Interview with Deric Emry - General Partner at ABS Capital Partners
What has been the keys to success and longevity for ABS capital?
First and foremost, I think it is our culture. Our founder and Chairman Don Hebb is a true gentleman and he sets the tone for all of us. We pride ourselves on being humble, approachable and always acting with integrity. I think even in situations that have been difficult, people would say we dealt with them fairly.
What decisions has ABS made in the past that you believe positioned the firm for success?
I think it was really a decision we made a long time ago—and we have stayed with it—to be focused solely on investing in late stage growth companies. We know what we do well and by maintaining a disciplined focus, we have been able to build a great network of executives and board members. We believe gives us an edge.
How has the role of growth equity investor changed over the years, and has ABS adapted its philosophies or stayed the course?As I said above, we have stayed the course. I think that growth equity is better understood today as a distinct strategy, which wasn’t always the case. Furthermore, it has become more popular in recent years. Venture funds have tried to reduce some risk by going into later stage companies and more private equity funds have found that it is a business that can be done without so much dependence upon the debt markets. However, I think we distinguish ourselves through our long history and singular focus on growth companies.
You invest in media and communications. As both a consumer and investor, what excites you about the future of these sectors?
I think this is a fascinating time of transition for these industries. The historic “walled gardens” within these industries are breaking down. Thus the reason that we look at these sectors holistically. Increasingly all content is being moved over Internet Protocol allowing for convergence as well as interactivity. Individuals have more control in this environment which enables freer flow of content and communications. The ability to reach a mass audience has never been simpler for an individual, think Youtube. And the implications are profound. Look at the role that Twitter and social media have played in recent regime changes around the world. At the same time individuals have ever great choice of what to consume, including whether to consume advertising. This is challenging advertisers to come up with truly useful and engaging advertising (ie Google and search) rather than rely upon forced consumption through marriage to content. I am truly enthused by the prospect of what will be created as we increasingly put the power of media in the hands of individuals.
If you look back at some of ABS’s success stories, are there any key decisions or actions that you feel management teams got right that others could learn from?
I think it is important to have clear strategic focus as well as a sound executive team to whom you can delegate. When businesses are growing quickly they often find opportunity in multiple directions. But they must prioritize and focus or risk diluting their efforts. It can be just as important to have a NOT “to do” list. We try to work with our companies to help them to maintain that discipline. I think the other really important thing for our CEOs is to make sure they hire great people and then let them do great things. This can be hard because in many cases the CEOs poured everything into the company and in the early days and became accustomed to being a part of every decision. But the company will stall at a certain size if they can’t delegate effectively.
You like to play a role helping companies transform industries. Certainly there are great companies that don’t transform industries. What sets apart those who transform vs. those who don’t?
Visionary leaders are important factors in companies that transform industries. It takes something special to gauge the receptivity of the market and enter with the right product at the right time. Being transformational means, by definition, being ahead of the market and having the fortitude to see it to fruition. But being too far ahead of the market can be a death sentence. I think seeing 3 years into the future is in some ways the hardest thing to do. In many ways it is easier to see 10 or more years into the future but that is too long for any visionary to sustain themselves in advance of the market.
Reflecting on some of the most successful companies you have worked with, what are some of the smallest decisions that have the biggest impact?
While I wouldn’t necessarily call these decisions “small”, personnel decisions tend to have the greatest impact. People are the core of the information age businesses in which we invest. As stated previously, getting the right team members in the right roles makes all the difference.
Who are the unsung heroes in your business that deserve more credit than perhaps they receive?
Chief Financial Officers are probably the unsung heroes of my organizations. Without appropriate and timely information it is difficult for senior management or Boards to make good decisions.
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