You Are Your Business: Creating a Great Workplace Culture

Keeping your new company afloat takes a lot more than free-flowing capital or strategic thinking (though those things certainly help). A company, if it’s a good one, won’t just demand great work from employees: it will actually encourage employees to do their best through a supportive, productive workplace culture. It’s necessary to what you want your company’s environment to be straight out of the gate to make sure you’re maximizing your employees’—and your business’s—potential.

Henry Kravis, who has spent decades buying, selling, and building companies, knows the value of getting the culture right. His advice to entrepreneurs setting out on their own is to believe that they are building a real business. To make sure they achieve success, Kravis encourages young companies to define their workplace cultures “as early as [they] can.” If you go into business without a good idea of who you want to be, you risk failure.

When you open your doors, make sure that your vision, mission, and strategy are clear. Because a company’s mission is largely defined by its CEO, make sure that you’re setting a good example for your team and following through with the things you say you’ll do. Furthermore, your team needs to know that they are working towards something. Don’t just describe the mission to your employees—be the mission.

Motivate your team to be supportive, transparent, and efficient. How you do this—office activities, rewards, competition—is up to you, but you need to prepare your employees to fulfill their purpose in your company. Offer managerial support and continued training for your workers so they feel engaged in their work and with each other. If your company values trust and transparency, employees will internalize that and actively contribute to the company culture.

In addition to leading by example, there are a number of other things to do that will ensure a healthy workplace environment. Hire the right staff by choosing the people you think best embody your company’s mission; make sure your employees are comfortable; encourage collaboration and social events; sit down and talk with your employees; and make sure they’re never overloaded or bored.

Creating a great office culture can be tricky, but if you are clear about what your company values and you personally demonstrate those values, you’re on your way.

Going Public? Here’s What’s Next

So you’ve decided that the time has come for you to take your company public. You think you have the right amount of revenue and visibility, and of course investors are going to want in on what you’re selling. Even if the market isn’t great, you think now is the best time to make an IPO. If you want to take the plunge and go public, there are a few things you’re going to need to keep in mind.

First, legendary private equity expert Henry Kravis urges you not to go public unless you have a really, really good reason. His words ring especially true if your company lucky enough to be called a “unicorn,” a company with a valuation of a billion dollars or more. While Kravis understands that some companies can soar after making an IPO, many of them don’t—so proceed with caution.

If you know your company has a good reason to go public, then you can start to consider what that would look like for your company and what your team will need. Start recruiting or rounding up your best bankers, legal counsel, auditors, and stock transfer agents to help you in the IPO process. It can take a long time to find all the right people for your business, so remember to be patient. If you rush an IPO, it won’t go well.

Additionally, you’ll also need financial advisers and a solid management team. It takes a literal village to execute an IPO effectively, so don’t skimp on capable personnel.

Have your team evaluate all the obstacles you are likely to encounter. Prepare for the best, but plan for the worst, says Adam J. Epstein, author of The Perfect Corporate Board: A Handbook for Mastering the Unique Challenges of Small-Cap Companies. It doesn’t hurt to have a backup plan, especially as your company is likely to undergo many changes before the long, long road to an IPO is reached, both for your team and your business model.

Epstein says that most pre-IPO companies “tend to underestimate the time, pressure, and expense of being a public company.” Many teams lack the necessary corporate finance acumen to make the move, so train your team up with the proper skills. Then, even if you trust your team and your business’s ability to adapt, do not miscalculate what a long and expensive process making an IPO will be.

Common mistakes to avoid include outsourcing of the S-1 drafting process instead of doing it yourself, says Epstein. Don’t fail to “appreciate that public companies are graded just as much on forecasting the future as reporting the past,” and remember that you will be very closely scrutinized, both through the process and after. If you aren’t ready for that kind of critique, the time may not be as ripe as you thought to make an IPO.

But if you are ready, exercise sound judgment, flex your business acumen, and hire the right people—then you might really get somewhere.

Thinking Only Quarter to Quarter Stifles Innovation

IMG: via Shutterstock

For small businesses, thinking only from one quarter to the next is extraordinarily helpful: being able to see changes on the small scale can ensure survival or help correct problems before they become catastrophic.

But for some businesses, thinking in the short-term can be detrimental to innovation and creativity. Successful companies like Google and Amazon have the ability to think ahead—far ahead, in the case of projects like Google’s self-driving car project. Though experimentation won’t work for all companies, it does keep Google and Amazon on the front lines of innovation.

For many small businesses, looking only quarter-to-quarter seems like all that’s possible, but as companies become more successful, they have more room—and more budget—to experiment. However, because shareholders are not forgiving of the trial-and-error process, not every company should experiment with their capabilities, and certainly not before they go public, according to KKR’s Henry Kravis. Even established Wall Street firm KKR, which has begun to branch into venture capitalist investments, understands that experimentation is a delicate process that needs a lot of research and attention.

