At a very early age, Jamie Keenan knew he wanted to pursue a life in business, chiefly through seeds planted by his father and tended by important mentors. With no straight path into venture capital out of college, he took the advice to pursue investment banking to get both the breadth of experience it afforded and the deep industry-specific knowledge he was lacking but would need in the future. And even though his mentors instilled in him the discipline to keep an eye on the long game, his chance to realize some of his dreams came a lot earlier than he'd thought possible. Find out how asking for guidance and following up on good advice can help in both the short and long run.
A very early interest in the business world, planted by his father’s explanations of his own work and nurtured by mentors in the investment industry, gave Jamie Keenan a vision for what his future might hold. He decided to seek out breadth through his history major, foreign study in France, club water polo and his fraternity. When he started to think venture capital would be his direction, he learned there is no straight path to get there. He took the advice to pursue investment banking to get both the breadth of experience it afforded and the deep industry-specific knowledge he was lacking but would need in the future. And even though his mentors instilled in him the discipline to keep an eye on the long game, his chance to realize some of his dreams came a lot earlier than he'd thought possible.
Find out from Jamie how asking for guidance and following up on good advice can help in both the short and long run…on Roads Taken with Leslie Jennings Rowley.
About This Episode’s Guest
Jamie Keenan has been in the investing world nearly three decades. He is Managing Partner at Keenan Capital, which he's run since 2012. His long stint of managing portfolios for his partners and family has kept him busy but also has afforded him time to be with his extended family in the Bay Area.
For another story about someone hitting it out on their own, listen to our episode with Jessica Drolet Wadlow.
Jamie Keenan: Whenever I talk to folks that, you know, want to get into the investment business, I always tell them to focus 120 percent on the mentor you might work with and discount how much money you might, you know, be offered, et cetera. Just find someone super talented that it's a good teacher and that'll take you a long way.
Leslie Jennings Rowley: At a very early age, Jamie Keenan knew he wanted to pursue a life in business, chiefly through seeds planted by his father and tended by important mentors. With no straight path into venture capital out of college, he took the advice to pursue investment banking to get both the breadth of experience it afforded and the deep industry-specific knowledge he was lacking but would need in the future. And even though his mentors instilled in him the discipline to keep an eye on the long game, his chance to realize some of his dreams came a lot earlier than he'd thought possible. Find out how asking for guidance and following up on good advice can help in both the short and long run...on today's Roads Taken, with me, Leslie Jennings Rowley.
Today I'm here with Jamie Keenan and we are going to talk about where we think we might go, getting there, not getting there, and getting places that we might not have been able to imagine. So Jamie, thanks so much for being with us today.
JK: Absolutely.
LJR: So, when I get together with my guests, I ask them two questions, and they are these: When we were in college, who were you? And when we were getting ready to leave, who did you think you would become?
JK: Great. All right, starting out with when I was in college, who was I? You know, I played club water polo all four years. I had an ambition to play tennis at Dartmouth, but quickly realized with a walk on tryout that I wasn't good enough. So I pivoted and ended up playing club water polo and had a fantastic experience doing that. Ended up being the president of the club the last couple years. You know, I was a history major. Loved that major. You know, it actually It was interesting preparation to become an investor later, just kind of a similar research process. And I love diving into topics and kind of creating the original, you know, history as sort of progressed through the more advanced history classes. And, and you know, the papers were a little more original. And a French minor. You know, I went like so many people studied abroad and had a wonderful experience in Lyon, France, actually, with Doug Asano, and a number of other classmates.
And then I was in AD, and I had a really good experience in my fraternity. It was just, you know, just my last two years I was in AD, junior and senior year, and lived in the house. And, you know, some of my closest friends to this day you know, are, are Alpha Deltas.
