Founders romanticize hiring young, ambitious talent to save money, but it's a costly mistake. Paying a premium for proven, experienced hires yields significantly better outcomes and avoids the low hit rate of "angel investing in people."

In a world of imperfect information, a good decision can lead to a bad outcome, and a bad decision can get a lucky good outcome. Lindsey Scrase focuses on developing a good process for making decisions, recognizing that this is what is controllable and builds trust, even when individual results vary.

During due diligence, it's crucial to look beyond returns. Top allocators analyze a manager's decision-making process, not just the outcome. They penalize managers who were “right for the wrong reasons” (luck) and give credit to those who were “wrong for the right reasons” (good process, bad luck).

A PE firm's most impactful 'investment' isn't a company but its own repeatable C-suite hiring process. By systemizing hiring with tools like the Lou Adler method and Hogan assessments, firms can move beyond partner biases and dramatically reduce costly executive turnover, which is a major driver of underperformance in portfolio companies.

After a career spanning public markets, private equity, and operating, the ultimate investment lesson is simple: bet on exceptional people in big markets. Great founders will always figure out execution and pivots, making the person a more valuable signal than the initial idea or short-term traction.

Contrary to the belief that founders are simply high-risk takers, their outperformance often stems from a systematic process of de-risking their venture at every stage of growth. This methodical approach is a key differentiator compared to non-founder-led companies.

Delaying key hires to find the "perfect" candidate is a mistake. The best outcomes come from building a strong team around the founder early on, even if it requires calibration later. Waiting for ideal additions doesn't create better companies; early execution talent does.

TeamShares initially hired young, smart generalists from consulting and banking, mirroring their own backgrounds. They discovered this led to "very uneven" outcomes and a wide variance in performance. They pivoted to hiring experienced, local industry specialists for more consistent, predictable results in their portfolio companies.

While process is necessary, any repeatable, process-driven advantage that generates significant alpha will quickly be arbitraged away in competitive markets. A firm's true, lasting edge comes from its ability to recruit and retain exceptional people within a culture that fosters truth-seeking.