This interview with Alpine Investors Founder Graham Weaver was originally published on Medium by Authority Magazine. Read the original post here.
Thank you so much for doing this with us! Can you tell us a story about what brought you to this specific career path?
I pushed myself hard academically and athletically in college and landed in an analyst program on Wall Street at Morgan Stanley in their private equity program. I got a fair amount of exposure to the business world during that program but I also learned that Wall Street wasn’t for me.
I left Wall Street for business school. The fall of my first year, I started trying to buy companies on my own. I didn’t have a fund, I had no money and I was in debt. Stanford didn’t have class on Wednesdays, so I would take red-eye flights Tuesday night after class to the East Coast to visit companies and fly back late Wednesday night. I finally convinced an owner of a small label printing company to sell me his company and then spent the next three months doing bank meetings and meeting with investors to try to raise the money. This was the beginning of what would become Alpine Investors.
Can you share the most interesting story that happened to you since you began leading your company?
I started Alpine in my dorm room while I was in business school, and I made just about every mistake you could make in the early days as I gained my footing.
Probably the most transformative moment was during the depths of the Great Recession in 2009. I remember it incredibly vividly because it changed everything. I was sitting at my desk feeling super anxious, as I was most of the time during that period. I had near-constant racing thoughts about how the economic backdrop was affecting our firm, and I felt the weight of my responsibilities bearing down on me. I had recently hired my first ever executive coach, JP Flaum, and we were scheduled for a call, but I was so busy that I felt I didn’t have time to talk. One of the cardinal rules in working with an executive coach is making a true commitment by not canceling sessions simply because of a packed calendar. Still, I texted JP to tell him I wasn’t going to make it. He wouldn’t accept that, and he held me accountable. We had the call.
As we started our session, I was a little scattered. I told him I had to fly to Dallas and fix a problem with a portfolio company… I was worried about a deal we could potentially lose… We just lost a major customer in Chicago… I’d also have to fly to Washington, D.C. to put out a fire… On and on I went. JP finally got a word in and told me to slow down and tell him a little more about the issue in Dallas.
I told him how the company had been missing projections and how the recession was impacting the business. His response was, “How would you rate the CEO?” I was confused and not really sure how the question was germane to the conversation. I told him that the company’s issues were related to the Great Recession. I think I actually said, “Have you seen the news in the past six months?” He patiently asked the question again, “So, how would you rate the CEO?” After some thought, I told him I guessed the CEO was a “B” (which in hindsight was probably a generous rating). JP reminded me that I’d told him I wanted to build the greatest private equity firm of all time. He continued, “How do you plan to do that while employing ‘B’ CEOs?”
The question hit me like a ton of bricks. He added, “Graham, if you’re someone who keeps a ‘B’ CEO, how would you rate yourself as the CEO of Alpine?”
As we progressed through the crises facing me, I realized they each shared the same root cause — having the wrong person in the wrong role. I had been running around extinguishing fires rather than fixing the real problem — the people.
That was my “a-ha” moment. I realized that while I technically ran a private equity firm, my actual business is the talent business. It quickly sunk in that the highest use of my time is to hire, train, and retain the best people. So, we redesigned Alpine to focus our resources, time, and energy on becoming a firm focused first and foremost on talent. Our results started improving meaningfully and in short order. We’d found our secret sauce, which ultimately led to the CEO-in-Residence, CEO-in-Training, and undergraduate internship talent programs that remain the driving forces of our business today.
Are you working on any exciting projects now? How do you think that will help people?
I’d say that every one of our investments is an exciting project! Alpine invests in software and services, and I’m particularly proud to be involved in the EdTech sector. We all know that the pandemic and public health measures enacted to mitigate COVID presented challenges for K-12 in-person learning over the past two years, but America also has a more deeply rooted problem with equitable access to education. We recently acquired an online tutoring company called FEV Tutor, which aims to bridge the gap by providing tutoring access to students of all demographics. We are really excited to help them scale nationally.
We also launched Alpine Social Ventures (ASV), our social venture accelerator that supports entrepreneurs interested in impacting the world as a Force For Good. So many social entrepreneurs have incredible products and services that will solve a real problem, and there was a hole in funding for these ventures. ASV will provide these entrepreneurs with a peer group, mentorship, access to capital, and access to Alpine’s training and business operations playbook. The inaugural class of ASV Fellows started in August 2022 and will develop ventures that impact healthcare, climate, and refugee work.
