Perform, Don’t Perform, But Also Perform
After I wrote about Permanent Equity’s secret formula, I received an email reply (which I love…if you reply to this email it goes directly to me) from someone who said “I’ve been involved with companies for more than 25 years and keep getting caught up in the ‘what people think you need to do or want to see’ perspective.”
I think this was mostly a reaction to the idea that we don’t require our portfolio company leadership to be good at PowerPoint animations and that one shouldn’t spend time on activities that don’t actually move the needle. But it’s also true that it doesn’t hurt to be good at PowerPoint animations.
What am I talking about?
I made the observation on Twitter that back when I ran an investment team, the ideas from extroverts were overrepresented in our portfolio vis a vis the ideas from introverts. The reason was we had a process that required analysts to present their ideas to a group and introverts were not as good at that as extroverts. And that wasn’t fair to the introverts or a very good process, which I think is a point that stands.
But SuperMugatu aka Dan McMurtrie (a very smart investor we know) responded “I agree with the virtue of what you’re saying but have been seriously burned by people with poor communication skills.” And he’s got a point too.
When I was first starting out as an investment analyst I was taken aside and told “Look, you’re not going to be judged by all of your ideas. You’re going to be judged by the ideas clients actually take action on. So, you have to always be selling.”
That’s why it can pay to be good at PowerPoint animations. They’re a means to convincing others that your ideas have merit. Yet it’s also true that if you’re always performing for others, you won’t have time to spend on efforts that actually generate good objective performance.
This can be thought of through the product/packaging paradigm. In order to be successful, you need a good product, but you also need to put that product in attractive packaging that is enticing to consumers. In other words objective performance and performative performance go hand in hand, but striking the right balance can be an ongoing challenge. If you tilt too far to the former without the latter, you’re the proverbial tree falling in the forest that no one hears. But if you’re the latter without the former, you’re, as they say in Texas, all hat, no cattle.
P.S. Permanent Equity’s investing team is hiring. Click here for the details.
– By Tim Hanson
