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Volume #4 TL;DR:

Attributes of ‘Humanness’ I assess:

• Level of self-reflection & self-awareness

• Willingness to be truthful & honest at all costs / Integrity

• Decision-making patterns (i.e. tearing down the initial yes vs. slowly coming to conclusions)

• Fears & insecurities

• Right balance of thoughtfulness & conviction

• Depth and width of intellect

• Personal value system

• Emotional & behavioral patterns

• Shaping journeys of personal formation (upbringing, friendships, etc.)

• Etc.

Table of Contents

• The Manager(s): Humanness & Profession

• What Is Humanness

• The Attributes of Humanness

• What Moves You Will Move The World

The Manager(s): Humanness & Profession

1. The Manager(s)

2. The Strategy

3. The Track Record

4. Fund Operations

The Manager(s):

LPs underwrite people who underwrite people. So, when conducting due diligence on Emerging Managers, it is critical for Limited Partners to gain an in-depth understanding of how the GP invests, advises, and walks with people. In order to understand that, you have to understand who the Emerging Manager is as a person, what their life has been shaped by, their value system, their general level of thoughtfulness, their decision-making patterns, etc. But the LP also has to look at the professional formation of the Emerging Manager. This entails work experience, education, technical expertise, operational experience, etc.

I call these two parts of my diligence of ‘The Manager(s)’: Humanness & Profession.

The concept of Emergence follows that the whole is often greater than the mere sum of its parts. This means that when the Emerging Manager integrates their Humanness with their Profession it should create a whole in which both parts amplify each other exponentially and not linearly.

The Humanness should be fruitful soil for the Profession and the Profession fruitful soil for the Humanness of the Emerging Manager.

What Is Humanness

I define the Humanness of Emerging Managers as such in my approach:

“Humanness describes the personhood of the Emerging Manager, what shapes their thinking, behavior, and approach to life and people. This in combination with their professional experience and expertise lays the foundation for the successful pursuit of the Emerging Manager’s investment approach and fund strategy.”

I recently heard Daniel Kimerling from Deciens, an Emerging Manager I think incredibly highly of, say the following in a recent podcast episode (I’m paraphrasing):

“As an Investor you have to be 50% Investment Banker, 50% Management Consultant, and 50% Rabbi.”

First of all, the math doesn’t quite add up, which I believe is part of the point. Emerging Managers have to unify such a unique combination of personhood, experience, and wisdom that it is pretty much impossible to unify all elements in one person. And yet, every now and then, you come across an Emerging Manager who does just that.

Further, Emerging Managers do not only have to be 50% Investment Banker, 50% Management Consultant, and 50% Rabbi, they also have to discern when to be what and when to be what in what ratio.

Ergo, it takes a special kind of person with equal unique human experience, richness, professional experience, and expertise. Only when Humanness and Profession merge in such a way is when I will consider investing.

The Attributes of Humanness

The journey of an entrepreneur is oftentimes somewhat of a spiritual journey. It is one of hardship, facing inner demons, embracing insecurities, and relentless pursuit. The best Emerging Managers I know personify the role of a coach and trusted sources of wisdom. Their ears are more active than their mouths, they speak the truth and give counsel that goes beyond business - they are “50% Rabbi”.

This requires an incredible amount of self-awareness, reflection, honesty, thoughtfulness, conviction, a personal value system, etc. It goes far beyond job experiences or a college degree. And yet, this part of the Emerging Manager is what can open doors to the best-priced friends and family rounds of a company, create a position of influence in a company, and most importantly: it can keep the founder on the right track.

The “50% Investment Banker” is needed since the right deals need to be found, picked, won, terms negotiated, returns modeled, etc.

This is everything else but easy.

And finally, the “Management Consultant”, brings the skill of advisory, strategic directions, and support in decision-making to the table.

A book could be written about what kind of human attributes an Emerging Manager should unify, but below is a list of what attributes I asses:

• Level of self-reflection & self-awareness

• Willingness to be truthful & honest at all costs / Integrity

• Decision-making patterns (i.e. tearing down the initial yes vs. slowly coming to conclusions)

• Fears & insecurities

• Right balance of thoughtfulness & conviction

• Depth and width of intellect

• Personal value system

• Emotional & behavioral patterns

• Shaping journeys of personal formation (upbringing, friendships, etc.)

• Etc.

As I keep building Embracing Emergence and what I envision it to be, I will have more opportunities to dive into these various aspects and will continue to share insights into how LPs can assess these traits.

But in short: at the beginning of the diligence process, nothing is more important than what questions the LP asks, how the LP asks the questions, and how the LP observes the answers. When observing the answers of the Emerging Managers, LPs should not only recognize what is being said, but what is not being said. Silence can often be the most insightful. It is also important to track the pattern of answers and ensure that the Emerging Manager gives answers that form a cohesive picture of a person - the insights should not contradict each other!

What Moves You Will Move The World

I recently listened to a podcast diving into different motivational drivers behind human behavior as it relates to behavior in leadership positions. The podcast outlines the misconceived notion that postmodernism has formed, which suggests that most human behavior and almost all leadership is motivated by the acquisition of power.

The point that can be made, based on psychological studies, is that it is intrinsic to our human nature to find meaning and fulfillment in supporting others in a way that uplifts, increases their potential, and enables them to pursue goodness. It is proving to be the most rewarding for people when they practice an outward focus on others, investing themselves into the flourishing of the people around them.

I recommend listening from 1:10:00 below:

Here is how it ties back to the Humanness I assess in Emerging Managers. Emerging Managers need to have mastered the skill of play with a variety of different people and personalities. They need to be charismatic, intellectual, open minded, trusting, giving, and supportive people, who can invite the engineer, the 2nd generation family office representative, the tech billionaire, the college drop out, the insecure genius, etc. to play with them. This play manifests itself in an instinctual behavior to build trust and care for other people.

Only when understanding who the Emerging Manager is as a person, what shapes them, and what guides their decision making beyond their professional experience and expertise - only then the LP can assess the EM’s ability to attract capital and access and pick the best founders.

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