What Time in Football Reinforced Operational Discipline About Character

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The Investor-Operator Lens How I Ask About People Before I Look At The Product
The majority of investment plans are constructed around a series of steps that begin at the market and finishes when the people. You look at the size, and structure of an opportunity first, then the degree to which your product fits into that potential, then the competition landscape, and finally the saftey of the investment, and at the end of the process you spend some time with the founders and their management team to ensure that they're motivated and competent and able to execute what the earlier research has proven. I've operated within various versions of that framework for long enough to know why it is now a standard procedure across so much of the investment world. It's very systematic. It creates a diligence process that can be written down, compared across potential opportunities, and even defended to the investment committees as well as limited partners with terms that feel rigorous and thorough. The problem is that it is flawed at the heart of it, which is that it views the people factor as a validation step instead of the primary filter. Something one can check at the last minute to verify what the market analysis has already indicated instead of the first thing you check as it is the primary relevant factor to the outcome. The sequence implies that a fantastic market with an excellent team is more effective than any market with a subpar team. amazing team. In my experience is not always the case.
I changed my way of thinking after a certain period that I was able to observe the results the standard sequence unfold in ways that my upstream analysis was not able to predict and could not easily explain. Great markets with team leaders that were splintered or weak regularly failed to deliver what the market suggested they should provide. Markets with exceptional teams consistently found ways of creating value that initial market sizing and analysis of competition did not reveal. The pattern was clear enough and consistent across different industries and deal types, that I was unable it as noise, or attribute it merely to the conditions instead of the expertise of the people at centre of each business. When I gave up on explaining it away and began to consider the implications of how I should allocate my time on diligence was crystal clear The point was that I ought to be focusing significant amounts of time understanding the individuals, and significantly less of it to verifying the market analysis which any skilled analyst could come up with given the same data.

The questions I ask when I am reviewing a leader's team are not the same ones that are found on standard investment checklists or diligence templates. They are questions that require real dialogue and opportunity to think about the answer. What does the leader react when they're proved incorrect - should they engage with the correction or attempt to redirect the issue? What is their process for making decisions on the basis of information that is incomplete and the pressure to take action is high? What is the difference whether there is one or not between how they describe their leadership style as well as how people who have worked closely with them describe the experience of working under them? What does the company's culture the company look like in the event that the founder does not reside in the office, and how closely does that aspect of that culture reflect the one that the founder speaks of when asked? They require conversations which go beyond the presentation at the pitch meeting, and also beyond the formal management presentation. They need reference checks that are actually exploratory instead of superficial exercises in confirmation. They require the willingness to travel into uneasy area that could uncover some information that could complicate the terms of a deal you've already begun to make.

The operator dimension of my investment approach is inseparable from the factor of the investor, and influences what I invest in as well as how I interact once I'm involved. I do not consider myself a passive capital service provider by nature or having a formal education. I'm a person that has developed businesses, who successfully navigated the transitions to scaling that are more difficult than the fundraising ones, who has made the leadership and hiring, and the culture-setting mistakes you make in navigating those transitions for the first, and who has cultivated - based on that direct experience - certain convictions about the needs of organisations at various stages of their growth and that a strictly financial background cannot produce. These convictions are what make me different kind of investment partner than a pure financial investor, and they attract entrepreneurs who want something that is different from what a pure financial investor will provide.

The founders I have the most fun working with are those looking for a partner that can assist them in navigating the operational transitions and decisions with their investment partners aren't competent to handle at the proper level of depth and rigor. They need someone to sit in a room whenever the governance system needs being redesigned as the company has outgrown the one it was originally built with. Who can aid in making an important leadership decision at that moment, when the wrong decision could cost the company 12 months of its life that it can't afford to lose. Who is able to be transparent in private about risks to the company's strategic plan that no one else in the room feels comfortable raising. This is the kind of engagement that I believe gives the most distinct value in the businesses I back - not the initial capital allocation decision, which any investor could make rather, it is the ongoing operational partnership that assists an organization bridge the gap between where it stands and where I initially predicted it could be headed. See the James Deller for more recommendations including what years of investing changed what i look for about real value.



