From Operator to Advisor: Carlos Granda on Navigating Private Equity

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you're listening to the Far Side

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with founders and Leaders Podcast

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the podcast that gives you a behind the scenes look

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of some of the world's most

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amazing founders and leaders

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looking at their journeys

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and how they got to where they are today

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hello everyone and welcome to the latest edition

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of the fireside with founders and leaders podcast

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today I am

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delighted to bring you the amazing Carlos Granda

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who is currently working as an operating advisor

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working as a mentor

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he's worked at companies like HG Capital

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Google Salesforce SAP um working as chief

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customer officer for a number of those organizations

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now he's moved from operator to advisor

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something that we talk about how he made that switch

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and also we delve

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deep into what it's really like to work for a PE

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organization so if you're someone who's

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thinking about getting into the world of PE

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trying to understand it a little bit more

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trying to really understand the nuance the difference

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we're gonna bust some myths today

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we're gonna help you get set

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to really position yourself

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and understand is this the right environment for you

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and if it is how you can try and get there

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so I know you're gonna love this one

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I'll leave you just to check it out

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hello Carlos welcome to the podcast

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hello Rupert good morning

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good afternoon to you good morning

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and good good morning to you and good afternoon

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to me cause you are uh coming all the way

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from from California right and I'm over here

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in the UK today

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so we don't have distance on our side

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but we're making things work and so far

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things are going pretty well with

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communication so it's not letting us down um

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we've got some really great topics

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to talk about today so I wanna get

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stuck into it cause there's some

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some what I think people will find very

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interesting things that we're

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we're going to talk about

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but I'm gonna ask you to set the scene

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in terms of your background and who you are because you've worked

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for some really interesting companies

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if anyone goes on your LinkedIn they'll see that you've worked

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for likes of SAP and Salesforce and Google um

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so some big names people will recognize but you've

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you've

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sort of moved into a slightly different position

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uh more recently so yeah I'll let you tell

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tell the story and talk about your journey

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from from where you started and and where you are now

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sounds

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great for first of all Rupert thank you so much for

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inviting me I'm

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excited to participate and share a little bit about my story

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I won't spend

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too much time on it cause we don't want your

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audience to fall asleep

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I did spend 30 years of my career

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in technology industries

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pretty much all focus on post sales functions

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um I started my career doing consulting

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work and then slowly moved

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into the software side of the world uh

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started as a developer kind of an individual

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sort of contributor to eventually leading practices

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and then pretty much

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over the course of my career I've been able to uh

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manage pretty much every component

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of the customer journey sort of

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post sales once a Po comes in

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so my team always took over whether it was onboarding

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or implementation adoption usage

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and eventually customer support customer success

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it seems like the names and acronyms change

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seems like every year there's a new word a new buzzword

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so I've done it kind of done quite a bit

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so I did work for companies like

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SAP Salesforce Vmware Google Cloud uh the Google Cloud

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experience is probably one of the most fascinating

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ones cause we did start customer success from scratch

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and having to hire

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lots of very very smart people but have to do it uh

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right as the pandemic started so that that in itself

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can yeah can have its own

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its own show of how challenging it was but also uh

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rewarding I have to say that was probably one of the uh

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probably most rewarding

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things of my entire 30 years of having to build

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great culture and

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build a great team and great friendships

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but about two or three years ago I sort of

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decided that it was it was time to transition

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to a new phase in my life I'm not gonna call it retire

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cause uh

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people in my family will get

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very upset if I use that word yeah um

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but I really transitioned

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into sort of this new world of being an advisor uh

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instead of that shift from being an operator

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to an advisor it's uh it's not easy

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uh everybody thinks it's easy but it's not that easy uh

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and so hopefully today you know we'll be able to share some

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some thoughts best practices cause

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there really isn't a playbook out there for people

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who want to transition

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into this role so hopefully maybe

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some of the things that I went through that I can

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you know I'm happy to share with with your audience

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nice we can create the playbook uh and then let's do it

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this is it this is what it's for so so you moved

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from operator to operating

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advisor as you mentioned right so yup

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what was the thing that triggered the shift cause I'm

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interested interested

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was it like a pull or was it a push or what happened

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you know

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it's a great question I think you and I talked a little bit about it when we first

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sort of met and started having this conversation

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you know I I went a little deep

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you know uh I don't know if it was the post pandemic

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situation um I don't know if it was having my two sons

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and you know one of them graduating

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from college at some point and then the other one

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sort of starting college

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sort of being an empty nester as you you wanna call it

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uh we dealt with some health issues in my family

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as well so I don't know if all these things were sort of coming together

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uh but it came to

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to the point of me wanting to realize

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that I wanted to have a more purpose driven

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sort of second half of my life uh as you know I see you

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you Chelsea fan

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back there you know that I am a soccer or football fan

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so looking at sort of what happens in the second half

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what adjustments do you make at half time

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so you can come back and kind of

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enjoy the second half of the game the lead

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or maybe come back and win the game and so I wrote

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this thing called My 4 Pillars of purpose which was

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really kind of trying to find

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what was really important

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what was really meaningful to me

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um you know you get to a certain extent where you know

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some of the financial incentives

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that pull you in into working on a day to day job

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it gets to a point where like what's

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what's enough you know what's

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and you know I've always been a big believer

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that you know not just in leadership roles but

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just being a dad that the best thing to do is to

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model the behavior you want for your own sons

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and so at least for me you know

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I know you have a seven year old son so with that

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comes to like what you can't just tell them what to do you gotta show them what to do

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and so part of that is to ensure that you always have sort of some purpose in life and so I

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decided to write this

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four pillars of purpose cause I didn't have anything

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better to call it and I wrote because we have

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my family we have a soccer non profit

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a football non profit that we've been doing since 2,015

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where we collect soccer gear for kids

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around the world who are less fortunate

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so that was sort of one of them um

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the second one is I've been doing

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a lot of mentoring so I do mentor

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through the Latino community through Alban

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or other programs

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where I mentor they pair us up sort of

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you know seasoned veterans with sort of young

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entrepreneurs who are getting started

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many many times focus on technology and obviously some

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you know this new word called

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AI or at least these new two letters called AI

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so they pair us up with that and then also investing

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in in other parts of the world I love to cook

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so I started you know investing in some

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you know uh food and restaurant

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things out there as well

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but I also felt that I was not that old

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or at least as people thought that is like you know

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you still have more to give and so part of that was to shifting

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into the fourth pillar

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which is really being an advisor

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being an operator and you know

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how do you actually help coach

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mentor companies advise companies and so I enter the PE

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world of understanding what the world is which is was

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uh very um

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unknown space for me I did not know what it meant

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I didn't know how many P firms existed

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if you and I were in Las Vegas

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and had to put some money on how

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to guess how many P firms exist in the world

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I probably wouldn't have guessed more than 50

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I honestly had no idea

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that this whole new world existed and so um

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learning that was has been a great journey of learning

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and adjusting as well so that's

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that's really kind of the why I made this shift

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and I've been doing it for three years and I love it

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I love it I don't I'm not gonna say never

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but there's probably a very

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very slim chance I would ever

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go back and be a full time operator again

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it would have to be the right P firm the right

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seal the right circumstances so I'm not gonna say no

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never um but it would be a very rare opportunity

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and when you've been making this

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identity shift if we call it that right from um

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from operator to to where you are now

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like what surprised you about about

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yeah it's a good question um

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I think everybody gives you some level of advice

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so I think

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there's probably two things the first thing everybody

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said oh it's gonna be very different

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you know you're gonna move from

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being in the driver's seat to being in the back seat

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of a car

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yeah and even though people tell you you really don't

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appreciate it until you're actually in uh

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in in the middle of the battle

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um and it's very very true so I think in many cases

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uh depending on the P firm so I'll caveat

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in general a lot of our conversation

