At its core, investing in a great company means investing in the people who work there. At most companies, there's no one more important to investors than the CEO. When things go well, we shower the CEO with praise. When things go poorly, we bash the CEO incessantly for whatever flaws we can find.
So what should we look for in our CEOs? While some ideal qualities wouldn't make these people great drinking buddies, the right traits could nonetheless help investors make money.
It starts with a vision
The common element of great CEOs is the vision they instill in a company. CEOs are especially important in companies that make only a small number of different products, because their vision gets embedded in everything the company does. Look at how involved Steve Jobs is in every product's design, functionality, and sales at Apple
The same can be said for Netflix
If you purchased either of these companies five years ago, it probably wasn't because you could clearly envision how they'd look today. It was because you could trusted the leader of the company to instill the right culture and vision companywide.
Big ego, big money
Ego is rarely portrayed as a positive trait, but for a CEO, just the right splash of hubris can go a long way. You can credit Las Vegas Sands'
Adelson was the single reason I invested in the company in March 2009. I bought into the vision he had for the Cotai Strip, and more importantly, I knew that his ego would not allow the company to fail.
Of course, finding the right balance is a challenge where ego's concerned. Richard Fuld had enough arrogance to drive Lehman Brothers straight into the ground. It's clear that self-importance untempered by vision won't get you anywhere.
Sprinkle in some luck
In business, like investing, sometimes it just takes a little luck. When Steve Jobs bought Pixar, he happened upon a revolution in moviemaking. Yet that success didn't spring from his vision, but rather from current chief creative officer John Lasseter's. Sometimes it's better to be lucky than good.
So who'll be tomorrow's great CEO stories? The first name that comes to my mind is Tesla's
But my favorite is Steve Ells, co-CEO and founder of Chipotle
My honorable mention goes to Wang Chuan-Fu of BYD. Anyone who has the guts to tell Warren Buffett that the Oracle can only buy a limited stake in his company is someone I want running my business.
Find the right leader
Sometimes a CEO can make a company more than you ever imagined. If you can find that visionary leader, push your chips in and hang on for the ride.
What CEO are you investing your hard earned money with? Leave your picks in the comments section below.