[REPLAY] Paul Black and Mike Trigg – How to Build a $100B Money Manager (Capital Allocators, EP.227)
Feb 5, 2024
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Paul Black, co-founder of WCM Investment Management, and Mike Trigg, portfolio manager at the same firm, dive deep into transforming a struggling financial company into a $100 billion giant. They discuss the pivotal role of culture, innovative hiring practices, and the need for truth-telling in fostering a supportive workplace. The conversation highlights balancing care with accountability, leadership transitions, and the importance of cultural fit. They also reflect on personal growth, mentorship, and the commitment necessary for long-term success.
WCM Investment Management embraced change and focused on the direction of competitive advantages, shifting their investment philosophy to moat trajectory and culture.
WCM Investment Management prioritizes cultural fit when integrating new team members, emphasizing vulnerability, trust, and openness in leadership.
The podcast episode emphasizes the importance of maintaining a positive culture through accessibility, truth-telling, and gratitude.
Deep dives
Rebirth from Struggle: The Journey to a Hundred Billion Dollar Firm
Paul Black and Mike Trig from WCM Investment Management share the story of how they turned a struggling boutique into a powerhouse with over a hundred billion dollars in assets. After underperforming and losing most of their assets, they pivoted to an international large cap growth strategy, despite having minimal experience in the area. They embraced change and focused on the direction of competitive advantages, rather than just seeking cheap companies. They recognized the importance of culture and learned from the toxic cultures they encountered in other firms. They emphasized the value of hiring people who care more and integrated them into the firm's culture. They also highlighted the challenges of transitioning wealth from one generation to the next, emphasizing the need for founders to be generous in order to ensure the continued success of the firm.
Thinking Differently: Evolving Investment Philosophy for Success
WCM Investment Management adopted a new investment philosophy focused on moat trajectory and culture. They realized that a conventional approach of buying wide-mo businesses at a discount to intrinsic value had limitations, as many others were doing the same. They shifted their focus to the direction of competitive advantages and sought to understand the importance of culture in driving success. They encouraged employees to think differently and get better, giving them a safe space to bring new ideas to the table. They embraced continuous improvement and built an R&D lab to explore new sources of alpha. They acknowledged that their investment philosophy might need to evolve over time, and they were open to new frameworks and methodologies to stay ahead.
Cultural Integration and Transitioning Leadership
WCM Investment Management prioritizes cultural fit when integrating new team members. They understand that integrating someone into their culture is just as important as teaching them their investment philosophy. They share stories about the firm's history, past struggles, and lessons learned to help new employees understand the firm's values and why they do things the way they do. They emphasize vulnerability and openness in leadership, creating a safe environment for people to learn, grow, and make mistakes. They value the importance of trust within the investment team and the organization, believing that trust is necessary to navigate tough times. Furthermore, they recognize the challenges of transitioning leadership to the next generation and the importance of avoiding excessive debt when passing on ownership to maintain stability.
Maintaining a Positive Culture
The podcast episode discusses the importance of maintaining a positive culture within a company. The hosts emphasize the need to create an accessible and friendly environment where employees feel valued and cared for. They share examples of how the firm's co-founder, Paul, makes himself accessible to everyone, encouraging people to stop by his office and have a brief conversation. This accessibility fosters a strong sense of connection and camaraderie among team members, contributing to a positive culture in the firm. They also explore the importance of hiring practices that prioritize attitude, humility, and curiosity to ensure a good cultural fit.
The Power of Truth-Telling and Gratitude
The podcast episode highlights the significance of truth-telling and gratitude in maintaining a positive culture. The hosts acknowledge the challenge of having difficult conversations and providing honest feedback. They stress the importance of truth-telling as a way to improve and help individuals reach their full potential. They also emphasize the value of gratitude, encouraging team members to appreciate what they have and express gratitude for the opportunities they've been given. By practicing truth-telling and gratitude, they aim to create an environment where individuals feel supported, valued, and accountable to each other, ultimately fostering a positive and cohesive culture within the firm.
Paul Black and Mike Trigg from WCM Investment Management are both past guests on the show who have taken an investment philosophy focused on culture and moat trajectory to turn a once struggling boutique into a $100 billion powerhouse. Paul came on the show a few years ago when WCM had quietly grown to $25 billion in assets, and Mike joined a year ago to dive into their research process. Their colleague Mike Tian shared another perspective earlier this year when he described applying WCM’s moat trajectory discipline to investing in China. In this continued exploration of WCM, we start with the truly unique facts about the firm’s rebirth a decade ago and turn to key features of its success, including embracing change, the importance of culture - alongside some characteristics of toxic cultures, hiring practices, telling the truth, integrating new team members, managing turnover, and transitioning leadership to the next generation. Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership
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