Idiosyncratic Assets
We recently concluded our annual planning process, what we call The Blueprint, with each of our portfolio companies for 2026. If there was a single shared takeaway, it’s that everyone is seeing something different. Some of this is industry-driven, but geography is also a factor, and so are people (because of how hard it is becoming to hire well). In other words, it continues to be a mixed bag out there in the real world, despite our trying to own nothing but excellent, small-but-important businesses that care what happens next.
We often wish we had more predictive ability, but a running joke in our office is that we are glad to have a portfolio of idiosyncratic uncorrelated assets (the institutional investors in the audience should like that one). While that means nothing is ever all going well at the same time, it’s never all going poorly either (knock on wood).
What’s interesting right now, however, is how wide the variance is. For example, Ryan, who works with a number of our portfolio companies, noted in one of his recent weekly updates that this was the “first time since I’ve been here that I have seen clear market signals of weakness at every company I work with.” He went on to ask if the rest of us were seeing the same or different.
I chuckled before writing back that two of the companies I work more closely with were about to close their best years in history…and that it wasn’t particularly close.
This gap in performance isn’t an indictment of Ryan or a validation of me. Rather, it’s to point out that it’s a weird world out there right now. And when things get weird, the connection between effort and outcomes gets acutely detached.
I write this not to make any grand pronouncements, but to flag that 2026 has the potential to be a frustrating year (though don’t they all, don’t shoot the non-committal messenger). But if we stay the course, put in the effort, and don’t get turned into forced actors, we should all do just fine.
Have a great weekend.
– Tim
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