From where I sit, the most enjoyable aspect of starting a new venture is bringing and keeping together a unique team.
I have so far worked with over a dozen teams around the world from Tokyo to Singapore to New York. Imagine the diversity of personalities, nationalities, religions, educational and family backgrounds! These teams have ranged from small to large, emerging to experienced, and seeking seed investors to well capitalized.
Here are some red flags I now avoid when I evaluate fund managers as business partners:
- Transparency: Does the fund manager believe in long-term compensation, which is fair and transparent? Avoid those leaders who promise discretionary bonuses based on multiple criteria, especially if you have no way of meeting these guidelines. For example, if you are the firm marketer and the fund manager wants to compensate you with a year-end bonus based solely on that year's fund performance (i.e. not your objective results), think twice about signing that contract.
- Scale & Scope of Work: Do you have a good idea about what kind of responsibilities you are expected to take on and what kind of results are expected? Best to avoid situations where you are asked to assume new responsibilities without renegotiating related compensation/title/recognition that you feel most comfortable with.
- Micro-Management/Oversight: You have been delivering good results and have a well-established work flow, but suddenly, your boss decides to micro-manage or have someone else oversee what you do. Address those types of conflicts by asking smart questions proactively.
- Colleagues: Are your colleagues disgruntled about working for the firm? Do they have plausible concerns about the fund manager?
Many of us have numerous observations each day, some of which are worth ignoring and others that are important to pay more attention to. Based on my experience, I find that it helps enormously to stay focused and reflect periodically on what kind of people and organizations I work with.
At the end of the day, success depends on not just the nature of the products and service we deliver to our clients, but also what kind of people we partner with.
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