It's time to start working 'on' your business in 2025

Not in it... big trends and what it takes for GP's to get ahead

Each month I have many dozens, if not hundreds of interactions with GP’s and it’s striking how each chooses of these GP’s choose to lead their firms. Across all of the leaders I speak with, a common characteristic that I have observed is that those with the highest functioning teams, biggest ambitions and a clear strategic vision are working on their business, not in their business.

Much like Brad Jacob’s states in his book, How to Make a Few Billion Dollars,

“you can mess up a lot of things in business and still do well as long as you get the big trend right”

There are a lot of ways to identify big trends. Some of the most effective ways for me are: talk to a lot of people, read a lot of research and surround yourself by industry experts.

The good news is that if you are in business, especially if you are a GP there are plenty of ways to do this. The first quarter of each year is a good time to connect and identify the big trends and in particular what is changing. I do this by prioritizing industry events where I can connect with a lot of people in my industry who have deep expertise. These trends help me by informing what I will start doing, stop doing and keep doing. See at the bottom of this post for a reference guide to the events that I recommend if you are in institutional real estate.

In order to identify big trends you need to free yourself up from the minute by minute and day to day details of your business. I know this sounds crazy.. .How can you do that? You may even be saying but “I am the [insert important title, including CEO, here] and if I don’t do this work, nobody will.” Well, let me tell you, it’s not easy, your ego will likely get in the way, your anxiety may peak but it is possible and you can do it.

Here are 4 things I have observed from executives that work ‘on’ their business, that can help you:

• Hire great people. Hire “A” players. These are the best of the best. Pay them well. These people are the ones that hardest to land and most costly to loose. A players hire A players. How do you know.. they are the people that you would be devastated to loose if they were to leave your firm. There are not that many of them, so when you find them… keep them. It’s more costly to hire a average performer than to leave that seat open… Don’t rush it.

• Set a clear strategic vision for your organization. Teams that understand and share a common goal will work best together. If your team doesn’t know your vision as leader of X department or Y company, how do you expect them to help you? Where do you want to be in 12 months, 24 months.. what about in 10 years?

• Create incentives that align to your vision. This is not always about money but compensation is a big part of it. What are the tools you have to align your team to work toward the shared goals you set. Focus on incentive plans. I recently hosted a invite only executive roundtable on how investment managers create “enterprise value” and one of the big take-aways’ is around getting incentive plans right. You can read the key take-aways’s here.

• Over communicate. You need to say it again and again and again and again… then again and again. I can’t over state this. It’s tiring but it’s important. When was last time you broadly communicated your goals for the business, or maybe just your goals for the year or the quarter or even just your team. Do it now. Do it again and again and again. The more frequently and clearly you communicate, the more clarity your teams have. At Juniper Square we have regularly 1:1’s between managers and employees, we have weekly (or sometime more frequently) team and department meetings, we have monthly all hands where we clearly communicate our goals and provide radical transparency into the performance of the business, we do a quarterly board meeting de-brief where we read every employee into what was discussed at our board meeting in addition to comprehensive written documentation about our goals and priorities at the individual level, team level, department level and company level.

Now that we have established the importance of working on your business and how that will enable you to focus on the big trends, let me share the big trends that I believe are most important for me and our business and where I will spend my time and energy in 2025 (and beyond).

Broadening access to private markets. More people will invest in private investments (aka “alternatives”) than they have previously. While institutional capital will remain critical, it’s the dawn of a new era. An era whereby individuals and their wealth advisors will have access to and interest in investing in private markets (i.e. venture capital, private equity, private credit, infrastructure and real estate). I have had several discussions on this trend on my podcast, The Distribution and if your interested in understanding the opportunity, what will be required and learning more about some of the firms at the forefront of this trend, I’d start by listening to or watching the episode with Joan Solotar, Global Head of Private Wealth at Blackstone (the leader in the space with ~$255B coming from private wealth) and then check out the episodes with Darren Fisk, Chairman and CEO of Forum - a firm built for working with wealth advisors and finally the episode with Michael Episcope, co-CEO of Origin is an incredible story of how a investment manager can be built for the individual investor. If your a institutional GP reading this, one fact is that the way you and your teams sell to wealth advisors and individuals is very different and thus how you hire, educate and compensate your sellers will need to evolve. (scroll down for #2)

A focus on enterprise value and related trends around consolidation.

The investment management landscape is evolving. Rapidly. What made a great investment manager in the last cycle will not be what makes a great investment manager in the next cycle. A lot of GP’s are deal shops at their core and have historically neglected critical areas like operational efficiency and the investor experience. And of course, track record. Not the marketing kind. The real kind. The kind without leverage where you can show a investor exactly how you generated your returns through differentiation. These three trends are paramount to building a strong and durable enterprise. A company that has intrinsic value beyond just the management fees and promote. A company that will be around to see the next big trend and the next, next big trend.

As the markets have tightened, so too has the pressure to outperform. Sophisticated LP’s are looking to consolidate manager relationships with a focus on those that can truly generate alpha. My good friend, client and industry veteran, Jeff Toporek, co-Founder at FD Stonewater summed it up wonderfully in his recent post and white paper on the importance of understanding returns called “The Naked Truth” about what happens when you strip away leverage… and of course this is about being vulnerable. The industry needs more of this type of honesty and transparency.

