Character Trumps Economics

Jeremy Giffon shares insights from his experience at Tiny Capital about the importance of prioritizing character assessment over deal economics when acquiring businesses. He emphasizes how greed and attractive numbers can blind you to obvious red flags about people's character, often leading to costly mistakes.

Key Points:

• Character Red Flags:

  • Flashy behavior is almost always a bad sign
  • When multiple experts and friends express concerns about someone's character, take it seriously
  • Small behavioral indicators (like seeking drugs during business meetings) can signal larger issues

• Deal Blindness:

  • Attractive economics can create "blinders" that make you ignore obvious warning signs
  • The better a deal looks, the more critical it is to scrutinize character
  • People often ignore red flags "for greed reasons" when deals appear too good

• Lessons from Bad Deals:

  • Dishonesty usually shows up in small ways before becoming a major problem
  • Lost money on deals where they ignored character concerns
  • Even when others warned about character issues, the attractive economics made them proceed anyway

• Best Practices:

  • Listen to feedback from trusted network about potential partners
  • Don't let attractive numbers override gut feelings about character
  • Pay attention to how people treat others and handle small interactions
  • Be willing to walk away from good economics if character is questionable

• Recovery Strategy:

  • Minimize initial investment when character concerns exist
  • Keep deals small when testing new relationships
  • Be prepared to lose everything if character assessment proves wrong