"When you work in the operating world, you are in the weeds of your business. For example, at SoFi I knew all the nuances of different types of student loan forbearance programs and at Brex I knew the minutiae of the Mastercard transaction chargeback rules. This contrasts with my experience as a private equity investor where I look at purchasing a business ranging from a chain of laundromats to Ancestry.com within the same month."
"In private equity, success often came down to three things: underwriting growth, paying the right multiple, and adding leverage. There is no way to distill what it is like to run a business, especially one as complex as Figure, into such a simple framework. The most successful operators enjoy going deep."
The distinction between operating and investing roles centers on depth versus breadth. Operators immerse themselves in business minutiae—inventory management, regulatory details, transaction rules—becoming experts in their specific domain. Investors, conversely, evaluate multiple diverse businesses using simplified frameworks focused on growth, valuation multiples, and leverage. The author's transition from private equity investing to operating roles at SoFi and Brex revealed that successful operators possess genuine interest in and aptitude for understanding complex operational details. This contrasts sharply with the investor mindset, which prioritizes comparative analysis across different industries. The fundamental difference lies not in intelligence or ambition, but in whether someone thrives diving deep into specific business mechanics versus maintaining broad analytical perspective across multiple companies.
#operating-vs-investing #business-skills #career-transition #operational-excellence #business-aptitude
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