Setting ethical baselines....

At the end of 2024 I took time off to reflect. I wanted to answer a fundamental question: “Do I respect the work I have done at Fairbridge to date, and what must I do (or not do) better so that when I look back at the end of it all, I’ll be proud of my life’s work.” In this instance, success is the achievement of a firm’s desired economic outcomes within the philosophical, moral, and ethical parameters established by the founder at the start.

The philosophy
Many of today’s successful companies were conceived by founders inspired by high purpose: Google founders wanted to democratize information and do no evil; Zuckerberg wanted Meta to bring people together and make the world more connected; Jobs founded Apple to channel technology for creative expression and individual empowerment. After some time, a force, let’s call her Avarice Force, begins to gently, but persistently put this high purpose to the test, proposing compromises that initiate drift and eventually derail a company to a place and shape that the founder no longer identifies with. At the peak of her powers, Avarice is inevitable and will crush those who resist. Founders who can withstand Avarice have a real chance to build enduring companies that they are proud of and that deliver truly differentiated value.

Investing early in high purpose
At Fairbridge, we are usually the first institutional check for founders driven by high purpose. Our job is to help them remain authentic to the source and to equip them with the tools to succefully navigate inevitable battles with Avarice. The key areas we discuss are:

Mission-to-model integrity: I was once in a room where Stephanie Cummings, the founder of Please Assist Me shared that she only accepted investors aligned with her decision to make all cleaning employees in the firm employees (w2) vs. contractors (1099). Her mission is to empower lower-wage families through predictable work. Her perspective is that the value created by superior service from satisfied employees dwarfs the savings from contracting. Not all investors share this fundamental posture, but the ones at the table must.
Stakeholder alignment: While investor influence on companies is widely documented, customers, employees, vendors, and regulator dynamics are not. Yesterday, I was on a call with my gracious friend Tony Chen and he told me about a portfolio company he has been putting a lot of work into. The company recently fired a top customer in the gambling space because of ethical misalignment. Such a move can cement or irreparably damage relationships depending on who is at the table.
Incentives: We perform a system-wide check on what our founders reward—explicitly and implicitly—especially on their team. An excellent founder in our portfolio doesn’t do retainers; each contract is a bespoke representation of metrics and outputs that align with the firm’s mission. And since venture is a LIFO business, we discuss alignment by assessing how early investors (family and friends rounds) are treated.
Culture: Culture is to incentives what diet is to exercise. Diet is the ongoing discipline that gives substance and definition to exciting bursts of activity. When left unattended, it reverts to a destructive default. We seek to understand how founders translate their mission into shared experiences that others consistently find compelling and engaging.
Stamina: High purpose is often misunderstood, is considered fantastical, and is expensive. It’s easier and more profitable in the short term to build businesses with fewer constraints. Fairbridge founders face strong headwinds and so we seek to understand deeply what will keep them going—How big is the chip on their shoulder? How thick is their skin? Who really is on their side? How do they deal with not being liked? What is the role of exercise in their life? What are their vices? Where do they get replenished?

Alpha belongs to those who can harness Avarice

In 2011, we learned that software was eating the world and that insight drove unprecedented global return. Today, it’s money that’s eating the world. Alpha will come from high purpose founders who can channel Avarice to build truly differentiated businesses that solve consequential societal problems. We aspire for Fairbridge to be a beacon for such founders.

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