Interview with Julie Won (Startup Finance)

As a member of the Girls Innovate!’s Teen Committee, I had the opportunity to work with Celina Chow, my co-Project Leader, to organize the second installment of Girls Innovate!’s exciting Intro to Startup” Series for girls!

This second workshop is called “Startup Finance Basics” and will be held on Sunday, March 9, 2013 at the lovely offices of Cornerstone Research in Menlo Park. The guest speaker will be Julie Won, a partner at investment management firm, Hanson & Doremus (who also happens to be one of our sponsors).

Julie will help girls explore the basics of a company’s finances. Participants will learn about how companies maximize profit, how companies get funding for their activities, and how to distinguish better companies from lower performing ones.

We always try to interview our speakers ahead of time, so that you get a chance to “meet” them before the event. I learned a ton from this Q&A with her and hope you will, too!

Julie Won

Julie Won runs Hanson & Doremus’ Palo Alto, California office and focuses on investment research and portfolio management. She worked with the firm between 2005 and 2009 and then ran her own money management firm in Palo Alto before rejoining Hanson & Doremus in 2013. In addition, Julie has in the past worked with institutional investors at Citigroup’s foreign exchange group in New York and a national economic policy think tank.

Julie received her undergraduate degree from Harvard University, an MBA from the Stanford Graduate School of Business, and a Masters degree in East Asian Studies from Stanford. She earned the Chartered Financial Analyst designation in 2008 and is a member of the San Francisco CFA Society.

Question #1: Some may think finance is dry and unexciting. What makes it, for you, the subject on which you can spend hours and hours everyday working?

Oh yes, I get it — finance does not seem like the most exciting thing in the world for a lot of people.  If you are thinking about looking at balance sheets and income statements all day or pondering interest rates and foreign exchange rates, this may strike you as being quite boring.

But finance, economics, and the world of investment present a set of tools that allow you to think about much more interesting questions like: Why is this company unhealthy?  What is this company going to have to do to get to the next level?  How can we get more people employed in jobs they like?  What are the implications of slowing population growth in developed countries?  How are high economic growth rates in countries like China going to affect the way I live and the way I will have to compete?  Just how dominant is Coca-Cola in the world of soft drinks?

I am an investor and a big part of my job is to look at hundreds of individual companies close up.  It’s not that I love looking at balance sheets and financial statements for their own sake.  It’s that understanding those statements helps me to understand what a company is all about — how the money comes in and goes out, what its strengths or weaknesses are, how fierce the company’s competition is, and where the company might be headed in the future.  The fact is that having a financial skill set is a stepping stone to solving some really interesting problems and thinking about bigger-picture and open-ended questions.

Question #2: Was there one defining moment in your life that you could point to when you decided “I’m going to be an investment manager”?

No, there wasn’t a single defining moment.  It took me a long time to find the work I love.  I’ve had different kinds of jobs in the world of finance and economics.  I worked on macroeconomic policy research for a while and I also worked on a big trading floor where big names would call in to exchange really big sums of dollars for Japanese yen, or vice verse.  It was a high adrenaline type of job, but in the end not for me.

Fortunately, I fell into investment as I practice it now through luck and circumstance, and I was able to find out what a great job it was.  At one point, I realized that my job was really just to read and read and explore all the great ideas inside and outside of the world of investment and then to think and think without too much of an agenda.  That’s when I realized, “Wow, how lucky am I to have this job?  Nothing could be better than this!”

I was fortunate to meet mentors who taught me a lot about what it takes to invest other people’s money and to really take care of it.  I learned two really important things.  One is that you can be quite successful as an investor by doing things that most other people cannot bring themselves to do because for different reasons, they just cannot think outside of what they see their neighbors and everyone else in the news is doing. That is, if you just think differently from most people or think a little bit longer-term, or are able to step outside whatever the current fad or frenzy is, you can do much better than average as an investor. The other thing I learned is that people do very silly things with their money because it’s naturally human to panic or get greedy or complacent, but not so natural to be rational in times of stress or giddiness.  If you can be just be a bit more rational and less emotional than average, that puts you miles ahead.  So I think at some point, I realized that I enjoyed doing both of these things and that since it was hard for others to do, I thought it might be worth something.