LJR: All right, so. History major, water polo. It's funny that you use the word diving kind of into topics. So there's a depth to history and then this broadness often like what, at least novices in water polo viewing would say there's a symmetry….to that with your sport, that you had to kind of be broad and deep. Did you always think this is just an academic pursuit and I'm going to do something in the business world? Or what was, what were your thoughts as you were kind of, You know, finishing up a history degree?
JK: Yeah. You know, I had a very early interest in the business world starting from literally, you know, when I was a kid. The primary reason for that is my dad is a real estate developer here in the Bay area. And he, he sort of talked to me as an adult. You know, from very early on and brought me into his world. And I was fascinated by what he was doing. He was developing office buildings, partnering up with home building companies here in the Bay area. And he was creating things and then, you know, really got into the architecture of these creations. And so I was fascinated by that. And he had a really good friend, this guy, Reese Duca, who was a very talented investor and early venture capitalists from the seventies. And I was fascinated by what Reese did. So going into Dartmouth, even though I knew it was a liberal arts experience, I had a pretty strong notion that I'd end up in the business world where exactly I didn't know, but I had that notion.
You know, actually, I was in touch with Reese Dukka while I was in college and his partner, Tim Bliss, about how could I possibly become a venture capitalist or an investor, and they didn't have, you know, great near term answers. But they did give me a reading list that focused on some of the great investors, you know, of the sort of modern era, including guys like Benjamin Graham and Phil Fisher, who are the two primary mentors of Warren Buffett and then lots and reading on Warren Buffett. And so, you know, again, I had this notion I wanted to, you know, potentially either get into the investment world or perhaps the real estate development world that my dad was in. But wasn't sure exactly how I'd get particularly into the investment world. That's a harder nut to crack.
LJR: Yeah. So did you take leave terms and internships to kind of investigate that early or did you go a roundabout way to get in there?
JK: Yeah, I tried to track down an internship in particular my junior year. I was pretty focused starting between junior and senior year. It turns out it's really hard
LJR: Yeah.
JK: to find internships with investment partnerships, whether it's venture capital, public equity, private equity, probably a little easier nowadays in private equity because it's become such a big industry. But I remember interviewing actually with a Dartmouth alum, a guy named Bob King who is a very successful investor out here. And, you know, felt like the interview went well, but it was a partnership of five or six people and so they just, they didn't do interns. It was more of an informational interview. So the suggestion I got from the good family friend Reece Duca was why don't you pursue investment banking or consulting? That might be a good avenue, you know, to at least launch your career, learn the language of finance, since I had no background as a history and French major. So that's where I focused my guns junior year into senior year. I had no clue about the corporate recruiting process. Actually, a good friend, John Cocoziello—who unfortunately passed away way too early—he was on top of that process. He probably was thinking about getting an investment banking job while he was in high school. And another good friend, Roger Vincent, also was very much on top of the process. So through them, I learned, you know, the importance of internships and grades. Didn't realize that grades actually mattered when it came to getting a job. I thought grades were important for grad school and I really had no intention of becoming a lawyer or a doctor. So, you know, I was more interested in having fun than focusing on my studies.
LJR: Did you get the grades memo a little too late or did you have enough time? You know, three of the four years were okay, but freshman year was not great in that department. So, yeah. You know, you know.
LJR: OK: We care about the trajectory, right?
JK: That's right. Yeah. That was the story I pitched. Exactly. Exactly.
LJR: All right. So then you got the taste of corporate recruiting internship. Now you're, you're probably well versed. You have a bit of the language as we're leaving. Was that a successful pivot right after graduation?
JK: Yeah. So I was able to get a job with a regional investment bank located in San Francisco by the name of Montgomery Securities. And I was an analyst for a couple of years. I worked in their retail and consumer product group, working with growth companies typically earlier stage companies that, you know, were IPOing or potentially post IPO, but…and thinking about mergers and helping them with that kind of analysis. But it was an amazing learning experience. I did thoroughly learn the language of finance and I met my wife there, which you know, it was a massive bonus.
LJR: Yes, totally.
