Mr. Compton: We started the firm in 2002 with an almost Puritan zeal - in the financial as opposed to religious sense, in that from our respective backgrounds we really wanted to manage money in a more open, disciplined and logical way. It very quickly became clear that what our skill sets and what the market also needed now was unconstrained, long-only investment management, investing in business as opposed to indices, sectors or weightings. It came down to being a very strong value-driven business. We were lucky, with a blank sheet of paper, to identify and thus avoid other people's mistakes. We found that here in the UK, about nine-tenths of the managers relied on their brokers rather than carrying out their own research. We went for a focused, value driven approach and developed a very strong in-house valuation model. We were also lucky enough to be able to say, "Okay, what can we do that is new?" We did pioneer some new ideas in the UK context and even one unique to America. We were the first firm with a mutual fund to pioneer performance fees in the UK; the regulators were not keen but we drove them through and the law was subsequently changed too. Performance fees for us were all about alignment of rewards to the shareholders, the staff and the investors. The other area where we really had a breakthrough was portfolio transparency. We appear to be the first and are still the only firm in the world where investors could actually see their portfolios on the Web. When you think about it, this is quite surreal. Every firm, good or bad, says, "We are really transparent," and in most cases, you can't click on the portfolio to see what you, the investor, actually own. That was a real change in the business, which is now getting great traction, because every time a long-only fund, a bank or a hedge fund goes pop, people say, "What did they hold? My God, we should have known that." We then enhanced some of the best attributes from our competitors, a very strong in- house valuation driven model. Lastly, we launched the business, raising 10 million of capital in August 2002 with 5 million of funds under management, so we had the highest capital to funds under management in the world! Another interesting thing when we started the business was that I interviewed literally hundreds of people. They kept asking me, "What is the exit strategy?" It showed the extraordinary short-termism, and greed, rife across the business. We decided to say, "We haven't even started with the entry policy, yet." If you have a good business and you are doing it right, you never need an exit strategy - it looks after itself. Then and now, the mentality was, how quickly can I cash out? For us, good businesses are created by not even worrying about cashing out, but worrying about how to do the business well.
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