Here at Mutual Capital Partners (MCP), we know that we could not be successful investors and mentors to our portfolio companies if not for the incredibly talented and experienced limited partner investors (LPs) who support our fund. Our investment decisions are often shaped by the knowledge they bring to the table and the guidance they give to our portfolio companies. In this series of profiles on our various LPs we hope to highlight many of their unique experiences and insights and better share how MCP brings expertise along with capital.
In this LP Profile, we spoke with Rick Sapio- a co-founder and GP Advisory Board Member of Mutual Capital Partners. Rick is a life-long entrepreneur who started his first company when he was just 13 years old, and since then has founded more than 20 companies. He is currently the CEO and founder of Mutual Capital Alliance, Inc., a privately-owned holding company which has made investments in private companies, public companies, start-ups and real estate. You can read more about his background on our website here.
Q: What attracted you to a career in venture capital?
When I was 11-years-old, our entire family received the news that my dad had incurable cancer. My family had 9 kids and my mom had never worked, so while he was dying he told me I needed to know business to survive. He helped me immensely to understand business and taught me every aspect of running his car dealership. I’m passionate about entrepreneurship because I honestly believe that it saved my life. If my father never taught me how to make something out of nothing, then I would never have survived.
A mentor in my teenage years encouraged me to study engineering as a great background to whatever career I decided to pursue. Ever since I got that engineering degree, I’ve seen the world from the perspective of patterns and systems. Venture capital investing allows you to look at big pools of companies and spot patterns in those companies, in order to find aberrations in the market.
Q: What has been your favorite job experience?
My favorite job was right after college. For five years, I worked with a team of people who bought the debt of bankrupt companies at deep discounts. We took 14 companies through the process of bankruptcy; and subsequently, we converted the debt into equity. I got to see every aspect of business, that I could ever hope to see, from negotiating to existing debt and equity holders, to the transition process of taking a public company through a restructuring of their balance sheet; and it was truly invaluable.
Q: What are some trends you see shaping our future?
I think that the transition to automation and the internet of things will have far more impact on our lives than we can possibly imagine. People aren’t ready for the change in their lives, as there is less for them to physically do; and I don’t think society is ready for it. The way that we as individuals and as a society deal with this will be monumental in the coming years.
Another trend I see is that we’re underestimating the impact of solar energy. It is now a fact that the cost of solar is less than any other energy. The only barrier now is legacy thinking and legacy industries. I believe that people are currently underestimating how the continued adoption of solar will impact our world.
Q: What is the biggest mistake you see entrepreneurs make?
The biggest mistake business people make – in general - is not holding out to hire the very best talent. I once read a study done by Microsoft – in the 1980s – in which they determined how much profit is attributable to an employee in the top 1%, versus an average employee. They created a formula and what they found was the top 1% produced 5,200% more profit, when compared to the profit attribution of an average employee. Therefore, I believe that it is incredibly important to find the best talent at all levels of your organization. Entrepreneurs typically hire employees that they know, or that are related to their family, but that is often a huge mistake, if you’re trying to building a scalable company.
Q: What is your top advice for entrepreneurs?
Before you start anything, you need to think through what the purpose is, what the catalyzing statement is, and what the business strategy is; and have those answers crystal clear. When the purpose, the catalyzing statement and the strategy are not clearly thought out, how can a business owner tell the difference between an opportunity and a distraction? I spoke at TEDxBoccuniU (watch here) about the importance of using catalyzing statements. A great example was the mission of the U.S. space program in the 1960s. They had a singular goal. i.e. to send a man to the moon by the end of the decade of the 1960s. That clear, concise purpose drove everything they did; which allowed them to accomplish something no other country or organization had ever done.
Another perfect example: the founders of Apple were two guys who dropped out of college; and who went on to create the highest market cap company in the world. They did this by clearly defining the purpose, catalyzing statement and strategy for Apple. They created a simple, three paragraph document (The Apple Marketing Philosophy) off of which they would base every future business decision. That document is one of the reasons for the huge success they have seen.