On Being “Weird” for 25 Years (and Counting)

What 25 years of doing private equity differently has taught us.

Technically, Alpine Investors is a private equity firm. But if you take a deeper look—inspecting what lies underneath every investment, advancement, and activity—you’ll find something you might not expect to see: a firm whose purpose and mission is “Unleashing Heroes.” If you think that sounds like a weird focus for a bunch of “finance people,” you’re absolutely right. But as I reflect on Alpine’s 25th anniversary, I’ve learned that perhaps the weird is where all the good stuff comes from.

Our version of private equity hinges on introducing world-class leadership to grow middle-market companies. We’ve lived firsthand the asymmetric upside and the conspicuous cultural impact of bringing in a mission-driven leader who engages employees deeply and drives remarkable results. For years, this practice has allowed us to “fish in a different pond” for businesses that, for their own unique reasons, don’t necessarily come with ongoing management. The idea is to buy well and build well to consistently drive exceptional investment outcomes. There’s abundant commercial rationale for our PeopleFirst philosophy, to be sure. But I’ll admit there’s also a deeper, more personal rationale, too.

Put simply, our world needs more great leaders: exceptional servant leaders who combine unwavering character with a white-hot will to win and a profound personal humility. We need leaders who care deeply for the mission they serve and the people they are entrusted to lead. Show me a competent leader with powerful followership and a team committed to a “big why” that stirs the soul, and I’ll show you a business that wins.

Anyone who’s been a part of a high-performing team knows what I’m talking about. We all want this dream state for ourselves. But how exactly does that dream come about? What are the actual mechanics of that magic?

At Alpine and in our portfolio companies, I think the magic of unleashing heroes can be reduced to three main things.

“The day soldiers stop bringing you their problems is the day you have stopped leading them.” -General Colin Powell

Without question, the first thing is the leader. Conventional talent acquisition is based on hiring great resumes—people with proven experience. At Alpine, we value experience too, but we’ve chosen to focus primarily on hiring great attributes—people with winning personal characteristics. While that concept may sound simple, putting it into practice with every hire is really difficult. Imagine an entire investment firm devoting decades of time to building the infrastructure required to deliver this PeopleFirst model across hundreds of deals each year. It’s taken us countless iterations, and we’re still always building and refining, constantly asking ourselves important questions to sharpen our point of view: What personal characteristics of a leader are most predictive of success? How can we best evaluate whether a candidate truly possesses those successful characteristics?  And then ultimately, how can we reliably attract these special leaders to an altogether different type of private equity proposition, one where we invest in the leader first, before we invest in the company they’re going to run?

Our talent-centric dream has always inspired us, but it was the early bright spots we encountered, combined with consistent application of the mechanics over time, that led to our sweeping conviction to go all in on this PeopleFirst model. About 15 years ago, we totally committed our investing strategy and all our firm resources to finding, underwriting, developing, and deploying attribute-rich Alpine leaders into largely founder-owned middle-market companies. It has been the best decision we have ever made.

Now, we hire everyone from summer interns to senior executives with the intention of a lifetime relationship. Most of our platform leaders come through two distinct programs, each designed for a different background and career stage. Our CEO-in-Training (CIT) program recruits high-potential MBA graduates and places them directly into operating roles at portfolio companies, accelerating their development into CEO-ready leaders faster than any traditional path would allow. Our CEO-in-Residence (CIR) program is built for seasoned executives who bring deep industry experience and a vision for what they want to build. Alpine backs them before a single acquisition is made and constructs the platform around them (literally People, First), reinforcing their development trajectory with CEO peer networks, executive coaching, and a set of repeatable and scalable operating practices. We’ve created similar programs across other executive roles, building a funnel of high-attribute leaders throughout the organization. The ultimate goal is a recurring model for values-aligned, playbook-trained homegrown talent that becomes more formidable over time. Our PeopleFirst leaders are the business-building cornerstone of ultimate investment success.¹

“Make each day your masterpiece.” -John Wooden

Which brings us to the second element of the magic: what we call the PeopleFirst Operating Rhythm (PFOR), a set of regular practices all of our leaders follow. A one-page strategic plan, quarterly all-company renewals, board meetings that don’t just track financial performance but also focus on employee NPS, customer NPS, and the leading indicators of competitive distinction. Add-on integration models rooted in a culture playbook for enrolling every employee into the high dream of the company. Clearly defining for each employee how what they do this quarter connects to the company’s overall objectives. Empowering our people to go beyond the task level—not just “hammer the nail,” but instead to observe, take initiative, and deliver outcomes based on developing a better way of doing things rooted in extreme personal accountability.

Speaking of getting better, a central tenet of PFOR is a cultural commitment to innovation. Our companies operate with a habit of quarterly OFI (Opportunity for Improvement) projects that are sourced from all-employee reflections on the company’s bright spots and shortcomings. Cross-functional teams self-organize, identify the opportunity, design and build the solution, and then land the gains in a period of 90 days. Our teams do this over and over and over again, compounding continuous improvement every quarter, every year.

