…Think in decades, not quarters or years. Taking a long-term orientation helps put every action and activity in perspective. I know that these five things would have made me a better CEO earlier, but it is never too late to put these into practice.
As part of my series about the leadership lessons of accomplished business leaders, I had the pleasure of interviewing Beto Pallares.
Ebetuel “Beto” Pallares is the fund manager of two early-stage venture capital funds as well as an investment advisor to a family office based in El Paso, TX. He is the Investor in Residence at New Mexico State University and is teaching classes on Entrepreneur Mindset and Capstone Strategy. He holds a BA, MA and Ph. D.
Thank you so much for joining us! Can you tell us the story about what brought you to this specific career path?
I was half-way through a doctorate in strategy when I was approached by a civic group about consulting and potentially finding technology-based companies to vet and assist in obtaining venture capital from a State of Texas fund. I had spent the early years of my career around technology and venture-backed companies, and I had entrepreneurial experience, but I had not raised capital myself. Nonetheless, the idea of helping to usher resources to people and companies working on innovative, game-changing technologies excited me as much then, as it still does now. This was especially true back in 2006 when the idea of accessing venture capital was a remote, unattainable thought in the minds of most entrepreneurs in West Texas with whom I interacted. I started by networking with angel investors and the few VCs I knew at the time. The process the State had set up to vet the deals was imperfect, time-consuming, opaque, and often left everyone involved frustrated. That’s when I thought, “the State should not be the arbiter of who receives venture funding. The market should determine that.” At that point, I thought to myself, “why don’t I raise private funds to invest innovation?” Through a relationship with a highly respected businessman and civic leader, I got my start. He seeded my first fund. I remember telling him, “I don’t know everything I need to know to be successful at this. However, give me five years, and I’m going to make a lot of mistakes. Give me 10 years, and I’ll figure this out. Give me 20 years, and I’ll make a lot of money.”
Can you share one of the major challenges you encountered when first leading the company? What lesson did you learn from that?
When I launched my first fund, I needed a lot of help and mentorship. I reached out to someone whom I hardly knew and had not worked with, but on paper, that person had years of experience and appeared to share the same ethics and values that I did. After a very brief courtship, we agreed to be equal partners in raising and managing a venture fund and we set up offices in two cities, five hours from each other. The first year seemed to go relatively well. Within a year, we’d made four investments, and we had quickly positioned ourselves as the go-to firm in the region. Given my lack of experience in managing the back office of a fund, or in conducting all aspects of due diligence, I made a number of mistakes, but these were not ethical breaches or items that would constitute “cause,” to use the language usually found in legal documents. After a few years, however, the relationship was not going well, and it was affecting the portfolio companies. I found myself spending a disproportionate amount of time second-guessing my partner’s decisions and interactions with entrepreneurs. We found ourselves further and further apart on the set of values that I thought we shared; how to treat others, how to approach conflict, and how to communicate with stakeholders. I realized that I was in a long-term partnership (venture funds usually last 10 years or more, or until the last company exits), that was not headed in a good direction. While my partner had a vision for how we wanted to run a fund and what was his communication comfort zone, I would lie awake at night thinking how I would do things differently and disappointed that I had microwaved the courtship in a partnership, rather than letting it simmer and evolve naturally. The very thought that I was stuck in a relationship that only affected me but many others drained me. The idea that what linked my partner and I was not a set of shared values, but rather the prospects of financial gain somewhat protected by contractual obligations with investors really made me uneasy. Then, I remembered what I had told our first and largest investor. This was a season of learning, and sometimes, learning can be a costly endeavor. However, lessons are worth their cost if you apply them and don’t repeat mistakes. One morning, I set out to dissolve the partnership I was in, and I walked away from potentially significant sum of money and started all over again. This time, I was starting alone, but with the confidence that I know what values I was striving for, and that I was playing a long, long game, of 10, 20 or perhaps 25 years in this field. The lesson; your values are ever present and before you and others. Though you might not always follow a linear path, the trajectory of what you stand for matters.
What are some of the factors that you believe led to your eventual success?
I define success as attaining recognition for achieving mastery or reaching a significant milestone in a field. That in itself is not difficult. What is difficult is to recognize that success is a shared experience whereby others have also contributed or coached me along that way. This requires humility in admitting mistakes and asking for help, as well as being empathetic of those whose path has not been fraught with more challenges than mine. In the world of venture capital, success has a number of milestones including raising capital, making investments and of course, returning capital beyond the amount raised to those who entrusted you with it. It sounds paradoxical, but I believe that an important factor for my success is to give first before receiving. To be the recipient of recognition, you have to recognize others first.
What are your “5 Things I Wish Someone Told Me Before I Became CEO”? Please share a story or example for each.
It’s difficult to distill all the things I wish someone had told before becoming a CEO, but there are five things I believe should be part of anyone’s list.
The first is that work is what you do, not who you are. As an American, it is easy to default to defining myself by what I spend a lot of my time doing, or what I’m compensated for, like work. Even when we first meet someone, we want to know what people do, versus who they are. I used to live in Santiago, Chile, and it struck me that nobody asked what I did for a living. They cared more about family and what I liked to do on weekends. That resent how I think about what I aspire to, and as a CEO, you need to remember that you are not solely defined by the work you do.