JK: Yeah. And back home, right? So you're a West coast or Bay area guy. Was that part of the calculation or just good luck?
JK: That was part of the calculation. I had an offer from Lehman brothers actually in New York and chose to go home. It actually was a little bit of a tough decision because so many of my fraternity brothers and classmates were moving to New York or Boston. But I just I'm a softy West Coaster. I like the weather out here I love the outdoors and so I chose, you know chose to come home. I also had a notion that I wanted to work with these growthier stage companies That was more interesting to me than working with, you know, big established industrial or real estate companies or what have you. So that was interesting and turned out to be really true. I mean, I've been investing in growth companies for the last 25 years now.
LJR: Yeah. And that was the time to be in growth companies in, you know, Northern California, Silicon Valley, for sure. So you were never wooed away to the kind of tech side. It was always going to be on this investment side?
JK: No, I was more interested. In the sort of academic study of business rather than potentially getting into the operations. Yeah, so I didn't hear that, that call to go work for one of the notable companies around here.
LJR: So when you were either at Montgomery or later, did, it seemed like you had an early kind of homegrown MBA with your reading list from your mentors and that sort of thing, did you go on to that track or did you need it?
JK: So midway through my experience at Montgomery, the same man I mentioned earlier, Reese Duka and his partner, Tim Bliss, got in touch with me and said, we're thinking about hiring a couple of younger guys, and we'd like you to come down and interview with us. That was music to my ears. It just worked out really well that their partnership had had a couple of big successes. They were inclined to hire a couple of younger guys to continue investing their capital—they actually don't have any outside money—in the same manner that they had invested it over their career. And there was a very specific strategy. They weren't comfortable farming their money out. And so I, it was just very fortuitous that that timing worked out. I interviewed with Tim and Reese ended up getting a job offer and it was an unusual offer in that they gave me a fund to manage right from the get go, you know, age 24 and two years of investment banking experience. I did not expect that. You know, I was excited about it. I was also quite intimidated
LJR: Yeah.
JK: : Because I'd done a little bit of investing on my own, but not much. Both of them feel you learn the investment process most thoroughly by being thrown into the deep end and having to make decisions right from the get go. So that was the offer I was given.
LJR: Oh my gosh.
JK: And you know, it, it took me, it took me about nine to 12 months to actually put any capital to work and start actively investing. In that time, I was working very closely with Tim Bliss in particular, who I always describe as half professor, half investor. So I was super, super fortunate to have him as my primary mentor. Whenever I talk to folks that, you know, want to get into the investment business, I always tell them to focus 120 percent on the mentor you might work with and, and discount how much money you might, you know, be offered etcetera. Just find someone super talented that is a good teacher and that will take you a long way.
LJR: Yeah, well, great advice. I hadn't really heard it that way, but probably not just an investment. That's a really good strategy. Do I dare ask? How did that first fund do on the short term or long term or however you want to talk about it.
JK: Yeah, you know, it was a really interesting time. So I started in October of 98 with investment group of Santa Barbara was the name of the partnership. I moved to Santa Barbara for the job reluctantly because my now wife was in San Francisco as were all my friends and family.
LJR: I've never heard anyone say “reluctantly moved to Santa Barbara,” but that's a different story.
JK: It's a sleepy town when you're 24.
LJR: I know, I guess.
JK: If you're in college, it's perfect. If you're, you know, 60 and retired, it's great too. In between, it's a little sleepy.
LJR: Got it. Got it.
JK: So, you know, I moved down there. Jeremiah Thompson, unfortunately, another classmate who passed away way too early was my roommate down there. He was in the theoretical physics PhD program at UCSB, which happens to be a top five program in the country. You’d never know it, but it, but it is. So anyways, you know, it took me a while to put some capital to work and that was right in the middle of the dot bubble period, the dot com bubble period. And it was confusing in that I had this background looking at growth retailers, consumer brands. I'd spent, you know, years sort of getting to know my dad's business, which was very like fundamental based real estate investing and the dot bubble was something else. There were a lot of stories and not a lot of numbers that made sense. So the fortunate thing is I didn't invest in any of the dotcoms, the pets.coms of the world that went public?