Ok, let’s jump to the main part of our interview. According to this study cited in Forbes, more than half of the US workforce is unhappy. Why do you think that number is so high?
I think there are two reasons. First, leaders don’t consider employee engagement a priority that falls on their plate, and second, as the Forbes study said, they don’t know how to engage employees.
There are two essential employee engagement metrics that you can quantify — employee net promoter score (NPS), i.e., “Would you recommend this company to a friend?” and employee retention. I will throw out something that not many people may agree with me on — I believe that leaders, CEOs, and managers need to prioritize these metrics, and they need to own them — not outsource them to HR.
Most leaders focus on metrics like revenue and EBITDA. These are great lagging metrics, but employee NPS and employee retention are leading metrics. They are measurements of your culture, which ultimately will be a strong predictor of how you will perform in the future.
How should leaders focus on these metrics? In addition to measuring the scores across their business units, they should ask specific questions related to the culture. Then, they should listen to the answers and take action. It is not tremendously complicated. Leaders are typically good at solving problems — they just don’t consider employee engagement and company culture to be problems they should be solving. And I think it is the single most important problem they should be solving.
Over the years at Alpine, we have scored poorly on many different metrics we measure — work/life balance, compensation, benefits, mentorship, feedback, communication, and recognition. And we dig into the issues, listen to employees, and take actions to improve. Often the solutions are not quick fixes and can be costly in terms of time, money, or resources.
Based on your experience or research, how do you think an unhappy workforce will impact a) company productivity b) company profitability c) and employee health and wellbeing?
One of the greatest costs to an organization that doesn’t appear on the P&L — at least not in the short term — is employee churn. Turnover is incredibly costly. The tangible costs of churn are relatively easy to measure; recruiting costs, training costs, and separation costs from exiting employees. But these tangible costs just scratch the surface. Consider the productivity and skills of an employee you have trained for three years compared with one who has been with you three weeks. Now multiply that delta across your entire organization — the difference is staggering. Ultimately, poorly trained employees will cost you customers.
In addition, high churn creates a poor culture. People don’t want to invest in relationships that they don’t deem to be recurring relationships. Employees aren’t going to form close bonds with their co-workers if they know they or their co-workers aren’t going to be there long. This creates a vicious feedback loop and, left unchecked, has the potential to impair a business significantly.
Disengaged employees who stick around are often even more harmful. These are the employees who would like to quit but either don’t even have the ambition to quit or are not good enough to be employable in the outside world. They can be cancer for your customers and other employees. In our experience, the price of keeping disengaged employees over time is the loss of your top performers who what to operate in a high-performance culture.
Most of us spend about half our waking hours at work. If we spend that half our life disengaged in a place where we don’t feel valued, that will have a significantly negative impact on our self-esteem, confidence, and relationships in the other half of our life. How could it not?
Can you share 5 things that managers and executives should be doing to improve their company work culture? Can you give a personal story or example for each?
Hire for Culture and Get your Hires right
When we were small, our entire firm sat around a single table and we vowed not to grow. We said we wanted to maintain the wonderful culture we had and we worried growth would kill it. And then we added an amazing new employee and the culture improved. And then that happened again and again.
The single most important ingredient in a culture is who you hire. This likely sounds obvious, but time and time again, I see leaders miss this. New hires go on the to-do list, and we want to get them off the list as fast as possible. So, we take shortcuts. We don’t put in the energy developing a good pipeline of candidates. We ignore yellow flags. We settle for “good enough.” But every hire you make either adds to — or subtracts from — your firm’s talent and culture. There is an expression that A’s hire A’s and B’s hire C’s. So as soon as you settle for a B in your management ranks, you will likely settle for B’s and C’s in that entire department. In 28 years in private equity, I’ve never seen an A report to a B for any length of time. Spend the time you need to spend on hiring. There’s likely nothing you’re doing that’s more important.
Hire for attributes over experience.
