Private Equity labels on hundred dollar bill
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How do you succeed in business? You have to have product fit, sure, but what about people?
There are any number of leadership books purporting to direct would-be career professionals on how to manage, in so many different ways, including the leadership of a workforce, which is one of the stickier parts of being a leader, in general. Do people want to be led? If so, how? How do you balance loyalty to the job with loyalty to people?
I recently interviewed David Mussafer of Advent International, a local private equity firm with a big reach, about how to make business work well in today’s fast-paced and highly technological world.
Mussafer spent a lot of time on personal context, as we explored his growing up in Montgomery AL, in a place with so much in the way of human rights history, and the history of business in his family, with his dad as a retail entrepreneur, and how his parents met at Tulane.
He talked about studying finance, and going to Wharton Business School in the midst of what he called a “buyout boom.”
“Every week, there were companies that were being bought, and it was the beginning of a very innovative time, a different time,” he said. He talked about how Peter Brooke of the TA Associates (Tucker Anthony) brokerage founded Advent, and how it thrives within the investment world.
“That’s the great thing about the investment business,” he said, “it’s not a zero-sum game. Here in Boston, we’ve been really fortunate. We have some of the very best investment shops from all around the world that are resident here in Boston.”
Of Advent in particular, he narrated some of the business philosophy that drives the firm forward:
“We’re collectively the largest investors in our own fund,” Mussafer said, “and so we haven’t diversified into private credit or real estate or other infrastructure that’s white-hot today, but rather, focused on what we’ve done.”
The following stats, he suggested, show some of the trajectory of a firm focused on acquisition:
· 102B assets under mgmt.
· 445+ investments
· 30+ subsectors
· 310+ investment professionals
That’s a good track record, for sure.
The Catch-22: Raking Seaweed
A little later, Mussafer hit on one of the great ironies of investing, in a way that I thought was compelling.
“If you’re really good at investing,” he explained, “your reward is that you’re promoted and given management responsibilities, but the management work doesn’t necessarily map to success as an investor.”
What about management? Here’s some of his most central advice in a nutshell:
“I spent a lot of time thinking about what’s the right criteria, what’s the right approach to managing a very high-performance set of people,” he said. “The simple analogy is that there is no perfect answer. I use the metaphor of raking seaweed on the beach: that if you want to have a clear beach, you go that day, make good decisions, work with people, and tomorrow, you have to start all over again.”
Highlighting this Sisyphean process, Mussafer compared leadership to baseball, citing differences between minor league teams, where he characterized comraderie as a common element, and major leagues, where team members may get on each other’s nerves more.
“Getting back to raking the seaweed,” he said, “just don’t be an ass. Just, you know, don’t take yourself that seriously. Just do your job … there are so many books that have been written by people who left those companies, talking about how the leadership are not fun people to work with, or leading in a way that’s not healthy.”
Teams, he suggested, have respect for the tones set by managers, the culture set up, and the values shown.
“What if we could create a firm where people actually like working there?” he asked rhetorically. “It shouldn’t be that unusual, but it’s not easy.”
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Mussafer also talked about how funds can diversify into a lot of different areas, with the confidence that comes with good core strategy.
“Whether there’s any rhyme or reason whatsoever to our investing between shampoo and drones,” he said, “the reality is that what makes investing so fun and exciting is that virtually every day you’re in an environment where you’re learning about something, and you’re not just learning it in a cursory manner. You own something, which means if it goes well, or it goes badly, you own that. And you’re going a mile deep in terms of your knowledge.”
Applying Artificial Intelligence
Toward the end of the talk, we covered AI, briefly, which is why I included this in my posts.
“We’re using AI in ways that are very exciting from the standpoint of being able to do primary work that you couldn’t have dreamed about,” Mussafer said, noting that, at Advent, an AI robot sits on the investment committee.
“Hopefully, it can learn from our mistakes, learn from what we’ve done well, and not well,” he said. “This has been an evolutionary process, as we’re building this.”
As his partner and other visitors took the stage to participate, Mussafer returned to those core business principles, describing, again, how leaders can work with others to move the ball forward.
“I think part of what people like is being self-directed,” he continued. “So, if you’re developing the ideas that you’re leading, that feels fine. If you feel like you’re under the thumb of somebody and they’re saying, ‘Do this, this, and this,’ maybe not. And so, the idea is trying to ignite that fire in each person and say, ‘You figure it out. Be amazing. Go be the very first person to do this type of investing,’ or ‘go be the first person to figure this out.’”
Basically, this form of cheerleading is incredibly valuable in business, and I like how Mussafer showcased that.
“Have a culture where you want to win together, play as a team,” he concluded. “It’s not going to be big egos.”
I found this to be really helpful, in delineating the shape of business in the AI era. Stay tuned for more.