Jun 26, 2023 · 1h 4m · capital-allocators
Matt Breitfelder – Optimizing Investment Performance through Human Capital (Capital Allocators, EP.323)
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In this episode of Capital Allocators, host Ted Seides interviews Matt Breitfelder, Partner and Global Head of Human Capital at Apollo Global Management, on applying human capital science and behavioral psychology to institutional finance. Breitfelder shares his career path, actionable frameworks for de-escalating team conflict and maximizing performance, and methodologies for evaluating talent dynamics during investment manager due diligence.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 17.4% of the talking time here. How this is scored →
Ted as informed peer 4.2 Guest teaching 6.2 Guest disagreement 0.0 Ted pushing back 0.1
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 32:45 Critique of asset management's talent lag
In a very collegial episode, Matt's strongest critical stance is his critique of the asset management industry and elite business schools for historically neglecting human capital and organizational psychology.
Hardest push from Ted ▶ 42:01 Challenging the link between team feelings and public market alphaTed directly pushes back on the link between internal team sentiment and public market performance, noting that stocks and bonds do not care how well a team functions.
Biggest teaching moment ▶ 15:40 Quantifying the 80% failure rate in human capital engagementMatt provides compelling empirical data on the 70% failure rate of corporate strategies and the 80% lack of high engagement, reframing HR as an urgent economic issue.
Ted holds their own ▶ 54:28 Formulating the LP allocator due diligence challengeTed displays his deep allocator domain expertise by pinpointing how institutional LPs should evaluate manager human capital practices during operational due diligence.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Early Life and the Intersection of Business and Psychology | 3 | 5 | 0 | 0 | Ted prompts Matt to discuss his foundational career origins at the intersection of business and psychology. Matt explains how his entrepreneurial father and therapist mother shaped his career focus on helping high performers. | |
| International Trade Negotiations and Core Lessons | 4 | 6 | 0 | 0 | Ted asks about the key lessons learned from international trade negotiations at the Department of Commerce. Matt outlines a three-part framework centered on rigorous preparation, deep relationship building, and playing the long game. | |
| Business School and the Strategic Value of Talent | 4 | 6 | 0 | 0 | Ted explores how Matt's HBS experience helped crystallize his career path. Matt recounts observing that top CEOs considered talent and culture their most enduring legacy, despite HR being traditionally viewed as non-strategic. | |
| Consulting Insights, Career Pivot, and Joining PwC | 4 | 7 | 0 | 0 | Matt details his analytical insights from consulting, citing data on corporate strategy failure rates and low employee engagement before pivoting to PwC. Ted listens as Matt explains the realization that human capital needed disruption. | |
| Facilitating High-Performance Teams and Conflict Management | 4 | 6 | 0 | 0 | Ted inquires about the specific tools used to align diverse global teams. Matt shares frameworks from the Harvard Negotiation Project and self-assessment methodologies that turn internal friction into productive output. | |
| Practical Tactics for De-escalating Team Conflict | 4 | 6 | 0 | 0 | Ted presses for concrete tactical de-escalation methods in heated moments. Matt shares practical tools including humor, strategic timeouts, and physical changes of venue to reset group emotional states. | |
| Maximizing Individual Performance and Humility | 4 | 7 | 0 | 0 | Matt details individual performance optimization, emphasizing strengths-based growth from A-minus to A-plus rather than fixing minor weaknesses. He contrasts beginner-mind humility against the plateauing risks of rising stars. | |
| Incorporating Sports Psychology and Pete Carroll's System | 4 | 7 | 0 | 0 | Ted asks how sports psychology translates to executive performance. Matt outlines Pete Carroll's system of caring and internal competition, explaining how psychological safety enables high accountability. | |
| Transitioning Human Capital Concepts into Asset Management | 5 | 6 | 0 | 1 | Ted notes the long-standing industry paradox where great money managers often make poor people managers. Matt agrees and describes treating the historic lack of HR sophistication in asset management as a major competitive opportunity. | |
