Matt Truman: “If you want sustainable, industry-wide change, you need a systematic approach that builds a momentum of its own.”

Chair of the board

7 min read

Matt Truman is executive chair at True, the B Corp he co-founded to reimagine the investment industry and offer an alternative to what he’d experienced in investment banking. Here, he shares his insight on playing to your strengths to do the most good, rethinking the common wisdom around a leader’s job, and why ESG isn’t a personal opinion.

From having front-row seats at Lehman Brothers during its demise to raising eight investment vehicles and funds with True, are there defining moments in your career?

The first was meeting my now business partner, Paul Cocker. I was a terrible accountant at Deloitte, he was a great one with deep emotional intelligence, and my dad had always told me to attach yourself to people better than you — so I did.

The second was having a boss at Lehman Brothers who thought the internet was a fad and handed me over the accounts for a bunch of web start-ups that he didn’t find that interesting or perhaps didn’t think we could make money from. Those turned out to be Ocado, Asos, and I was 24 years old and it gave me a chance to learn, analyse and advise whilst understanding the early stages of the internet, and ultimately work on the floatation of companies I really didn’t have any rights to.

And the third was Paul and I making our first investment, into e-tailer Alex and Alexa. I had the majority of my wealth in unvested Lehman shares so I used my last remaining savings to buy a majority stake in the start-up — in June 2008, three months before Lehman failed and went to zero. Post Lehman’s demise, the only thing I had was this start-up! The company was basically a Net-a-Porter for kids (think designer jackets for two-year-olds) and all my friends with children assured me that the concept was absolutely idiotic. Three years later, and despite having made every mistake in the book, we sold what had become a 120-people business to Tiger Global who just happened at the time to be looking for a digital way to enter the growing e-commerce and key Asian markets that were demographically shifting.

“You shouldn’t attribute too much of your success solely to your smarts.”

These moments and others taught me not only that timing is everything in life, but also that luck can make or break enterprises and that you shouldn’t attribute too much of your success solely to your smarts.

“Private equity” and “positive social impact” don’t always go hand in hand. How are you trying to change that, and what can PE bring to the B Corp table?

Both Paul and I felt we had to fight our way up in a sector full of people who wear the same suits and attended the same schools. Paul is from St Helens and the first of his family to go to university; I’m from a farming family from Lowestoft in Suffolk and my mum grew up above a village sweet shop that didn’t sell many sweets. While that’s far from the harshest backgrounds and both of us were lucky with very supportive parents, it meant no one in the VC world would meet with us and we had to build everything from scratch, working on the business at night — with me fainting from exhaustion on my way to my day job on one occasion, up Bond street tube! And that made us realise that, considering the challenges we faced, raising money had to be incredibly tough for those starting with a worse deal than we did.

That’s how True came to be, with the core idea being that, to have the impact we were aiming for, we couldn’t go it alone and had to rely on network effects by bringing together traditionally disparate parts of the same consumer ecosystem for mutual benefit, In my mind, Metcalfes law is a profound one for our model. To do so, we operate three arms — a VC fund for incubating businesses, a PE fund for proven companies, and an innovation advisory for enterprise — all part of one ecosystem that gives our clients access to what their current size prevents them from having. To illustrate:

  • With the larger firms — 7-Eleven, Abercrombie & Fitch, Associated British Foods, Marks & Spencer, Warner Bros. Discovery, and Walmart to name a few — we act as a “skunkworks” team for CEOs, CSOs and main board members who buy into innovation, offering them flexibility, an unbiased opinion and speed. We put in place new technologies that, thanks to the scale these companies operate at, will quickly recoup their development costs and deliver value.
  • Then, we use what we’ve learned to help the smaller companies (our portfolio companies and broader ecosystem connections), sharing with them know-how, the networks created and technologies that they’d struggle to have access to on their own — for example giving a small retailer the same kind of inventory management capabilities as a T.J. Maxx. We deliberately look for businesses in areas where their growth could have a significant impact on local communities, and we put them in touch so they can share their experience and develop an ecosystem that leads to growth that leads to a stronger ecosystem, instead of a bunch of silos that lead nowhere.

