Capital designs the game.

Prime Future 204: the newsletter for innovators in livestock, meat, and dairy

"It’s worth remembering that it’s the capital that ultimately designs the game that everyone else plays."

That quote is from a recent tweet that caught my eye. Here's the rest of the tweet for context:

"I had coffee with the head of a large family office today, and he said something really profound that I’d never quite put together.

Paraphrasing: “Capital structure ripples through management and ultimately ripples through employee experience”

If you work in a business run for cash flow, a PE-backed platform, a business run for growth or a business run for long term hold, your experience as an employee could not be more different.

The cash flow capital demands low overhead, fast ROI, had little patience for capacity building.

The growth capital spends aggressively to build the company of tomorrow, today. Nobody worries much about profitability.

The PE capital is all about the exit, and everyone is managed aggressively quarterly to maximizing strategic value and EBITDA at time of sale.

The long term hold capital worries about downside more than upside and tends to err on the side of conservatism. It’s a marathon, not a sprint.

No one right way, but it’s worth remembering that it’s the capital that ultimately designs the game that everyone else plays."

The insight that capital structure impacts the employee experience makes complete sense.

But take that insight one important step further: