“Some cause happiness wherever they go; others whenever they go.” -Oscar Wilde
Our firm has a strict “no asshole” policy. When we explain the rule to others, they inevitably chuckle and nod. It seems as though everyone can identify with the miseries that invariably accompany such folks.
Adventur.es takes a proactive, zero tolerance approach to assholes. We have no tolerance for dishonest, manipulative, belittling, or egocentric individuals. No tolerance for the rude and obnoxious. No tolerance for employees or partners who play politics, or cut corners. No tolerance for those who focus on how to get the most, the quickest.
This policy has cost our firm and our portfolio companies a great deal over the years, including profitable clients, exceptionally smart talent, and financially near-perfect acquisition opportunities. Yet every temporary setback has been well worth it, setting us up for the best possible long-term outcome.
A POLICY IS BORN
“Graveyards are filled with indispensable men.” -Charles de Gaulle
Our “no asshole” rule originated as the result of trial and error, with an emphasis on the error. Early in our existence, we had a fast growing portfolio company fail for all the wrong reasons -- it was full of assholes. From the outside, the company looked like the definition of success. It was packed with heavily-recruited, talented individuals who were capable of delivering outstanding work. Bigger and bigger clients signed on board and the ranks grew.
Despite the success, there was constant chaos. Factions formed, operational metrics fluctuated wildly, and conflict was common. The perceivably irreplaceable skill sets emboldened some to push the boundaries of acceptable behavior, often with little recourse.
While management spent time playing conflict mediator between team members, the far more debilitating network of systemic problems went unconnected for far too long. This network included, among other things, output errors, unidentified customer frustrations, increased absenteeism, and, eventually, substantial losses.
A study by Georgetown University quantifies the “asshole problem.” Of those surveyed who had been on the receiving end of incivility, over half said that they lost time avoiding the offender (63%), that they lost loyalty to the organization (78%), and that their work suffered (66%). Just under half reported that they intentionally decreased their work effort (48%) and intentionally spent less time at work (47%).
It’s not just employees who suffer. In one experiment, a bank representative humiliated another employee in front of customers. Of those who witnessed the encounter, only 20 percent said they would use the bank’s services in the future. If you see an asshole in action, it’s easy to imagine how your next encounter will turn out.
Out of our early experiences we developed a common goal: Do what you love, in a place you enjoy, with people you admire. Oh, and no assholes… ever.
ACQUIRE WITH EXTREME CAUTION
As we’ve painfully discovered, no deal is good enough to justify being in business with bad people. Back in 2010, we had an employee bring us what looked like a fantastic opportunity. On paper, the deal would return our capital in less than two years by leveraging operational and client efficiencies.
The first meeting went ok, with the deal being as described -- lots of opportunity and seemingly little risk. It was the kind of deal that investors dream about. But something felt “off.” The personalities involved were challenging to say the least and there was an added husband and wife dynamic. The second meeting went poorly. Lots of ego-filled head-butting amongst the proposed management team. But the strategy developed was sound and the numbers continued to look even better. We pulled the trigger.
But as we learned, dreams can quickly turn into nightmares. The management team flamed out almost immediately. The husband and wife closed rank and blocked any progress. Egos flared and the work environment became hostile. What was a low-risk, high-return opportunity reversed course and we ended up losing money.
An interesting thing has happened since we started emphasizing the no asshole policy. We began attracting a different type of intermediary and seller. Turns out there are assholes in private equity (who knew?) and some sellers are more interested in finding the right buyer than getting the highest price.
ASSHOLE ACID TEST
Almost everyone, including jerks, agree that a workplace free from assholes is attractive. This makes the hiring process incredibly important and we place a large emphasis on culture fit across our companies.
The Georgetown University study found that only 11 percent of organizations consciously evaluate a candidate’s character and treatment of others throughout the entire interview process. Perhaps the majority of companies should learn from Southwest Airlines, known for their culture, who uses a hiring principal known as, “hire for attitude, train for skill.” While it’s not always feasible to train the skills required, it’s certainly a good place to start.
In software there is a concept called “code debt,” which refers to future liability for continually patching bad code. The little fixes that save time in the short term, create a ticking time bomb. Eventually the system blows up and costs a tremendous amount of time and money to fix. But until that event occurs, things look considerably more profitable. Culture operates identically. Companies can offer retention bonuses and cajole a rosy facade for a while. Eventually though, the underlying issues show and the culture debt is paid.
We encourage our management teams to employs the same practices we use to identify culture fits. There are two almost sure-fire ways to understand someone’s perspective. The first is to eat with them. How do they treat the wait staff? Are they demanding, or easily agitated? What happens when things aren’t perfect? The other test is to meet their significant other. What qualities did they choose in the person who has the most influence over them? We call these the “asshole acid test.”
THE LONG GAME
Some companies can seemingly operate well with personalities of all kinds. We can’t and won’t. Life is too short to work with those you don’t admire, regardless of immediate cost. Ultimately we believe it results in both higher profits and greater happiness. Not a bad combination.
If you’re an intermediary focused on the “right fit,” or a seller concerned with finding a caring, permanent home for your company, feel free to give us a call (573.445.0678), shoot us an email, or even fire off a tweet. We’d love to chat.