Always Bet on the Jockey & Not on the Horse

Posted by chris_haroun@hotmail.com | Investing

Ideas are commodities. Execution is not. The most important critical success factor in business is investing in the right management team and not investing in the right idea. Whyjocckey is it that most business schools don’t dedicate any time to assessing the quality of a company’s management team? Shouldn’t this be the most important thing to consider before making an investment in a company? We spend far too much time analyzing business models, markets and financial statements and we often overlook the most important investment quality, which is who is running the company and are they the right choice?

This is especially true in the money management or venture capital industry where the most important success factor in any investment is making sure that you have the right management team in place. The right management team can pivot, adapt and react to a material crisis or constantly changing end markets. The right management team can effectively market elegant products to their customers with the simplicity of Apple’s Steve Jobs and with the healthy paranoia of Intel’s Andy Grove.

Past performance is indicative of future performance if you have the right CEO and the right management team. Yes that was a very controversial statement, but I believe that if you bet on a management team that has been extraordinarily successful in the past, then your chance of success betting on this management team in the future is materially higher than it is betting on a B or a C management team.

The best CEOs and entrepreneurs don’t have a job; they have a passion. Superb examples of passionate CEOs and entrepreneurs include Richard Branson of Virgin, Marc Benioff of Salesforce, Christian Chabot of Tableau and Godfrey Sullivan of Splunk. The best CEOs and businesspeople in the world are passionate salespeople with unbelievably positive attitudes. Their positive attitudes lead to an incredibly positive corporate culture. Fly on Virgin America or Virgin Atlantic and you will understand why Virgin is an exceptional brand. Virgin employees are so happy that they don’t appear to have a job! Rather, they have a passion. Watch an interview with Richard Branson and you will understand why.

Similarly, employees of technology company Splunk are incredibly positive people and this might be due, in part, to the incredible leadership of their CEO Godfrey Sullivan who’s genius is that he praises often in public and only offers constructive feedback in private. The result is a relentless, positive ‘can-do’ attitude that resonates throughout the entire company. This has led to the creation of one of the best corporate cultures in the history of the technology sector.

How do we assess if a CEO or an entrepreneur is worth backing? We can use www.Glassdoor.com and read reviews of the management team written by employees. Godfrey Sullivan from Splunk and Marc Benioff from Salesforce both have 96% approval ratings according to Glassdoor.com from employees and Christian Chabot from Tableau has a 100% approval rating!

How do we do additional background checks on a CEO before deciding to invest in the company? Never call references that the CEO provides as nobody would ever provide a reference list of people that wouldn’t say something positive! Rather, use LinkedIn and find contacts that you (or your friends/colleagues) have that know the CEO or people that work at the CEO’s company. Then simply call these contacts and ask for feedback on whether or not the CEO is an effective salesperson and leader.

For private companies, read about the background of the management team on the company’s website. For publicly traded companies, you can read the annual reports, which all have descriptions of the background experience of the executive team. You can find a wealth of information online at www.sec.gov.

The productivity of employees of a company with a passionate, visionary leader is materially higher than the competition. More productive employees leads to enhanced shareholder value ovejockey2r time. We will all be much better investors if we spent a lot more time analyzing management teams. Only after we feel comfortable backing the right management teams should we start doing due diligence on the business model or the total addressable market.

Ideas are commodities. Execution is not. Always bet on the jockey and not on the horse.

Originally published on 2/23/16 in Inc. Magazine at:  http://www.inc.com/chris-haroun/3-daily-habits-that-will-make-you-more-successful.html

The most important investment you will ever make is you. Follow these tips to take your career to the next level.

picturesque green field and blue sky

You are your biggest investment. Don’t be cheap when it comes to education, health and self-improvement. Continuous improvement is of paramount importance when it comes to your success in business or in life in general.

The best way to invest in you is to always spend more than you think you can afford on education, including degrees, online education, books, audio books, podcasts etc (whatever it takes). You do have time to read. Yes you do; you can listen to audio books during your commute to work or at the gym.

1. Watch, Read, Listen and Learn: 

Most online lectures are free and my favorites are inspiring Ted Talks. If you have Wi-Fi and a stationary bike at home you can watch online courses on Udemy.com or even on YouTube.

Be a voracious reader. Read as many books as you can on successful business people and humanitarians. What are their secrets? Learn from them and watch your career take off.

Invest in a subscription to Audible.com for $15 per month and listen to biographies of successful entrepreneurs. I recently listened to audible books from Marc Benioff, Warren Buffett, Steve Jobs, Elon Musk and many more.

I have always been a voracious reader of biographies of successful people. I love learning from them. What are their recipes for success? How did they do it? Did they lead a well-balanced life on the road to their success?

2. Follow Your Heroes:

Use Twitter to follow your business heroes. They often tweet incredibly motivational quotes that resonate well with me. I love their short snippets of optimism, hope and best practices.

I find it incredibly motivating to know as much as I can about these successful people as most of them came from very uncompromising backgrounds. I love the poor, smart and hungry rags to riches stories. I feel empowered when thinking about them; there are no limits to what you can achieve. These people are no smarter than you are; this video will change your life:

I Have Never Met a Successful Person With…

You will never meet a successful person with a negative attitude. If they didn’t believe in themselves and in their goals, then they would never have been successful; the quintessential example of this is Richard Branson. I just finished his latest audio book and my goodness does he ever have an amazing positive attitude.

What I have learned from most of the audio books that I have completed on successful people is that the secret of their success is that they all believe that there are no limits to what you can achieve! Keep a journal and write down what made them successful.

3. Write Down Your Goals

The probability of you being incredibly successful rises materially if you simply write down your goals. I write mine in my calendar application on my iPhone as a 6am repeatable calendar entry. When I wake up every day, the first thing I see on my iPhone is that 6am goal calendar entry which makes me want to jump out of bed and have fun working towards achieving my goals.

Successful entrepreneurs have their partners and employees also document all of their goals. A great example of this is Jeff Bezos as he has all of his product managers write a press release that will not be published for at least a year. This way his product managers can focus on filling the gap and making the press release and their goals a reality.

There are countless other amazing examples of simple goal setting strategies from successful people; my favorite one is from Derek Jeter. My son is a huge Derek Jeter fan (I love the Blue Jays but heck Jeter is a great role model). My son read Jeter’s book called “The Contract.” In the book he wrote that the reason for his success was that his parents made him write a simple one page contract every year from a young age.

Jeter’s Contracts with his parents included basic goals, like “I will do well in school, I will do my chores, I will practice baseball, etc.” My son has his goals on his wall now. My wife was even cool with the scotch tape he used on the wall!

The most important investment you will ever make is you! Write down your goals, be a voracious reader of published works, watch online videos and follow twitter feeds written by or written on your business and humanitarian heroes. Follow their success blueprints and one day others will follow and read about you as part of the most important investment they ever make.