Human Capital Investing Partnership

I am an investor. This means I would rather say 'no' more often than 'yes'. Let me save you some time by telling you if this is for you or not.

This is NOT For:

  • Those who are driven by fear of failure. If you need to know something will work with 80% certainty you probably operate in an environment that does not allow failure and nothing great can come out that. 

  • Those who want to mass hire 100s via job boards in 1 to 2 years for hyper growth over methodical growth.

  • Those who do not believe an investment in human capital is the top priority for the company.

  • Those who run a company with no vision or purpose but are just mercenaries hoping for quick exits.

Please read further for:

  • Those who believe in purposeful growth over 5, 10 even 20 years. Slow is fast. 

  • Those who believe in Google's rule of 10. Less is more. Most people want to hire 100 who can play 1 note. I want to partner with those who want 6 who can play Mozart perfectly.

  • Those who understand patient investing. "Sharpen an axe today to cut two trees tomorrow instead of cutting one tree a day with a blunt axe"

  • Those who exemplify the growth mindset and importance of flow states.

  • Those who want to build the culture right at employee #5, not #100. 

Why Human Capital Investing Matters Early-Stage

My investment philosophy developed from the teachings of Warren Buffet and Charlie Munger. There are many principles and tenants related to their teachings. One in particular is the investment in wonderful businesses with sustainable competitive advantages that are operated by intelligent fanatics

Despite coming from an unorthodox background, I got my opportunity to be a full-time investor at a top value investing fund that managed billions in assets. Investing was the perfect career to satisfy my intellectual curiousity. But in the face of the social pedigree and financial upside, there was something that nagged at me. Though I loved learning about the various companies in the world, what truly excited me was learning about companies that had leaders who "got it". They understood what made a wonderful business.

What is my definition of a wonderful business? A business that has 20%+ ROI, growing profits at 20%+ over 20 years. Something like that. That's a wonderful business. It's simply the business' ability to generate high return on investment over a long period of time. Think companies like Berkshire Hathaway, Basecamp, Automattic, Buffer, Zappos, and Semco.

What's the equation for high ROI?

High ROI = Greater Profits per $ invested = Increase Revenue + Decrease Costs = Customers buy more + Business limits waste

Customers buy more = Better Customer Service + Irreplaceable Product

Business limits waste = No Bureaucracy

Last I checked, Steve Jobs didn't write the IOS code for my iPhone 7 and Jeff Bezos wasn't the customer service rep that replaced my broken speakers from Amazon. Whether it's a great product or excellent customer service, it's the people of the company who execute it. 

The first principles of building a wonderful business are its people. 

The people of the organization will help create a competitive advantage and make it sustainable. A business' competitive advantage is not absolute nor is it stagnant. It shrinks and expands dynamically based on internal factors. If a competitor enters the market and erodes your advantage, it's on your people to act. It's also up to the people to erect a barrier so high that no entrant ever enters your market. At the core of every competitive advantage are the company's people. 

Common business acumen is to treat investment in people, your human capital, as a HR problem. It's not. It's a Growth problem. If your business doesn't grow, it shrinks. There are many ways to grow and a methodical investment in human capital is the sustainable way. 

When a business goes public and/or hits a large enough size, the leader's job evolves to being a financial capital allocator. Much like an investor. As the company grows, its ability to invest in projects that generate equally high ROI at historical rates diminishes. This is where leaders can opt to acquire, pay dividends, buyback stock etc..  This is what the Outsider CEOs from William Thorndike's research excelled at. But in the early stages of the company, the leaders must be human capital allocators.

Culture is established in the early days of the organization and morphs from there. Its harder to uproot an old tree than a young one. Not to mention, older trees have rotten roots that will go deep. This is why most companies suffer the path of increased bureaucracy and the decay of their culture. Most never had a strong foundation to start with. The culture must focus on acquiring and developing talent. Just like how winning portfolio managers water the flowers and pull out the weeds in their stock portfolio, organizations must create an environment to led the best thrive. It's a culture that focuses on cultivating each individual's genius area and allocating them to where they'll perform at their best. 

It's not merely designing the organization's systems but the individual's own system as well. You can't have high performers by focusing on work life balance. That's a path for mediocrity. Rather, work and life must be harmonized. This means, the organization must focus on taking care of their people. Constructing an environment where people have the necessary motivational factors to focus and excel at what they do best. That's how creativity will thrive and how innovation will be born from within.

How can we Create Such an Environment as partners?

I hope you're ready for a truly unsatisfying but real answer. 

It's not open work spaces. This will actually inhibit creativity and deep work. 

It's not stocked beer fridges, and endless snacks. This will increase inflammation in their system and negatively impact health and their mental performance. 

