solving that problem is greater than somebody who just wants to start a company. And they're kind of thinking about this product that might solve this type of solution. So I think that if you can find and it's Dean Waller, it's the same with many things in life. It's the people that you're investing in. It's the people that are managing the businesses, it's the people that are leading, and it's the people that are going to ultimately react to good outcomes and bad. And so, so much of life, so much of this investment business that I find myself in, it's about the people and their willingness to go to work, show up everyday, work hard, and really be obsessed. You know, you think about Sam Walton right Walton College of Business, he was obsessed with this concept of retailing, he was going to competitors and seeing what they were doing and he couldn't help himself. And when I think about, you know, Sam Walton, one of the world's best entrepreneurs in the history of all of it, I can imagine how obsessed he was. And so you look for you look for a little bit of that, in the companies that you're you're working for, and it can be the CEO, it can be the, the technical, you know, CTO, it can be anyone on down, but you look for that passion, and that grit, that desire that competitiveness, and then the revenue and gross margin, all that stuff is almost a result of that.

Matt Waller: 00:20:48

Well, Aaron, again, we're very proud of what you've accomplished. And we're really, you know, we're grateful for all the work you did while you were student here, and for continuing to be engaged with us. But congratulations on your tremendous success and in your work at Perot Jain.

Aaron Pierce: 00:21:07

Thank you very much. And I I just want to say a special thank you to you for all the work that you're doing for the university, for the Walton College, what you've done for me over the course of years, and it's just a true honor to be able to continue to share my time with the university and and I'm very excited about where the University of Arkansas is going. And I thank you for allowing me to come on and speak a little bit to your listeners.