Time and attention in this operational realm reside way below the typical high-level purview of most private equity investors. Of course, every PE investor seeks a great investment outcome, but most don’t know or even care to know about the fundamental mechanics of how that greatness can be rooted in regular leadership habits and operating discipline. In fact, chances are I’ve probably already lost most readers with this part of the story. I get it. Words like “habits” and “operating model” don’t sound sexy to me either. But, as my own experience as a CEO would suggest, greatness in anything—not just business building—comes from a leader and a team that are consumed by the everyday process of becoming great. Making each day your masterpiece—or at least the dutiful habit of becoming a little “less wrong” every day—is essential to reaching any aspirational and worthy goal. This mindset, applied consistently over time, leads to successful investment outcomes, grateful founders, and unleashed heroic leaders and employees who are fulfilled knowing they are building enduring purpose-driven companies.

“The most powerful force in the universe is compound interest.”           -Albert Einstein

The third element of magic is best summed up by the great Charlie Munger: “The first rule of compounding is to never interrupt it unnecessarily.” The traditional market forces that act on private equity compel firms to sell their best companies to realize great returns in order to raise their next fund. Rinse and repeat. Many years ago, we asked ourselves a pivotal question: What if we did the opposite? What if we watered our flowers and cut our weeds? Like any firm, we have good deals and less good deals. But as students of Buffett and Munger, we know that you can’t eat IRR. We exist to grow companies and grow people to achieve things they might not have realized they were capable of achieving. And the principle of long-hold compounding for our best businesses—and our best leaders—has made this possible.

It turns out the story of Alpine itself is a terrific example. As our own Graham Weaver wrote about in his reflections on our anniversary here, we made a lot of mistakes in our early days. At times, we invested in companies that lacked a compelling reason to exist and inherited leaders who were not always the “attribute-rich” profile I’ve described here. We “hustled and scrambled,” only to deliver somewhat inconsequential returns. It wasn’t until years later during the Great Financial Crisis that we forced our own reckoning.

At that time—between 2009 and 2012—it was hard to raise a new fund. Lehman had collapsed, and investors were retrenching. Our performance as a firm was good, but not great. We knew we had a team of exceptionally committed people we cared a lot about, but we had to look in the mirror and decide who and what we were endeavoring to become. We landed on a very important question that would change the course of our firm to this day: “What would have to be true for Alpine to become the best-performing private equity firm of all time?”

It took us two years of tedious and exhaustive internal reflection and strategy work to answer that question properly.

Our answer resides at the intersection of three other derivative questions we confronted, popularized by Jim Collins’ “Hedgehog Principle.” First, where could we conceivably lay a claim to being the best in the world? Second, what really drives our economic engine? And third, what are we deeply passionate about that stirs our soul? For us at Alpine, it was Leadership Talent, Proprietary Sourcing, and Unleashing Heroes. But it wasn’t just our point-in-time answers that led us to immediate success with our PeopleFirst strategy; it would be the ongoing habit of daring to regularly ask the questions themselves. The audacity of our pursuit forced us to show up differently.

And so it is today—with each and every one of our portfolio companies—that our leaders are “Alpine people,” our companies must grind to articulate and then execute against their unique competitive moat, and our horizon must be long. But I think at the end of the day, the most important part is that our people must feel part of something bigger than themselves so that they make uncommon commitments to serving the mission they’re pursuing and to serving each other as loyal teammates.

Personally, it feels a little overwhelming to reflect on the entire Alpine journey—probably because I’m just so grateful for it all. The bumps and bruises, the victories, and most of all the remarkable people who have conspired together to make Alpine what it is today. They say over time you become the people you work with and if that’s true, I’ve certainly become a better, more intentional human. Like any organization, we are far from perfect. But I’m proud that we stand for something I believe in and I’m personally honored to be playing a small part in so many people’s hero stories. Endeavoring—in the words of the late Steve Jobs—to make our own small dent in the private equity universe.

If all of that sounds like a weird or romantic notion, well maybe it is. But remember where all the good stuff comes from. Here’s to another 25 years of weird.

Disclosures and Endnotes

This article is provided for informational purposes only, is not investment advice and does not constitute an offer to sell, or a solicitation of an offer to buy, interests in any Alpine Fund. Past performance, including performance by prior Alpine Funds, is not indicative of future results. Portfolio company performance is presented for illustrative purposes only and does not represent the performance of any Alpine Fund as a whole.

(1) Compensation, expense reimbursements, and equity interests received by CIRs, CITs, PeopleFirst Executives, and Alpine Operations Group professionals are generally borne by the applicable Alpine Fund(s) and/or portfolio companies without offset to the management fee.