Running with the Bulls and 7 Questions with Pat Scheper
Question 1:
Is it true that you’ve “run with the bulls” in Pamplona, Spain?
Pat Scheper:
I did! It was actually 10 years ago this summer. It was a bucket list trip for sure. It's something that I had wanted to do ever since I got out of college and read “The Sun Also Rises” which popularized the Festival of San Fermin and the bull run. I become obsessed with the idea of going and doing it.
My wife and I wanted to take a trip abroad, so we put together this big trip to Spain for a couple of weeks.
She said, “I support you doing this, but you have to do it before we have kids!”
It was a ton of fun. The festival goes for seven days, and the bulls run each day. You can't totally mitigate risk out there. There is an element of danger, and the bulls are uncontrolled, but you're in a crowd. You're only really beside one for, at most, a few seconds, maybe 20 seconds. It's pretty exhilarating.
Plus, we were over there when Spain won the World Cup. We were in Pamplona when they beat Germany in the semifinal. That was pretty cool—one of the world's greatest parties.
Question 2:
Where did you grow up?
Pat Scheper:
I grew up in Westminster, Maryland, which is about 40 minutes west of Baltimore. But I generally tell people I'm from Baltimore. It’s the general area where I went to high school. Later, I went to college at Virginia Tech and studied finance.
Question 3:
Why did you study finance in college?
Pat Scheper:
I really liked math, and I started out as a math major. But then, they stopped using numbers and started getting into a lot of theory, which is fun. But, by that point, I thought, "Wow, the career tracks ahead of me are coding or computer programming or becoming an actuary.”
So instead, I took a finance track, and here I am, working with companies that provide technology for actuaries and insurance companies.
I really liked numbers and applied math, but the career tracks ahead of me just weren't akin to what I was looking forward to doing. I was looking forward to getting into the business world. Finance was an easy extension and blended two passions: a love for numbers and looking at things that are concrete from a mathematical standpoint, but also the interpersonal side of business.
Question 4:
What do some people think a venture banker does, and what do you actually do?
Pat Scheper:
A lot of people hear venture banking and confuse it with venture capital and think that we're the “equity guys,” which we are not. Or they put that all together and think we're investment bankers—which, again, we are not.
Venture banking is senior banking. We offer commercial banking products, just like Live Oak does for entrepreneurs of all flavors, and what I like to call “Main Street” entrepreneurs and small businesses throughout the country. We just focus on a different type of entrepreurial company, namely high growth, innovation economy companies.
We provide senior loans to those types of companies where they first have raised venture capital on the equity side. Then we provide loans to complement that equity, extend runway, and provide additional growth capital. Our risk is then, in part, mitigated by the venture equity and their support.
I really like the analytical and mathematical side of venture banking, and the personal relationship and interpersonal piece of it.
I take the company, look at its numbers, its historical performance, its pro forma, and get behind all that. Then there's the whole relationship angle with the management team and the venture firm where you have to assess commitment, conviction, the story behind the company, and it goes beyond the balance sheet.
Question 5:
What do you or Live Oak think about AgencyKPI?
Pat Scheper:
First of all, institutionally we love AgencyKPI. A number of folks here have gotten to know Trent and Bobby really well. It began with Kelly Drouillard in our insurance vertical. She's known Trent for a long time. He got introduced to Huntley Garriott, our president. Then Huntley and Kelly introduced Trent and Bobby to me and my team.
We love the team, and we really like, in general, the story of what you guys are doing in providing innovation to a space that really hasn’t seen a lot of innovation.
Insurance is one of the oldest businesses or business models in the world. It goes back pretty far, ever since human beings were able to quantify risk, and say it's more than just the “will of the gods." Or nature acting randomly.
At some point we became able to assess risk and we did two things with that. We played. We weighed games of chance and gambling where you could benefit from taking risks. But then we tried to mitigate it too. The idea of providing insurance or risk mitigation goes back really, really far. There's evidence of it back to Babylonian and prehistoric times, where trades were mitigated, and losses were mitigated. It's a very old industry that has continued to evolve, but, like all longstanding industries, whether that's banking or insurance, or manufacturing processes that have been around for a while, they're all ripe for disruption and innovation. By the way, there’s a great book on this topic called “Against the Gods: The Remarkable Story of Risk” which I highly recommend. It really helped inform my thinking on this topic.
AgencyKPI, in general, is creating a lot of efficiencies that should make the insurance world better. We like how AgencyKPI is innovating on the backbone of things and creating efficiencies that should benefit a lot of large players in the space and be on the forefront of innovation in a very old industry, that's ripe for innovation.
At Live Oak, we like innovation in the finance space. Insurance is part of that and tangential to to it. We just think what you guys are doing—innovating for people that probably aren't seeing a lot of innovation while everyone's focusing on the next big consumer play or front-end insurance—is really interesting.
Question 6:
What is Scheper's Peppers Hot Sauce?
Pat Scheper:
I love hot sauce. I always have a bunch of bottles in the pantry, so I decided a couple of years ago to start making my own.
My dad's a pretty good cook and he has his own garden. He brought some peppers down, and we got a couple of recipes and started experimenting.
I've got a couple of different recipes that I have honed in and perfected, and now I have my own labels for them.
I do it just for fun. I label them and have shrink wrap tops so it looks really official and then give them away for fun gifts. People usually appreciate the effort that went into it. I like to think the sauces are pretty good. I get decent compliments on them. They're pretty hot. They're for people who like heat and the hot part of hot sauce, but I think they're both really flavorful too. It's not just heat for heat's sake.
It's not uncomfortable, where you can only put just a little dab on, or you wouldn't be able to eat anything else the rest of the day. It's spicy. It's not novelty kill-your-taste-buds hot. I make one with habanero, and the other one I make with ghost peppers and other ingredients.
It's just a fun hobby. I just do it on the weekends when I get some time. I've got two kids that usually keep me busy. When I get a few hours, it's a fun thing to do. Little Zen moments…I’ll just dial in for an hour or two, make a batch, and then my wife, Chrissy, usually helps me bottle it.
Question 7:
Are you any good at Monopoly? Why or why not?
Pat Scheper:
No, I'm impatient. I'm impatient. It takes too long. No, I can't do it. Also, I don't like to cheat. I'm not saying I'm the highest standing moral character of all time, but I feel like with Monopoly, you have to be really patient, or you have to cheat. I don't love either one of those things. So I just don't play it.