| Co-Creating Talent Strategy at BlackRock | 4 | 6 | 0 | 0 | Matt describes building talent strategy at BlackRock by leaning into founder skepticism and co-creating solutions with commercial business leaders rather than imposing top-down HR initiatives. | |
| Sponsor Message: Ridgeline | 4 | 6 | 0 | 0 | Following an ad break, Ted asks how Matt turns around an underperforming unit. Matt outlines pre- and post-360 feedback and engagement surveys, emphasizing Ron Heifetz's concept of 'getting on the balcony.' | |
| Linking Team Dynamics to Long-Term Outperformance | 5 | 6 | 0 | 1 | Ted questions how internal team dynamics translate to public market performance where market prices do not directly communicate with teams. Matt responds that high-functioning teams optimize controllable factors and exhibit both fierce resolve and humility. | |
| Leadership and Growth at Apollo Global Management | 4 | 6 | 0 | 0 | Ted probes Matt's move from BlackRock to Apollo and the contrasting cultural reputations. Matt explains that Apollo's culture of challenging convention and contrarian thinking aligns well with rigorous talent problem-solving. | |
| Preserving Culture and Applying the Platinum Rule | 4 | 6 | 0 | 0 | Ted asks how Apollo maintains its culture while scaling from 1,000 to over 2,500 employees. Matt introduces the 'platinum rule'—understanding what each individual specifically needs rather than just treating them as you would yourself. | |
| Human Capital Best Practices for Boutique Firms | 5 | 6 | 0 | 0 | Ted asks how boutique firms without dedicated HR departments can apply these practices. Matt recommends executive coaches, structured 360s, and anonymous surveys, cautioning leaders never to 'wing it.' | |
| Assessing Human Capital in Investment Manager Due Diligence | 6 | 6 | 0 | 0 | Ted frames the allocator due diligence challenge of assessing manager human capital. Matt outlines specific questions allocators should ask about employee surveys, investment committee hygiene, and continuous learning habits. | |
| Emerging Frontiers: Neuroscience and People Analytics | 4 | 7 | 0 | 0 | Ted asks about leading-edge human capital developments. Matt discusses the NeuroLeadership Institute's brain research on feedback, Google's Project Oxygen/Aristotle on psychological safety, and reframing talent from 'soft stuff' to hard performance drivers. |
Statements from this episode (27)
Breitfelder: Human capital focuses on helping high performers peak, not clinical remediation
“The difference between my mother's passion and my own was she was very focused on restoring people to health. And looking back in it, I realized, oh, my vocation's much more helping healthy people perform at the highest possible levels.”
Breitfelder: High-stakes negotiations live or die on fine points requiring relationship goodwill
“Building strong relationships with the folks on the other side of the table. So getting to know them, breaking bread with them, building the goodwill that you knew you were going to need when it got down to the finer points that were going to be the toughest, …”
Breitfelder: Harvard Business School offered zero HR classes twenty years ago
“But in that era of HBS, and I graduated twenty-odd years ago, there weren't any HR classes. HR was not seen as a profession anyone from HBS would ever go into. And HR functions had been positioned as administrative, not strategic.”
Breitfelder: Research shows roughly 70% of new corporate strategies fail
“The failure rate of most new corporate strategies is roughly 70% in all of the studies that have been done on this.”
Breitfelder: Strategy failures are almost always driven by talent and culture
“Almost always the root cause of that failure is about talent decisions, about culture, about humans not wanting to go in a different direction and the company's inability to solve that human problem.”
Breitfelder: Only 20% of workers report being highly engaged in their jobs
“All those studies showed that when you measure employee engagement, which is a self-assessment that virtually every company on earth Does these surveys where you're asking someone, are you not engaged in your job, mildly engaged in your job, okay, or highly en…”
Breitfelder: Intangibles like talent and culture drive 70-80% of company market value
“The intangible value of the market value of companies is like 70 or 80%, and most of that value is about The market's perception of your talent and your culture and your ability to continue to create value for a long period of time.”
Breitfelder: A strategic pause can reset stalled or heated negotiations
“When you're stuck and it's getting heated, the strategic pause is helpful. And you're actually just taking a break because it's no longer progressing. It's stuck and you got to shift the energy.”
