Red Notice by Bill Browder is a must read for anyone interested in the world of finance, hedge funds, and Russia’s power structure. If you want to learn how secretive and corrupt Russian politicians and oligarchs can be, this is a fascinating yet tragic true story.
Regarding Red Notice, Andrew Sorkin of The New York Times stated that it’s “Part John Grisham-like thriller, part business and political memoir.”
Couldn’t have said it better myself…
Bill Browder was the former American founder and fund manager of Hermitage Capital Management. He started it with nothing and grew the hedge fund into one of the most successful foreign investors in Russian history.
Browder is an interesting fellow with untraditional roots for someone who became a titan in the world of finance and a regular at the World Economic Forum in Davos. He grew up in a family of American communist supporters. In fact, Browder is the grandson of Earl Browder, a man who once led the American Communist Party. Early in the book, Browder jokes that he became an American capitalist hedge fund manager just to rebel against his family.
Entrepreneurs will thoroughly enjoy this book as it demonstrates Browder’s tenacity to succeed, his moments of humility, triumph, and perseverance.
The Entrepreneur Fund Manager
Browder knew he needed a contrarian approach to investing if he was to differentiate himself just a few years into his hedge fund management career. And back then, everyone in his industry was betting on America, therefore driving valuations to astronomical levels and taking out much of the investment upside. So, like all great entrepreneurs, Browder thought radically and outside the box.
Taking an unconventional approach to fund management back in the 90s, Browder took a huge risk and bet it all on Russia during the Yeltsin years, a time when the country’s future was arguably more uncertain, and less understood, that it is today.
Four Things Learned After Reading Red Notice
Misfits often make great entrepreneurs: It pays to be a disruptor in business. As youths, our entrepreneurial spirit often emerges in disruptive/unappreciated forms (i.e. mischief and challenging authority – disrupting the status quo). While this can create headaches for parents, it can also be a sign of great things to come for a youngster if that energy and attitude are channeled correctly…
Browder was no exception to this rule. He was sent to boarding school, eventually leaving because he wasn’t fitting in and got into a brawl. He wasn’t necessarily a troubled youth, but trouble had a way of finding him in his youth because he liked to challenge people.
Browder was a believer in himself from day one. And little did he know in his teenage years when he was getting into fights and chasing girls, that confidence would serve him well when going toe to toe with Vladimir Putin decades later.
Entrepreneurs don’t make good company men: Out of University, Browder, like all students, sought career advice. He was advised to join one of the top firms in the world of finance. He followed that advice, and at every turn when he tried to get creative in the types of deals he wanted to help finance (which was his job), the power structure came down on him, road blocking any unconventional ideas. This frustrated Browder to no end because he saw an opportunity to make unmatched returns for the firm.
Naturally, this stonewalling took a toll on Browder’s energy and enthusiasm for the fund management business. Self-doubt began to creep in for the first time in his life.
Just before losing all interest, Browder, by necessity, went out on his own, and that’s when his world changed forever. He went from being tied up in a cubicle to jumping on planes and raising money all over the world. Once Browder went out on his own, exciting things almost immediately began to happen. He was an unleashed entrepreneur.
Political risk is the biggest risk to foreign investors: Whether you’re investing in a mine in Peru or an oil & gas producer such as Gazprom in Russia (which is exactly what Bill Browder did with Hermitage Capital), your greatest risk investing in foreign countries is political – especially in nation’s with a history of nationalization, defaults and currency crises.
For a while, Browder’s interests aligned with then new President of Russia Vladimir Putin. This temporary alignment helped Hermitage’s ROI for its investors. But once Putin’s interest turned self-enriching, Browder was in a world of hurt… I’ll leave it at that so not to spoil this incredible story.
Naivety can help you make a fortune but also cost you dearly: Naivety is a valuable characteristic sometimes, especially when starting out as an entrepreneur. If you aren’t aware of the potential challenges and threats that could come your way, you’ll stay focused on the goal and approach the day fearlessly. Being green, I think, helped me launch my first business with great success. There’s a saying regarding entrepreneurship about this very subject: “If people knew how much work and struggle it takes to succeed at building a business, they’d never become an entrepreneur.”
I think that rings true in many instances; it certainly did for Bill Browder when he decided to become the first American hedge fund in Russia…
Browder could only see the upside potential in Russia. He saw how low valuations were for Russian companies compared to their American counterparts, so he pursued investment in the country fearlessly. That resulted in monster gains for early investors in his fund. He turned millions into billions and was recognized across the world for his ability to garner massive profits. However, there was a reason no other American funds were operating in Russia. The political risk was massive. And Browder ended up finding that out the hard, painful and tragic way. What happened to his friends, family, and company in Russia forever changed him.
Red Notice, the story of Bill Browder’s rise to the top of the hedge fund world, is a fascinating read about corruption in business and politics in Russia. It certainly casts Vladimir Putin in a villainous light and speaks to the dangers of those who go against him in Russia. Bill Browder is an entrepreneur turned civil rights activist because of the torment and struggle he endured as a hedge fund founder in a country that is still very much run by a king.
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