Coffee Break With… Lucio Di Ciaccio

by Gianluca D’Andrea and Martina Doveri

We had the pleasure to end this academic year by interviewing Mr Lucio Di Ciaccio who undertook quite an amazing journey from Aerospace Engineering to The Carlyle Group, eventually joining SoftBank Vision Fund where he is currently working. #GetInspired

1) First of all, thank you, Mr Di Ciaccio, for joining us for our ‘Coffee Break with…’. Would you like to start with a brief overview of your professional and academic background?

Good afternoon and thank you for inviting me to be part of this initiative. I’m an aerospace engineer by training. In the Fall of 2010 I enrolled at the University of Rome, La Sapienza, and I got my Bachelor in Aerospace Engineering in the Spring of 2013. After that I moved to Imperial College London where I received a Master of Science in Advanced Computational Methods for Aeronautics, and then I ended my studies at MIT where I was awarded a Scientiae Magister in Aeronautics & Astronautics – there I was also doing research in the Uncertainty Quantification and Computational Design Laboratory. All of this took me around five full years and then towards the end of 2015, I started at The Carlyle Group. After a couple of years I left Carlyle and moved to SoftBank Vision Fund, where I’m currently working.

2) Wow, an impressive track record! It seems a quite unique career; I guess there aren’t many rocket scientists in finance, what brought you there? Can you tell us the story from the beginning?

Yes, I know, it isn’t a very common path – I get asked this question a lot! Ok, starting from the beginning, I come from a quite poor suburb of Rome, I didn’t have any friends or relatives working in Finance and, as a consequence, I didn’t have any idea or understanding of the financial world. I have always enjoyed challenges, and I’ve always found research fascinating. Consequently, when I was in high school, and I had to select what to study I looked for a field that was challenging, where I thought there was still a lot to discover and where there was a practical angle as well. Aerospace Engineering suited that profile well. I found studying engineering extremely fulfilling; I still remember the pure excitement I felt when I received my acceptance letters for MIT and Stanford which were my dream schools – I spent 15 minutes jumping around my room. I’ve since realised that research has become so advanced that to make a meaningful impact today you need to heavily focus on very granular aspects of a field and go very deep. While doing this, I felt I was losing sight of the big picture, and I started considering if there were something else I would enjoy more. I met a lot of people from various industries – you can’t imagine the number of people I emailed/cold-called! After all these conversations I developed the view that investing would be something I would enjoy. The two key aspects I’ve always found fascinating about scientific research are that it incorporates independent learning and is very challenging – to discover something new you need to absorb everything that has been done before on that ‘problem’, but you also need to look at it from a different angle. This is something that I also found in investing. Let me give an example. Imagine you are looking at a company, for argument’s sake let’s say Apple. A lot of other people are looking at Apple as well and have developed a view – let’s put aside luck and market inefficiencies for a second – which determines the current market price. For you to make a good investment from it you need to have found, through your research and analysis, an angle that the other side doesn’t see or doesn’t believe in – one of the two of you is making a wrong decision in selling or buying. Moreover, to be a good investor, you need to continue your research. Imagine investing in a space like Cybersecurity, which is continuously evolving; you need to have a market view and continually keep yourself up-to-date. This is very a simple example but, hopefully, broadly explains the reasons why I found in investing many of the characteristics that I enjoyed in scientific research. Finally, I liked the fact that you see the impact of what you are doing and, in some cases, you can take a more managerial role as well (e.g. when you sit on the board of a fast-moving company like Uber, a lot of crucial decisions need to be taken). Therefore, once I developed my “thesis”, i.e. the fact that investing was a good fit for me, I looked for an internship in a perfect place to validate my “assumptions” and to learn to invest from the best investors out there. Carlyle was definitely a good fit.

3) Very interesting, it seems your experience at Carlyle was a key part of your development, could you tell us more about that? How did it all start?

Everything started with an internship. Carlyle isn’t known for internships; usually at a junior level they hire the top people from leading investment banks, so they arrive already with good financial training. However, they decided to trial an internship program where the idea was to get four or five good interns and give at most one intern an offer for a full-time position if they felt that there was someone that really deserved it. I got lucky, I was selected for the internship program and started enthusiastically but without even considering the possibility of being hired afterwards. Among the interns I was the only one without prior investment banking or financial experience; all I knew were the few things on accounting and corporate finance that I read in my spare time while at MIT. When I started, I definitely had the most scope for improvement, but then there was a learning curve and one of the good things about Finance, from my perspective, is that you get to the point where you can show if you have something extra a little earlier than in other, more scientific, disciplines. I ended up getting the job offer, and I started a few months later. I was elated – I loved the job, and I loved the team. In my two years there I got lucky because I ended up in several successful transactions from pure equity or debt trades to buyouts and loan-to-own investments. I was also given a lot of freedom to scout for new deals in my spare time, and I sourced a deal that then became the first investment of our new fund. That project went very well, exit IRR was above 50%, and it gave me a lot of credibility internally given I lead the sourcing, underwriting and management – it was a very exciting time.