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today I'm gonna caveat by being very general

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because I don't wanna generalize

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and by the way it's not 50

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PE firms there's over 5,000 PE

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firms in the world so I was nowhere

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close so you would have made a lot of money on me

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if we were in Vegas together um

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so I don't wanna generalize it but I think

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every P E firm is different

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whether you're majority stake minority stake

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as well as just your philosophy around how

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you treat your investments

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and so you can either be very hands on or completely

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away so there's that

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there's definitely a range of their

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style their philosophy and

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you know if you have complexity of a multiple P

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firms owning a company that in itself

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changes the dynamics of what you as an operator

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can help those comments yeah

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right so it's not just being in the in the back seat you may be in the

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you know if you're

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if you're using the train analogy you may be in the

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the last wagon yeah of the train

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so you're nowhere near so trying to influence change

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becomes

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very difficult so I would say that's number one

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um and I think the second one when it comes to

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sort of moving into this role is that there isn't a playbook

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there really

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isn't a playbook I talked to a few folks

266
00:11:02,133 --> 00:11:03,700
that I knew in the space and

267
00:11:04,233 --> 00:11:06,066
nobody really had this like

268
00:11:06,066 --> 00:11:08,566
do this do this do this do this

269
00:11:08,866 --> 00:11:11,133
um it was very very different

270
00:11:11,133 --> 00:11:13,766
and people didn't like to share their story

271
00:11:14,266 --> 00:11:15,400
they were very guarded

272
00:11:15,400 --> 00:11:18,966
as a sharing of like the journey that they went through themselves

273
00:11:18,966 --> 00:11:21,566
so which is very very interesting and I think it just

274
00:11:21,566 --> 00:11:23,600
comes down to the competitive nature

275
00:11:23,600 --> 00:11:26,133
of all these P E firms and they're all competing for

276
00:11:26,666 --> 00:11:28,733
investments and targets which is great

277
00:11:28,766 --> 00:11:30,333
but I think that translates into everybody

278
00:11:30,333 --> 00:11:31,766
else and so for me I'm like

279
00:11:31,833 --> 00:11:34,166
there's 5,000 P E firms in the world so

280
00:11:34,366 --> 00:11:36,366
if I if somebody asked me about

281
00:11:36,400 --> 00:11:38,433
what took me to get here

282
00:11:39,033 --> 00:11:42,166
I wanna share I don't know there's plenty there's like

283
00:11:42,233 --> 00:11:44,333
there's plenty work to do I'm like

284
00:11:44,433 --> 00:11:47,666
there's probably we probably need 10,000 Carloses out there to even

285
00:11:47,766 --> 00:11:50,966
you know hit 1% of what I think P farms really need

286
00:11:50,966 --> 00:11:51,233
yeah

287
00:11:51,233 --> 00:11:54,000
and so so for me that that was also very surprising

288
00:11:54,000 --> 00:11:55,533
that wasn't really a playbook

289
00:11:55,533 --> 00:11:59,266
yeah yes you can go into Claude or Gemini or

290
00:11:59,266 --> 00:12:01,866
open or chat GPT and type it in there

291
00:12:01,866 --> 00:12:04,933
but the three years ago when I first started

292
00:12:05,166 --> 00:12:07,366
it was really more kind of getting to know people

293
00:12:07,366 --> 00:12:09,766
networking and and trying really understand

294
00:12:10,066 --> 00:12:12,533
what's it gonna take to get here

295
00:12:12,533 --> 00:12:15,633
and that's probably still the best way to do it right is to go and

296
00:12:15,733 --> 00:12:18,133
speak to people try and network

297
00:12:18,433 --> 00:12:22,500
it it's um it's one of those those sort of places you

298
00:12:22,666 --> 00:12:25,200
so I call inner circle right you have to be

299
00:12:25,200 --> 00:12:28,666
on the inner circle build trust build relationships

300
00:12:28,666 --> 00:12:30,633
before people then start to let their guard

301
00:12:30,633 --> 00:12:31,766
down so imagine

302
00:12:32,000 --> 00:12:33,866
that it wasn't always the case that people

303
00:12:33,866 --> 00:12:36,066
people don't still tell you

304
00:12:36,066 --> 00:12:37,633
like things now you're in a position

305
00:12:37,633 --> 00:12:39,766
where people will talk to you and they'll

306
00:12:39,766 --> 00:12:41,666
tell you a bit more of what they're doing because

307
00:12:41,666 --> 00:12:43,533
you've built their trust and

308
00:12:43,533 --> 00:12:46,733
you're part of that sort of circle if you like

309
00:12:47,400 --> 00:12:49,133
yeah no it's a good point and I think

310
00:12:49,566 --> 00:12:51,100
another thing to think about is that

311
00:12:51,200 --> 00:12:53,066
the whole P world is a

312
00:12:53,266 --> 00:12:55,933
whole new different set of people

313
00:12:56,333 --> 00:12:58,166
that I never really interacted

314
00:12:58,166 --> 00:13:00,066
with for the last 30 years

315
00:13:00,333 --> 00:13:03,866
you know through my network I can probably get to

316
00:13:04,000 --> 00:13:06,600
pretty much anybody in a company whether

317
00:13:06,600 --> 00:13:10,566
CEO CFO CCO CTO CTO cause somehow

318
00:13:10,566 --> 00:13:12,833
someone is connected to somebody that I know

319
00:13:13,466 --> 00:13:16,133
but you go to the P world a lot of these

320
00:13:16,133 --> 00:13:17,566
very smart investors

321
00:13:17,566 --> 00:13:21,766
very smart partners that came from Wall Street I wasn't

322
00:13:22,166 --> 00:13:25,700
in that world and so to getting to know the truly

323
00:13:25,733 --> 00:13:26,600
power hitters

324
00:13:26,600 --> 00:13:29,333
and sort of the people that are the influencers

325
00:13:29,633 --> 00:13:32,933
for a better word in the P world are not people that I

326
00:13:33,666 --> 00:13:35,400
new and so it was

327
00:13:35,400 --> 00:13:38,300
it was really almost like starting from scratch of like

328
00:13:38,433 --> 00:13:41,000
building your network making the connection and and

329
00:13:41,000 --> 00:13:42,266
and getting them to understand

330
00:13:42,266 --> 00:13:45,600
like this is what I bring to the table yeah nice versus

331
00:13:45,600 --> 00:13:47,733
what they bring to the table so it's just very different

332
00:13:48,666 --> 00:13:52,800
super entertaining and uh very rewarding uh

333
00:13:52,800 --> 00:13:55,066
cause they're way smarter than I am when it comes to putting

334
00:13:55,066 --> 00:13:55,400
numbers

335
00:13:55,400 --> 00:13:58,133
and spreadsheets together than I ever thought of I was

336
00:13:58,233 --> 00:14:00,966
um but yeah it's it was just it's just a different

337
00:14:00,966 --> 00:14:03,933
network of people that uh now I'm finding myself

338
00:14:03,933 --> 00:14:06,433
that OK now I'm opening it up and now I can

339
00:14:06,700 --> 00:14:10,366
get to certain people that before I never had a chance or even they know that existed

340
00:14:10,566 --> 00:14:10,633
and

341
00:14:10,633 --> 00:14:13,966
and what parts of being an operator did you have to

342
00:14:13,966 --> 00:14:15,900
to ultimately let go of like

343
00:14:17,266 --> 00:14:21,066
um yeah so for me I'm a natural operator I'm

344
00:14:21,066 --> 00:14:22,766
just that's just what I do I

345
00:14:22,766 --> 00:14:25,233
uh even my family thinks I'm nuts when

346
00:14:25,233 --> 00:14:26,866
we plan a vacation it's like it's

347
00:14:26,866 --> 00:14:29,466
it's a project it's a program a project with

348
00:14:29,466 --> 00:14:31,966
milestones and implications and budgets and

349
00:14:32,000 --> 00:14:34,166
and so being in a role where you're an advisor

350
00:14:34,166 --> 00:14:37,233
you can't do that you can only show them

351
00:14:37,366 --> 00:14:40,733
and so building trust with the portfolio companies

