I think one way to develop it is to learn the stories of others who overcame stupendous odds to survive, or thrive, or succeed. My father’s story certainly injected in me a level of grit. Knowing my genes come from him, and knowing the tortures he endured and the risks he took to survive, makes me feel that I, too, should be able to survive anything I might face. What’s a market collapse compared to a death march? What’s a bad day investing compared to a day moving 50lb boulders around a Nazi run granite mine in a concentration camp? So a way to develop grit is to learn stories like those of my father, and take the lessons that can be learned from them and apply them to our own lives.
I had the pleasure of interviewing Jack Hersch. After getting a computer science undergraduate degree, and then a few years later an MBA, both from Columbia University, Jack entered the world of institutional finance. He became an expert in advising and investing in distressed and bankrupt companies. Following stints at investment banks and then hedge funds, he started his own hedge fund in 2007. He sold it in 2015 but remained with the fund and its new owners until last year. His first work of non-fiction DEATH MARCH ESCAPE released in the US in January 2019.
Thank you so much for doing this with us! Can you tell us a story about what events have drawn you to this specific career path.
In college I worked summer jobs, and put some of my savings into the stock market. I quickly discovered that I loved investing. The problem-solving challenges of understanding a company’s cash flows and valuation was hugely attractive to me. Also, my father came to the United States at 33 years old from Europe, with only a fifth grade education, and so his only avenue to success was entrepreneurial. It worked out well for him, and it instilled in me the desire to be on my own, too. When I got the chance in 2007, I seized it. Finally, the investing side of Wall Street is a nearly-perfect meritocracy. You get promoted, or capital to manage, because of your ability to successfully advise and invest, and not because of your political infighting skills. I found that immensely appealing, because I believe in being nice and fair to everyone, meaning I don’t have the desire, or the skill, to work in a cut-throat corporate environment where politics are important. I save my combat skills exclusively for working on behalf of my investors and clients.
Can you share your story of Grit and Success? First can you tell us a story about the hard times that you faced when you first started your journey?
The first twenty years of my post-MBA journey, when I worked for others, enabled me to first learn, and then sharpen, my investing and management skills. When I launched my own hedge fund in November 2007, I quickly needed every skill I’d ever mastered, because that launch date was just three weeks after a major market top in October 2007. In other words, I started my fund at the start of the biggest market collapse since the Great Depression. I was responsible for my capital, and for my employees, during a period where investors faced market gyrations that were unprecedented. No one had ever seen anything like what we had to face. Every day we feared the gears of the global financial system would freeze up, taking everyone down with it. Though charts today show the volatility, nothing encapsulates the palpable fear pervading investment professionals during those insanely difficult months. I had friends whose funds lost 50% and 60% on their investments between September and December2008. Those are incredible loss rates. My fund lost around 10% during the same time. And that wasn’t even the bottom! The bottom was in March 2009. But while others continued losing money, I did not.
Where did you get the drive to continue even though things were so hard?
I’ve always had the ability to keep my head in a crisis. I think I got that from my father, who had survived a Nazi concentration camp. He spent the last twelve months of World War II in Mauthausen Concentration Camp, which was known as the cruelest, most abominable camp in all of the Third Reich. At the end of the war, when my 18-year-old father weighed 80 pounds, down from his normal 160, he was put on a 34 mile “death march,” and expected to die on the route. Instead, he escaped. He was recaptured, miraculously not killed, and returned to Mauthausen. A week later he was put on another death march, and he escaped again! This time he was found by local couple, who risked their lives to hide him until the Americans liberated their town three weeks later. I wrote about his story in a book, Death March Escape . I’ve known that story my entire life, and I think my father’s guts, heroism and — yes — grit, is a part of the fabric of my character as well. I have obviously never been tested as he had been, but that’s exactly why I think I persevered when the markets plunged in the fall of 2008. What was I facing compared to what my father faced? Where was the starvation, and beatings, and risk of death? It was nonexistent. All I had to do was focus on my job, establish hedge positions that would make money as the markets fell, keep capital available to invest as stocks and bonds got cheaper, and bring my twenty years of investing experience to bear in protecting my investors’ capital — and by extension, my employees’ jobs. When the dust settled in late 2009, my hedge fund was intact, we had made very significant profits for our investors, and we were a growing business.
So how did Grit lead to your eventual success? How did Grit turn things around?
My ability to keep calm and rational when every day the newspapers, talking heads on TV, and my investing friends were screaming that the world was ending — and that’s really what people were saying — made all the difference in the end. Hanging in there, assessing market information coolly and dispassionately, and putting on the right positions at the right time, enabled me to lose less, and ultimately to earn more, than most of the professionals around me. I wasn’t right all the time — no one is. But I was right often enough that it worked out for my investors and my business.
So, how are things going today? 🙂
We survived the 2008-to-2010 period better than 90% of our peer funds. But 2011 was in many ways harder than 2008, something that many non-professionals are not aware of. We lost money that year, but we fought back to have good years in 2012 and 2013. 2014 was once again difficult, but we survived yet again, and this time, in 2015 I had a chance to move the fund to a larger institution, which would give it stability and help it grow again. So I made that move.
Based on your experience, can you share 5 pieces of advice about how one can develop Grit? (Please share a story or example for each
I think we all have grit within us. Some display it more, others less, but we all have it. Much of it is developed and refined through our childhoods, especially if we have what might be characterized as “difficult” childhoods. But I think even as an adult it can be developed, and strengthened, almost like a muscle.
