We talked to Francisco Hernández Parga of Menhir about Distressed Debt, and he had the following to say:-
First of all, how are you and your family doing in these COVID-19 times?
Francisco Hernández Parga: Thank God we are all well. The pandemic has not hit us, but I hope this goes away as soon as possible so the world can recover its natural way of doing things; otherwise, we can get used to this impersonal approach to personal and business relations.
Tell us about you, your career, how you founded Menhir.
Francisco Hernández Parga: When I was a kid, I always loved to visit the cockpit when flying; I was amazed by those giant metal cigars with wings that could fly so “easy.” Hence, I studied Aerospace Engineering, found out that it was not so “easy.” In my first year of university, I decided to create my first startup: CheckApp (failed). Then I went into stock trading to recover financially, but after some months of profits, I was unhappy as I was not creating any value, I was just looking at three screens with indicators and trading WTI and Brent Oil, so I stopped trading. My next startup was Kibiwoo, a ski, surf, and bike rental marketplace to rent from trusted shops. My cousin and I spent two amazing years building it, but we ended up closing, he flew to Chicago for his MBA, and I started working in Strategy Consulting at Alkemy Digital, where I had an incredible boss and CEO who taught me how to execute and get things done. I owe them so much for taking the time to teach me! Later on, I left to create Arextech as Co-founder and COO; after a year and a half, I sold my shares due to a breakup with my cofounder, and this leads to today that I’m involved at Menhir, where we bring Quantitative Investing to the Distressed Debt asset class.
How does Menhir innovate?
Francisco Hernández Parga: Silicon Valley has flying cars, Wall Street has spreadsheets. We craft AI algorithms that act as a digital portfolio manager. As humans, we make biased decisions, and special situations are an asset class where we see incredible bid-ask spreads, fund returns, and incredible deviations. This can be solved by bringing the algorithmic trading way of management to this asset class.
How the coronavirus pandemic affects your business, and how are you coping?
Francisco Hernández Parga: Sadly, the pandemic is going to take down a lot of SMEs, and I hope governments start making better decisions than those that led us here. Countries like Australia and New Zealand are doing a great job, and I wish the rest start copying them. In terms of opportunities, we will see more distressed operations, so this can be “good” for us in a sense, but the whole Zoom-meeting experience is doing a lot of harm in terms of B2B sales. It is not easy to close deals as a B2B company delivering such a specialized product. We’re trying to solve this problem by bringing-in advisors with great connections that can lead to high-value sales.
Did you have to make difficult choices, and what are the lessons learned?
Francisco Hernández Parga: I think cash is king. We had the opportunity to raise VC money, and we didn’t in order to remain a bootstrapped company, but as we needed a bigger team, we saw an amazing talent that we couldn’t hire. I think the slowdown in B2B sales has forced us not to hire some of the best talents in the world.
How do you deal with stress and anxiety? How do you project yourself and Menhir in the future?
Francisco Hernández Parga: Tough one! Combine a pandemic with creating a startup and getting married in 7 months! It is vital to have shutdown routines to unplug from work and know your flow triggers to engage undistracted working time. Schedule time for meetings, block the same time every day, time for deep work, time for sport, and time for personal stuff, and the most important part: stick to it. Shutting down notifications has lowered my iPhone screen time from ~4h to ~1h and has increased my focus ability a lot. I think the biggest enemy of companies and executives are attention thieves, and in order to protect our businesses, our relationships, and ourselves, we need to take care of how we use our available focus.
Who are your competitors? And how do you plan to stay in the game?
Francisco Hernández Parga: Accenture, KPMG, Alantra, and other advisory firms could see us as a threatening boutique focused on Distressed. With a smaller headcount, we can achieve great results, but I see them as potential partners to implement our solution. We are not a KPMG substitute to perform Due Diligence, but a partner that provides key insights about the portfolios that are being analyzed.
Your final thoughts?
Francisco Hernández Parga: I wish the best to all entrepreneurs surfing this pandemic. Remember, we are first humans, don’t get lost in work and look at things with perspective. I recommend reading and studying other times in history where stuff like this has happened. Analyzing the pandemics and other crises can predict the most probable outcome and stay ahead of the events.
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