352
00:14:40,733 --> 00:14:41,800
with the leadership team

353
00:14:41,800 --> 00:14:46,166
that I am not there to take your job I am not there to

354
00:14:46,400 --> 00:14:50,033
get rid of you and replace you I am there to help you

355
00:14:50,266 --> 00:14:52,766
and I think I would say that's probably where I have to use

356
00:14:52,766 --> 00:14:55,666
really use my skills of um

357
00:14:55,666 --> 00:14:58,400
getting them to trust me and understand

358
00:14:58,400 --> 00:15:01,600
that yes I bring this to the experience to the table

359
00:15:01,600 --> 00:15:03,800
but I am here to help you um

360
00:15:03,800 --> 00:15:04,966
I think that's sort of the

361
00:15:04,966 --> 00:15:07,866
the first thing is just really getting them to trust me

362
00:15:07,933 --> 00:15:10,866
um and I always uh coach this to my own team

363
00:15:10,866 --> 00:15:12,433
when we started a new company

364
00:15:12,433 --> 00:15:14,733
or we were in a new company and we always said

365
00:15:14,966 --> 00:15:16,733
look respect their journey

366
00:15:17,033 --> 00:15:18,800
cause they it took them they were

367
00:15:18,800 --> 00:15:22,066
successful before we got here so respect that

368
00:15:22,133 --> 00:15:24,166
yeah but they also hire you cause they need some help

369
00:15:24,166 --> 00:15:27,400
and so then bring your your so find a balance between

370
00:15:27,400 --> 00:15:29,000
respectful of where they were

371
00:15:29,000 --> 00:15:31,100
and that you don't have all the answers and

372
00:15:31,666 --> 00:15:34,766
hey things that worked at Google or SAP or Salesforce

373
00:15:34,833 --> 00:15:36,633
may not work here yeah

374
00:15:36,633 --> 00:15:38,966
so almost have to be very humble

375
00:15:38,966 --> 00:15:41,066
coming in but at the same time

376
00:15:41,200 --> 00:15:43,333
understanding and sharing your your your

377
00:15:43,333 --> 00:15:44,766
your experience and I think the trust

378
00:15:44,766 --> 00:15:46,700
kind of builds on its own over time

379
00:15:46,833 --> 00:15:48,500
yeah nice and and you said obviously

380
00:15:48,533 --> 00:15:49,566
we said a couple of times

381
00:15:49,566 --> 00:15:51,000
there's no playbook for this or

382
00:15:51,000 --> 00:15:52,933
there certainly wasn't any playbook other than

383
00:15:53,000 --> 00:15:55,633
now as you say you can go into one of the AI models

384
00:15:55,633 --> 00:15:56,333
and probably

385
00:15:56,333 --> 00:15:59,033
build a playbook whether that's right or wrong

386
00:15:59,466 --> 00:16:01,233
let someone else decide but

387
00:16:01,233 --> 00:16:03,400
like what do you think of the questions that someone

388
00:16:03,400 --> 00:16:05,833
should ask themselves before they consider

389
00:16:05,866 --> 00:16:08,200
making this move if they're someone who's

390
00:16:08,200 --> 00:16:10,733
you three or four years ago

391
00:16:10,833 --> 00:16:14,033
thinking OK I'm gonna make the next chapter

392
00:16:15,166 --> 00:16:16,000
yeah I think the

393
00:16:16,000 --> 00:16:17,866
the first thing is that it's not for everybody

394
00:16:18,266 --> 00:16:23,100
I I really think that um even if I had a playbook um

395
00:16:23,333 --> 00:16:26,566
every human has to assess it for themselves

396
00:16:26,966 --> 00:16:30,133
because there's financial constraints there's

397
00:16:30,166 --> 00:16:31,566
personal constraints there's

398
00:16:32,133 --> 00:16:36,533
uh you know family constraints there's um so everyone

399
00:16:36,533 --> 00:16:39,066
needs to kind of look at their own situation

400
00:16:39,366 --> 00:16:40,933
independently from

401
00:16:41,066 --> 00:16:44,233
my advice or any advice that comes from any of the

402
00:16:44,233 --> 00:16:45,966
uh AI models out there

403
00:16:46,033 --> 00:16:48,600
um so I think that's number one is you need to assess it in

404
00:16:48,600 --> 00:16:50,566
in kind of whether you are ready or not

405
00:16:50,566 --> 00:16:52,266
for the transition I think that's the most

406
00:16:52,266 --> 00:16:53,066
important thing

407
00:16:53,233 --> 00:16:55,033
and I think the second thing is that look there's

408
00:16:55,033 --> 00:16:56,366
there's over 5,000 p

409
00:16:56,366 --> 00:16:58,666
farms in the world and they're all are

410
00:16:58,666 --> 00:17:00,900
super successful in their own merit

411
00:17:01,133 --> 00:17:03,900
but at the same time they all have their own style

412
00:17:04,333 --> 00:17:05,000
their different

413
00:17:05,000 --> 00:17:07,700
almost like a personality of how they treat

414
00:17:07,833 --> 00:17:09,166
not just the targets

415
00:17:09,166 --> 00:17:10,733
of companies that they're trying to buy

416
00:17:10,833 --> 00:17:13,066
but also how they take care of them sort of post

417
00:17:13,066 --> 00:17:13,900
acquisition

418
00:17:14,333 --> 00:17:17,300
and so then you kind of have to match your style

419
00:17:17,466 --> 00:17:20,000
as an operator who wants to shift

420
00:17:20,000 --> 00:17:22,333
this to kind of work with those PE firms

421
00:17:22,966 --> 00:17:23,966
I work with some PE

422
00:17:23,966 --> 00:17:26,800
firms who completely leave me alone like literally

423
00:17:26,800 --> 00:17:28,666
they make an introduction to a portfolio company

424
00:17:28,666 --> 00:17:30,533
and I never hear from them again and suddenly

425
00:17:30,533 --> 00:17:31,833
I'm helping them I'm actually

426
00:17:31,833 --> 00:17:33,900
reaching out to the PE firm to see like

427
00:17:34,166 --> 00:17:36,200
let me share with you what we just did and they're like

428
00:17:36,200 --> 00:17:37,633
ah you're fine yeah

429
00:17:37,633 --> 00:17:39,666
so there's some are like that and there's others

430
00:17:39,666 --> 00:17:42,900
that are like no Carlos this is where you're going to

431
00:17:42,933 --> 00:17:44,766
breathe eat

432
00:17:44,766 --> 00:17:47,033
and go to the bathroom this is like literally

433
00:17:47,033 --> 00:17:47,400
what we're

434
00:17:47,400 --> 00:17:49,566
you're gonna do for each portfolio company so

435
00:17:49,766 --> 00:17:52,633
you have to adjust your style for some people one

436
00:17:52,633 --> 00:17:55,300
one extreme or the other extreme works better

437
00:17:55,333 --> 00:17:57,466
so you need to just adjust it so there isn't

438
00:17:57,633 --> 00:17:59,966
I guess that's maybe that's why uh there isn't

439
00:17:59,966 --> 00:18:02,433
really a playbook but at least there's a framework

440
00:18:02,433 --> 00:18:04,133
to kind of think about is that

441
00:18:04,266 --> 00:18:06,366
every P firm is different um

442
00:18:06,366 --> 00:18:09,466
you have to assess your own personal situation

443
00:18:09,466 --> 00:18:11,466
independence and understand

444
00:18:11,466 --> 00:18:12,633
that you're I think the third one is that

445
00:18:12,633 --> 00:18:14,833
I think you're not in the driver's seat anymore

