We are talking with Peter Loukianoff, Managing Ð artner of Almaz Capital Partners, about the peculiarities of partnership based organizations, about the process of taking decisions in such organizations and about values which are important for Peter.
1. What are the peculiarities of partnership based organizations in Russia?
With regards to partnership relationships in Russia in terms of how centralized the things are, there is certainly time and place for partnership, and there's certainly time and place for making decisions and moving on, and for the leader to take an active role and declare that he'd listened to everybody, empathized and heard everybody but now he's moving forward. I think that that's an important trait as well. With regards to your question about Russia specifically, I think, partly it's a cultural thing, in the history of the country there has been a very top-down approach, and I think it's hard to overcome it from cultural perspective. On the other hand it can be very efficient, as we know from the US history of city of Chicago and how they run their business in dictatorial form, but they get things done, sometimes. And I think in order to scale a company one needs to do that in a way that you rely on other people and you can't just be dictating.
2. What qualities should a leader of a partnership organization have?
In the history the best companies have been those who allowed their employees to grow within the structure. In terms of partnership different traits like listening, empathy, trust and having smart and good people around who are better than yourself and having success DNA, having people who have had experiences in different areas, so they can bring something to bear in your company. And it may be a different view than yours. It helps from the standpoint of debate, new ideas, from the standpoint of looking at problems differently, and that creates a strong partnership and over a long-term a better company.
3. How the decisions should be taken in the partnership based organization?
In our case we make decisions as an investment committee, we have managing partners and others who contribute to that decision, but in terms of facilitating strong relationship between the partners which are rather hard, partnerships are not easy, because you don't have that one person dictating certain things. But on the other hand they can be effective on the standpoint of having different ideas and hopefully collectively coming to a better decision than one would come to on his own. The key ingredient for partnership is communication and trust in the other people, and it think that's one thing you constantly must work on in terms of social interactions, more communications, and it's never enough, unfortunately, you can always do better. That is the ideal to strive for more communication, more social interaction, more sharing of ideas, and hopefully you can come up with better ideas and better decisions, but it's not an easy thing to do.
4. How do you behave in the decision making?
We are very patient and we force ourselves to be patient. One of the things that I insist on is the question I ask during every investment decision: "Is this one of the best deals we are going to do here?" And if it doesn't meet that bar, we unlikely will do it because it will really force us to find the best opportunity at that particular time. And sometimes you go a long period of time of making the investments, the investments have to make sense, they have to have the potential of returning a multiple of capital to our investors. And from that standpoint we have to be extremely patient, and we have to be strong in terms of our due diligence in the market and in the companies themselves, and really understand what we're investing - that's point one.
5. And what about timing?
However in terms of timing, I think there're different ways: it's like you're surfing on the beach it's important if you get too far on the back on the wave and you cannot catch the wave. If you get too far in front of the wave it will crash you down and you will eat the sand. I think the important part for investors and venture capitalists is to catch the wave in the right time, and catching it in the middle section where you can be actually pushed by the wave - that's optimal in terms of timing. And now I'm talking about market waves, the things that you cannot control. Within that on the micro scale venture capitals can look at what stages you invest in and try to be prudent in terms of investing at the right stage, giving a particular wave of the market. And getting that timing right is the part of why we're get paid for what we do and part of the challenge of investor.
6. Could you comment on quantifiable and unquantifiable risks?
Whenever you make an investment decision you're looking on the quantifiable risk and unquantifiable risk. And in terms of quantifiable risk I think it's a known issue. But in terms of the unquantifiable risk it comes down to making sure that we understand the key driver is behind the market and make sure that those key drivers are aligned with the business. And the other issue is whether you have that entrepreneurial talent. Very often there's business case study that says that the average start-up goes through 3,2 changes to its business model over its life and you need to find people who will stick through those changes and be able to adapt to those changes and make the company successful. That's a very hard thing to judge, but it comes to betting on the right people, on the best people you can.
7. What values do you share in life?
Values are tremendously important from the very practical standpoint, not just a moral standpoint of reputation. If you ruin your reputation you will not have another chance, so making sure that you run a reputable business, things may not turn out the way you want or you will not be able to say no - it's the crack way to the entrepreneur. Or something like that happens and you have the disagreement with those who do naturally normal things. But in terms of creating environment where you can support the serial entrepreneurs over and over again, one of the reasons we say that is because we want to create the situation where we have strong reputation with people, where we treat them fairly and right and we work with them to build their businesses. So from that perspective the reputation is hugely important. And if you take a shortcut and cheat somebody or something like that, my view is that you will ruin your reputation and affect not only your personal life, your partners' lives, but it's always bad from a family perspective. My father always said: "Don't dishonor the family because you come from good people, you have reputation and don't ruin it". So I think it's highly important not only in your personal but also in your business life. It's important to be straight, direct and honest with people in every business team.
