The Three Most Important Cultural Decisions We Made at Alpine
How attributes over experience, extreme empowerment, and building lifetime relationships helps us hire—and retain—the best of the best.
“Culture eats strategy for breakfast.”
– Peter Drucker
We’ve heard and read a lot about the importance of culture. Culture seems to be one of those business school buzzwords that gets used and abused and means very different things to different people. For some, talk of culture conjures up images of people being nice to each other, free lunches, or day care, and for others, it conjures up images of the workspace or dress code.
Common phrases I hear from students or leaders:
“I didn’t hire her because she didn’t fit with the culture.”
“I don’t work there anymore because I didn’t like the culture.”
“Our culture has eroded as we’ve grown.”
The best cultures are not amorphous, squishy, or ephemeral. They are instead a series of decisions a firm makes regarding very tangible things, including:
Who gets hired?
Who leaves?
What behavior is tolerated, rewarded, or celebrated?
How do people engage with each other?
What is the frequency and format of meetings?
What is measured, tracked?
How do we set goals?
What is the construction of a team?
Are business units formed around products, functions, or silos?
Are people compensated and promoted based on merit, tenure, teamwork, and/or individual contribution?
Decisions around areas like those above might not sound as fun/sexy as ping pong tables, sushi lunches, and yoga mats, but they are far more important. These tangible decisions define what it is like to work in an organization, how the organization functions, and, as Peter Drucker states in his quote above, they often have more to do with a company’s success than strategy does.
I’m going to share what I think are the three most important—and very intentional—decisions we made regarding Alpine’s culture.
1. We Value Attributes Over Experience
We have found that a person’s attributes are more important predictors of success than their experience—especially when measured over the long term. In other words, who someone is at their core matters more than where they’ve worked in the past. Attributes we look for include integrity, character, drive, leadership, ability to sell, intellect, emotional intelligence, people skills, a will to win, grit, and persistence. We test for these attributes using reference checks and carefully-formulated interview questions we’ve refined over the years.
For most roles, we are willing to compromise on a candidate’s experience. For example, nearly all of our investing analysts begin as interns—they join us for the summer between their junior and senior years of college, and most have never worked a day in finance. Many don’t know a balance sheet from a music sheet.
Those who do well in these roles become analysts. In the early days, because these analysts don’t come from the industry, they are less knowledgeable and require more training. We invest in them and teach them how to read financial statements, build financial models, and analyze companies. But over time, their extremely high attributes give them a steeper trajectory than other analysts, and after about 9-12 months, they surpass where the more traditional analysts would be. They continue this trajectory throughout their careers at Alpine.
We follow this same “attributes over experience” practice when recruiting for our portfolio companies. We designed our CEO-in-Training (CIT) program in which we hire high-attribute, recent MBA graduates to train under more experienced CEOs with the goal of becoming CEOs themselves in three to five years. Similar to our undergraduate programs, CITs don’t need specific experience in a given field, instead they need to have the attributes described above.
One of the big benefits of our CIT and internship programs is the diversity we can bring into Alpine. If we hire tech CEOs who have 20 years of experience in a specific field, we are selecting from a fixed, often homogenous pool of candidates. However, hiring for attributes means we are able to hire candidates diverse in gender, age, race, and experience. Our team comes from a range of backgrounds; in the past few years we have hired former consultants, professional athletes, military pilots, and professional dancers. And nearly 50% of our CITs are women, compared with just 10% female executives at S&P 1500 companies and 5% female CEOs of Fortune 500 companies, according to Fortune.
Our firm has a continual influx of hungry undergraduates and MBAs who learn, develop, and grow—personally and professionally. Our new hires are open to new ideas and don’t bring baggage from their prior firms. They typically continue to experience steep career trajectories for many years and are able to take on tremendous amounts of responsibility. They also tend to be loyal to and appreciative of Alpine for investing in their training and development and for taking a chance on them.
2. We Believe in Extreme Empowerment
When I graduated from college and went to work in an investment bank, I was the fifth person on a five-person deal team. My job was to build and format the financial models on new investments. I learned how to do that job in about a month and then repeated the same process for nearly two straight years. I reported to someone 12 months older than me who generally told me what to do, when to work, and when I could leave the office. You can read more about my early experience and how it shaped the way I think about culture in “Why I Started Alpine.”