446
00:18:14,833 --> 00:18:16,733
you're in the back seat and you have to be okay

447
00:18:16,733 --> 00:18:18,933
with that it took me time by the way it's

448
00:18:19,066 --> 00:18:22,233
there's times that I'm still wanna jump over the

449
00:18:22,266 --> 00:18:25,433
the the seat and take over take over the wheel um

450
00:18:25,933 --> 00:18:28,666
but learning that it's it's it's hard

451
00:18:28,666 --> 00:18:31,033
it's probably the hardest thing outside of the three

452
00:18:31,066 --> 00:18:33,166
did you feel you've you've now you've got

453
00:18:33,166 --> 00:18:35,766
control of that though in terms of where you are

454
00:18:35,766 --> 00:18:37,766
from where you've been you're not

455
00:18:37,766 --> 00:18:39,600
you're not sort of scratching to get over

456
00:18:39,600 --> 00:18:43,100
over the seat as you said a second ago as much

457
00:18:43,566 --> 00:18:45,866
yeah I think I've Learned the techniques

458
00:18:45,866 --> 00:18:48,200
and sort of the balance of working closely with a P

459
00:18:48,200 --> 00:18:51,366
firm closely with a portfolio company and I think

460
00:18:51,366 --> 00:18:53,333
I would say the the number one thing is just

461
00:18:53,333 --> 00:18:55,666
I think your experience helps you build trust

462
00:18:56,400 --> 00:18:57,733
and I think that's where

463
00:18:57,733 --> 00:19:01,333
you know AI can give you 60 70% to get there

464
00:19:01,533 --> 00:19:03,433
but you still need the 30%

465
00:19:03,633 --> 00:19:05,366
uh that you need the experience

466
00:19:05,633 --> 00:19:08,366
I was using this analogy with somebody and I said look

467
00:19:08,533 --> 00:19:11,066
you know I I was I was doing this event

468
00:19:11,166 --> 00:19:12,233
uh in the East Coast uh

469
00:19:12,233 --> 00:19:14,166
back late last year and I asked the audience

470
00:19:14,166 --> 00:19:16,233
and I said look AI is great

471
00:19:16,666 --> 00:19:18,333
but let me ask you guys a question

472
00:19:18,433 --> 00:19:19,433
and I said does anybody

473
00:19:19,433 --> 00:19:21,600
travel everybody raise their hand does anybody

474
00:19:21,600 --> 00:19:22,833
go on family vacations

475
00:19:22,833 --> 00:19:24,766
you just came back from South Africa right so everybody

476
00:19:24,766 --> 00:19:27,033
goes on family vacations great yes

477
00:19:27,466 --> 00:19:29,133
would you feel comfortable

478
00:19:29,733 --> 00:19:31,233
having the AI fly

479
00:19:31,233 --> 00:19:33,666
the plane by themselves with no pilot

480
00:19:34,133 --> 00:19:36,133
no pilot in the cockpit or no pilot

481
00:19:36,133 --> 00:19:37,966
anywhere as a passenger

482
00:19:39,666 --> 00:19:43,066
and everybody said no way yeah yeah yeah no freaking

483
00:19:43,066 --> 00:19:46,233
way yeah yeah so if you think about it that way right

484
00:19:46,233 --> 00:19:49,833
our AI models can get us to the 70% there of

485
00:19:49,833 --> 00:19:52,300
sometimes what the answer could be or should be

486
00:19:52,566 --> 00:19:57,166
but you still need 30% of old guys like me

487
00:19:57,533 --> 00:20:00,466
who can bring sort of that experience cause there's

488
00:20:00,466 --> 00:20:01,800
there's a pattern recognition

489
00:20:01,800 --> 00:20:03,833
that AI does not bring to the table

490
00:20:03,866 --> 00:20:06,133
not yet I gotta say someday they will

491
00:20:06,400 --> 00:20:07,733
but they're not there yet

492
00:20:07,766 --> 00:20:09,633
and I can give you plenty of examples

493
00:20:09,633 --> 00:20:11,666
where AI came up with an answer

494
00:20:11,966 --> 00:20:14,866
and once we dug in into the situation it was like no it was something

495
00:20:14,866 --> 00:20:18,100
different than what the actual answer from AI was

496
00:20:18,166 --> 00:20:19,066
and so just learning

497
00:20:19,066 --> 00:20:20,733
that is I think is in being humble

498
00:20:20,733 --> 00:20:22,466
about that that's I think that's where the P

499
00:20:22,466 --> 00:20:25,966
firms that get it truly are making meaningful impact

500
00:20:26,366 --> 00:20:29,466
and we've talked a bit about AI so I'm gonna

501
00:20:29,466 --> 00:20:32,633
gonna jump in in terms of some of the the AI

502
00:20:32,633 --> 00:20:34,933
related topic we can't not talk about AI

503
00:20:34,933 --> 00:20:37,433
these days it's everywhere um

504
00:20:37,866 --> 00:20:41,900
we talk about like AI creating value creation

505
00:20:42,266 --> 00:20:45,300
uh across the board with different organizations

506
00:20:45,533 --> 00:20:48,433
and making sure that there's like

507
00:20:48,433 --> 00:20:49,833
the pricing is correct and all

508
00:20:49,833 --> 00:20:51,600
all these sorts of things different different areas

509
00:20:51,600 --> 00:20:53,000
that AI can help but

510
00:20:53,000 --> 00:20:57,233
where do you think it helps in terms of creating value

511
00:20:57,266 --> 00:21:02,000
in terms of like MNA um for P firms cause they

512
00:21:02,000 --> 00:21:02,833
they have a playbook

513
00:21:02,833 --> 00:21:04,200
towards all of that stuff right you

514
00:21:04,200 --> 00:21:05,466
there might not be a playbook for doing

515
00:21:05,466 --> 00:21:07,000
what you've done but they've got a playbook

516
00:21:07,000 --> 00:21:08,533
that they normally work to so

517
00:21:08,533 --> 00:21:10,966
how's AI changing that part of the game

518
00:21:12,000 --> 00:21:13,500
yeah it's um

519
00:21:15,000 --> 00:21:16,266
I would say in the last

520
00:21:16,266 --> 00:21:19,600
even just in the last like probably 12 to 24 months

521
00:21:19,600 --> 00:21:21,333
uh maybe even less probably

522
00:21:21,466 --> 00:21:26,066
um I think AI has truly at least I believe so may not

523
00:21:26,066 --> 00:21:27,000
not all the PFS

524
00:21:27,000 --> 00:21:28,966
may agree with me but at least this is my own personal opinion

525
00:21:28,966 --> 00:21:30,033
so I'll carry on by that

526
00:21:30,033 --> 00:21:33,800
yeah um I do I do believe that AI has changed

527
00:21:33,800 --> 00:21:38,900
and will continue to change the traditional thesis that

528
00:21:38,966 --> 00:21:40,800
most P firms do

529
00:21:40,800 --> 00:21:43,833
evaluate or do due diligence when it comes to

530
00:21:43,966 --> 00:21:45,666
um buying companies

531
00:21:46,066 --> 00:21:48,933
uh because I think AI change that so traditionally

532
00:21:48,933 --> 00:21:51,200
um and again I'll caveat by like

533
00:21:51,200 --> 00:21:53,633
not all 5,000 do it this way may they may do it differently

534
00:21:53,633 --> 00:21:55,266
but at least in the software space

535
00:21:55,266 --> 00:21:57,500
at least some of the ones that I've interacted with is

536
00:21:57,733 --> 00:21:58,666
and this is no

537
00:21:58,666 --> 00:22:01,766
not a matter of national security this is pretty traditional