Early at Alpine we celebrated when we landed a “celebrity” CEO in one of our companies. This person was a 20+ year veteran and well-known in the industry. We exhaled knowing the CEO would turn around the company. But the industry had evolved. In many ways the CEO was a victim of his own success. He CEO wasn’t interested in learning or changing. After several years of poor performance, we fired him and out of necessity, we put in someone who we trusted from the Alpine ecosystem. This new person had no experience in the industry, but understood what it took to build a great team and to focus that team on a small number of priorities. The new CEO turned around the company, which ended up being one of the best investments in that fund.
Hiring for experience says that you should hire someone who has 15 years of experience doing X, Y, or Z. Hiring for attributes means you hire someone who might have the attributes you want but not the experience. The high attribute person might have grit, persistence, the ability to build a team, and the ability to sell, but not have worked in the company’s industry. Hiring for attributes also significantly widens your employee pool and allows you to create much more diverse workplaces because you’re not choosing from a pool that was determined 15 years ago.
Give away responsibility early
When I graduated college and started work at an investment bank, it was very hierarchical and limiting. I don’t think I used more than 5% of my capabilities in that role. Three of the five analysts in my group quit before our two-year program ended. Studies have shown that one of the top predictors of happiness at a job is the degree to which individuals feel like they have control over their time and work. A close second is the amount people feel they are learning and growing in their roles. High levels of empowerment allow us to achieve both. People learn by stretching out of their comfort zones.
One simple way to increase empowerment is to be super clear about who owns what decisions. A famous example is the Nordstrom customer service agent who can personally fix any problem for an employee up to $100. That makes the employee enjoy their job much more and creates a way better experience for the customer. An example of this at Alpine is that we let junior analysts decide to kill a deal, get on the phone with a founder, spend money, and visit companies very early in their careers, but they need approval of the deal partner to submit an offer. They know where to go to get that approval and can typically get the approval in 24 hours. Clarity in decision rights allows people to make more decisions themselves, move faster and enjoy their jobs more.
Don’t accept high churn — in any department
We talked about it earlier — churn kills your culture. Whether you’re hiring first year analysts or employees in a call center, you will be well served to create career paths for each employee so they can see themselves continuing with your firm. This is not easy, and the career paths are not always obvious. Focusing on retention costs a lot of time and money, but nearly all good cultures have this single thing in common.
Listen to people. Survey them. See how satisfied or unsatisfied they are, and the dive into causes. You will likely hear some things you don’t want to hear. But would you rather hear what needs to be fixed or just watch employees leave? I think in some ways, the Great Resignation was really a negotiation. People finally realized they could vote with their feet. They weren’t happy, and they took action by leaving. Companies that listen better and respond in a timely fashion won’t be caught flat-footed, and they’ll know what they need to fix.
It’s very nice to suggest ideas, but it seems like we have to “change the culture regarding work culture”. What can we do as a society to make a broader change in the US workforce’s work culture?
Peter Drucker once said, “What gets measured gets managed.” We took that to heart at Alpine by publishing employee net promoter scores across all companies every quarter. The board leads of each company sees these numbers and holds CEOs accountable to them. If I see a CEO who consistently has low employee NPS or high employee churn, that is a conversation we’re having at the board level and it is something that needs to change. Building companies where employees want to work is one of our core values at Alpine, and high employee NPS is also the leading indicator to success in the long run.
One way to fix this nationwide would be to start by having all companies publish the employee data publicly (like a mandatory version of GlassDoor) and then have boards hold CEOs accountable to the metrics. By the way — boards should be doing this regardless of their position on social good. There is no better leading metric for business performance.
How would you describe your leadership or management style? Can you give us a few examples?
I have a few principles that I rely on to help me as a leader.
- Make Alpine a place where the best people want to come to work and could see themselves spending their career. Invest the time, dollars, attention and resources to make this a reality. Almost always make the decision which will solve for keeping our best people. Even if we need to create new roles, be flexible, give them decision rights.
- Focus. Be super clear with the entire organization about what is most important. Get everyone aligned on these priorities (we us a “one-page-plan” as the tool). Over-communicate these. Then give the team permission to NOT do the other things.
- Compensation is based on team performance versus eat-what-you-kill. Your main compensation (carried interest in the fund) requires your colleagues to win too.
- Don’t be afraid to fire test bullets. Try things on a small scale and give people permission to make decisions and act quickly.