Breitfelder: Focus development on turning A-minus skills into A-plus strengths
“Going from an A- to an A+, is where we should put all our energy. And going from a C to a B matters as well, depending on what your job is. But if you're a C at something, the path from C to A plus is really long, really hard, really steep. The path from A min…”
Breitfelder: Top performers possess extraordinary humility and beginner's mindset
“The most successful people have an unusual level of beginner's mind and humility and Because if they're at the frontier or edge of their profession or their craft, they know exactly what their gaps are. Because, especially in investing, investing is a probabil…”
Breitfelder: The confidence that drives early career success often causes plateaus
“You often see this pattern in rising stars. Who are really successful, but plateau. They often plateau because the confidence and ambition that got them there is exactly what holds them back from progressing any further.”
Breitfelder: Caring and psychological safety unlock peak human potential
“And as the coach, if you care about your players, you create psychological safety for them. And you help them do the inner game work to clarify their mind. Then you're unlocking their full potential.”
Breitfelder: Top Business Schools Were Late to Modern Human Capital Science
“I think the fact that HBS and Wharton and Stanford and all the top business schools have also been late to it didn't help because most of the leaders of these firms were educated in the same era, so they just weren't exposed to it”
Breitfelder: Employee Surveys and 360 Feedback Work for Every Company
“Two tools that work for every company on earth are an annual employee engagement survey and three 60 feedback.”
Breitfelder: Limit 360 Feedback Action Items to Three Maximum
“Don't ever focus on more than three things maximum, because you need to be able to walk around thinking about it all day long and staying really open.”
Breitfelder: Teams with constructive conflict consistently deliver better investment performance
“Surprise, surprise, a team that's firing on all cylinders and it's really working and has really good constructive conflict. In my experience, you just saw better investment performance over and over again.”
Breitfelder: Top investors obsess over team construction alongside investing
“I think having worked in asset management for 10 plus years now I think the best investors are Obsessed with investing, but they're also obsessed with team construction and the tools of optimizing a team.”
Breitfelder: Alternative Asset Managers Were Late to Human Capital Practices
“So asset management was late, and I think Alts was also late as a group of companies.”
Breitfelder: Talent and Culture Problems Can Be Solved Like Deal Team Problems
“The talent culture problems can be approached in exactly the same way. And I think that's worked really well.”
Breitfelder: Effective managers apply the platinum rule, not the golden rule
“The platinum rule is actually taking the time to understand what that person needs from you.
Like, what do they need?
How do they want to be treated?
What drives them?
What's their story?
What's coming from their background and what they're contributing?
And h…”
Breitfelder: Employee engagement surveys show outcomes correlate with the manager
“You know, if you look at employee engagement surveys,
Everything correlates with the manager.”
Breitfelder: Leaders without a concrete self-improvement plan leave value on the table
“If you are not walking around with a list of one to three things where you are, you know you need to get stronger and better, and you're not being vulnerable asking people for feedback, and you're not working a plan, you're leaving way too much value on the ta…”
Breitfelder: Allocators must assess asset managers' human capital at three levels
“So I'd be asking about at the three levels, the organizational level, what are you doing as an organization to achieve outperformance over a long period of time? Like what are those practices? How do you run your investment teams? And how do you make sure you'…”
Breitfelder: Poorly delivered feedback often degrades employee performance
“Feedback is the breakfast of champions, but poorly delivered feedback oftentimes makes performance worse, not better, because we know how humans react. And if you're not tuning into that individual human and you're treating it like an engineering problem, you'…”
Breitfelder: Google found moving top coders to bad managers collapses performance
“They ran studies where at Google there's a project called Project Oxygen where their hypothesis was maybe managers are so bad we should just eliminate the role. So let's test what are the characteristics of a great manager and does it even matter? And they fou…”
Breitfelder: Debate without psychological safety causes wasted organizational energy
“Psychological safety must be inherent for a team to fulfill its total potentials for performance. Seems like an obvious point. But if you have debate but not psychological safety, there's a lot of wasted energy.”
Breitfelder: Intuition is most valuable when tested and challenged by others
“Intuition challenged by other people is gold. Ignoring my intuition because I started believing other people were right, and I had to set that aside. It's just a terrible error. It's such important information. I don't ever want to ignore my intuition.”