In all of our investments, we have a very active engagement with the founder/management team. We will hold at least one meeting per month with the management team and will commonly seek detailed monthly reporting based on KPIs that we consider critical to the company’s success.
Perhaps the most important activity we participate in for both young and rapidly growing companies is the continuous monitoring and preparation for the impact of the “Peter Principle”. This principle states that ”everyone rises to the level of their own incompetence” and is a problem that is commonly seen to have a major impact on a company, particularly in the early years.
We work closely with the company to address and resolve conflicts associated with the Peter principle that diminish the effectiveness of the company’s existing management team. When transitioning “across the chasm” (Moore, G. A. (1999). Crossing the Chasm) from a young company to a growth company, this problem is particularly important to address as the skill sets that were successful during the companies early developmental phase are not the skills that will make the company successful when it becomes a professional commercial entity. We, therefore, seek to identify and phase in the replacement talent for these companies as early as we can. We believe this is critical ensure the company reaches its full potential.