Letter #240: John Phelan (2022)
MSD Capital Cofounder, Rugger Management Founder, and ESL Principal | SMU Distinguished Alumni Award Speech
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John Phelan is the Cofounder and Chairman of Rugger Management. Prior to launching Rugger, he cofounded MSD Capital—Michael Dell’s family office, as well as MSD Partners, an SEC-registered investment advisor that allowed a select group of outside investors to invest in strategies developed by MSD. John helped MSD post double-digit net returns and over $20bn in profits during his tenure, and serves as Chairman Emeritus. Before starting MSD, John was a Principal at Eddie Lampert’s ESL Partners. John was responsible for ESL’s Special Situation and Distressed Investments, and helped grow the firm from $50mn to >$2bn in AUM. Prior to ESL, John was a VP at the Equity Group and in charge of acquisitions (Western region) for Sam Zell’s Zell-Merrill Lynch Real Estate Opportunity Funds. He also spent a summer with Richard Rainwater. He began his career at Goldman Sachs, where he was a financial analyst in the Investment Banking Division and was mentored by Hank Paulson and Byron Trott.
Today’s letter is the transcript of a speech John gave to accept SMU’s Distinguished Alumni Award. In this speech, he thanks his friends, mentors, business partners, and colleagues, before sharing the importance of teamwork and the role it played in his life, some background on his family and where he came from, core lessons from his parents and how they shaped him, why he chose to attend SMU, the importance of a strong network, interviewing with Goldman Sachs, and the only thing that lasts in this world.
I hope you enjoy this speech as much as I did!
[Transcript and any errors are mine.]
Related Resources:
Rainwater Model
Bass Brothers
Ziff Brothers
MSD
ESL
Eddie Lampert Compilation - 161 pages
Zell-Merrill Lynch
Transcript
Wow, thank you. That's the first I got to see that video. It's interesting, for sure.
So before coming here tonight, I was discussing what I was going to say this evening with my wife, Amy. And she said to me, Don't try to be too charming, too witty, or too intellectual. Just be yourself. So I'm gonna do my best.
So as Henry V said to his third wife, I won't keep you long.
Thank you all for coming this evening. I'm very honored to be with you tonight, and quite humbled to be one of the honorees given the prestigious group of current and past honorees. I'm truly thrilled to be here in front of people I greatly respect and admire.
First, congratulations to my fellow recipients this evening. What an extraordinary group. I feel privileged to share the stage with you.
In my senior year, I was President of SAE fraternity. And when a call from the school came to please call a report to the President's office, it was never a good thing. So Dr. Turner, thanks for this call, because I really welcome the change. Much better. It's what I look forward to now. So thank you, Dr. Turner, again, for all that you do and the great changes you've made at the school.
I'd also like to thank Brad Cheves, Bob Sharp, the SMU Alumni Board, and all the people from SMU who created this beautiful space tonight and helped make this evening happen in the awesome Armstrong Fieldhouse.
Thank you [Christy Upton] and [Tina Kalina] for all that you do for me and our family.
I'd like to give a shout out to Andy Teller, Jonathan Kraft, and Michael Dell, for those very kind words on the video. It's always nice to hear things about yourself, particularly when it is highly exaggerated. I also greatly appreciate Andy and Jonathan not sharing some of my more colorful college and graduate school stories. So thanks for that.
Amy, you're the love of my life. And thank you for always being there for me. Our daughter Mackenzie is here this evening. And I could not be prouder of the fabulous young woman she has become.
Finally, I feel blessed to have lifelong friends, mentors, business partners, and colleagues joining me tonight. Thank you for coming, particularly those of you who came in from out of town.
One thing I've learned, as Michael Jordan so eloquently put it, is great players can win games, but you need a great team to win championships. I truly believe that the reason for my success and why I'm being honored this evening is due to the friendships, guidance, and support of all of you. It is a great reminder of what counts in life is not what you have in life, but who you have. All of you have played important, meaningful roles in my life. Thank you. All of you mean the world to me.
Just a quick background on my family because I think it's important. My father's family was from Ireland, and my mother's from Italy. Needless to say, family reunions were interesting, and always entertaining. My grandparents came to Ellis Island in New York four and five years before the Great Depression. I just think about their journey and landing in New York in winter, with not much but the clothes they were wearing. It boggles my mind when you really think about it.
My parents were the first ones in their family to have a college degree. After serving in the Korean War, my father became a doctor, and my mother was an English teacher. Education was very important to them, and growing up as a child of immigrants instilled in us certain values and ethics: honesty, hard work, helping others less fortunate than yourself, humility, and doing the best that you can.
I learned a great deal from both of my parents, and I'm the person I am today because of them.