538
00:22:01,766 --> 00:22:02,733
but they all look at

539
00:22:02,733 --> 00:22:04,800
hey we're gonna do a bunch of MNA work

540
00:22:04,800 --> 00:22:06,766
right so we're gonna buy company a

541
00:22:06,966 --> 00:22:10,100
and we're gonna try to wrap it around BC DNA

542
00:22:10,266 --> 00:22:14,433
companies either through geography expansion or

543
00:22:14,433 --> 00:22:15,666
feature expansion

544
00:22:15,666 --> 00:22:18,633
or I'm gonna go take out a competitor or

545
00:22:18,633 --> 00:22:19,733
you know whatever it is

546
00:22:19,766 --> 00:22:21,633
it's good good strategy mmm hmm

547
00:22:21,666 --> 00:22:23,866
part 2 of that thesis is

548
00:22:23,866 --> 00:22:25,066
number one thing is that we let's

549
00:22:25,066 --> 00:22:27,500
we should look and evaluate price

550
00:22:27,966 --> 00:22:29,600
should we increase prices

551
00:22:29,600 --> 00:22:31,766
is there an opportunity for us to

552
00:22:31,800 --> 00:22:33,600
maybe we haven't been getting uh

553
00:22:33,600 --> 00:22:34,733
the money that in return

554
00:22:34,733 --> 00:22:35,866
maybe we haven't increased prices

555
00:22:35,866 --> 00:22:37,800
most customers and you're getting more value so

556
00:22:37,800 --> 00:22:39,100
we should increase prices

557
00:22:39,366 --> 00:22:42,233
and the third one is all about optimizing sales

558
00:22:42,800 --> 00:22:45,233
kind of growth right cause it's all about

559
00:22:45,266 --> 00:22:46,366
the value of these companies

560
00:22:46,366 --> 00:22:48,466
all about top line growth and things like that

561
00:22:48,666 --> 00:22:51,800
so I do think before I get to your AI answer or

562
00:22:51,800 --> 00:22:53,766
your AI question is it

563
00:22:54,033 --> 00:22:56,633
that typically will manifest itself

564
00:22:56,966 --> 00:23:00,366
into seeing churn in year 2 year 3

565
00:23:01,000 --> 00:23:03,766
because a lot of those things you do are going to impact

566
00:23:03,766 --> 00:23:08,766
how um customers are viewing themselves right so if

567
00:23:08,766 --> 00:23:10,666
you're working with one company and then this company

568
00:23:10,666 --> 00:23:12,933
gets bought and suddenly they have tons of companies

569
00:23:13,566 --> 00:23:14,833
customers feel the pain

570
00:23:14,833 --> 00:23:17,166
they're the ones that actually feel the pain

571
00:23:17,166 --> 00:23:19,033
of that acquisition and what they're doing

572
00:23:19,033 --> 00:23:22,000
so I think that's one I think on the price increases

573
00:23:22,000 --> 00:23:24,333
if you increase price with any additional value

574
00:23:24,833 --> 00:23:27,633
customers are going to especially within the AI world

575
00:23:27,666 --> 00:23:30,066
it's much easier to

576
00:23:30,066 --> 00:23:32,733
go somewhere else than stay with what you have so

577
00:23:33,166 --> 00:23:34,166
that traditionally

578
00:23:34,166 --> 00:23:37,233
the the the challenge of traditional thesis

579
00:23:37,400 --> 00:23:39,666
is very different impact turn yeah

580
00:23:39,666 --> 00:23:42,200
so now I believe that I think when you're doing due

581
00:23:42,200 --> 00:23:43,866
diligence um

582
00:23:44,133 --> 00:23:48,200
the AI lens need to be kind of in the forefront yeah

583
00:23:48,200 --> 00:23:49,733
because you're not the thesis of like

584
00:23:49,733 --> 00:23:53,533
I'm gonna buy company a and buy B C d and E and F is

585
00:23:53,533 --> 00:23:55,833
well now you need to think about is like are there other

586
00:23:55,833 --> 00:23:57,166
AI companies

587
00:23:57,166 --> 00:23:59,666
who potentially if you're if you're the incumbent

588
00:23:59,733 --> 00:24:02,500
yeah are there other ones that are gonna disrupt you

589
00:24:02,766 --> 00:24:05,666
so your thesis of price increases more acquisitions

590
00:24:05,666 --> 00:24:08,166
sales optimization new logos top

591
00:24:08,166 --> 00:24:10,600
top line growth which then translates into valuations

592
00:24:10,600 --> 00:24:13,066
which translate into multiples which translates into

593
00:24:13,233 --> 00:24:15,966
enterprise value three and a/2 to 5 year x exit

594
00:24:16,833 --> 00:24:19,166
now you're you're dealing with seems

595
00:24:19,166 --> 00:24:20,966
like by the time you and I are done this conversation

596
00:24:20,966 --> 00:24:22,366
there's gonna be 10 new AI companies

597
00:24:22,366 --> 00:24:25,466
that were just born yeah and so

598
00:24:25,600 --> 00:24:30,433
now that has to be considered and looked at not just

599
00:24:30,433 --> 00:24:31,566
does my target

600
00:24:31,566 --> 00:24:35,900
have an AI functionality or an AI module is

601
00:24:36,333 --> 00:24:39,500
our thesis is not gonna have to be adjusted to

602
00:24:39,633 --> 00:24:40,966
are there other AI

603
00:24:40,966 --> 00:24:45,133
startups that can potentially disrupt this company yeah

604
00:24:45,133 --> 00:24:47,133
and so that's that's a different lens

605
00:24:47,133 --> 00:24:49,200
that maybe we haven't seen before that I think P

606
00:24:49,200 --> 00:24:50,566
firms will have to

607
00:24:50,566 --> 00:24:52,966
start looking at and then obviously in post sales

608
00:24:53,733 --> 00:24:55,866
you know AI is just

609
00:24:56,933 --> 00:25:00,333
just driving so much change whether is in go to market

610
00:25:00,333 --> 00:25:03,733
whether is in product engineering product development

611
00:25:03,833 --> 00:25:06,866
and then obviously in my space of customer experience

612
00:25:07,433 --> 00:25:09,833
gosh we see it everywhere whether it's customer

613
00:25:09,833 --> 00:25:12,433
support whether it's customer success

614
00:25:12,733 --> 00:25:14,333
whether it's onboarding

615
00:25:14,333 --> 00:25:16,533
whether it's implementation I mean it's just

616
00:25:16,566 --> 00:25:19,900
it's being disrupted yeah quite a bit and I think so

617
00:25:19,933 --> 00:25:21,866
not just due diligence but also the value creation

618
00:25:21,866 --> 00:25:23,133
piece of it begins to

619
00:25:23,133 --> 00:25:25,733
uh be need to be considered what AI will do for that

620
00:25:25,833 --> 00:25:28,800
and and so we've talked a bit about sort of where

621
00:25:28,800 --> 00:25:32,666
AI is and it's obviously it's like everywhere but so

622
00:25:32,966 --> 00:25:36,266
there are some firms and I I believe this myself

623
00:25:36,266 --> 00:25:38,566
this is my opinion that probably uh

624
00:25:38,566 --> 00:25:42,633
have an over reliance or an overestimation on

625
00:25:42,633 --> 00:25:46,700
the things that AI can do so from a PE

626
00:25:46,733 --> 00:25:50,200
perspective like what do you what do you see that

627
00:25:50,200 --> 00:25:54,566
they're doing um to overestimate like AI leverage

628
00:25:56,400 --> 00:25:57,666
yeah um

629
00:25:58,566 --> 00:26:00,566
it's hard to to

630
00:26:00,600 --> 00:26:02,766
give you a range cause a range can be very big

631
00:26:02,766 --> 00:26:04,566
especially depending on the size of companies

632
00:26:04,566 --> 00:26:07,000
right if you're a 50 million dollar AR

633
00:26:07,000 --> 00:26:08,600
or you're a 250 million dollar

634
00:26:08,600 --> 00:26:10,166
AR or you're a billion dollar AR

635
00:26:10,600 --> 00:26:15,533
AI will be uh sort of consumed slightly different um

