Modern Deal Guy as Gunslinger: Conduit of Value

I’ve written about the concept of Modern Deal Guy and the more I observe the rapidly changing world economy around me, the more important this concept is to understand. In a more dynamic world, financial organizations need to be more adaptive. Duncan Young who writes the Conduit of Value describes this change so very well: https://conduitofvalue.substack.com/p/the-age-of-the-gunslinger 

A world from institutions, scale and deep analysis to something more fluid and fleeting. He states that the last 5 decades were an anomaly in the financial world and that we are going back to something old yet new. 

“The era we're leaving wasn't the new normal. It was a brief window during which the analytical layer looked like it could substitute for the conditions layer, enabling new institutional scale due to the elegant story of MBAs in towers. It couldn't. It was just expensive enough to look like a moat. What it produced was institutional blandness, that needed to be quietly backfilled by the conditions the analytical layer claimed to have replaced. 

The facade is fading as the cost of analysis falls, and the market is going back to the way it always was, an insider’s game.”

He goes further on this point: 

"These conditions weren’t dormant the past five decades and they aren’t newly important now; they were always the real work. Even at the peak of the analytical era, the deals that closed were the ones where someone in the room had real conditions on the asset. The model didn’t win the deal, rather: the relationship got you in the room, the context told you what to underwrite, and the analysis was the formality you ran after you’d already decided.

The conditions always mattered, but up until now, they’ve been modeled over. We’re returning to an age where they are all that matter.

Relationships. Who picks up your call. Who returns your text on a Saturday. Who introduces you to the founder before the banker does. Relationships never went away during the analytical era. They quietly kept doing the work while the analytical layer got the credit. The shift now is that the spotlight is gone. Access lives here too: the room you can walk into, the deal you see before it becomes a process, the supplier who quotes you a real number instead of a list price.

Information. What you know that the model doesn’t. The conversation that hasn’t been transcribed. The pattern you saw three jobs ago that nobody else in the room saw. The supplier whisper, the customer churn signal that hasn’t shown up in the data yet, the regulatory rumor from someone two beers in at a conference in Vegas. Information that lives in a person, not a database.

Context. What you’ve already been through. The cycle you survived. The mistake you don’t have to make again because you made it in 2018. The deal that went sideways the way this one is starting to. It’s a library of pattern matches the model can’t borrow. The reason a customer in this niche behaves one way and a customer in the adjacent niche behaves the opposite way, even though the spreadsheet says they should be identical. The model can simulate context. It cannot live in one.

Resources. What you can deploy right now, not in three weeks after committee. Cash, team, attention, time. Capital plus the ability to act fast is a different instrument than capital alone. A check that lands on Tuesday is not the same instrument as a check that lands in February. A team that can do the work alongside management is the most impactful in this new era.

Together they constitute position — where you’re standing on the board. For twenty years the smart money invested in better models. The next decade rewards investing in better positions.”

Duncan’s nomenclature for style of investing in the new time. Gunslingers. Or my interpretation, another word for the “Modern Deal Guy” as per Jeremy Giffon and Will Manidis. 

“The figure who operated this way before the analytical era arrived had a name. They knew to read the room, knew the terrain, kept his rolodex in his head, moved before consensus formed, and traded on context the institutional players hadn’t seen yet. They were The Gunslinger."

However, the seat is increasingly rewarding what you do with the company after close: the operating insight, the years of context, the relationships you bring to bear that nobody else can manufacture in a quarter. 

Four moves to start executing on your conditions:

Take inventory. Most operators and allocators can’t actually list their own conditions. Spend an afternoon writing them down: relationships that pick up your call, information lives in your head, access that other people in your category can’t. What you’ve been through that others haven’t. The list is shorter than you think and more valuable than you’ve been pricing it.

Refuse the consensus trade. If everyone in the room has access to the same model and the model is producing the same answer, you’re not in a gunslinger seat. You’re in the crowd. Pass on those deals. Take the ones where your conditions tell you the consensus is wrong, or where the consensus hasn’t formed yet because the deal hasn’t entered the analytical funnel. This is harder than it sounds. It feels safer to be wrong with the crowd than right alone. Get over it. The analytical era rewarded crowd-rightness. The gunslinger era doesn’t.

Be in the room. Conditions compound through physical and temporal proximity. The deal flow that matters travels through dinners, not data rooms.

Move when the moment opens. Position is necessary but not sufficient. The gunslinger edge is position plus the ability to fire when the moment opens. Most analytical-era institutions are built to slow that down — committees, processes, diligence cycles, approvals. If you can structure yourself or your firm to act in days rather than weeks when a condition-driven opportunity appears, you’ve built an edge no model can match.”

Net net in Duncan’s words: “Institutionalized analysis is no longer an edge, creating opportunities for smaller teams to thrive in the market on their conditions.” 

This is the world where modern deal guys and small organizations now have the advantage and can really thrive. It’s Go time for the Modern Deal Guy aka Gunslinger.