Insight

Innovation By Method Investing by Faisal Buttt

When Daniel Day-Lewis famously played the cerebral palsy-afflicted Christy Brown in My Left Foot, he insisted on using a wheelchair at all times, and for his meals to be spoon fed to him – just as Christy Brown had to during his life. This is known as ‘method acting’, a technique in which actors try to identify with and live as closely as possible to the character played. Lewis’s obsession with understanding his character inside out clearly paid off, as he went on to win an Oscar for Best Actor at the 1990 Academy Awards.

Method Investing

What does any of this have to do with business or investing? I believe that just as the method actor must understand the character he has essentially become, to fully understand a business one must become equally as immersed in every fibre of the organization, understanding it ‘inside out’ and ‘outside in’.

Some of the best investors and serial entrepreneurs, I would argue, have to ‘go into character’ as they explore new ventures in sectors they are unfamiliar with. Having focused my earlier investments in the traditional property sector, when I started to explore the ‘PropTech’ space in 2013, it felt like I had to practise for a new acting role. I had to learn to dress differently, learn new jargon, and even alter my writing style (there’s apparently an abbreviation for everything in tech circles). I even spent hours loitering at hipster-filled cafés in the East End to culturally assimilate.

I have had to network aggressively into new sectors I hitherto knew nothing about, learn the cultural nuances, adopt the business traditions, and get intimately familiar with the risks and how to overcome them. Essentially, I have had to ‘catch up’ with everyone else in the sectors I target and play the role as if I had been doing it all my life.

‘Method investing’, as I like to call it, has slowly and iteratively evolved into my current investing style – I dig deep and virtually ‘go into character’ with each new venture I look into.” This is the only way I can be sure that the business and sector I’m deep-diving into is one I want to be in, and if so, that I can actually add value. In fact, method investing has become something I can replicate across any new sector I explore. Recently, I’ve been spending quite a bit of time investigating a new real estate venture related to senior living. Applying the form of method investing to a sector I see as a bastion of long term growth, is taking me through all sorts of new and exciting adventures.

Not For The Faint Hearted

Method investing is not for the faint-hearted or the conventional, risk-averse investor who sticks to the sectors he or she knows. It is for those who are not afraid to try radically new roles in new businesses, in new sectors, and even new regions.

Method investing is a natural fit for the more entrepreneurial investors, those that themselves have been on the other side, have had to ‘create something from nothing’, and know what it means to ‘hustle’ during the tumultuous early days of any new business. It is for the dynamic thinkers who can connect the dots between seemingly unrelated ideas, sectors, and regions. It is for the passionate and the borderline obsessive amongst us.

A method as concentrated as ‘method investing’ must come with its own health warning – a dose of reason and common sense is needed to temper the passion. Unbridled passion when investing could lead to a deep, dark hole financially. We need to be passionate about the business but never emotional in our decision-making, a fine line that must be carefully balanced by a skillful method investor. To avoid the downward spiral that destroyed some of the finest method actors, including Heath Ledger, our passion must be checked by temperance and rationality in approach, in addition to meticulous research about the business we are evaluating.

Innovation By Immersion

The American fashion designer and film director Tom Ford recently admitted, ‘I probably do have an obsessive personality, but striving for perfection has served me well’. History has taught us that there is often a thin line between a madman and a genius, and visionaries with an obsession for their craft have often straddled both sides of that line.

Be they a master of science, the arts, performance or technology, many speak of a feeling of complete immersion in their subject, and how this deep focus eventually leads to dynamic discovery. It is only when you truly understand something down to its most minute detail that you can use it to achieve something truly special. Method investing is no different, and those who adopt this approach are well placed to discover the next billion-dollar company.

For the challenge in real estate lies beyond merging the old with the new, without seeing bricks and mortar crumble in the process. The challenge real innovation brings is deeper, it will be to maintain our sanity as we go through the uncertain, treacherous, pothole-infested journey until our life’s masterpiece is built.

Read more about PropTech & Innovation in our Insight Report here, A Brave New World? Innovating Real Estate