When lining up a prospective investment you may do the wonky number crunching when it comes to financials; look down the road where a particular industry is heading and project future growth; comb through earnings reports and check narrative indicators. But one area often overlooked is the culture of a business: are the employees happy and what do they think of their CEO? The Motley Fool’s David Gardner says he’ll always reference Glassdoor.com to see what current and former staff think about working at a company, as it’s a terrific barometer for company social health. If there’s a serious toxic environment and/or lack of trust with a CEO, it might not be a good investment (until they address the situation). And if it’s the opposite, it only bolsters your investment thesis.
With relatively new companies (Kubient) or recently merged entities (Magnite) there’s usually not enough time to showcase a true sample size as the culture is “in development” so to speak. Otherwise there is a good track record to be explored. Let’s look at the programmatic advertising data company LiveRamp (RAMP) out of San Francisco. These guys are definitely doing something right because staff reviews on Glassdoor revealed 87% would recommend the job to a friend and 98% approve of the CEO. Those are just solid numbers suggesting a happy workplace, and you can read individual testimonials for illustration. Contrast that with Perion Network (PERI), where only 46% of staff would recommend the job to a friend and 53% approve of the CEO. They might have a problem with work culture that could spell trouble down the road unless it’s resolved. This doesn’t necessarily make it a deal breaker for taking out an investment, but something to keep in mind. See link below for a fantastic podcast discussion on a16z regarding the importance of work culture.
“Most of us have jobs that are too small for our spirits.” –Studs Terkel
It is never a bad idea to quote Studs Terkel anytime. This is informative, thank you!