We take the same approach to diversity. It is possible to improve things in the short-term through your hires — and I’ve lost count of the number of headhunters to whom I’ve said, “If you send me another shortlist with the usual suspects on it, I’m never using your services again”, until we started working and partnering with Suki Sandhu at Audeliss and Lucy Harris at Altrua. We also request advice from people who truly care, such as Christine Hodgson, the chair of Severn Trent Water, or Sir Ian Cheshire, who chairs the Prince of Wales’s Charitable Fund and the corporate climate change coalition, “We Mean Business”. Ian is our ESG lead on behalf of True alongside Paul.

“I’ve lost count of the number of headhunters to whom I’ve said, ‘If you send me another shortlist with the usual suspects on it, I’m never using your services again.’”

But if you want sustainable, industry-wide change, you need a systematic approach, at scale, that involves others and builds a momentum of its own. So, we’ve partnered with universities, via our key charity partner Universify, to raise awareness amongst young people who might believe a job in private equity or becoming a top executive isn’t “for them” because they’re not Oxbridge kids. We enrol students in summer schemes and employ our network to plant the seeds that will deliver long-term change. And, playing to PE’s strengths, we leverage the exclusive connections available to us and have a “portfolio day” where our portfolio CEOs and staff from different backgrounds go into schools to talk to under-resourced children, sharing their experiences and demystifying their roles. Everyone involved loves doing this, and we know we’re having a positive impact because we track how these kids progress against the context of their school and area. I have been mentoring one such Birmingham lad as part of the programme who is intensely bright but lacks confidence and access; it is the best thing I do! He is one of thousands of children the charity has now helped.

Combine all that, and our team members today are 45% women and 38% from diverse minority backgrounds. We’ve been deliberate and ruthless about it — with 50% of our compensation being determined by ESG and cultural scorecards — and we’re proud not just of these numbers and of the values that they convey but also of the diversity of thoughts that they enable and of the opportunities that they unlock.

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We’ve seen significant backlash against ESG in recent months. What’s your response to that pushback?

Proving your ESG credentials positively contributes to your brand and gives you a better multiple — up to 30% in some cases. So, even from a purely financial standpoint, the people complaining that ESG is a breach of fiduciary duty should reconsider. The benefits are clear, and to dismiss them out-of-hand suggests that they are actually the ones not doing their job properly. I also think it is where the puck is headed, like everything meaningful there is no such thing as an overnight success.

“No matter how you personally feel about it, ESG simply makes good business sense.”

If you don’t believe this, just look at Boohoo: although their performance as a business hasn’t been horrible, their market cap has cratered, losing about £5 billion because of a failure to take action against modern slavery. No matter how you personally feel about it, ESG simply makes good business sense, and it should be a common value-creation tool for the investment committee.

You are in the unusual position of not sitting on the main board of a business you founded. Why is that?

Whether chairmen, CEOs or founders, we should all understand our weaknesses and put protections around them. In my case, it took me a while to realise, but I was being a disruptive influence because I dislike and am actively de-motivated by long meetings that are obliged to look at matters that don’t always drive the business forward   whereas my co-founder is much better at handling that environment and delivering productivity through it. And I eventually figured that my job should be about allocating capital and people rather than spread myself thin doing things I don’t add value to just because “that’s how all founders do it.” So, we manage it through constant communication between Paul and me, which works very well.

More generally, I’m wary of rules for rules’ sake; I must understand the logic behind them, and I try to do things differently if I don’t get it. In this case, I don’t think attending board meetings would enable me to deliver the impact I can have outside of them, so what’s the point of having me in the room?

What book would you recommend to aspiring entrepreneurs?

The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success, by William N. Thorndike Jr., which tells the story of eight chief executives whose firms’ average returns mean an investment of $10,000 would be worth over $1.5 million 25 years later. Decentralising decision-making and empowering staff proved to be the key factors in their success, and I try to remember that lesson in my own endeavours.

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