Toby Ross

In profile

An unlikely edge

It seems counterintuitive, but perhaps the greatest value Baillie Gifford brings to private companies is our experience in public markets. And it’s why, after two decades of analysing and investing in global equities – from immature high-risk businesses through to some of the world’s largest companies – I have joined our Private Companies Team.

The entrepreneurs we partner with have strong ideas about what they want to build and how to do so. That often involves a stock market listing to reward employees and early backers, and to fund further growth. The transition allows anyone to invest in their company. But the mistake is to think it means an end to picking their investors.

Distinctive DNA

Where newly public firms often go wrong is thinking that they must pump out lots of data, hit every quarterly target and please every shareholder. In fact, the most successful businesses retain a distinctive voice for years, even decades, after floating. They have a clear, simple understanding of what it is in their DNA that’s different and enduring, and they relentlessly stick to it. In doing so, they self-select stakeholders who share in their mission – whether that be their customers, employees or, indeed, asset managers and others who invest in their stock.

It doesn’t mean an unwillingness to pivot when circumstances change. Every company eventually faces macroeconomic weakness, supply-chain bottlenecks or a disruptive shift in its industry. And it’s critical to act nimbly and build new muscle in response. But what also matters is that leadership demonstrates clarity about the principles on which it bases its decisions.

My work and meetings with companies I admire bear this out. They include Wise, Shopify and Atlas Copco – a firm we’ve held since the year I was born, which has reinvented itself many times. One piece of advice I’d pass on to founders: don’t lose your voice as you make the move to being public. Write your letter to shareholders yourself, and make it reflect your convictions – don’t outsource it to your PR adviser.

Facing forward

None of this is news to my new colleagues. But at a time when the Private Companies Team is growing, and an increasing number of the businesses we have backed are expected to follow SpaceX, Affirm and Tempus AI into listed status, my experience of what wins over public investors complements the team’s depth in private markets.

I sometimes joke: “Don’t look behind you, you’re not going that way.” That’s not to dismiss the lessons of business history or my own experience. But the future will be very different to the past, and the companies worth backing are those that adapt best. Many of them are growing in private markets. Finding and supporting them, on behalf of our clients, is what energises me most.