636
00:26:15,666 --> 00:26:16,833
but I would say

637
00:26:16,833 --> 00:26:20,033
anything traditionally that when you think of AI

638
00:26:20,266 --> 00:26:24,300
you're like everybody's like we can save 30 40% of cost

639
00:26:24,600 --> 00:26:26,266
by reducing this cause we gotta

640
00:26:26,266 --> 00:26:30,233
get we can get rid of you know 34% of humans basically

641
00:26:30,433 --> 00:26:33,266
you know in our organization so the cost the impact

642
00:26:33,266 --> 00:26:33,966
is right away

643
00:26:33,966 --> 00:26:36,266
so to me I think that's an overestimation

644
00:26:36,433 --> 00:26:38,833
in my opinion cause I was thinking

645
00:26:38,833 --> 00:26:39,833
about this just a few days

646
00:26:39,833 --> 00:26:41,633
ago so I mean if you think about

647
00:26:41,966 --> 00:26:44,733
when the whole offshore model

648
00:26:45,366 --> 00:26:48,466
came out yeah where you said look we can

649
00:26:48,533 --> 00:26:50,200
send all of our development

650
00:26:50,200 --> 00:26:52,833
we can send all of our implementation our customer

651
00:26:52,833 --> 00:26:54,933
support to whether it was India

652
00:26:54,933 --> 00:26:58,700
Thailand the Philippines Argentina wherever it was

653
00:26:58,800 --> 00:27:00,133
right we all said

654
00:27:00,133 --> 00:27:03,000
we can reduce cost cause you know a a person

655
00:27:03,000 --> 00:27:05,900
here in California is gonna cost us this much

656
00:27:06,033 --> 00:27:07,566
a person in the Philippines

657
00:27:07,566 --> 00:27:10,166
or India or any other places will cost us literally

658
00:27:10,200 --> 00:27:13,733
you know 10 x less than what cost us here

659
00:27:13,933 --> 00:27:17,833
yeah and so on paper if you do a comparison 1:01 yes

660
00:27:18,133 --> 00:27:21,366
but when you come to the actual implementation of that

661
00:27:21,466 --> 00:27:24,800
is you still had a lead person

662
00:27:24,800 --> 00:27:28,166
in the Philippines or India you had a lead person here

663
00:27:28,433 --> 00:27:30,833
they did QA you have to do double QA

664
00:27:30,833 --> 00:27:32,266
cause some of the QA that was coming

665
00:27:32,266 --> 00:27:34,833
on board on the other side was not done properly

666
00:27:35,033 --> 00:27:37,700
and so it wasn't the 10 x savings

667
00:27:37,933 --> 00:27:40,433
it was maybe only 4 x savings

668
00:27:41,000 --> 00:27:42,200
and then the headaches

669
00:27:42,200 --> 00:27:45,133
of having to manage an offshore piece of it became

670
00:27:45,333 --> 00:27:46,800
much bigger the people will say

671
00:27:46,800 --> 00:27:49,066
do I really need that I'm not sure I need that

672
00:27:49,233 --> 00:27:51,766
yeah and so I feel like in some cases it's somewhat

673
00:27:51,766 --> 00:27:52,566
similar with AI

674
00:27:52,566 --> 00:27:55,866
where AI is making these very massive promises

675
00:27:56,266 --> 00:27:59,200
um I heard something today where 80% of case

676
00:27:59,200 --> 00:28:01,800
deflection be done by one of the AI tools out there

677
00:28:01,800 --> 00:28:02,600
right

678
00:28:03,066 --> 00:28:05,500
yeah wow like that just seems

679
00:28:06,166 --> 00:28:08,966
like super big but it's just yeah yeah so I

680
00:28:08,966 --> 00:28:10,033
make and so I think the

681
00:28:10,033 --> 00:28:12,000
the the problem is that in some cases

682
00:28:12,000 --> 00:28:15,733
people read that on a magazine or on a Super Bowl ad or

683
00:28:15,833 --> 00:28:18,033
you know wherever it is and suddenly

684
00:28:18,033 --> 00:28:20,033
they're like we should come and do that in our organization

685
00:28:20,033 --> 00:28:21,200
like tomorrow and like yeah

686
00:28:21,200 --> 00:28:23,700
it doesn't work that that the same way so I think

687
00:28:23,933 --> 00:28:26,466
I think organizational readiness is important

688
00:28:27,166 --> 00:28:30,300
I think organizational maturity is important

689
00:28:30,933 --> 00:28:32,033
I think understanding

690
00:28:32,033 --> 00:28:34,833
the overall ecosystem where AI can play

691
00:28:34,833 --> 00:28:36,066
I think it's important

692
00:28:36,633 --> 00:28:39,366
I think sprinkling a little bit of AI

693
00:28:39,366 --> 00:28:41,166
on on on your organization

694
00:28:41,366 --> 00:28:44,200
it's not the way to do it you gotta do a full transformation

695
00:28:44,200 --> 00:28:46,433
I think you definitely have to be ready

696
00:28:46,566 --> 00:28:48,766
but you also have to be honest with yourself

697
00:28:48,833 --> 00:28:52,800
about are you organizationally ready for that yeah

698
00:28:52,800 --> 00:28:54,866
yeah you know is your is your leadership team

699
00:28:54,866 --> 00:28:56,466
ready for that change and transformation cause

700
00:28:56,466 --> 00:28:59,133
we're talking about change and transformation

701
00:28:59,800 --> 00:29:01,766
that's not new most aren't ready

702
00:29:01,766 --> 00:29:03,666
that's the main thing right ultimately

703
00:29:03,666 --> 00:29:05,733
there's lots of companies that aren't ready and

704
00:29:05,733 --> 00:29:08,800
as you say the sprinkling and that's again why I see

705
00:29:08,800 --> 00:29:10,333
just generally take PE

706
00:29:10,333 --> 00:29:14,266
aside like most businesses are doing a sprinkling and

707
00:29:14,300 --> 00:29:16,666
then they're realising actually

708
00:29:16,666 --> 00:29:19,633
that doesn't work you just need to you need to

709
00:29:20,033 --> 00:29:23,866
take it down and almost build it up again yeah

710
00:29:23,866 --> 00:29:25,766
it's like you like you'll do that you're like yeah I'm gonna

711
00:29:25,766 --> 00:29:27,566
sprinkle some AI um

712
00:29:27,566 --> 00:29:30,066
I can get rid of these five people here but then guess what I have to hire

713
00:29:30,066 --> 00:29:32,733
five more people over here so not gonna support AI now

714
00:29:32,766 --> 00:29:33,366
yeah I'm like well

715
00:29:33,366 --> 00:29:35,966
what's the really cost benefit that you did and so

716
00:29:36,033 --> 00:29:38,233
I also I do think like when somebody says

717
00:29:38,233 --> 00:29:39,033
when I think of

718
00:29:39,033 --> 00:29:41,133
when I ask the question to whether there's a border

719
00:29:41,133 --> 00:29:46,333
the CEOs and I like what's the value of AI for you and

720
00:29:46,600 --> 00:29:48,766
their their answer to that question

721
00:29:48,766 --> 00:29:50,800
will tell me whether they're ready or not it's very simple

722
00:29:50,800 --> 00:29:51,966
the question is simple is

723
00:29:52,133 --> 00:29:53,666
what's AI gonna do for you

724
00:29:53,666 --> 00:29:55,766
and if they're thinking like oh this is gonna save me money

725
00:29:56,166 --> 00:29:59,000
this is gonna reduce you know the hit counts

726
00:29:59,000 --> 00:30:01,466
that I have in this particular department yeah

727
00:30:01,466 --> 00:30:03,666
you're not ready yeah the companies

728
00:30:03,666 --> 00:30:07,233
that say you know what this is gonna reduce 30% errors

