Last week my beloved New England Patriots won their sixth Super Bowl title this century. It was their ninth Super Bowl appearance together in the last 18 years, an unprecedented feat made more remarkable with 32 teams vying in a football league structured for parity.
In seeking to explain New England’s success, Sally Jenkins of the Washington Post said, “The Patriots’ secret is focusing on the details. Every. Last. Detail.”
Patriots coach Bill Belichick has established a culture focused on process, efficiency and precision. Even at 66, he reportedly arrives for work at 5am daily. Every single minute in practice is accounted for. “If you show up one minute late, they just tell you to go home for the day.” “In practice there was not a single rote or apathetic moment: If a player wasn’t on the field, he was running an individual drill with a position coach.” There are no ‘small mistakes.’ “They are always on point. They throw the ball fast but they are always on point. That’s tough to do.”
Belichick’s focus on detail is reminiscent of John Wooden, the only person inducted into the Basketball Hall of Fame both as a player and coach. Wooden said, “Success if the accumulation of small things done well.”
“Success is the accumulation of small things done well.” John Wooden
He divided his 200 hours of team practice each year into five-minute segments, starting each college season teaching the correct way to put on socks and sneakers and building up from there. He kept detailed notes of each practice looking for ways to improve practices and skill development the next season. These incremental improvements paid off: Wooden won no national championships in his first 30 years of coaching but won 10 in his last 12 years.
In 2017, Alex Honnold became the first person to free solo the 3000 foot vertical face of El Capitan, a feat no one thought possible. Free soloing, or climbing without ropes, demands perfection as an exposed fall means certain death.
In his documentary Free Solo, Alex talked frequently of the need for meticulous preparation in his pursuit of perfection. He climbed El Cap an estimated 40 times memorizing through detailed notes in his climbing journal every maneuver, hand hold and foot hold on each difficult section of the climb. He top roped from the summit repeatedly to practice key sections high on El Cap. Only after over ten years on El Cap, including two years of intensive practice, did Alex successfully free solo El Cap.
Leonard da Vinci is famous for his paintings The Last Supper and Mona Lisa. Yet as Walter Isaacson described in his outstanding biography, Leonardo was an insatiable learner whose scientific inquiries were essential to his art.
He was able to give Mona Lisa that mysterious look because he had studied all the muscles involved in smiling. In The Last Supper, his perspective was flawless because he had spent countless hours understanding how our eyes perceive objects at a distance. His detailed observations enabled Leonard to perceive and portray the world as no one ever had before.
As thesis driven investors, NGP Capital strives to match the level of detailed preparation and precision set by Belichick, Wooden, Honnold and Leonardo. Our best investments have emerged from systematic diligence over a period of years.
Our best investments have emerged from systematic diligence over a period of years.
We invested in Ganji, a Chinese mobile classifieds business, in 2009 following a 2+ year worldwide review of local services businesses. Our investment thesis was that location was to mobile as search was to the Internet: mobile phones identified location making it searchable and monetizable in real-time.
We looked for businesses that were good on the Internet but would be great with mobile. Pouring over Comscore data showing consumer engagement metrics for all websites in India and China, we looked for inherently local businesses with high consumer engagement, which led us to classifieds.
We then met all online classifieds businesses, identifying Ganji and Quikr as our preferred companies in China and India, respectively. Since Chinese classifieds were further ahead in monetization and engagement, we invested first in the Series A round of Ganji while monitoring the India market. Six months later, with investment interest pricing Ganji 3x higher than our initial investment, we moved preemptively to invest in Quikr. Ultimately, we sold Ganji for $3.6 billion and continue to hold Quikr, which is now valued at over $1.5 billion
NGP Capital’s investment in Rocketfuel in 2010 followed a similar two-year investigation of the digital ad tech sector. We believed that mobile phones opened a new media channel that would attract advertisers for its persistent engagement monetizable with targeted ads that were locally and immediately relevant.
As we met with media and advertising executives, we realized that the traditional agency model would not effectively address this opportunity at scale. Mobile required a new approach, yet most mobile ad tech startups were simply applying the traditional approach to a new channel.
But Rocketfuel was different. Having fully surveyed the market, NGP Capital readily appreciated that its programmatic, highly targeted approach was both scalable and disruptive to the prevailing traditional agency models. We invested early in Rocketfuel, which went public in 2013 reaching a $2 billion valuation, 40x the price of our initial investment.
Like Ganji and Rocketfuel, NGP Capital believes Lime, though still a young business, is a high potential company that we identified early through a year-long search following our global, thesis driven approach.
In 2016, we saw the rapid ascent of shared, dockless biking companies Mobike and Ofo in China. NGP Capital believed the dockless model could, with some adjustments, disrupt the docked bike sharing model that prevailed in the US and Europe. We met nearly every shared biking company in the US and Europe over nine months before investing in Lime in 2017.
At the time, we saw Lime as more than a shared biking company with an aggressive, capable management team that could extend its model into other shared vehicle models. Lime has executed well on this broader shared mobility vision over the past 18 months.
Our thesis driven approach seems orderly in retrospect but the process can be messy as it unfolds. We pivoted several times in our local services review before identifying the classifieds business. We almost gave up on ad tech 18 months into our search. We serious considered multiple investments in the bike share space before finding Lime. For every successful search, we have had multiple dry holes — searches where our investment premise proves unfounded or we do not find the right company.
Our thesis driven approach seems orderly in retrospect but the process can be messy as it unfolds.
And we don’t always get it right. We live in an uncertain world where good outcomes can come from bad decisions and bad outcomes from good decisions. While we are ultimately judged on our investment results, NGP Capital focuses on making consistently good investment decisions believing good outcomes will tend to follow.
And we have found that our best decisions are those made with a prepared mind: where we understand the market well, have investment insight and a basis to believe we are investing in the best company in the space.