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What Was Curt Schilling Thinking?

Posted by Larry Doyle on June 26, 2012 5:20 AM |

Investing, in general terms, evokes a sense of hope and excitement of steady growth and longstanding positive returns.

These emotions are accentuated when it comes to investing within the realm of venture capital. Not that making enormous and outsized returns within venture capital is to be expected, but the dreams of such are not uncommon. If it were only so easy to make these dreams come true.

To those wading into the waters of venture capital, I would say WAKE UP and BE VERY CAREFUL

Venture capital investing is a very high risk/high return undertaking. While the allure of the high returns can be captivating, the focus should be on the high risk. The first and most pressing questions I would entertain are: what is my downside and how much might I lose if the enterprise goes bust?

Against this backdrop, and for those who have heard about the recent VC experience of former baseball great Curt Schilling, I ask: “What the heck was he thinking?”

Schilling himself admits that his entire baseball fortune has been blown by the failure of his company, 38 Studios, which is a video game enterprise based in Rhode Island.

Curt Schilling was a tremendous competitor on the baseball diamond. Longstanding Boston Red Sox fans love #38 for delivering the first World Series back to Boston in 2004 after an 86 year hiatus. Schilling amassed a tidy 8 figure fortune over the course of his illustrious career. As such, if properly managed, Schilling could have and should have been able to take care of many generations of future Schillings and provided significant philanthropic help to whatever charities he preferred along the way. Those realities will now seemingly never happen.

Did Schilling employ any financial advisers? Where were they? Did Schilling’s own ego override those who may have cautioned him from literally risking his entire financial well being in this company?

There is a very real lesson for all of us in Schilling’s financial demise. Whether investing in venture capital or another high risk investment, ask yourself: 1. how much might I lose, and 2. if I lose that, how will it impact my overall financial standing. Assume you will lose it.

NEVER PUT ALL YOUR EGGS in ONE BASKET!!

This very simple piece of financial advice is overstated BUT often not properly implemented. Curt Schilling might go down in history as one of the greatest clutch pitchers of all time. He will also go down in history as a glaring example of how NOT to manage one’s money.

I thoroughly enjoyed watching Schilling compete on the field. His off the field experience evokes a simple sense of gratitude. We should all thank Curt Schilling for highlighting that total loss and failure can happen to anybody who does not practice a very real and rigorous investing discipline.

Not to be callous, Curt, but “Strike 3 . . . yer out!!” To everybody else in the stands watching this nightmare unfold. . . NAVIGATE ACCORDINGLY!!!

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Ron Larson

    Another baseball business “genius” who blew it.. Lenny Dykstra. Now in prison for his business antics.

    The sad part was, he was doing good. He had bought a very diverse portfolio of businesses in L.A., including a successful high end car wash, real estate, fast oil change shops, etc.

    He decided he was a financial genius and decided to sell his expertise to other athletes with more money than brains. That was his downfall.

  • Bill

    As another famous performer in a different venue said, “A man’s got to know his limitations.”

  • BC

    I’ve been especially enjoying your recent commentary – particularly pointing out the Michael Burry commencement speech.

    Re VC investing, I think there’s another element that Shilling (and others) don’t understand. Personally I’m very skeptical of the VC industry – I think they foist money losing businesses on the public via IPO more often than they give us companies that really have any potential to create value. Part and parcel of this process is the symbiotic relationship between VCs and banks. Because these IPOs are typically of crappy companies that trade on hype rather than legitimate expectations of cash generation, limiting the supply becomes key (very similar to the Chinese capital markets).

    So if your average 8-figure guy wants to bankroll a startup, he’d better make sure it can become sustainable on its own without needing to IPO. You’re not going to get a bank to IPO one of these companies unless you can convince them that they can turn to you a few times per average year for more product. And the VCs certainly won’t want to make room for you at the table, so all in all, don’t bankroll tech startups with thought they’ll IPO.

  • Peter S.

    No bloody sock controversy here. Who said prolonged video gaming doesn’t alter self-perception.

  • phil

    What Was Curt Schilling Thinking?

    he wasn’t.






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