After growing up in remote Australia and attending boarding school on a farm, Blue Sky Alternative Investments founder Mark Sowerby says he spent more than two decades figuring out “what am I good at and what am I not?” before eventually creating a venture capital fund that now manages over $2 billion in assets.
This journey of self-exploration equipped Sowerby, who’s currently serving as Queensland’s chief entrepreneur, with a deep understanding and appreciation of not only his own talents, but the value in others around him.
Sowerby says Blue Sky Alternative Investments, founded in 2006, began with a “cunning plan” to help him build his own business, while also supporting other ventures in a range of fields he found exciting like agtech.
“I just had all those ideas and could see all these opportunities that no one else could be bothered doing,” he tells StartupSmart.
In the wake of the global financial crisis, Sowerby says he knew alternative assets would be the future for investors.
“Everybody says you won’t do it and it’s been 11 years and we’re still doing it,” he says.
To help him start, Sowerby completed a Harvard Business School venture capital course led by Josh Lerner, who was an advisor to one of the world’s largest alternative asset firms, Blackstone.
As of March 31 this year, Blackstone’s reported assets under management totalled $US368 billion ($494.7 billion).
Sowerby stepped down as chief executive of Blue Sky in the second half of 2016, having run the company for 10 years. Reflecting on his journey, Sowerby says there have been some really “horrible times” but the sheer “guts” and “desperation” of his team to make it work is why Blue Sky Alternative Investment’s still standing today.
“Any founder knows that it’s relentless and there’s always days of panic,” he says.
Which makes being reflective and willing to learn all the more important. Sowerby says a “famous investor in the US” once offered him the following advice.
“Just remember as the founder you’ll eventually become the most dangerous person in the room so self-awareness is a really important thing to understand and be mindful of.”
The brunt of betrayal
Looking back, Sowerby says the “two worst moments” of building Blue Sky Alternative Investments were sparked by internal betrayal.
“Where people did the wrong thing and were happy to do it at the expense of the team,” he says.
But these experiences, which still sometimes anger him, have led to the team Blue Sky Alternative Investments has today.
According to Sowerby, the company’s employee turnover was at 50% in its first five years but this dropped to 2% for the next six because they “got rid of the bad ones and kept the good ones”.
“You’re in the trenches for a long time with people and it’s surprising what people will do for themselves at the expense of others, and those moments have been emotionally, not necessarily financially, by far the worst things,” he says.
This is even more painful, he says, when betrayal is done by people “closer to home”.
“This is an emotional game,” he says.
Fortunately, he says, such instances have only occurred a couple of times.
“Every now and again, I go back to those moments and your guts tighten up and you get anger again but as time goes on, I’m sure I’ll let it go,” he says.
Starting with trust
Instances of betrayal are a good opportunity to wise up as a founder, says Sowerby, but they shouldn’t destroy all trust in new relationships.
“We got burned really badly by some people but I still had the same view, you know, as you get older people talk about getting more cynical and what people do [and] there is some merit in that,” he says.
“But I actually have found that trusting people 100 percent from the start and believing in them 100 percent in the start, and working back from there is a much better way to operate.
“The net benefit of doing it that way has outweighed the cost of betrayals and things that went wrong.”
Mitigating the risk of growing a team
As you build a startup, a founder is building an engine of human strength and abilities, and with each new investor or employee comes opportunity and risk, according to Sowerby.
“For every shareholder you introduce, you double your risk so you need good filters,” he says.
When you grow from one to two people, then two to three people, the risk is doubled each time, he says.
“[At Blue Sky Alternative Investments] the test was believing in the vision, understanding what was possible and realising this is a dream that could come true, and now they’re the ones that are fulfilling the dream,” he says.
To mitigate the risk of growing a team, Sowerby says it’s important to start with founding members who’re unified by shared experiences, history, mutual friends and similar values “before you go into business together”.
“[When you look at] human beings and the way they behave under pressure and in different situations and what they’re capable of, you understand that I’m introducing a significant variable here which increases the volatility of returns,” he says
“[So] the returns that they’re going to return for me and this business need to be substantially strong enough to outweigh the doubling of the risk.”
Knowing your super powers
Putting together people with complementary strengths is often what’s needed to fill gaps and increase the combined potential of a startup’s team, says Sowerby. This means getting “rid of egos” to honestly identify the strengths and super powers of each team member.
Sowerby says there’s a rule at Blue Sky Alternative Investments that all startups and first-time founders should follow.
“Each person has to have something that they do that is better than everybody else,” he says.
These could be anything from being a strong decision-maker to having exceptional emotional intelligence. It may also be someone who gives really great cuddles.
And having a “no dickhead policy” can really help build a team of people who genuinely love and care for each other and the overall vision of a company.
At Blue Sky Alternative Investments, Sowerby says private equity managing director Tim Wilson is the “cuddler” who has always been a source of truth and a “hard and strong” force for doing the right thing.
“He gave me a lot of cuddles … you have your moments,” says Sowerby.
Blue Sky Alternative Investments’ managing director Robert Shand is “the guy that could make a hundred decisions in a day and get 95 right”.
According to Sowerby, Shand can tell when a decision “probably doesn’t really matter” or “could kill us because five scenarios from now that could be the decision you made that was the death of this company and ultimately all these people suffer”.
“The judgment required to know which one is which is really challenging,” says Sowerby.
Blue Sky Alternative Investments’ venture capital division is headed by Dr Elaine Stead, who is “someone who can smell the wind”, says Sowerby.
According to Sowerby, Stead has the “highest EQ” and empathy in the team.
“The best people are those who’ve suffered and found a way through and in many ways a lot of our good people are like that,” he says.
“It’s no coincidence that it’s not an investment banker running our venture capital, and [Stead] offsets the bankers and business beautifully,” he says.
*This article was updated at 9am on May 24, 2017.