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It was part of the DNA of Terra Invest’s founder-partner when it came to tennis. The lesson of sport was something that had already been on his mind years before Krishan Rattan was managing money, making complex financial deals or building investment businesses.
Tennis has been an important thread for the Founding Partner of Terra Invest. Rattan played during his formative years and continued to be immersed in sport during his time at the University of California, Berkeley. He has been back to the tennis court repeatedly since then, as a tool to think about pressure, decision making and performance since a tennis pro in New York City, London and other financial centres.
But not just competitiveness was what stuck with him. The psychology of being 100% responsible for the next decision. This is something that I realized quite early on in my career as a tennis player: that nobody is coming to play the game for you to fix the issue. There are times when everything is perfect, and there are times when nothing is working at all; but somehow, you must find a way through it.”
Learning to play the point in front of you
Career in investments is generally thought about in terms of successes – that deal that got closed, that investment which grew, that business which scaled up. But the actual experience is far from linear. The market cycle changes, financing opportunities get shut, management makes mistakes, political decisions change the equation. What was once a transformational technology can suddenly lose out to something else.
According to Rattan, tennis helps to think of such situations in the right way. A missed point cannot be taken back. The player has to take the lesson from the point without letting it infect his future decision-making.
“You cannot spend the next five games thinking about the last point. This is one of the most transferable sports-to-business lessons ever. Learn from your mistake, but do not emotionally get trapped by it.”
The difference between learning from an experience and being ruled by it has become very critical in his career at Terra Invest. He has held senior positions at Morgan Stanley, Credit Suisse, Deutsche Bank, and Société Générale, before becoming an entrepreneur in the area of alternative asset management. Terra Invest’s biography mentions that he has managed and invested more than $12 billion worth of deals and had established Mount-Row, which became more than $1.2 billion worth of assets under management.
Conviction is not the same as stubbornness
According to Rattan, one of the worst impulses when investing is being right all the time. Playing sport is a remedy because even top athletes score points against themselves in a game. Excellence is not the absence of failures, but the skill to prevent individual failures from becoming systemic failures.
In relation to investments, it is not necessary that each investment is extraordinary. The secret is in the knowledge of risk, allocation of positions, correlations and the point in time when your original premise loses relevance.
“Conviction and stubbornness are very different things. Conviction allows you to stay in the match. Stubbornness makes you hit the wrong shots all the way through.”
This principle enables us to understand why Rattan focuses on themes such as artificial intelligence, healthcare, energy and financial infrastructure, while being skeptical about using a trendy story as the basis for an investment strategy. The larger the theme, the more crucial it becomes to understand the system surrounding it.
Why sport has become an investment category?
The connection between Rattan and the world of sports has relevance in yet another form. Professional sports have now become an advanced global asset class. Teams are brands; media rights are strategic assets. The popularity and commercial investment in women’s sports have been increasing. Athlete-created businesses are on the rise. Information regarding performance, recovery, medicine, and longevity are now starting to converge.
It is possible to construct a sports ecosystem today in the form of intellectual property, broadcasting, sponsorship, ticketing, hospitality, real estate, consumer goods, data, and technology. This renders it much more attractive to institutional investors compared to the older approach of just buying teams and then hoping for their value to increase.
For Rattan, the intersection of sport, health, and longevity has particular relevance. It is no secret that elite sportspeople have always been able to use advanced diagnostics, recovery methods, biomechanics, nutrition, and performance medicine. Many of these techniques are now finding applications in general preventive healthcare.
“Many of the things we do today in the realm of longevity can be said to be based on the implementation of concepts used in elite sports settings for a broader demographic group.”
The Berkeley effect
Berkeley also continues to figure in this narrative. Rattan keeps his connection with the university and sits on the steering committee at the Haas School of Business. He says that it was an environment where the worlds of technology, academia, entrepreneurship, and competitive sport were quite close together.
Several decades down the line, that combination seems more pertinent to the realm of investments. Artificial intelligence is entering healthcare. Medicine is becoming predictive. Sports is becoming more analytical. Universities continue to serve as vital points of convergence between basic science and financial capital.
“You want to spend time with people who are thinking about what becomes possible next, not just what can be financed today.”
The long game
The lesson that has lasted the longest time in terms of the sporting experience of Rattan is probably that of time. A tennis match changes very quickly. Momentum comes and goes. The early leader may not be the winner.
It happens with business careers too. Rattan’s career has changed from being in the banking sector to entering the entrepreneurial venture of Terra Invest via a number of market cycles. The key factor has not been any single asset class, but rather a capacity to keep learning and entering the fray.
“In business and in sport, you have your good days and bad days. Neither give you the whole picture. The important thing is whether you can bounce back with the same curiosity, the same discipline and the same desire to play the next point.”
For someone whose professional life revolves around thinking about the future, it is one of the oldest lessons in his arsenal: play the point in front of you.
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