Question #3: What school subjects and skillsets or mindsets help prepare for a successful career in finance?

There’s no one answer for this because finance is such a broad domain that there is room for many kinds of people.  For quantitative traders or modelers, the profile is that you have an advanced degree in statistics or physics some other quantitative discipline that allows you to model.  If you are an accountant or a CFO, then you might be detail and planning-oriented and have the knack for organizing a lot of fine-grained information in your head while also being able to look ahead and think strategically.  If you do the kind of investing I do for a job, I actually think the most important thing is to be a curious, open, original thinker, and — believe it or not — having a strong liberal arts education may be the best preparation for that.

No matter what, for all jobs, emotional intelligence, being able to relate to people and what they care about, and being able to communicate well are key.  You just cannot get too far in any job without these qualities.  The other things is you must be highly ethical.  These are the things that are required for every job.

Question #4: What is startup finance? How is it different from other areas of finance? What would be the best preparation for someone who wants to be sure that she is prepared to run her business in a financially-sound manner?

Startup finance, as we’re looking at it, is knowing the financial basics to be able to write a realistic business plan and run a business in the early stages.  You do not need to be a finance expert.  But you do need to know if your projections for revenue and expenses are realistic.  You need to know how to look at your income statement after someone prepares it for you.  You need to know what that statement is telling you about how things are going.  And you need to know how you will be financing your venture.  Will it be debt or equity?  If it’s debt, how much debt can you take on?  If it’s equity, how do you take a stab at understanding what your business is really worth?

Question #5: What do you hope girls would take away from your workshop that relate to their lives and future generally, not just in the context of starting a business?

One thing is that I hope girls start to see finance as an important tool for doing interesting work.  If some find it interesting in itself, great!  But if not, I hope that all the girls start to see financial tools as important for doing the things that they think are important.

More than that, though, I hope the workshop just gets girls thinking about money in their own lives — how it gets made and how it gets spent — because that’s going to affect everyone in profound ways, and it’s not something that gets taught very well or that we’re forced to think about too much in middle school and high school.  The earlier you start thinking about money and finances, the better.

Question #6: What made you agree to do this workshop for Girls Innovate!? In preparing for the workshop, what challenged you the most (if anything)? What personal qualities or skillsets did you bring to bear to overcome them?

The main reason I’m doing the workshop is that I really love Girls Innovate! and support it wholeheartedly.  I feel fortunate that I’ve been able to be involved with the group over the past year-plus, and I love that it is an inclusive organization — that anyone with the will or interest to make something happen can be supported to make it happen.

The main challenge in preparing the workshop has been thinking about how to make it interesting and relevant.  As your first question implied, finance may not be the most interesting thing for girls.  The other challenge for me is striking the right tone with the audience.  I’m used to speaking with financial analysts and adults who are in the general public, but not so experienced with middle school and high school students.  I think that will be tough.  I have a 13-year old daughter, so I know that students know a lot.  They are highly intelligent, so you can’t oversimplify things.  Yet you can’t bog them down with detail either or talk in the way that I would talk to another analyst.  It’s going to be interesting.

I’m not sure if I’ll be able to overcome these challenges.  We’ll just have to see, and I hope you’ll bear with me as I give it a try!

Question #7: Who are some of the people who have influenced you the most? This includes people you know have known personally, those whom you have read about, and those whom you have read.

There are too many to go into great detail here.  I’ve had some great teachers from middle school to grad school in different subjects who encouraged me to dig deeper into the things that really interested me.  I was an art history major in college and learned a lot about the world through that discipline.  I guess I should mention I also had an athletic coach who taught me a lot about being tough, having a good work ethic, leading by example, and always being mindful of the team and how my performance would affect everyone else’s ability to be at their best.  And as I mentioned earlier, I had a great investment mentor who taught me that being a great investor meant being a quiet thinker, a contrarian who was willing to step up where others will not, and above all, a humble person — because we surely make many mistakes..