My mother taught me a tremendous amount and always told me: Be nice to people on the way up, as they're the same people you'll meet on the way down. She said: Think of yourself as if you're writing a book about life. What type of book do you want it to be? Do you want a best seller? Or something just to say you wrote a book? With every action and decision, you are writing the words, sentences, and paragraphs of your life. She also reminded me that there are no ifs in history.
My dad would always say: Life's not about expecting, hoping, and wishing. It's about doing, being, and becoming. It's better to be a lion for a day than a sheep all your life. He also told me: If you do dumbass things, pretty soon you're gonna be labeled a dumbass. So it was very helpful.
My decision to go to SMU was really one of serendipity. I was visiting Rice and the University of Texas, and my mother said to me, You're already going to Texas, let's check out SMU. It looks like a beautiful campus, and our friends who have kids there love it.
So I started doing my research on SMU. And since I was a kid, I've always loved to use frameworks, the kind of pros and cons, to help me make decisions. My logic, in retrospect, was not bad. The pros for SMU were a 2:1 girl:guy ratio, strong Greek life, great athletic program with the Pony Express, strong academics, beautiful campus, good class size, mild winters--very important for a kid from Florida--and located in Dallas, Texas. Cons I really could not think of any. Now, by the way, the pros I mentioned were not ranked in their order of importance--although I was 18, so maybe they were. Hard to say.
What you get when you go to SMU is a great education and a different perspective. You learn how to think, not what to think. And that Texas entrepreneurial spirit of just going for it pervades the campus. These are all great things for an 18 year old just graduating high school.
The other key differentiator for SMU, and one which helped me, is the network of supportive alumni like all of you who love the school. I believe the single most important way to influence the world is through the education of leaders. The school motto of World changers are made here is evident by the alumni and the recipients of this award.
Quick story: my freshman year, I joined the SAE fraternity, and a bunch of them are here tonight. Thank you for being here. My friendships are what I'm most proud of.
My fraternity experience has been one of the defining aspects of my development as a businessman and leader. I went to the London School of Economics my junior year. And despite being gone for a year, I was encouraged to run for President of SAE, which I did. And I was elected, and then reelected in my second semester. Obviously, I'm a glutton for punishment, and I'm not the smartest person for doing that.
Being somewhat responsible for trying to manage over 100 college undergraduates is a very interesting experience, particularly when a significant majority of them operate under the mantra of--he's a good friend of mine--Never say no to a bad idea. And that was them.
In my very first interfraternity council meeting, and I've heard his name a lot tonight, Dean Jim Caswell was telling us about his expectations going forward, and how things were going to change. New rules, GPA guidelines, etc. As he walked around the room, with all the other fraternity presidents, he stopped behind me, and he put an article down in front of me, that basically said the founding chapter of SAE at UVA had been shut down. And he said, I hope you and your brothers don't suffer the same fate. Then he asked me if I was enrolled in school, as it turns out my predecessor, who is here tonight, who was not enrolled in school during his tenure as president. So that was an excellent start with the administration.
Then when I was interviewing for a job with Goldman Sachs, my final interview after about 25 prior ones, was with Dan Cook--God rest his soul--a senior partner who ran the Dallas office. After exchanging some nice pleasantries, he said, I've heard great things about you. And then he looked me in the eye and said, President of SAE. I said, Yes, sir. He said, You guys have my sign. I looked at him somewhat perplexed, and candidly, mildly terrified. He told me, I own a ranch called Gun Barrel City. And I recently got a call from the Campus Police telling me they found my road sign in your chapter room. And we'd like it back. He then asked, So what do you have to say about that? Well, I figured this job's not going to happen, so I said, Mr. Cook, you have to admit it's a very cool name, and sign--particularly for a fraternity chapter room. But I'd be more than happy to have it delivered back to you. He started laughing, and he said, I guess it is. Keep the sign, and welcome to Goldman Sachs. He said it's a very, very nice thing.
I'd be remiss if I did not mention a fellow SAE and honoree, Don Donnally. His passion for the school and the SAEs was unmatched. After Don was told about the award and the other honorees, he called me up and said, Congratulations. I was unaware at the time of having been selected. And I said Congratulations for what? He said, Have you heard from SMU and Gerald? I said, About what? And he said, Oh boy. He goes, Do me a favor--act surprised when you hear, but you and I are receiving the Distinguished Alumni Award, and we're gonna have one heck of a party. He also told me that more SAEs have won this award than any other fraternities. I have no idea if that's true. But Don has been a true inspiration to me and many young students and he'll be sorely missed.
One thing I've learned is that the only thing that lasts in this world is being good to other people.
I truly appreciate all of you coming this evening. Thanks very much for this award. I can only hope that I can uphold the standard that has been set by the prior and future recipients of this great honor.
Have a great night. Thank you.
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