Table of Contents



Preface

  1. What is Reflections of an Allocator?
  2. Why Pursue Investing?
  3. About Me/Contact Me

Overarching Themes & Principles
  1. Want to Predict the Future? Look at Incentives.
  2. Culture Really Matters.
  3. People, People, People = A Winning Formula for Success.

Asset Allocation & Risk Allocation

  1. Where Have All the US Public Companies Gone?
  2. Why Invest in Private Equity?
  3. Creating a Private Equity Investment Strategy.
Manager Selection & Co-Investing

  1. Creating a Manager Selection Framework.
Direct Investing & Security Selection

  1. Creating a Business Quality Framework. (Part 1)
  2. Creating a Business Quality Framework. (Part 2)
  3. Creating a Business Quality Framework. (Part 3)
  4. Creating a Business Quality Framework. (Part 4)

Business & Industry/Sector Research

  1. Aggregators in the Public Markets (Part 1): TransDigm Group.

People, People, People = A Winning Formula for Success.






—David Swenson

Background

As investors, it's easy to get distracted by data points that may seem important in the moment but lack significance in the long run. At the Patterson Family Foundation, we hold a core belief: our investments are in people. Every competitive advantage a business has—from its vision and processes to its culture and mission—is shaped by the people within it. In other words, exceptional businesses are built by exceptional people.

This naturally raises the question: how do we define "exceptional people"? Like culture, this is a challenging concept to quantify. In this section, I aim to distill the idea of "exceptional people" into a few key traits that can be identified through conversations and by examining the history of any organization, individual, or team.

People Framework

As we established earlier, the foundation of any successful organization rests upon its people, and among the countless attributes that define "exceptional people," three stand out to me: integrity, intelligence, and a strong work ethic. Their definitions are below:

1. Integrity

 Integrity is the cornerstone of exceptional character. It speaks to a person's honesty, ethical principles, and commitment to doing what is right. In the world of business, integrity builds trust—the most valuable currency in any relationship, whether with colleagues, partners, or clients.

2. Intelligence 

Intelligence is another crucial factor, but not just in terms of IQ or academic performance. In the context of exceptional people, intelligence encompasses a broader range of abilities, including critical thinking, emotional intelligence, adaptability, and the capacity to learn and grow. This trait naturally lends itself to understanding complex problems, thinking strategically, and making sound decisions.  

3. Hardworking 

Hard work is the engine that powers the application of integrity and intelligence. Exceptional people are not just diligent; they are also persistent, disciplined, and committed to excellence.

The Exceptional People Matrix
 
The last step is to bring these traits together into a matrix. See below:


For fun, I’ve taken the additional step of applying this matrix to one of the latest high-profile financial frauds—Sam Bankman-Fried of FTX. This is just one of many examples that could potentially fit this matrix well.


Conclusion

While this attempt to quantify “exceptional people” may be somewhat simplistic, I believe it serves as a valuable starting point for anyone looking to examine the "people factor" within an organization. As with any framework, this is just an initial step, and many additional areas of due diligence can and should be considered.