1. I think one way to develop it is to learn the stories of others who overcame stupendous odds to survive, or thrive, or succeed. My father’s story certainly injected in me a level of grit. Knowing my genes come from him, and knowing the tortures he endured and the risks he took to survive, makes me feel that I, too, should be able to survive anything I might face. What’s a market collapse compared to a death march? What’s a bad day investing compared to a day moving 50lb boulders around a Nazi run granite mine in a concentration camp? So a way to develop grit is to learn stories like those of my father, and take the lessons that can be learned from them and apply them to our own lives.
2. A second way to develop grit is to face tests, and pass them. I’m referring to things like getting a pilot’s license, or a black belt, or playing a team sport. I have a commercial pilot license with an instrument rating, I am a black belt, and I play ice hockey. As a pilot, I know that if I’m at 10,000 feet and the engine stops, I will either figure it out, or I will die. As a martial artist, when I’m sparring with someone twice my size, either I will figure out my opponent, or I risk injury. As a hockey player, I can either go after the puck that my opponent is controlling, or face the consequences of not having stopped my man. I’ve gotten through scary incidents in the air and in the dojo, and I practice constantly to survive life-threatening events. That instills grit. In hockey, I’ve been knocked on my rear more times than I can count while playing my hardest, and I think that, too, instills grit.
3. A third way to develop grit is to realize that you’re a role model, and that people junior to you are looking at you for guidance. Even if they aren’t asking you questions, they’re watching how you act, and react, in your work environment. During the market collapse of 2008, I was constantly aware of being watched by my employees, my partners and my investors. Knowing that you are being measured by others ought to instill a desire to do your best, tough out the rough stuff, and display qualities you’d want to see in your own leaders. Grit is certainly one of those qualities. Focus on that often enough, and it will become second nature.
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 you when things were tough? Can you share a story about that?
I launched my hedge fund in November 2007 with the financial support of a very successful investor and close friend, a guy named Mike. I needed Mike’s capital, expertise, and his resources in order to get my hedge fund off the ground and keep it running in its early stages. Yet his investment vehicle faced collapse in early 2008 as the markets began to weaken. He worked with me to find a replacement for him, and in the summer of 2008 we found one — another guy named Mike. I’m indebted to both Mikes — the first one for having the confidence in me to help launch me, and the second Mike for having the foresight to see that I would survive the market collapse and thrive in its aftermath.
How have you used your success to bring goodness to the world?
I help mentor young professionals, and am always willing to offer advice and guidance to those who ask. I’ve never not met someone who’s asked to meet, and I’ve never not responded to someone who’s reached out. We were all junior once, and I think we should never forget that feeling.
Are you working on any exciting new projects now? How do you think that will help people?
I am. As I mentioned, my father had survived a Nazi concentration camp, and I’d written a book about his survival. The book also talks a lot about what it is like to be the son of a man who, in my opinion, did the impossible. I often speak in front of audiences, both high school kids as well as adults, about my father’s story and lessons that can be drawn from his survival. I wrote the book for a few reasons, all of which I think are beneficial to mankind at large. First, I wrote it because I want people to remember what happened to the Jews of Europe, and to realize that in our current time of polarizing politics and divisiveness, negative attitudes towards others taken to extremes can have dire consequences. Inequality of any kind, whether it be religious, racial, gender, or any other form imaginable, has in the past led to nearly unstoppable horrors. If we forget the past, we are capable of repeating it. So we should never forget it.
Second, I wrote it because I wanted people to realize that they are the product of their parents, and their parents’ histories play a large role in who they themselves are. I think that is true whether our parent survived a concentration camp, or was a soldier, or fireman, or housewife, or accountant, or delivery driver, or whatever. It doesn’t matter. What matters is the story. Every parent has one, and I think it behooves us to learn our parents’ stories before they are lost to history. We’ll learn more about ourselves by doing so than we can possibly have imagined.
Third, I wrote it because, as I mentioned, there are life lessons that I learned from my father that I wanted to impart to the reader. When one considers my father’s survival story, his endurance in a granite mine while being fed a diet designed to starve him, and his split-second decisions to escape, anything else in life is just a speed bump. He came out of the war as happy, funny, interesting, and engaging of a young man as he was before the war. So I think if people consider his story, they’ll realize that their own lives — as difficult as they may seem at a particular time — should be dealt with knowing that others have — and have had — it much worse, and managed to come out the other side. And they will, too.
What advice would you give to other executives or founders to help their employees to thrive?
Two quick pieces of advice. First, if you want to start that company you’ve always been scheming to start, go start it. There will never be a “perfect time.” I started mine three weeks into the second greatest market collapse in modern history — though I didn’t know it at the time — and it worked out very well for me. Second, try hard to be a nice-and-good person, employee and boss. Let your performance do your talking. I firmly believe nice guys finish first, great performance eventually rules the day, and good deeds are rewarded. Maybe that sounds a bit naïve, but that’s what I believe.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
If I could start a movement, it would be one that reminds all of us that we’re equal. Our race doesn’t matter. Our religion doesn’t matter. Our gender doesn’t matter (except maybe in sports at the highest level — and not always there either). All that matters is that we are good to each other.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
My father had many sayings that he’d bring out on the appropriate occasion. He liked to say things were “no big deal,” and “not so terrible.” But his favorite was when things were really bad. Then he would say that whatever he was going through, “beat the alternative.” Anything in life was better than not being alive. That was the secret sauce to his survival in concentration camp. Every day that he was alive beat the alternative. Every day that he got a slice of bread and watery soup while spending twelve hours working in a rock mine beat the alternative. Every day ahead of his two bypass surgeries, and during his long recoveries, beat the alternative. Life beats the alternative every single time. When I’ve faced difficult times –whether it was the running my new hedge fund as the world seemed to be collapsing, or facing personal difficulties — my father’s words, “it beats the alternative,” would always come back to me and help get me through.
How can our readers follow you on social media? I’m on facebook Jack Hersch
Websites for my book