729
00:30:07,533 --> 00:30:10,166
of how we're filing claims or

730
00:30:10,233 --> 00:30:11,866
you know for a insurance company

731
00:30:11,866 --> 00:30:13,333
or you're dealing with patients

732
00:30:13,333 --> 00:30:14,233
right this is gonna reduce

733
00:30:14,233 --> 00:30:16,866
and give us more time for our doctors to spend time

734
00:30:16,866 --> 00:30:17,633
with patients

735
00:30:17,633 --> 00:30:20,133
in front of them rather than having to deal with charts

736
00:30:20,133 --> 00:30:21,666
and doing all this and that

737
00:30:22,000 --> 00:30:23,333
that tells me OK you're ready

738
00:30:23,333 --> 00:30:26,566
you're ready thinking about change transformation

739
00:30:26,566 --> 00:30:29,733
and ultimately who runs the business your patients

740
00:30:29,933 --> 00:30:33,566
your customers that's who actually pays our bills not

741
00:30:33,733 --> 00:30:35,766
the AI and the headcount reduction

742
00:30:35,766 --> 00:30:37,800
that we have to do sometimes so I think that

743
00:30:37,800 --> 00:30:38,900
tells me quite a bit

744
00:30:39,633 --> 00:30:42,333
and and when we last caught up you you spoke

745
00:30:42,333 --> 00:30:45,833
about something that you framed as the G R R time bomb

746
00:30:46,166 --> 00:30:48,333
uh I thought that was a really interesting interesting

747
00:30:48,400 --> 00:30:49,833
interesting phrase but also

748
00:30:49,833 --> 00:30:51,233
when you talked about it and explained

749
00:30:51,233 --> 00:30:52,933
it it's it's quite fascinating

750
00:30:52,933 --> 00:30:54,266
but it all makes sense so

751
00:30:54,266 --> 00:30:57,800
can we talk a bit about it what is it and uh yeah

752
00:30:57,800 --> 00:30:59,900
let's get into that because that's really interesting

753
00:31:00,633 --> 00:31:03,133
yeah so let me first start by sort of so

754
00:31:03,133 --> 00:31:04,600
GRR is you know gross

755
00:31:04,600 --> 00:31:06,733
revenue retention it's really where customers

756
00:31:06,733 --> 00:31:10,366
turn that's it is a hidden metric that

757
00:31:10,466 --> 00:31:13,766
everybody looks at it right most P firms do a

758
00:31:13,933 --> 00:31:15,900
really nice job during due diligence

759
00:31:16,000 --> 00:31:19,066
as well as to monitor kind of as things go by

760
00:31:19,400 --> 00:31:24,066
but GRR to me is a lagging indicator right

761
00:31:24,066 --> 00:31:25,600
it tells you when your customers

762
00:31:25,600 --> 00:31:27,766
are going to leave you they they turn but you know

763
00:31:27,766 --> 00:31:29,400
or they left you not when they're going to but

764
00:31:29,400 --> 00:31:32,100
when they left yeah but to me

765
00:31:32,400 --> 00:31:35,466
those customers didn't leave you today

766
00:31:35,833 --> 00:31:38,166
they were leaving you six months ago mm hmm

767
00:31:38,400 --> 00:31:40,466
the signals were there that six months

768
00:31:40,466 --> 00:31:42,700
ago nine months ago 12 months ago

769
00:31:43,066 --> 00:31:44,766
the signals were already there

770
00:31:44,800 --> 00:31:49,700
yeah and so to me that is why I think sometimes GR I we

771
00:31:49,800 --> 00:31:51,600
we spent a lot of times I've spent a lot of times

772
00:31:51,600 --> 00:31:54,200
reviewing board decks I the the slides

773
00:31:54,200 --> 00:31:56,133
that get put together for the quarterly board

774
00:31:56,133 --> 00:31:57,666
deck that has to be put together whether it's a P

775
00:31:57,666 --> 00:31:59,466
firm or even if you're not owned by a P

776
00:31:59,466 --> 00:32:00,566
firm just in general

777
00:32:01,266 --> 00:32:03,466
and I find it ironic that

778
00:32:03,733 --> 00:32:07,733
90% of those slides are focused on sales go to market

779
00:32:08,133 --> 00:32:12,833
pipeline conversion yield compliance uh

780
00:32:13,066 --> 00:32:14,866
retention of sales people

781
00:32:14,866 --> 00:32:16,033
retention of the pre sale

782
00:32:16,033 --> 00:32:17,633
all those things and then the other

783
00:32:17,733 --> 00:32:20,766
50% of the 90% is focused on product product right now

784
00:32:20,766 --> 00:32:21,833
product this and that

785
00:32:22,533 --> 00:32:25,366
and about 10% is spent on actual customs

786
00:32:25,400 --> 00:32:28,100
yeah and a couple of those lies is GRR

787
00:32:28,400 --> 00:32:31,466
yeah or NRR or NPS or

788
00:32:31,466 --> 00:32:33,733
CSAT and so to me those are all metrics

789
00:32:33,733 --> 00:32:36,800
that are like lagging indicator metrics that is like

790
00:32:36,800 --> 00:32:38,566
so what

791
00:32:38,833 --> 00:32:41,733
you're telling me the cost you tell me Rupert left us

792
00:32:41,766 --> 00:32:44,366
well Rupert was unhappy a year ago

793
00:32:44,600 --> 00:32:47,033
six months ago nine months ago and so I think

794
00:32:47,133 --> 00:32:49,466
the GR time bomb is that in many cases

795
00:32:49,466 --> 00:32:51,300
the traditional thesis of

796
00:32:51,333 --> 00:32:54,066
lots of acquisitions price increase all these things

797
00:32:54,166 --> 00:32:59,000
are creating sort of the Year 3 GR drop is sometimes

798
00:32:59,000 --> 00:33:02,166
um some companies and executive teams don't see it

799
00:33:02,166 --> 00:33:04,466
happening cause when you do lots of acquisitions

800
00:33:04,466 --> 00:33:06,633
now you have potential product competition

801
00:33:06,733 --> 00:33:09,133
yeah you may have potentially this

802
00:33:09,133 --> 00:33:11,000
product and this product overlapping

803
00:33:11,000 --> 00:33:12,566
functionality and so now you're

804
00:33:12,566 --> 00:33:14,633
putting customers into a situation where like

805
00:33:14,766 --> 00:33:16,133
you just bought this other company

806
00:33:16,200 --> 00:33:17,166
they're not integrated

807
00:33:17,166 --> 00:33:19,033
which you always promised to integrate them

808
00:33:19,033 --> 00:33:19,800
they're not necessarily

809
00:33:19,800 --> 00:33:22,666
integrated what is that gonna do to me guess what

810
00:33:23,400 --> 00:33:25,166
I'm gonna go explore some new starter

811
00:33:25,333 --> 00:33:28,566
yeah cause I don't need the 30 bells and whistles

812
00:33:28,733 --> 00:33:30,300
I only need these two or three

813
00:33:30,366 --> 00:33:32,433
things to you do it really good

814
00:33:32,566 --> 00:33:34,166
this other company that's all they do

815
00:33:34,933 --> 00:33:36,633
that's one the second one's are price

816
00:33:36,633 --> 00:33:38,900
increases right especially if you're not

817
00:33:38,933 --> 00:33:41,333
releasing great functionality

818
00:33:42,033 --> 00:33:43,933
value added stuff

819
00:33:44,566 --> 00:33:47,533
and suddenly you increase 20% 30% of price

820
00:33:47,533 --> 00:33:48,933
just so you can get a bump on

821
00:33:48,933 --> 00:33:51,433
AR and that's your thesis goes forward

822
00:33:51,666 --> 00:33:53,200
that potentially could become a challenge

823
00:33:53,200 --> 00:33:55,733
customers take that opportunity than the next renewal

