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As a newly minted MBA Graham Weaver set his sights on starting a Private Equity firm.

In 2001 he started Alpine Private Equity, a fund that has $15Bn of AUM today (assets under management). That's a lot.

But in his first two years running companies his experience was horrible. The great recession had just hit. His companies were falling apart. And he was flying from state to state putting out fires all the time.

Then one day his executive coach stopped him they worked through a "root cause" analysis.

The key question they wanted to answer:

Why was Graham having so many issues with his company?

He started by looking at his 3-best companies.

They were all in different industries but shared a surprising similarity.

These were a business situation where things went badly at first. Then they placed their own internal teammate to lead the business and fix it. And now these were their best investments.

Graham's main takeaway from this became: if they can control the talent in their leadership, they can control the outcome of their investment.

We learned a similar lesson in our plumbing and HVAC businesses. We found it very hard to find trade talent for our companies. And when we found people with the right technical skills, they were hard to train and adapt to our culture.

So we started pulling people straight from school that we trained on our processes from day 1. It was a MUCH bigger investment of our time and energy but worked great.

Graham learned there were many things he could teach his leaders. But some were not teachable.

So he looks for the following attributes (that you can't teach):

• The Will to Win
• Coachable
• Self Awareness
• Inspire Followership

I've had friends and old classmates join the Alpine MBA training program. These are incredibly impressive individuals that they mold into CEOs of their companies.

If you're interested in hearing more from the founder of Alpine, listen to his interview with Ted Seidles on Capital Allocators.

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🔑 Three interesting reads...

Here are some of my favorite articles from Graham Weaver's Blog (Alpine founder from above)

​Your guide to living a better life through asymmetry - This beautiful reflective post covers some of my favorite topics including:

• life is difficult no matter what. Instead of running away from it, find a path worth suffering for.
• Life is long - pick something that energizes you. Pick something you want to do for decades - you'll be surprised what you can achieve in this time.
• Find your disguised fear and strive overcome it.

​On how to get better sleep - especially for people with a lot of work stress

Charlie Mungers investment evaluation strategy

When evaluating potential investments, Charlie Munger breaks them into three categories:

1. Yes - the clear winners (the business is easy to understand and matches his investment criteria)
2. No - the clear misfits (don't match his criteria)
3. Too complicated - the gray area

Many of us forget about the third category. We feel compelled to force every idea into category one or two. We feel like we have to come up with a definitive answer.

But sometimes there isn't one. Sometimes a business is outside our circle of competence, and we just have to accept that.

This piece, Charlie Munger’s 3 Investment Categories: A Simple Guide, breaks down Munger's circle of competence concept. Give it a read if you want to sharpen your investment decision making process.

​Read it here​

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have a great week,

Sieva

Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.

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