There is no plug and play formula. If there was, then the Self-Improvement and Business categories in bookstores should only have a handful of books. Yet, they are one of the largest categories of the bookstore where everyone writes a 'how to' book on everything. But most companies are not wonderful businesses that you or I should ever invest in. Most companies are not truly sustainable and do not have a people focus at its core. 

No. Because it's hard work. Like anything worth having in life, it's not going to come easy. It's going to take a long time. The human mind is not a software you can program and make "efficient". Just like how you can't make true relationships 'efficient', same can be said about developing your talent. 

It starts from the top but builds bottom-up. 

My experience working with high performers from various roles like software engineering, management consulting, business operations, designing unearthed five motivational factors that need to exist in each organization in order for employees to thrive.

Some organizations had better systems than others to allow their people to thrive. Yet, all had no system to help each employee develop into their best self. It's only by speaking with and learning from the individuals responsible with the day-to-day of the company that you can uncover the 'holes in the armour'. 

We have to focus on the leaders to establish a vision for what kind of organization they want to create. The leaders themselves have to willingly prioritize fostering a growth mindset within themselves and for their own people. They set the tone for the organization and it begins with hiring for those who understand the importance of having a growth mindset. Then we focus on the individual employees to establish a baseline. You build from the bottom up because the company will only be as good as it's weakest link. 

The focus will be on radical self-inquiry for the employees. We'll invest time into helping each employee understand their internal system and priorities. Answering questions like: "Who are you? Where do you want to go? Where are you respective to that?". We'll create systems to help them identify their strengths and flow state activities. It's about understanding what matters to them and what makes motivates them. Everyone is on a journey of their own and their vision and purpose will be different from their colleagues. It may even evolve as they grow. What's important is identifying it and helping them attain it. The company and employee are in a relationship and both must be willing to give to each other first. 

This form of radical self-inquiry helps identify what the organization is doing well and what it needs to improve on from the eyes of the employees. The people that matter. The next step is to bring this up to the organization level and test out systems we can incorporate to improve on the lacking motivational areas. Each business model is unique so one solution that worked for one company won't work for another. Different types of individuals are attracted different kind of businesses. Different teams may find different motivational factors are priority areas as well. Regardless, the organization design will be iterated and data collected over time to see if it works over a period of time. Systems will continuously evolve and will need to be iterated as the business grows as well. A continuously organic process. 

There is no how to manual. It's a partnership and we're going on a journey together. My mission it to help individuals unlock their own potential and create as many utopian organizations as possible. Incentives drive behaviour. I approach this partnership like an investor. Whether I'm investing finance, time and/or sweat it's going to be a long-term relationship. 

This is the thing that doesn't scale. It's to get you from 80% to 99%. What we hope to see is a positive trend in the system of each individual employee. Over the long-term this should result in stronger growth and profitability for the company. Remember the equation above?

What do I bring to the table as a partner?

I’m not a certified coach of anything. I have no education in human resources.

Which is great if you don't want an average outcome. The best investors aren't the ones who specialized in finance either. 

What I've learned about human capital has come from lot's of books, conversations, primary research and experience.

An experience that includes working in one of the most competitive professions in accounting, management consulting and investing. Breaking into the top firms in said industries and creating systems to become a top performer within the role. All the while competing as a high performing athlete with international accolades. 

Not only did I work with PhDs, rocket scientists and problem solvers of various disciplines but I saw first-hand the power of an exceptional culture in an investment firm where we had set an industry standard for a unique and methodical culture design.

I don’t have gray hair and I wasn’t behind the success of Amazon, Google, Facebook or any other big tech darling.

Building trust starts with the ability to empathize. One's ability to empathize begins with being relateable. Then, it expands with having a wide spectrum of experiences. 

Most employees in early-stage companies are millennials from immigrant families. This is a demographic that a gray-haired Caucasian can't empathize with. They can try but without experiencing culturally similar upbringings, you just can't. As someone who's lived in Seoul, Hong Kong, Vancouver, Calgary and Toronto, I know what its like to be a minority in various settings. I also have experience living in a wider cultural paradigm than most. It also helps that I was a global investor who focused on cultural nuances in non-North American companies too.

Unlike someone who stayed in one job for 10 years, I've had multiple different roles. Within those roles I've worked with professionals from all manner of technical (i.e. Engineers, Designers) and non-technical (i.e. Sales, Finance) roles. A knowledge base that compounded with the 100s of conversations I've had. This is how I can empathize. Because I've been there. 

Interested?

Are you a leader of a company? We can explore partnering up for your entire organization or just one team.

Are you an employee or individual who believes in investing in your own self-awareness? We can explore a 1-on-1 partnership.

I'd love to chat and explore a way I can be your partner.