I estimate that I used less than 5% of my capabilities at the bank, a realization that was incredibly deflating to me and the other analysts. Three of the five analysts in my group quit before the two-year program was finished. Placing us in repetitive work roles was also a huge waste of our talent; we had much more to offer.
Most people will thrive with tremendous amounts of ownership, autonomy, and responsibility early in their careers. We have second year analysts at Alpine who lead investments, and people in their fourth year who run companies. Recently minted MBAs manage large groups of people and run divisions and/or companies. Not only are people capable of taking on challenges, but they crave them. People learn and grow by stretching out of and expanding their comfort zones.
“People learn and grow by stretching out of and expanding their comfort zones. ”
One of the keys to empowerment is to be crystal clear about decision rights. Decision rights simply means defining upfront which decisions individuals can and can’t make. If there is a decision an individual isn’t permitted to make, he or she needs to know from whom to get approval, and this approval process needs to be streamlined and fast. For example, we allow analysts and associates to kill deals, to get on the phone with founders, to spend money, and even to visit companies. To submit an indication of value, however, they need the approval of a partner. It is very difficult to unwind an indication once submitted, and as much as 80%+ of the ultimate deal will be reflected in this indication. When it comes to high stakes decisions like indications of value, we make it clear to analysts and associates to whom they should ask for approval, and they typically get an answer in a matter of hours. As a general rule, decision rights should be as close to the field as possible, and when individuals need approval, that process should be clear and quick.
Surveys of workplace employees 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. And 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.
Extreme empowerment at Alpine goes hand in hand with hiring high attribute people with growth mindsets. The impact on our intentional culture is that people are constantly learning, growing, and taking on more and more responsibility. They set goals, and we measure those goals against their achievements instead of the number of hours they work, or time spent in the office.
3. We Build Lifetime Relationships
There are many ways firms manage young talent. When I worked on Wall Street, analysts were hired for two years, and then they were expected to leave. Many banking, investing, and consulting firms have finite programs and send high performers away after a few years.
We hire everyone at Alpine with the intention of having a lifetime relationship with them. We set and hold a high bar to hire, but once an individual clears that bar, we endeavor to be partners throughout their career. When we hire for investing interns, for example, we are not just considering whether they can build a financial model, but whether someday they will be able to fly solo, to meet a founder, and to convince that founder to sell his or her company.
This core tenant has a profound impact on our culture. For example, if a summer analyst intern invites me to lunch or coffee and I know that I will likely never work with that intern once the summer ends, I am likely to say “no.” I may accept the invitation out of kindness or guilt, but I know that it is a poor use of my time. However, since we hire interns with the idea that they are the future partners at Alpine, investing an hour early in his or her career is an excellent use of my time.
This simple example occurs every day in nearly every interaction at Alpine. Employees spend more time investing in relationships with each other knowing they will be on the same team for years, or even decades. We spend significantly more time on training, mentorship, and career development, and we pay for executive coaches for Alpine employees. These cumulative actions across interactions, meetings, days, weeks, and years profoundly impact our culture.
Retaining world-class people is difficult. By definition, they have high standards, great ambitions, and many alternatives. We have learned to be very flexible around roles, constantly adjusting and re-defining roles to ensure growth, engagement, and enjoyment. We ensure each person is able to see an exciting career trajectory for at least three years into the future, and we update this trajectory every year or even more frequently through our renewal process. Often, we sacrifice short-term performance for the long-term retention of our people, and we move people into roles that align with their greatest passions versus roles they already know how to do well.
Summary
When we combine all three principles, hiring high-attribute people, extreme empowerment, and lifetime relationships, we build an incredibly strong and cohesive culture. Our employees stick around, which allows institutional learning to remain within our firm. We form trust, and meaningful, close relationships—many of us have been working together for a decade or two. We attract the best people because the best people want to be empowered, and they want to be in control of their lives. The best people also want to work alongside the best people, so our culture becomes a virtuous cycle.
We measure culture quarterly and try to make sure we have our pulse on the culture by spending time with people. This takes time, thought, and reflection, and it also consumes resources. The seven people in our talent and culture team focus on helping to build our talent and to make sure we’re winning on this front. And like anything, there is often trial and error.
As the leader of Alpine, my single most important job is to intentionally create a unique, positive, and winning culture. The best cultures are not accidental. They require intentional decisions, significant thought and meaningful investment of time, energy, and resources. But there is no better place for leaders to invest their energy!