Investing is tough! Achieving a 3X aggregate fund return requires moonshot performance from one portfolio company all too often. What if that could change? What impact would that make? We need to lessen the burden investors have in selecting unicorns. How is this done? By focusing on the highest ROI factor in any startup investment—the team. Yes, people; yes leaders.
We know it’s true. 95% of portfolio company success is the team¹. Yet, investors admit that their team member selections are wrong nearly 60% of the time². Why such a gap?! Only a select few PE and VC companies make leadership team diligence their top priority. Again why? We have to admit, it is because we all too often rely on opinions, i.e., referrals from peers, executive search firms, friends of the CEO, “my gut,” etc. For the vast majority of investment firms, approvals and most critical decisions on human capital, are not researched and put through a rigorous process to consistently achieve high performing C-level leadership. This must change!
Guerrilligence employs a proprietary process consisting of behavioral assessments and direct dialog to identify only high-performing company leaders; not only the right individuals but the right team. Never again accept marginal leadership and team misfit that destroys portfolio value. Put the proper focus on the one ROI factor that really makes a difference—human capital diligence the right way!
¹ Gompers, Paul A. and Gornall, Will and Kaplan, Steven N. and Strebulaev, Ilya A., How Do Venture Capitalists Make Decisions? (August 1, 2016). Stanford University Graduate School of Business Research Paper No. 16-33
² Geoffrey H. Smart (1999) Management assessment methods in venture capital: An empirical analysis of human capital valuation, Venture Capital, 1:1, 59-82
Investors admit that their team member selections are wrong nearly 60% of the time.
Mistakes in identifying the CEO and assembling the leadership team are costly. Poor efficiency, gaps in communication, operational snafus, lost time-to-market, lost dollars on recruiting/replacement to name a few. A lackluster leader or a C-level team member that isn’t carrying their weight can spell disaster if not recognized and corrected. Better yet, never commit to this team or leader in the first place!
We have all seen it—the CEO that labors over decisions; the COO that doesn’t really have it all together; the VP of Sales that doesn’t have a clue on building deep relationships. Investors should never have to deal with these headaches! High performing companies come from top performing leaders and teams. It is so simple it is scary. Yet over-and-over this fact is ignored or glossed over as a deal is put together. More time is spent on legal diligence and background checks (which have single-digit impact on success), than on measuring true company leadership.
The old, “we feel good about him/her,” that gut instinct is fine, but realize, that is all it is, a gut instinct. That doesn’t mean they are the high-performer needed to run the company or the next key individual that will be a catalyst to drive the team’s success. We know we need to find that person, but we grope to understand the how—how are top performers and top teams assembled? How can we assure our portfolio companies soar instead of spiraling downward due to flawed leadership? At Guerrilligence we eliminate wrong fit. We eliminate the “good enough” so often heard in selecting people. Instead, we assure a great portfolio of companies for you by assembling a great portfolio of teams.
High performing companies come from top performing leaders and teams.
Our vision at Guerrilligence is, through our human capital methodology, improve the performance of 10’s of thousands of businesses, and in turn, the life and livelihood of 100’s of thousands of business leaders, their investors and employees.
In the U.S., startups³ make up 51% of all businesses. Those that are “highly impactful” to the economy are the approximately 4% that are technology-related across a number of industries such as Aerospace, Pharmaceuticals, Medical Devices, Computer Networking, Semiconductors, and Software. These companies contribute an over-weighted share to R&D spending, skilled jobs, wages, and exports while adding $2 trillion to the nation’s gross output.
If, by expert human capital diligence, we could improve company leaders and teams by 10%, that potential increase of $200B in gross output is like adding another Marshall Islands to the global economy. Domestically, with these same dollars, we could pay for one-third of annual Medicare costs or go a long way in transitioning the U.S. to renewable energy. And even if we put those lofty goals aside, we, as the investor community, will still end up with more successful companies driving higher stockholder value.
³ How Technology-Based Startups Support U.S. Economic Growth, J.J. Wu and R.D. Atkinson, 2017, Information Technology and Innovation Foundation report.
The Guerrilligence approach is consistent and controlled. We provide quick insight in identifying the highest performing leader and optimal team mix.
In its purest form, it’s a four-phase process…
The proprietary toolset and process we utilize at Guerrilligence apply to high performing company leadership in a number of ways and align to various company and investment stages. Some examples are as follows:
- Human capital diligence to positively identify the best leader for the company and its market opportunity.
- Team leadership gap analysis to identify the exact position and next fit to catalyze the team.
- Human capital diagnostics to identify leader and/or team performance gaps and prescribe best practice actions to get the company back on track.
- Team build optimization—attract and get highest performers in the right seats.
- Growth stage:
- Functional team leader analysis to achieve high-performing balance in management and optimize long-term company performance.
- Human capital resiliency testing to foresee and prepare leadership team for shock/surprise along the growth path.
- Pivot / turn-around:
- Performance and fit diagnostics to identify the right next steps in replacing or expanding team members and transition to high-performing leadership.
Our simple pricing schedule is based on engagement type and activity focus. We’d love to find the right fit for you!