As an investor, I have been influenced by the writings of many  – Benjamin Graham, Warren Buffett, Seth Klarman, and Howard Marks, Jeremy  Grantham, among many others.  And since I’m a reader, I’ve been influenced by many books well outside of investment too– on human behavior, Chinese history, and also  by a lot of fiction.

Question #8: Where did you grow up? How would you describe your growing up experiences? How do you think your parents influenced the person you’ve become?

I was born in Harrisburg, Pennsylvania, and I grew up in that area until I went to boarding school in New England when I was 14.  My parents were Korean immigrants, and though I don’t think I could ever match their drive and toughness, one of the great gifts I got from them was that I got to observe those characteristics and learn from them.  Of course, when I was growing up, I didn’t fully appreciate these things, and I’m sure I would have been better off had I understood them earlier.  But now I know that my parents were truly extraordinary.  My father lived in total poverty in Korea, squatting in an abandoned building after the war, and studying like crazy while working multiple jobs.  It was so cold in his abandoned house that the ink in his ink well would freeze, and he just would keep going, using the flame of a candle, his only source of light, to turn his ink back into liquid and keep studying.  Like that, he put himself through high school, then college, and then medical school.  My mother didn’t have it quite that rough but if anything, she was fiercer.

But I was fortunate to grow up in a middle class household with plenty.  We grew up with books all around us and a love of learning.  I had an older brother and sister and a younger brother who were a lot smarter than me and taught me about all kinds of ideas that I probably wouldn’t have been able to learn on my own.

When I got to boarding school a lot changed.  In some ways, I was on my own — but maybe it was not so very different from other high school kids trying to make their way in a new world.  I’m just really grateful that I got all the chances I got.  Going to the good high school and college that I went to just made me an incredibly lucky person.

Question #9: What inspired you to run your own investment management firm? What were you most proud of and what would you differently if you were to do it again?

When I opened my own investment firm, I guess I thought I knew enough to do it all on my own, and I also knew that I had strong beliefs about how certain things should get done.  I knew I couldn’t go to other firms where I would disagree with their ethics or their investment practices.  A lot of people told me I was foolish for going out on my own, and in a lot of ways they were probably right.  But I guess what I am most happy about is that I had that experience of going out on my own and that I now know I can do it.  That’s invaluable to me — knowing that I could handle all of those investment challenges, make clients happy, and at the same time do the compliance and paperwork and the thousands of other business pieces that have to get done.  What would I do differently?  I’m not sure if there is anything big I would do differently, but there are a lot of little things I know more about and could handle differently.  I’m most proud of having made it though 2011, a very lonely and difficult investment year for me, just fine.

Question #10: How did you decide to partner with Hanson & Doremus? How would you describe what is special about your firm and the value you bring as an investment manager?

Well, we have a long history of working together.  I worked at the firm in the mid-2000s, and I learned a lot from Eric and Anne, the two other partners there.  When I ran my own firm, I also worked with the firm to collaborate on securities research, and over time it seemed to make sense for a lot of business reasons to join together.  Eric and Anne are both distinctive investment thinkers who come up with a lot of ideas that don’t come up elsewhere.  We have a compatible investment style, and we share beliefs about how clients should be treated well, but we also think differently enough that it’s valuable for us to bring our different opinions to the table.  We each have different strengths.

I think what makes our firm different is that we’re small enough that people can call us and know everyone who answers the phone, but big enough to get some really good investment thinking into their portfolios.  I’d say our firm is a combination of distinctive original thinking and personalized service all in the neat package of a small firm.  People can trust us to do the thinking for them and know we’ll bend over backwards to do the right thing for them.

Question #11: Do you have any final thoughts you would like to share with the Girls Innovate! community?

Just to think big, keep learning, and keep doing all the great things you’re doing.