SOMA Magazine February/March 2017 : Page 42
There’s a certain cohesive quality to the companies in your fund. We’re interested in how you make investment decisions among the vetted opportunities that come your way. Does it come down to a visceral gut feeling at some point when you’re deciding between opportunities that are evenly matched on paper? We evaluate opportunities individually, as different investments are never evenly matched on paper. The quality of the team, the chemistry of management and our partnership, the consumer franchise that a company has built, market tailwinds (or head-winds), cyclicality, competition, and pricing and transaction structure are each dimensions that vary widely from one oppor-tunity to the next. That said, the experience garnered from thirty years of investing is more important than any analytical work. When you were starting out, did anyone try to dissuade you from taking a long-view approach to investing before you proved this was a successful approach? If so, why did you decide to stay the course? In 1986, a consumer focused private equity fund was a novel idea and not endorsed by the gatekeepers to capital (consultants who advise pension funds on investments). We had little success con-vincing these gatekeepers that sector-focused investing allows for specialized expertise that is relevant in evaluating invest-ment opportunities and working with portfolio companies. The track record we achieved through multiple funds contributed to changing the perspective of consultants. Today, it is very difficult to raise funds without sector experience. We’ve all heard of vulture capitalism, but TSG seems to have the opposite approach to private equity. What drives you to take this conscientious route to investing? We have no interest in zero sum investments. We have care-fully crafted a conscientious and collaborative culture within our organization -and we win when our partner companies win. Do you immerse yourself in your companies’ products? If so, what do you learn that you might not understand with-out acting like an avid consumer? We are the biggest fans of our companies’ products. In fact, we were also the first private equity firm that I know of to proactively 42 seek a gender balance amongst our senior and junior invest-ment professionals to reflect the fact that purchase decisions for many of our companies’ products or services are made by women. Despite what might appear to be the obvious advantage of our approach, gender balance is still a major point of differ-ence between our partnership and other funds today. What are some of the most creative and strategic internal resources you’ve provided your companies with at TSG? We have significant category experience and functional capa-bilities within our partnership that provide real value to our portfolio companies. We have assisted companies in product line development, packaging, geographic expansion, joint ven-tures, digital strategies, supply chain management, and hiring and organizational development. We pride ourselves in thinking differently and are focused on investing in companies that think likewise. As someone who appreciates contemporary art, do you find that there’s any overlap in the way you evaluate an art piece and a potential investment? I am not personally focused on art as an investment. I think of art as being very personal. My wife, Ivette, and I enjoy collecting visually captivating works from artists who also think differently such as Joe Bradley, George Condo, Anish Kapoor, and Richard Prince. At the same time, we are focused on curation to create a dialog among the different works in our collection. The art that we collect, not unlike the brands that we invest in, evoke a very positive emotional response that is also thought-provoking. How have you stayed innovative throughout the three decades since founding TSG? And how do you plan to stay competitive and innovative going forward? Probably the most innovative idea since founding our part-nership is to simply stay the course as opposed to investing in areas that don’t relate to our experience or expertise. We have generated top quartile returns for three decades. It took 13 months for us to raise $51 million for our first fund; we had over $6 billion in demand one week after we printed our last offering memorandum. Focusing on what you do well is easy to say but not often easily done.