LJR: Right.
JK: And I ended up investing in. And the companies that I had covered at Montgomery Securities, which were growth retailers and consumer brands like an Abercrombie Fitch or a Children's Place or a K&G Men's Center. Deckers was another company I invested in that owned the Teva, Simple, and Ugg brands. And these companies were super out of favor in that time period. So they were very cheap on a metrics basis, real metrics—cashflow and earnings—that I could relate to and understand. When the dot bubble burst in the public markets, the NASDAQ was down like 38 percent in 2000. Those companies revalued in a really meaningful way.
LJR: Yeah, darlings.
JK: And so my fund, my fund You know, did really well in 2000, 2001, it was up 30 percent in 2000 and 26 percent in 2001. When, you know, the NASDAQ, I was just looking at the stats last night, it was down 39 percent in 2000 and down 21%. So I got off to a really good start and, you know. There were lots of lessons, you know that I sort of learned through that period. There's so much psychology in investing. It's a huge part of the profession. And so just understanding these cycles of fear and greed. There's a lot of greed associated with the dot bubble. And, and then, you know, I don't know if it was fear, but there was a little bit of fear associated with like old line retailers. As an example, e commerce was going to take over the world. So why would you ever invest in a bricks-and-mortar-based retailer and sort of taking a contrarian view on what's happening ended up playing out really well those first couple of years. So you know, I was lucky my career got off to a good start in the investment world.
LJR: Yeah. So I think I know where we're going to go. You're going to start your own firm, something. Does that happen soon?
JK: No, I was with the investment group of Santa Barbara for almost 14 years.
LJR: Okay.
JK: Managing a partnership there or a fund.
LJR: Managing that, eking everything you can out of that mentorship relationship because that's, you know, how you're growing. And then though, there does come a day where you say, I wonder if I could do this. Is that how it happens?
JK: You know, a little bit. But there was actually a regulatory change as a result of the Great Recession that forced that partnership to reorganize. So with the Dodd Frank regulation, for one reason or another, they focused on family offices and what it is to be a family office. The Investment group of Santa Barbara was technically a family office because there were no outside investors. But what had happened is over the years, my family became a family as I was sort of accumulating profits in my fund. I became a family within that partnership and effectively there were six families. And with the Dodd-Frank they said in order to stay within the family office, exemption from SEC registration had to be a single family. I didn't intend to leave Investment Group of Santa Barbara. It was an amazing organization, great mentors. But with this regulatory change, there are three of us managing funds within the partnership and all three of us spun out for slightly different reasons. But that was the catalyst. So I spun out and initially that was sort of early 2012 was continued to invest my, my own family's capital in thinking about what I wanted to do next. I primarily invested in public equities at investment group of Santa Barbara. I'd also done a few venture financings. So, investments in private companies. I'd done a seed stage investment. So, you know, very, very early stage investment. I'd invested in Facebook and Alibaba, which were very late stage private investments, and I wasn't sure if I wanted to focus on public equity investments or venture investments. I came to the conclusion that I'd focus a little more on public equity investments. I had more of a track record of success there. And then midway through 2012 decided I wanted to actually raise some outside capital and form my own partnership. So as part of that, I started working with a couple of folks that I thought might be interesting partners in that endeavor. And came to the conclusion that my now partner, Sean Carroll was a really good fit. And so we got together in late 2012, then raised some outside money in early 2013, which I'd never done before. It was really challenging. It took a lot of time. And a few months into it, I sort of turned to Sean and said, you know, we may not have a large fund to launch with, but whatever we have as of May, we're going to launch with, and we're going to stop spending so much time on trying to raise capital, just focus 99 percent of our time on investing. So we launched with, you know, a 62 million fund. There were 11 outside investors and you know, that was, that was the beginning of Keenan Capital.