But larger companies that can afford to experiment with their innovations and company trajectory certainly make some interesting things happen. Google X, the somewhat-secret facility run by the Internet giant, encompasses a lot of projects, some of which are known, some of which are moving into becoming projects, and some of which we may not have even heard of. One of Google’s most innovative projects is its intent to create cars that drive themselves, which has recently moved from an idea stage to actual experimentation involving prototypes.

Like Google, Amazon is also working on some creative projects that could significantly change the way mail is delivered. Amazon Prime Air, so far still in its embryonic stages, is a service that will deliver mail and packages by drone. The project is innovative and would likely be efficient, but it faces the stern countenance of public opinion on the drones, which could be hazardous if not engineered correctly.

There is no guarantee that the program, or Google’s self-driving car initiative, will work: both projects carry the heavy risk of failure, but they are potential failures big companies like these are likely to withstand. Even if shareholders can hold a grudge, they are more willing to take chances on large companies than they are on small ones.

Shareholders of Google and Amazon will probably still see profit even if these ambitious projects tank. But they have a long and sturdy record of measurable progress, so their futures are relatively secure, or at least secure enough that their scopes are not limited to quarter-to-quarter activity.

It’s hard for small businesses who lack the kind of revenue garnered by Google or Amazon to think years into their futures or to tackle ambitious progress where success is not guaranteed. Thinking only from one quarter to the next has its own benefits, of course, but for the larger companies that have the resources, being able to think ahead for the long-term might yield some truly astounding innovations.

KKR Looking to Entice Smaller Investors

Get out your piggy bank, now is the time to invest. IMG: via Shutterstock.

In a new U.S. Securities and Exchange Commission filing, KKR, the private equity firm led by George Roberts and Henry Kravis, is allowing smaller investors to contribute with as little as $10,000. Previously, the Carlyle Group, a chief competitor with KKR, allowed smaller investors to pledge as little as $50,000 beginning in 2013.

To be able to contribute, an investor must have a net worth of more than $1 million, which can’t include their primary residence. Generally, most firms include those who have at least $5 million in investments. Traditionally, both firms have relied on public and corporate pension funds for the majority of their capital. In recent years, however, they have been turning to individuals for more funding.

A professor at Harvard Business School, Josh Lerner, says that private equity at one time was much more restrained in sidestepping retail investors.

Said Mr. Lerner, “If we’re going to end up with an industry that is dominated by hot money flowing into the sectors that are the most overheated flavors of the moment, it probably doesn’t augur well for the kinds of returns private equity is going to deliver.”

This new filing will make KKR the firm with the lowest minimum requirement for investment. Altegris Advisors LLC will manage the fund, investing at least 70% of its assets in private equity funds and businesses run by KKR. To avoid legal obstacles, KKR has structured its new product in such a way as to navigate regulatory challenges by allowing a third party to manage.

A 1.2% annual management fee will be charged by the fund, and pending regulatory approval, it will offer shares for as little as $10 each until it has raised $25 million for its initial closing.

KKR Continues Energy Infrastructure Expansion

One of KKR’s Asia offices is located in Hong Kong. IMG: via Shutterstock

KKR, the private equity and global investment company founded by Henry Kravis, George Roberts, and Jerome Kohlberg in 1976, is no stranger to the energy and infrastructure sectors. For the past thirty years, the company has invested in global energy opportunities—and it’s not slowing down anytime soon.

Recently, KKR announced that it would be continuing the investment trend by expanding its global energy and infrastructure business in Asia by appointing Tony Schultz and Ash Upadhyaya to lead the charge.

“KKR aims to create a unique offering in the energy, infrastructure and natural resources market, and part of that comes from combining our local geographic knowledge with industry expertise,” said Joe Bae, who heads KKR Asia, and Mark Lipschultz, who is Global Head of Energy & Infrastructure. “We are very pleased to have Tony and Ash leading this effort in Asia.”

Schultz and Upadhyaya will focus their efforts on energy, resources, and infrastructure in Australia and Asia. Their goals will include continue building up the team in Asia Pacific, finding new global metals and mining opportunities, and providing flexibility in capital and solutions, according to Justin Reizes of KKR Australia.

Tony Schultz was formerly Managing Director at Sydney’s EIG. While there, he focused specifically on energy, metals, and mining investments in Asia Pacific—making him very well suited to his new post at KKR. Ash Upadhyaya has been with KKR since 2011, previously working as a Director on KKR’s Energy & Infrastructure team in the U.S. Both men bring a huge amount of knowledge about the sector to their new positions.