As LP’s seek new GP’s a few themes are emerging:

1. The market is bifurcating. LP’s are looking for GP’s that are either generalist (typically not where you go for alpha) or specialist (known and expected to produce alpha). What’s interesting to me is that the vast majority of GP’s - by count - do not fit either profile. They are in the middle. The middle can be characterized by firms that are ~$5B of EUM (equity under management) to ~$80b of EUM. I have been calling this the “messy middle” (see my recent LinkedIn post in on this). As the industry evolves, these will be the firms to watch. These are the GP’s that have the most on the line. Some will double down and change strategy, merging/acquiring/ selling or combining with others. Some will be gobbled up for their people or LP relationships and the rest will wrestle with the hard problems around how to build a durable business.

2. Operational Efficiency will become a top initiative for every GP’s. I think of this as the ‘low hanging fruit’ because you don’t need to break new ground. You can start with the basics, things that other GP’s have been doing and that LP’s expect. This includes, outsourcing everything that is not differentiated. In the world that I live in, this means fund administration but it can include other types of accounting, some technology (unless this is a key differentiator for you by using AI, etc), support and analyst level work, etc. Without being too prescriptive about what you should and shouldn’t outsource, I like to think of the 2006 speech from Jeff Bezos where he talks about Amazon’s desire to do the heavy lifting. This is the stuff that every GP has to do… it’s their job and as a result no GP gets credit for it. It doesn’t differentiate you. Never have I been told by a LP that the reason I work with X GP is because I love the fact that they do all their fund accounting in-house. At Juniper Square, supporting GP’s by doing the ‘heavy lifting’ is a key area of focus. We are, and will continue to be, the most important service provider / partner to GP’s and as Alex Robinson, Co-Founder and CEO of Juniper Square recently announced, we are investing $200M in R&D over the next 5 years to help with the “heavy lifting” or as Bezos calls it, the “muck” so GP’s and their LP’s don’t need to deal with this and can focus on the things they are great at… investing and outperforming.

3. LP / Client Experience. This should not be an after thought. Nobody will admit that it’s an after thought but in working with thousands of GP’s (and talking to many hundreds, if not thousands more) I can tell you that many GP’s view of client experience is outdated. Specifically the belief that all a LP cares about is good investment performance. While that is true, I have many stories about GP’s with a great track-record being fired by their LP’s due to terrible reporting, back investor communications and more. Long gone are the days where you send your investors a annual investor statement and their K-1. Investors expect more. They expect:

   1. Data not documents. They want to contextualize their investments and see performance. They want to be able to deconstruct what you say and rebuild their own models and make their own assessment.

   2. They want to access information about their investment on their time, not yours. This means they need ready access to a user friendly portal where they can see their investment data in addition to the required legal documents.

   3. They want consistent communication. In addition to having ready access to their data, they want to hear from you, the GP. They want to hear from you when things are going well AND when they are not.

   4. They want to be able to ask anyone that is client facing at your firm a question. It shouldn’t take days to prepare to talk to a LP when they call. They expect your accounting team, your IR team, your capital raising team and your executive/mgmt teams to be on the same page. In order for this to happen you need a unitary or common record of ownership across your firm. This means one where your internal teams and your outsourced partners, like your fund administrator, have access to the same info and that enable seamless communication. This is one of the key reasons why Juniper Square got into the fund administration space - what I just described had not been previously possible. We have changed that and will continue to revolutionize the way fund administration is done.

No more messy data. With the rapid raise in AI, it’s no longer a debate as to the benefits of technology. But there is a catch. In order to have your data work for you, the data needs to be accurate and accessible. Having a common record of ownership across all your investments and investor accounts is one critical step. If you are not investing in your technology and data platform to ensure accuracy and accessibility, now is the time. Once you have the foundation, then the power of AI will be exponential.

There will be many more big trends around specific asset classes, investment strategies, technology and more. The idea is not to boil the ocean but to set your focus, create a vision and make sure you are working on your business, not in your business.

For reference I have included some of the most impactful CRE events I attend each year below.

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A few of the key events that I make a priority to attend each year are institutional CRE focused. These are not the normal “networking” type events but are rich with content, candor and full of community. Each of these events have a level of exclusivity to them which is a critical reason why they are so impactful.

The bar for attendance is high to ensure the curation and community allow for candid conversations. I may be biased but the most impactful events I attend are the ones I host, these are always ‘by invite only’ and off the record. The power of curating the right mix is something I take great pride in and that means we can have candid conversations at a restaurant or at a resort.

Below are the most impactful gatherings for institutional CRE professionals each year that I attend:

• IREI VIP Americas

• NAREIM Executive & Officers Meeting (I am on the membership comt, if your firm wants to join, please reach out to me directly.

• IREI Editorial Advisory Board meetings

• IREOC (Institute for Real Estate Operating Companies) annual membership meeting

• PREA - Pension Real Estate Association - Spring and Fall Conference(s)

• My/Juniper Square hosted private dinners for CFO’s, COO’s and CEO’s

• Juniper Square Key Leaders - Deer Valley