LJR: And that was 10?
JK: 10 years ago.
LJR: 10 years ago.
JK: A little over 10 years ago, May of 2013, I think is when we officially launched and has the size of the. organization, like who's investing with you and all those sorts of things grown as well?
JK: Somewhat. It's still pretty small. So Sean is still with me. A guy named Kyle Zipfade joined us five years ago at a Stanford business school. And then there's two other folks on the operational side of the fund. So it's just the five of us.
LJR: Yeah. That makes sense. Cause you said that you were really more attuned to the academic pursuit of this rather than the operational of either a business, external business, or I can imagine your own. Like this is really about—I don't mean this in a pejorative way, but like—playing the game rather than like setting up the board and doing all the stuff, right?
JK: Yeah, no, that, that's right. That's right. I enjoy the investment process a lot. I don't think I'd enjoy managing a large organization and I certainly wouldn't enjoy being on the treadmill where I was really focused on raising lots of dollars. So we've sort of relied on word of mouth, capital raising, really. I always believe that in this business, the returns sort of attract capital more than any story you can pitch. You have to be very consistent about your process and your story, but it's really about generating returns and that's proven to be true in terms of attracting capital. LJR: Yeah. And where in this trajectory did you come back to the Bay Area?
JK: So that's interesting. 2001 actually, while I was still at Investment Group of Santa Barbara. My wife and I did the long distance thing for three years and it was getting old. You know, it's hard. So, I was happy to move back to the Bay Area, close to friends and family, and just work remotely. I was an early remote worker. In the investment business, it's relatively easy to do that.
LJR: And did that afford kind of more family time, either with your own nuclear family and or with your parents family, your original family?
JK: For sure. For sure. Initially just with my own, you know nuclear family, my wife's family and our good friends, we had a really great community of friends that we'd sort of accumulated, you know, since graduation in the Bay Area. And so it was great to be close to those folks again, big part of life in my view. So and then, you know, just generally the profession has afforded me lots of time with my kids. I feel very lucky in that, though, you know, the market really never, never goes away, I control my hours. So I've been able to, you know, coach my kids sports teams, which I've found really rewarding as an experience and, you know, cooking breakfast most mornings, driving to school, that kind of thing. So yeah, I feel very lucky in that regard.
LJR: Yeah. Do you think they would reflect back and say that dad opened up his business world to us? Like we understand what he does and kind of that the underlying mechanisms kind of like your father did for you?
JK: I think so. I think so. My, my oldest son is a junior in high school. He's very curious. And so he'll ask lots of questions. And I try to, you know, I try to bring him into my world a bit. And my younger son to a certain extent as well, who's a freshman in high school. So they have some interest and I don't know if either one of them will end up pursuing, you know, a career in investing. I think it takes, you know, pretty specific skillset and sort of innate psychological wiring, frankly, to deal with the ups and downs. So anyways, we'll see, we'll see where, you know, life takes them.
LJR: Yeah. And as you said, this is a lifestyle that affords you, you know, time. It seems, and you're somebody I can ask because I don't know, but it seems like this is also something that you could do, dare I say, forever. Warren Buffett's still doing it and it's been forever. So is that kind of how you see the next chapter? Like this is, it's going to be a continuation with this. It might grow or ebb or do these things, but this is kind of this is it for now.
JK: Yeah, I think so. I had time to reflect on what I wanted to do next in between Investment group of Santa Barbara and forming Keenan Capital. And I just frankly couldn't come up with something more interesting to do. So, yeah, I suspect that I'll be investing until, you know, my faculties fail me. I really enjoy it. Maybe in a slightly different form at some point, I might not have outside investors in the partnership, but you know, that sort of process of taking deep dives on companies and coming up with my own original mosaic of what I think is both happening and what might happen in the future. I really, really enjoy that process.
