Going long creativity.

We’ve chosen ‘where innovation grows’ as our tagline at Nauiokas Park. It reflects the ambition we have of creating and tending a ‘garden’ of entrepreneurship and innovation in our sphere of competence (financial services and markets – broadly defined.) But an equally appropriate, however blunt tagline would be:

Going long creativity.

One of the greatest challenges when starting a new venture is articulating concisely what it is exactly that you are setting out to do. There is a natural tension between describing in detail the thesis and proposed path, with all of its details and subtleties, and capturing the essence of the idea in a way that is immediate and will resonate with anyone. Our company is about investing time, capital and ideas in people and firms that bring creativity and innovation to bear on the world of finance and so distilled down to the core our investment strategy is “long creativity”.

This simple characterization came to me when reading a recent article by George Gilder at Forbes.com:

Knowledge is about the past; entrepreneurship is about the future. In a crisis the world of expertise pulls the global economy ever deeper into the past, where accountant-economists ruminate on the labyrinthine statistics of leviathan trade gaps, tides of debt and deficits, political bailouts and rebates, regulatory clamps and controls, all propping up the past in the name of progress.

The crucial conflict in every economy, however, goes on. It is not between rich and poor, Main Street and Wall Street, or even government and the private sector. It is between the established system and the new forms of wealth rising up to displace it–all the entrenched knowledge of the past and the insurrections of futuristic enterprise and invention.

And it is this tension between the established and the new, where in particular we hope to add the most value: by intimately understanding the strengths and weaknesses (and fears) of the ‘establishment’, we believe we can help the new, the creative, the diruptive navigate around some of the avoidable pitfalls and wherever possible create alignment of interests.

Ultimately, truly innovative and creative solutions to real problems and challenges will prevail. However, ‘ultimately’ can take a long time; and time has value. Hopefully we can help reduce this time and help our investors, entrepreneurs and ultimately (you need to think big) our society capture more of this time value by accelerating the process. It’s a long term view of course, but you can’t approach the opportunity in any other way if you believe that change happens more slowly (than you expect) in the short term, but (much) more quickly in the long term.

I’ve been on record for many years saying – in effect – that the financial services industry has been structurally “short” (strategic) creativity. (Although I’ve not until now articulated it thus.) It’s a seductive but dangerous position to have: like any short deep out-of-the money option position, you collect (relatively) small premia for a long time and then…you blow-up. We plan to be on the other side of that trade. A hedge you could say…

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