I’ve had the good fortune to go to fantastic universities and meet incredible people in my life, but I struggle to think about another period where I learned as much as I did in the two years I spent at Carlyle. The team was truly outstanding, and everyone was really friendly, supportive and generous with their time and knowledge. At the same time, there was a healthy focus towards “quality not quantity”, which meant the core of our time was spent only on developing a view and a thesis on the target and on the market.

4) I’m sure you left a good memory of you there! Given you had a great time at Carlyle so why did you move to SoftBank?

Yes, as I mentioned before I was very happy at Carlyle; I loved the team, and I highly appreciated and valued the trust they had in me. I still catch up with them regularly – I had drinks with one of my former MDs just a few days ago. There were a few reasons that led me to the decision to move to SoftBank: 1) at Carlyle I wasn’t working on high-growth tech companies and, given my background, I liked the idea of being a little bit more involved in investments in new technologies, 2) I think that analysing a tech businesses (e.g. think about a company offering cybersecurity products) often requires a little bit more technical/scientific knowledge than analysing, for instance, a standard auto manufacturer. Therefore, I thought it would be beneficial to start accumulating that knowledge when I was still 26, given I believe that 10-15 years from now the percentage of companies that have their technology as a core part of their value will increase. Consequently, I thought this was an opportunity that would also give me an advantage in the future if, for instance, I end up working in a firm with a different investment strategy. 3) I have always been told that I tend to be quite entrepreneurial and creative in my approach and I thought these attributes would have served well an environment that was less structured than a more established PE company. 4) SoftBank Vision Fund is by far the biggest fund ever raised with its $100bn AUM; with such a big size comes equally significant challenges, opportunities and stimulations so I thought it would have been exciting being part of it.

5) Very briefly, what’s your experience in the Distress Market and the Tech Market? What trends did you see in 2017?

I had a lot of fun in working on distressed investments, it’s an exciting space and is quite technical because it requires a deep understanding of capital structures and restructuring laws. When I joined Carlyle in 2015, there were a lot of distress opportunities, this continued in 2016 – many of which came from commodities-related businesses. 2017 was a much quieter year instead. We were still quite active in the market because the fund for which I was working had a very flexible mandate, so we were able to invest across many asset classes but 2017 wasn’t as active as the previous years. The equity market instead had a very positive trend, e.g. I believe the S&P 500 was up almost 20% that year and if you look at some of the critical key indexes or the main tech companies they did amazingly well (e.g. Apple, Facebook, Amazon, Google all up between ~25-60% that year). If you look also at the private market there had been a big wave of investments in private tech companies as well as many big tech funds raised. I think the last few years have been more exciting for tech investors than for distress investors.

6) Traditionally we conclude our program “Coffee break with…” with some tips to students who want to enter the industry or who are entering the industry next summer. What advice would you give them?

That’s a big responsibility! Well, I don’t believe in perfect plans. Particularly when you are trying to go ‘fast’ you need to be flexible. If you really care about getting to a certain outcome or to a certain position you need to overthink, you need to overwork, you need to make sure you have at least two or three different ‘paths’ that can lead you where you want because things go wrong in life and you need to take into account potential mistakes. The second tip I’d give to students is to try to find a job that they genuinely like, and that keeps their learning curve steep; always keeping in mind what ‘exit opportunities’ the knowledge that they are accumulating can give them. We live in a world that is changing rapidly so a job that may look like a great opportunity today may not be as good tomorrow; you want to be sure that you are acquiring valuable knowledge and skills that would allow you to be valuable even if the industry changes. Third tip, I’d advise them to be as hungry and entrepreneurial as possible, I think that certain parts of the financial industry tend to repress initiative as they are very hierarchical (e.g. think about an IBD team where above an Analyst there are an Associate, Senior Associate, VP, MD and Partner) and there is the consequential tendency to limit yourself only to what your tasks require you to do; I think, instead, it’s important that you keep thinking with your brain as well. Try always to go the ‘extra mile’, it’s what makes the difference between a good job and a great job and helps your development more than you think. The fourth tip, usually the more you are driven then, the more you would like to feel that you are continuously running ‘forward’ in your career at maximum speed but I believe that even a great career often looks more like a rollercoaster ride, where there are ups and downs, rather than a continuous progression. The fifth tip, before we run out of time, is to not focus only on professional development but also on personal development, it’s a marathon so who you are outside your job and how solid you are as a person will definitely matter in the long term.

Authors: Gianluca D’Andrea and Martina Doveri

Editor Responsible: Carmelo Spallino