What Matters Most in Private Investing?

Michael Lee says betting on exceptional people is the only thing that matters in private investing. If he ever went back into private markets, which he will not, he would look for exceptional people working on hard problems in big markets. Ideas are cheap and execution is really hard. Truly exceptional people always figure out how to make something work. He leaves open whether they do it by bringing someone on board who highlights a weakness, or by persisting until the right people support a plan everyone else calls crazy.

The greatest idea and the hottest traction over a short period are important signals, and early on the work is still a people business. Highly ambitious people on really hard problems in very large markets should get backing even when the plan looks crazy, because the upside convexity of backing them largely offsets the rest. The same rule is the name of the game in public markets. The best investments at Lone Pine, and the best companies in the market, came from finding exceptional people. Meeting Jensen Huang in 2017 showed the pattern, when the business was nothing like what it is today. Jensen Huang stayed remarkably consistent, kept clarity of thought, executed, surrounded himself with extremely loyal people among the smartest in the world, and kept refounding the business to compete in a changing market. Early stage or late stage, most people will be surprised to the upside.