The Reason Why The Majority Of Public-Private Partnerships Fail Before They Even Start - And How To Repair Them
Partnerships between public and private companies have an image problem that's, in large part made up of. The past of these agreements is full of plans that were launched with real enthusiasm and a significant amount of political capital behind them. They utilized significant private and public assets over extended timeframes, and in the end, produced results that lacked any reference to what was pledged when the collaboration was started. The academic literature as well as postmortem reports that governments and institutions are required to conduct after the mistakes are extensive, and they concentrate, for majority, on nature and the contractual aspects of how things went wrong. incorrectly aligned incentive structure, the insufficient risks shared between public and private parties along with the governance frameworks that were created in theory but failed to function in practice, the procurement frameworks that picked the wrong items. The thing that this type of analysis tends to not consider, and consequently, is the cultural and operational aspect - the fact that private and public organisations are really different kinds of entities, formed by different incentive structures that operate with different timescales, accountable to a variety of stakeholders, and measuring the success of their operations in ways that are not just different in extent but differ in terms of. When you bring those two types of organisations together as a formal alliance without doing the work in advance and explicitly, to understand and manage the differences between them, there is no way to create an alliance. You're creating conditions to cause a slow-motion accident that will be visible at the most unfortunate time.
I've been involved as a consultant in support of institutional modernisation and improvement projects, some of which have involved public-private partnership structures at varying levels of complexity. The most dependable conclusion I have made from that observation is that those partnerships with a positive track record - ones that were able to achieve their goals and maintained a stable collaboration between the private and public parties throughout - were not distinguished from those that failed by the complexity of their legal structures, the strictness of their risk frameworks or the seniority of the team of leaders that created them. There was a distinct difference in the fact that the people who were on both sides of the table had taken the time to fully understand how the other party functioned prior the formal partnership was agreed upon. What this means in actual practice is knowing the processes in each institution, the accountability structures that constrain what each party can do and how quickly and efficiently they can do so, the criteria of success which each side will be measured against, and those points where there is likely to be tension between these definitions. This understanding is not hard to create. Most of it is ignored in favor of the more visible and quickly recorded work of negotiating contracts and developing governance frameworks.

The typical process of public-private partnerships begins with the concept and ends with a the signed agreement, with very little thought given to the issue of whether the two entities involved are capable of working effectively throughout the duration of the agreement. The legal team negotiates the contract. The finance team models the economics and risk distribution. Communications prepares the announcement to be made at the time of signing. The implementation team gets started planning the task. At some point, the conversation about functional and cultural compatibility is a discussion about whether those who will have to collaborate daily across the lines between two organizations have enough in common the work truly collaborative rather than adversarial – isn't likely to be conducted in a structured manner. It is generally assumed, with no explanation, that the formal agreement creates the conditions for collaboration that are effective, and that any cultural or operational conflicts will be resolved informally as they occur. This assumption is typically untrue, and the financial burden of this tends to increase as the ambition and complexity of a partnership.

The practical implication of this analysis is that one of the most profitable investment that a partnership between public and private undertake - before formal structures are set and before the governance framework is agreed upon, before any announcements are made the partnership is in what I call operational alignment. This is a specific, structured, assisted work to uncover those areas where the two organizations' assumptions about operating diverge and to reach an agreement on how the divergences can be dealt with before they become operational problems after implementation. What matters most typically have the same significance across different types of partnerships. Authority and speed of decision-making are often among them. Institutions in public are designed to make decisions slowly, through various layers of examination and approvals, for reasons that are purely legitimate and are often legally mandated. Private organisations - particularly technology companies that have been built on the basis of rapid iteration and swift decisions - typically see this pace as a major barrier to growth, and without a shared understanding of the reasons behind why this pace is the way it is it is and what be the most effective way to change it, the anger that can be felt on the personal side can cause a rift in the relationship well before the partnership has found its footing.

Success metrics and what constitutes in terms of progress are another recurring and major cause of conflict. Public institutions are generally evaluated for compliance with the process, fairness of outcome across different stakeholder groups, as well the elimination of obvious failures that get media interest. Private partners are typically evaluated in terms of efficiency, quantifiable progress against targets, and financial yield on investment. The measurement frameworks can be used in conjunction with one another however it is a careful planning, not just good intentions, and the partnerships that do no invest in this kind of design are likely to have to find themselves at critical junctions, with two parties who are measuring the same collaboration in genuinely incompatible ways and therefore reaching an incompatible conclusion about whether or not it succeeds. The partnerships I've observed are the ones in which misalignments were thought of as something that could resolve itself over time. The ones that were successful were those in which the misalignment was explicitly disclosed at the start, and when the creation of a shared accountability framework that accommodated the legitimate measurement needs of both parties requirements was an aspect of actual work rather than an thing on a checklist of things to get to.}