LJR: All right. So mistakes, we've all had them. It doesn't sound like you had many, but tell us, tell us the mistakes. How does that? Where did that play out?
JK: Any investor who tells you they haven't made mistakes and you're full of shit. You know, it's a, it's a business where you're constantly learning. You probably learn more from your mistakes than in some regard from your wins. But you know, whether it was actual company mistakes, which I've made, and it's typically underweighting some weakness within a given company or just experiencing the cycles of the market. Like 08-09 was brutal. My fund was down 38%. You know, it took me three years to get back up to the high water mark. Or, you know, more recently last year, my fund was down 32 percent as growth stocks sold off. You know, really, really hard. So again, when I say there's a huge psychological component to investing, I really, really believe that you've got to be able to sort of persevere through, you know, those tough years, learn from mistakes and, and hopefully continuously improve.
LJR: Yeah. And really have that…not the myopia of, I got to get this right, right now. It's the longer term. Like there are going to be down years. There are going to be things that come out of the blue, right? But you do need dinner tomorrow, right? How do you balance that? Like, I want to get this right now, but I have to be looking longer term when you have a family and all those things, like it’s tricky.
JK: You know my mentors schooled me on the importance of thinking about a five year horizon [LJR: Five-year] and making any investment, at least kind of a minimum of three years, hopefully five years, hopefully longer in trying to invest in companies that could stand the test of time that had real competitive differentiation. So it's not easy is the short answer to your question. And most investors do focus on the short term because of those short term pressures. But it's really, really hard to outperform the market if you don't have a longer duration view.
LJR: Yeah. And actually something I wanted to ask you, so you at 24 were given this huge responsibility, for virtually someone else's money. And then later you have your money, which is tied up into someone else's money too, but it's really your money. And I guess the earlier one was your money in….But is there a difference psychologically as you say, between investing in someone else's money and investing yours? And which is harder, they both seem gutting to me like I don't want any part of it. But…?
JK: Yeah, because. The investment group of Santa Barbara, my partnership, I was managing the capital of the founding partners, I've actually always managed, you know, other people's money and there is absolutely a responsibility that goes with managing outside capital. So I don't find it too, too different. I take managing other people's money just as seriously as managing my own capital. And in a lot of ways my interests are super aligned with my investors because I do have a very significant stake in my partnership.
LJR: Yeah. Yeah. That makes sense. Yeah. I don't know how you do it. It's just too scary to me.
JK: It definitely takes, you know, it takes a little bit of a toll. You know, there've been studies done on, I think, gambling and investing and, you know, humans feel losses like exponentially more than they feel gains and wins. And so that's, that's just a hard part of you know.
LJR: Yeah. Yeah. A lot of ulcers. Well, Jamie, it's been a delight to talk to you and kind of see this road, maybe not as winding as you might have imagined when you like could not figure out how you'd get in. It must be tough and and all of this. But once you were in, you've really, I feel like found a path that just not only was the right one for you, it just seemed kind of fated. So I wish you the best of seeing where this goes with you for you. And thanks so much for sharing.
JK: Absolutely. Thank, thank you for doing all these podcasts. It's super fun listening, you know, to our classmates stories.
LJR: That was Jamie Keenan, Managing Partner at Keenan Capital, which he's run since 2012. His long stint of managing portfolios for his partners and family has kept him busy but also has afforded him time to be with his extended family in the Bay Area.//While not nearly as long as Jamie's, our nice long run with this podcast is something we're proud of. In this ninth season we're delighted to be bringing you new friends' stories and some new conversations with previous guests. With so much to discover, we'd love it if you turned a few more people onto our show. Tell them they can find us wherever they access podcasts or point them to our full archive at RoadsTakenShow.com. Thanks so much. We look forward to sharing with you all our upcoming episodes with me, Leslie Jennings Rowley, on Roads Taken.