Brian O’Malley

I'll give you an example.

If you're at a firm that is a little bit more risk adverse, you might have a junior person who makes all the right decisions, invest in something that's really interesting.

Like, for example, I invested in a company called Viddy.

They were the Instagram for video before Instagram head video.

We got to the point where we were doing a million downloads a day.

We're the top app on the app store for over a month.

Ultimately, Facebook launched video.

It didn't work out.

We still made a little bit of money on the deal, but it didn't materialize in a fashion that was a real winner for the firm.

But if you look, it felt like we did the right diligence work.

We got involved early.

We bought material ownership.

The inputs were right, even though the output wasn't what we ultimately wanted.

And I think to be really intellectually honest with yourself as a firm, if you're trying to create the right behavior incentives, you need some of those to be driven by the inputs.

And then you also want to align people economically based on outputs.

A lot of these firms, for example, have carry that is weighed equally across everyone's deals within the organization.

That is seen as fair.

You're now all fighting equally for each company within the portfolio.

I think there's a lot of merit to that.

But I also think there's value in having some people's carry be determined not just by the deals that they lead, but really by the deals that they put their weight behind internally.