Really great question... In a former life I spent a fair amount of time thinking about attribution (of returns) and how to determine what % of the return was luck (not repeatable) and what % was skill (which we defined as alpha). Attribution is an imperfect science, but in public markets there's a lot of data to help answer attribution questions. For a host of reasons, it's a lot harder to run that same exercise in private markets. With that in mind, I really like the horse-racing analogy to help steer the conversation. To win (BIG), you need the right horse, the right jockey, the right trainer, and a race structure that gives all three a chance to succeed. 1.The horse is the business. The very best investments I have been lucky to be a part of had a stable and understandable business, recurring or repeat revenue, low churn, limited customer concentration, manageable capital intensity, modest cyclicality, and limited key-person risk. A great jockey cannot consistently win on a weak horse. 2. The jockey is the searcher. Personal fit is often overlooked, but it is critical. The searcher needs a credible reason to own THIS specific business, the experience and temperament to lead it, and a genuine desire to do the day-to-day job. They also need to accept the financial, personal, and lifestyle consequences of the acquisition. A great asset in the wrong hands often does not work. 3. The trainer is the investor, board, and adviser group. The best searchers I have worked with are unusually humble. They are not merely coachable. They actively seek out people with deeper experience and truly value their input. They are willing to pay for strong advice and give up some economics to improve the odds of success. They would rather own 1/8 of a watermelon than an entire grape. They also enter the business intending to learn before they act. They spend time understanding the company, its people, customers, and operating rhythms before making major changes. That's rare 4. The race plan is the value-creation strategy. A credible plan is specific, achievable, matched to the searcher’s experience/capabilities and the company’s resources. All too often I have seen value creation plans based on unproven initiatives (all working at once). The right investors and board can be a big asset here, and help turn a reasonable plan into an executable one. 5. Finally, the track conditions are the deal terms and capital structure. A lot can go wrong in the first few years. Conservative leverage, ample liquidity, realistic working-capital assumptions, and patient capital create margin for error. If the capital structure leaves no room for a bad quarter, a lost customer, or a delayed initiative a good business in capable hands can still fail. There are, of course, other factors (Luck/Fraud/Misrepresentations/Pandemics/Changes in taxlaw/regulations are all additional considerations that can also impact outcomes), but I think these are probably the main ones. A lot has to go right for searchers to hit a home run... The newly released Stanford research note suggests as much. But with some foresight, and the right partners, it's still very doable (but hard to pull off). Looking forward to the follow up post on your thoughts about this extremely important topic.