Brian O’Malley

Are we going to incentivize the right outcome?

And to what proportion are we going to incentivize both things?

And then there's like team versus individuals.

It's a pretty complex system.

I'll throw in one more thing to make it even more complex is you actually really want to understand the incentives of the firms you're competing with as well, because that's going to determine how they show up in competitive situations.

And you mentioned if more people have the same incentives, you ultimately lose alpha with that.

And a lot of firms have incentives right now internally for people just to go out and do deals to really deploy capital.

And so if you're competing with a firm where you ultimately know that that individual there is really more focused on deploying capital than they are about getting a certain ownership percentage or really thinking about the risks associated with it, you're going to compete differently.

There's another firm that we would compete with frequently where it was really all about your win rate competitively against the best other firms in the world.

And so they wouldn't necessarily do a ton of diligence.

They knew that if the right other firms were looking at it, they probably did the diligence.

And now it was really about winning.

And so you had to know that they were going to show up competitively a little bit differently where they might not take as much time to try to answer the diligence questions.

They were really going to be 100% focused on selling those founders and getting them to want to work with them.

So you need to understand the incentives at different organizations and then have that really inform the North Star you have and then what incentives you have.

And I mentioned some that were economic, but a lot of these incentives are also cultural in terms of what sort of behavior do you recognize and do you reward internally?

Just based on people doing the right actions that ultimately lead to better outcomes.

It almost makes startup incentives extremely easy because especially at the early stage, everybody's equity is worth so much more than their incremental status or their incremental salary.

That makes actually very easy for everybody to be on the same boat rowing in one direction.

Yeah.