Sept. 24, 2021

156: Bring the Noise | Gershie Vann and Magma Capital Funds

156: Bring the Noise | Gershie Vann and Magma Capital Funds

Our guest this week is Gershie Vann, Founder and CEO of Magma Capital Funds, a Chicago-based quantitative hedge fund firm. We talk through the long iterative climb involved in launching a business, finding alternative skillsets outside of finance when building his team during the first pandemic lockdown in 2020, what’s at the core of his entrepreneurial mindset, quieting the always-on mind of the founder, an innovative approach to raising capital for new hedge funds, along with a shallow dive into crypto and sovereign currencies…and being the elder statesman in a family of 7 kids!


HIGHLIGHTS:

Gershie Vann on his inspiration to start Magma Capital Funds:

“I spent around two and a half years doing systems design and business intelligence. But my passion, my heart, was with macroeconomics and the world of finance.”

“I wanted to design a product that could synthesize business intelligence systems design and build something beautiful - I'm an entrepreneur at heart. I've done a lot of entrepreneurial stuff since I was a kid, and I wanted an opportunity to take that a little bit bigger.”

On launching a business just before the first COVID lockdown in 2020:

“Luckily I had raised the capital in February 2020 to run the business for our first year of operations, and my business partner came through on his end through the whole COVID situation.”

“There are always positives and negatives of every environment. When you start out in the middle of COVID and you start out with systems that are designed to be remote you start out with a more talented unemployed labor pool than you would typically start out with.”

“We also had more of a chance to focus on building out the business as we couldn’t meet face-to-face with investors. I firmly believe that the allocation of capital will always be a very personal decision made through face-to-face meetings, and I don't really think that's going to change.”

“So, if you can't meet with clients and raise capital, you have to really focus on the product that you're building, and that provided somewhat of an opportunity. I think there are a lot of brilliant companies that were born in the midst of a crisis, and in a way, that kind of strengthens you.”

On the qualities Gershie looked for when building the Magma Capital team:

“For a lot of the skill sets you focus on when you’re building a hedge fund - especially when you're going to focus on both the quantitative side in terms of the product development and you also want to put together marketing pieces that speak to the emotive component of the product - you don't necessarily need to solely focus on people that have been within the world of finance.”

“Often, people that have been within the world of finance for 20 or so years are kind of locked into a mode of thinking which isn't necessarily great for your company. I've looked for people who are genuinely curious, they appreciate the iterative cycle, enjoy the collective team effort, and are always trying to improve and get to the next step.”

 

On his view on the entrepreneurial mindset:

“I think every entrepreneur has to be a relentless optimist, almost to the extent that it's irrational. You have to believe in your ability to surmount any obstacle. I don't mean that in the sense that you believe yourself to be the Messiah; everybody should be cognizant of the limitation of their skillset.”

“I think I'm fairly innovative - and a lot of this is a product of having the right team behind me - but I never want a problem to become the end of the company, so we’ve relentlessly just improved at a rapid clip.”

On trying to quiet the always-on mind of the entrepreneur:

“It becomes near-impossible because, you have this responsibility, people work for you that rely on you sending out the paycheck with a certain cadence, and investors have trusted in you and your ability to build this company.”

“Sometimes, constantly thinking about problems prevents you from solving the problem, because your mind doesn't have enough room to free-think. I think that the workaholic-type approach has made it more difficult to solve problems. But there's a lot you get better at by figuring out when you've hit your limit, and you adopt other things within your day-to-day life to allow you to work through challenges more quickly.”

On the root of creative problem-solving:

“The root of creativity is finding the commonality between different paradigms or models of thinking. You find some overlap between two different fields, and you apply some feature within one field to another field.”

“When you slot those two together you have something that seems genuinely novel and people perceive it as innovation, but it's really just a transference of something that exists in one place to another place. When you constantly think about one paradigm, one sphere, you don't have that ability to free-think and to pull from other areas to innovate your way out of that.”

On how he sums up taking the leap as a founder:

“In a lot of cases where people are afraid to make the jump, there's actually very little downside to making the jump and there's massive upside to it. Once you get past that mental hurdle - and I don't mean to undermine the difficulty of starting a company or of hearing people say no to you - but once you shift that mindset, it's a lot less challenging.”

LINKS:

Episode title inspired by ‘Bring the Noise’ by Public Enemy and Anthrax

Get in touch with Gershie Vann and check out Magma Capital Funds to learn more

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Gershie Vann

Founder and CEO, Magma Capital Funds