Second, it is imperative to remember that leadership success is communal, while failure is often personal and lonely. Everybody likes a winner and wants to share in the success, but when failure happens the CEO is often left alone to reflect.
Third, while we all may aspire to values and characteristics, we wear on our sleeves emblematic of who we believe we are, we are most defined by the actions we do when nobody is watching. This reminds me that it is always the right time (in public or private) to do the right thing.
Fourth, take time for yourself and find the necessary time to relax. We believe that hard work pays off and that our duty is to work as hard as we can for as long as we can. However, nobody ever lied in bed in their last hour of life hoping they had spent more time at the office.
Five, think in decades, not quarters or years. Taking a long-term orientation helps put every action and activity in perspective. I know that these five things would have made me a better CEO earlier, but it is never too late to put these into practice.
What advice would you give to your colleagues to help them to thrive and not “burn out”?
Burnout is a real condition that unfortunately, we often recognized too late and when we’re in the thick of it. To avoid burn out, I offer three pieces of advice. The first advice I would offer is to learn to distinguish between good routines and bad routines. Good routines are those that offer you a glimpse into your personal or professional growth, like getting early to work out, or taking an online course to advance your career. You’re trading out a little more sleep, or an evening or two socializing, but the outcome of good routines is an investment in yourself. The second advice I offer is that when you need to unplug, you really need to unplug. This means giving your mind and body a full rest. Ease up — or eliminate — responding to email and checking social media when you’ve unplugged. Those you’ve chosen to spend time with during this season, evening or day, will thank you for the present in the moment. The third piece of advice is to build deep, meaningful relationships. In an age when we feel connected by clicking a like button or feel like we’re caught up on everyone’s life just by logging into social media, we need real, deep and meaningful connections that bind us. Note that this advice is coming from an introvert, who values his time alone. However, even as an introvert, having a sense that some of my relationships are firmly rooted gives me comfort and confidence that there are those that I can lean on from time to time. You can’t lean on something that isn’t firmly rooted, or time-tested; it won’t hold up the weight.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
My professional and personal experiences are dotted with individuals who poured their time, relationships, and treasure to see me succeed. Whether it was a success at a particular task I was learning at the time or some sort of undefined but well-intentioned outcome way into the future. I find that those that stand out the most are people who invest in you, not just for the sake of what it will mean to my personal success, but for the sake of the success of a community, of my family and of generations to come. One individual, in particular, has had a definitive impact in my growth as an investment fund advisor and manager, as a board member, and as a first-generation immigrant building a legacy in the region where I live. Through his brief, but spot-on advise, the example of his charitable giving, the consistent and unanimous admiration that others express about him, and the legacy I see forming in his now-grown children, Mr. Woody L. Hunt, Senior Chairman of Hunt Companies has influenced and supported my success over the last twelve years.
What are some of the goals you still have and are working to accomplish, both personally and professionally?
On a personal level, I am reconnecting with the joy of reading for fun, versus reading for work or to prepare to teach a class. Biographies, magical surrealism novels, and historical accounts are my new favorites. The joy of reading will rekindle my love for writing, which I used to do more of years ago. Another tiny joy of late is playing music. The joy I derived from playing bongos music with a salsa band on Thursdays or Saturdays in Cambridge, MA has long eluded me, but I hope to recapture it, even if it’s just in our family room as I play on an electric drum set to an audience of one.
Professionally, these are two endeavors I am embarking on. The first is to write more about topics that help others polish skillsets or discover capabilities they did not know they had. The other professional endeavor I want to accomplish is to reach 10,000 students via the entrepreneurship classes I teach. As many classes go online, it makes reaching a greater number easier, and believe this goal will be achievable within five years, so I may have to raise the bar on the number of students.
What do you hope to leave as your lasting legacy?
Many years ago, as a college freshman, I met Thurgood Marshall. I asked him what was the one thing someone could do to build a lasting legacy that can be measured way beyond one’s lifetime. His answer, “if you can, and you’re good at, write. We know so much about past cultures and historical figures because we find it in writing.” His words stuck with me. Imagine being able to shape people thinking and reactions not just years or decades into the future, but potentially centuries or millennia?! Writing is not easy. It’s a laborious, iterative, and lonely process. Now add to the idea that what you write may be read years into the future. There is considerable pressure to think of something that sounds like sage advice, or whose context is perfectly intact through the ages. However, the real challenge is not picking the words themselves, but the words accurately reflect the character of the writer. In my case, I long to leave behind writings that inspire, motivate and clarify, but halfway through my journey on earth, I’m still grappling with having enough motivation to get out of bed to work out and start the day.
You are a person of great influence. If you could start a movement that would enhance people’s lives in some way, what would it be? You never know what your idea can trigger!
If I could start a movement, it would be to called the “Skip a Generation” movement. Its focus would be to retrospectively identify something about your community that has persistently nagged and held the community back for generations and then deliberately spend 20 years (a generation) working to pivot away from it. For instance, if voter apathy is an issue in our community, spend 20 years volunteering for election monitoring, registering voters, and getting youth involved. The delta between where you initially took action and the following twenty years will be evident in the improvement you’ve helped to make.
How can our readers follow you on social media?
Yes, twitter @betopallares and LinkedIn.com/in/betopallares, and occasionally on Medium.
Thank you so much for sharing your time and your excellent insights! We wish you continued success.