The Only Investment Thesis You Need: Find the Operator

After running my own company for 17 years, I moved to the Board earlier this year and started doing some coaching and investing in small businesses.

I thought I knew what mattered: market size, product-market fit, unit economics, competitive positioning. I knew the Buffett quote that when an industry with a reputation for underperformance meets a management team with a reputation for excellence, the industry usually wins.

I’d spent the last few years analyzing deals through that lens, making investments based on those criteria, and watching most of them struggle while a couple thrived.

The difference wasn't the market or the product, it was the person running the company. I had been optimizing for the wrong variable entirely.

When you start investing in small companies, you see dozens of opportunities. Most founders are smart, many have decent ideas, and some even have genuinely great ideas with solid market validation.

The pattern that separates success from struggle isn't in the deck or the financials, it's in how the founder executes when things get hard.

Great operators find ways to win even when the original plan falls apart, they pivot without panicking, they learn from mistakes fast enough to matter, and they somehow keep the team moving forward through uncertainty.

These people are shockingly rare. I'm talking maybe one in a hundred founders or one in a thousand, possibly less. You can spend months evaluating opportunities and not find a single operator who has that combination of resilience, judgment, and execution speed that actually builds valuable companies.

That’s also tough to judge. How do you really know what they are capable of? I don’t know. I just got lucky a couple of times I guess or had some deep instinct that told me these were the right people.

This realization completely changed how I think about portfolio construction. The traditional wisdom says to spread your bets, build a diversified portfolio, don't put too many eggs in one basket. That makes sense with the stock market (I guess if I were an expert stock picker, I might say the opposite).

Additionally, that advice makes sense when you're making speculative bets on unproven concepts, but it falls apart when you find someone who has already proven they know how to build and scale businesses.

I made the mistake of treating my best investment the same as my mediocre ones. I found an operator who consistently delivered results, built strong teams, and made smart strategic decisions under pressure. Instead of doubling down and giving them more capital to execute bigger opportunities, I went looking for nine more investments to round out my portfolio. Those nine other investments combined don’t make up for one great operator.

The math is pretty straightforward once you see it clearly. Your returns don't come from having thirty companies in your portfolio, they come from the two or three exceptional operators who compound value over years. The rest of your portfolio mostly generates lessons about what mediocre execution looks like at various price points.

My investment approach now focuses on a different metric entirely: find the rare operator, back them heavily, stay close enough to support without micromanaging, and repeat with two or three more. Not twenty, not thirty, just a handful of people who have proven they can execute at a high level consistently.

The difference between a good operator and an exceptional one shows up in dozens of small decisions every week. Good operators follow best practices and avoid obvious mistakes. Exceptional operators see opportunities others miss, move faster on the right things, build cultures that attract other high performers, and somehow maintain momentum through the inevitable setbacks that kill most businesses.