David J. Grain
Founder and CEO, Grain Management, LLC
If you are pushing hard and facing an unusual amount of resistance, it’s probably not ‘go time’ yet. You have to be patient and wait for your pitch to swing at.
BY ADAM SYLVAIN
Tracing his entrepreneurial career path, David Grain T’89 says it can be tempting to embrace revisionist history and recall a simpler, more linear narrative. But doing so would belie the “walk of faith” that he says more accurately describes his journey from Wall Street, to Tuck, to founding Grain Management, one of the world’s leading telecommunications investment firms.
I followed the trickle to the stream to the river to the ocean, says Grain.
It has been a walk of faith, and you can’t tell that story without the obstacles, detours, and serendipity encountered along the way.
According to Grain, there are three main challenges entrepreneurs face: developing a financeable theme or idea, establishing credibility, and growing capital. He says each of these challenges proves daunting in its own way, and without paying time and attention to all three, building a successful venture is simply not possible.
There is no shortage of MBA students and young professionals, my children included, who say they want to work on a startup, Grain says.
But if you don’t take the time to really focus and build out those three areas, you’re fighting an uphill battle. You need as much of a head start and runway as you can get to grow your concept into a business.
He learned some of these lessons at an early age, watching his father build a successful trucking business during his off hours as a Midtown Manhattan postal worker. That small business venture grew to be sustainable for more than 30 years until his parents retired to Martha’s Vineyard where Grain attended high school.
Since I was the youngest of seven, I was around the most as my dad’s business was beginning to scale, shares Grain.
He was constantly on the search for growth and greater opportunities, and it was fascinating to see how he took advantage of whatever the marketplace offered him. That was when entrepreneurship became really intriguing to me.
After attending Holy Cross where he played football and rugby and ran track, Grain first turned his attention to Wall Street. He began his career in municipal finance but became increasingly interested in the acquisitions and takeover activity happening at the time. He knew an MBA would help him make that transition. A respected colleague at Dean Witter Reynolds, Jamie Miller T’85, “exuded enthusiasm about his experience at Tuck.”
Grain was also closely following the career of Christopher Williams T’84, a rising star on Wall Street who would go on to launch his own investment firm.
Grain entered Tuck in the fall of 1987, soon opening the newspaper to a report of the largest leveraged buyout in U.S. history to that point—the $985 million purchase of Beatrice Foods’ international division by Reginald Lewis. The international division was sold as a spin-off of the $6 billion alumni Beatrice deal structured by Kohlberg Kravis Roberts. He remembers turning to the full article and seeing Lewis, a Black man, standing with financier Michael Milken of Drexel Burnham Lambert.
Having inherited his father’s entrepreneurial spirit, Grain says seeing that image, and the success of other African American entrepreneurs, like Williams, raised his sights even more to what was possible.
At Tuck, he found an intimate and supportive environment to develop as a leader. Grain built strong relationships with several professors, including Dennis Logue and John Shank, but the most salient lessons he learned came from his many interactions with classmates.
I realized when I arrived that I had several preconceptions about people, shaped by my experience on Wall Street, says Grain.
Boy, were those notions demystified. Learning and working on projects with such an intelligent and diverse group of people on a daily basis made me naturally more open-minded and helped me appreciate that great ideas often come from unexpected places.
He believes it is a lesson well worth reflecting on today as leaders build their teams. When hiring new associates at his firm, Grain says he prioritizes diversity of thought, the result of giving people with a range of backgrounds, skill sets, and lived experiences a seat at the table. He says it’s not altruism—it’s good business.
Having a well-rounded team is essential for identifying opportunities and mitigating risks, says Grain.
You make your own decisions as a leader, but the input you get from everyone on your team is critical. We’re all looking for the best ideas and the highest risk-adjusted returns available.
As Grain points out, every leader is ultimately responsible for the risks they are willing, or unwilling, to take. To know when and how to take the right risks, he relies steadily on a process orientation that begins by creating a taxonomy of how things are organized and how they relate to each other. From there, he says a data focus helps you recognize that almost everything can be quantified and measured. Finally, repetitions help to develop pattern recognition and allow a leader to understand trends and flows in data to inform decision-making.
After enough repetitions, you see more quickly how seemingly unrelated industries, areas, and activities are similar and how they rhyme, he says.
Grain gained many of these valuable repetitions at Drexel, where he completed a summer-associate position before rejoining the firm after graduating from Tuck. In a short time, he learned a lot about the capital formation process that accompanies large-scale M&A transactions. When Drexel filed for bankruptcy in 1990, Grain spent a short period at Kidder Peabody before he was recruited to Morgan Stanley. Grain worked in several areas including M&A and corporate finance, but ultimately joined the high-yield group during a prolific period for tech, media, and telecom transactions.
During this time, Grain was in the early years of marriage to his wife Lisa, who became sickened with breast cancer. Thankfully, she recovered fully, and their marriage has grown to span more than 30 years. Grain says the experience was a clear wake-up call.
We got focused quickly to get her past that, Grain says.
And when she did, it became clear that life is not promised to you. If there is something you want to do, now is the time.
Motivated by this call to action, Grain began pursuing his entrepreneurial aspirations more intentionally. The support of his family, including his wife, a “personal kitchen cabinet” of relevant experts and mentors, and the opportunity to “scrimmage” as an entrepreneur in different scenarios all proved invaluable. In one example, Grain started buying and selling real estate and discovered, in many ways, real estate transactions were akin to a leveraged buyout, albeit on a much smaller scale.
While still at Morgan Stanley, he came across a prospectus for a cell-tower company and was struck by what he saw as a terrific business model with clear growth and operating leverage. Grain pitched a deal to AT&T, which ultimately fell through when AT&T spun off its wireless business. Soon after, he joined AT&T Broadband as SVP of the Northeast Region, a role that would allow him to gain critical operating experience.
During the same month that AT&T Broadband was sold to Comcast, Grain was approached by a friend and former client, Wes Edens, to lead the turnaround of a portfolio company of Fortress Investment Group, Pinnacle Towers (renamed Global Signal). When that company was taken public and then sold four years later, Grain finally had the theme, the credibility, and the capital to realize his entrepreneurial vision. He founded Grain Management in 2007.
Looking back, Grain says there were plenty of lessons learned along the way, which inform his advice for the next generation of entrepreneurs. First, he still sees tremendous value in getting in early and staying late. Throughout his career, Grain says he gained a lot of leverage by putting in hours and working hard. That said, also having the right tools, in the form of people and technology to go to as sources of information is equally important. Lastly, he implores patience and discipline to wait for the right opportunity to emerge.
If you are pushing hard and facing an unusual amount of resistance, it’s probably not ‘go time’ yet, says Grain.
You have to be patient and wait for your pitch to swing at.
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