- Spend time working on our business, not just in the business. Don’t just do deals, but step back and look at the people, processes and innovations which will make us better in the future.
- Schedule time to think. We have brilliant people. Give us space and time to step back and ask and provocative questions. Thinking is one of the most underutilized management tools of all time!
- Scale the bright spots. The single greatest strategic statement of all time “Find what’s working and do more of that.”
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
When I look back, I’ve had so many people help me that it would be difficult to name them all. My parents, siblings, family, and friends have all been enormously influential. I have truly been blessed with the people in my life.
Within the business world, the person who has probably had the most influence is Irv Grousbeck. He was an early entrepreneur in cable television who went on to a distinguished career teaching at Stanford’s Graduate School of Business. Today he’s actually a co-owner of the Boston Celtics. Irv is a legend at Stanford, and I got to take his class on entrepreneurship while getting my MBA.
The class was incredible, and it helped push me toward founding Alpine out of my dorm room before I even graduated. We stayed in touch over the years, and he consistently offered me advice and positive reinforcement whenever I needed it. Early on, I needed it often! He was one of the earliest investors in Alpine, which was a big boost of confidence to me. Eventually, he wrote a case study about me buying companies in my dorm room, and I spent a day in his class as the case guest speaker to walk through the real-life step-by-step of what Irv was teaching them. It was exhilarating being a case guest, and it was often my favorite day of the year.
About ten years ago, Irv called me to tell me he was going to stop teaching that class, and he invited me to teach it going forward. My first reaction was that I had an all-consuming job already, but luckily, I took some time to think about it. My family and friends knew how much I enjoyed Stanford and being a case guest speaker, and they encouraged me to consider it. Teaching at Stanford is one of the best things I’ve ever done.
I’ve modeled a lot of my personal and professional life after Irv. He is one of those people who walks the walk, so I’ve learned as much from watching how he treats people and how he conducts his life as I have from what he said in the classroom. He treats everyone like they’re the most important person in the world and has an admirable level of patience and humility. And by the way, there are probably a hundred people who would cite Irv as their greatest mentor if asked the same question.
How have you used your success to bring goodness to the world?
Growing Alpine has allowed us to create and expand the firm’s CEO-in-Training program, hiring leaders directly out of business school. Similar to how Alpine hires employees, the program hires people based on key attributes that can be leveraged in the workplace — emotional intelligence and humility, for example — rather than focusing simply on past experience. We know that past experience could easily be a function of systemic inequality and that hiring solely based on it could simply perpetuate society’s biggest problems and shortcomings. If we simply hire CEOs from competitors, all we’re doing is rearranging the existing chess pieces instead of widening the pool and adding the real value we are striving for. That philosophy has led to more than 40 people from our program becoming first-time CEOs, and 72% of them have come from underrepresented minority groups. Sixty-one percent identify as female and 39% BIPOC.
Another big way I think we’re bringing goodness to the world is by creating great cultures across the portfolio companies in which we invest. We often increase the employee NPS significantly across our portfolio after we invest in companies, which is incredibly rare in private equity. I think this has an enormously positive impact on the world because employees who are engaged, happy and feel good about themselves at work will show up better in the rest of their lives and in their families and communities.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“The ‘how’ is the killer of all great dreams.” — anon
I’ve talked to an executive coach every week or every other week since 2009. One of my executive coaches originally shared this quote with me.
The quote resonates with me in that it frees me to think about what I really want — i.e. If I knew I wouldn’t fail, what would I dare to take on? It is much easier to answer that question without needing to know “how” you are going to get there. Get your head out of the way and allow your heart to really choose what you want for your life.
I have learned that once you truly answer the question “What is my dream?”, you will be able to construct a path to get there, and more importantly, you’ll be willing to persist through decades of ups and downs to achieve it. So let the “how” go initially and just focus on what you want — and trust that you’ll figure out the how!
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
If my greatest influence could be a single simple message, it would be — your people are capable of way more than you think they are, so treat them that way. Build incredible workplaces where employees want to work and where they have permission to try, fail, and be themselves. In my career, I think I’ve proven that focusing on employee happiness, retention, and empowerment can lead to excellent performance. And it makes a way more fun and rewarding journey for everyone in this one and only one life we have.
Thank you for these fantastic insights. We wish you continued success!