824
00:33:55,733 --> 00:33:57,366
cause if they're stuck for for

825
00:33:57,533 --> 00:33:59,500
on the next renewal they're gonna go bye bye

826
00:33:59,833 --> 00:34:02,633
yeah that's just what's that's what's gonna happen

827
00:34:02,666 --> 00:34:05,600
and I think the third thing that you know when I think of GR

828
00:34:05,600 --> 00:34:09,766
is you know we evaluate companies on growing

829
00:34:10,200 --> 00:34:11,366
but I always ask a question is

830
00:34:11,366 --> 00:34:13,066
like are you going through new logos

831
00:34:13,066 --> 00:34:14,666
or are you really gonna up selling

832
00:34:14,666 --> 00:34:16,266
cross sell that organization

833
00:34:16,433 --> 00:34:18,566
or you know from a product's perspective

834
00:34:18,633 --> 00:34:21,233
so have you done due diligence and post sales

835
00:34:21,566 --> 00:34:22,233
and typically

836
00:34:22,233 --> 00:34:25,666
most of the due diligence is all done on product and

837
00:34:25,666 --> 00:34:27,066
sales and go to market

838
00:34:27,066 --> 00:34:29,066
and channel and market share all the beautiful

839
00:34:29,066 --> 00:34:31,566
things that happen in the front end but typically

840
00:34:31,566 --> 00:34:33,733
the back end is what's actually driving that

841
00:34:33,833 --> 00:34:37,166
and that's where GR becomes sort of a big issue

842
00:34:37,233 --> 00:34:38,266
right so everybody

843
00:34:38,266 --> 00:34:41,233
says what's your GR somebody says somewhere in the 90s

844
00:34:41,433 --> 00:34:45,433
check everybody moves on yeah and then two years later

845
00:34:45,800 --> 00:34:47,466
when you have multiple

846
00:34:47,466 --> 00:34:49,900
account teams calling on the same customer with

847
00:34:50,333 --> 00:34:51,833
potentially competitor products

848
00:34:51,933 --> 00:34:53,433
within the same organization

849
00:34:53,800 --> 00:34:55,200
or you call me for renewals

850
00:34:55,200 --> 00:34:56,400
and they're like wait a second

851
00:34:56,400 --> 00:34:57,766
you just increased prices

852
00:34:57,766 --> 00:34:58,866
this is the third time you've increased

853
00:34:58,866 --> 00:35:00,700
prices on me in the last two years

854
00:35:01,866 --> 00:35:03,033
that's when something

855
00:35:03,033 --> 00:35:05,733
gr becomes an issue and next you know it's like

856
00:35:05,733 --> 00:35:07,633
let's call Carlos or someone like Carlos

857
00:35:07,633 --> 00:35:10,033
who can come in and help us and guide us through this and so

858
00:35:10,033 --> 00:35:11,933
that's why I call it the time bomb

859
00:35:12,566 --> 00:35:15,566
because it's not something that you look at but it's like this hidden

860
00:35:15,833 --> 00:35:17,033
issue that

861
00:35:17,966 --> 00:35:21,000
just by looking at some of the stuff that they're doing I can just already

862
00:35:21,000 --> 00:35:22,933
start seeing it that all this is gonna happen

863
00:35:23,033 --> 00:35:24,433
in six to nine months

864
00:35:24,566 --> 00:35:28,766
I think that's where AI is very powerful it can actually help you do some of that prediction

865
00:35:29,000 --> 00:35:31,466
some of those insights that you can truly leverage

866
00:35:31,600 --> 00:35:34,600
and is that what you do so if you go into a portfolio company

867
00:35:34,600 --> 00:35:36,666
with declining GRR would you

868
00:35:36,666 --> 00:35:39,633
would you start with that as your diagnostic

869
00:35:39,633 --> 00:35:42,466
starting point if you like by just looking

870
00:35:42,600 --> 00:35:43,433
lifting up the

871
00:35:43,433 --> 00:35:45,633
the hood and having a look at what's underneath

872
00:35:45,633 --> 00:35:48,500
maybe using AI to to give you a bit of a head start

873
00:35:49,433 --> 00:35:52,500
yeah so traditionally you would go look at a uh

874
00:35:53,033 --> 00:35:54,166
at a company and understand

875
00:35:54,166 --> 00:35:55,600
them and by the way the leadership teams

876
00:35:55,600 --> 00:35:56,166
you know especially

877
00:35:56,166 --> 00:35:58,066
when they're presenting to the board and they like

878
00:35:58,066 --> 00:35:59,900
gr drop by 2 percentage points

879
00:36:00,066 --> 00:36:01,166
they already have tactics

880
00:36:01,166 --> 00:36:03,966
they already know at least in their mind what it is

881
00:36:04,100 --> 00:36:07,633
what's not working and so it really depends right cause

882
00:36:07,766 --> 00:36:09,633
I I don't have the magic wand

883
00:36:09,633 --> 00:36:11,933
to just fix it in 6 months and in a year

884
00:36:11,933 --> 00:36:13,700
it just doesn't nobody does

885
00:36:14,433 --> 00:36:15,933
maybe others do I don't

886
00:36:16,133 --> 00:36:20,133
but I think it really depends on the reason of GR

887
00:36:20,833 --> 00:36:22,433
and the reason for the turn

888
00:36:22,666 --> 00:36:27,733
right if the turn is related to product or architecture

889
00:36:27,733 --> 00:36:29,766
of that product and how it integrates

890
00:36:29,766 --> 00:36:32,333
maybe to an ecosystem depending on what kind of product you have

891
00:36:32,600 --> 00:36:34,066
depending on what that is

892
00:36:34,400 --> 00:36:36,766
that may take longer it may take a year

893
00:36:37,066 --> 00:36:38,000
for that product

894
00:36:38,000 --> 00:36:40,666
and so then at that point then I sit with the team to say okay let's

895
00:36:40,666 --> 00:36:41,700
let's discuss

896
00:36:42,266 --> 00:36:46,666
features functionality road maps and fixing this

897
00:36:47,000 --> 00:36:48,933
hmm cause sometimes that's it's kind of

898
00:36:49,266 --> 00:36:52,866
not necessarily a top priority because guess what it's not maybe

899
00:36:53,166 --> 00:36:56,866
has not hit the the level of uh

900
00:36:57,033 --> 00:36:59,766
the the you know the house on fire yet

901
00:36:59,833 --> 00:37:02,033
and so maybe the engineering team has not done it so

902
00:37:02,033 --> 00:37:03,600
taking a look at that and kind of

903
00:37:03,600 --> 00:37:04,966
sitting down with the teams okay

904
00:37:05,000 --> 00:37:06,200
how do we help prioritize

905
00:37:06,200 --> 00:37:08,633
I I won't do it I can't do it but I can show it

906
00:37:08,866 --> 00:37:11,833
here's the 10 other features that we want nobody cares

907
00:37:11,833 --> 00:37:14,033
that you want a red button instead of a blue button

908
00:37:14,266 --> 00:37:15,000
guess what

909
00:37:15,000 --> 00:37:17,333
this particular functionality is gonna help reduce

910
00:37:17,333 --> 00:37:18,933
3 percentage points of

911
00:37:19,033 --> 00:37:21,700
GR and by the way that continues to grow even further

912
00:37:21,833 --> 00:37:23,933
yeah so that's kind of one thing to look at is

913
00:37:24,000 --> 00:37:27,300
truly look at what the executive the leadership team

914
00:37:27,466 --> 00:37:30,033
whether it's the CEO or anybody in that organization

915
00:37:30,033 --> 00:37:31,566
has already put together cause I mean there's

916
00:37:31,566 --> 00:37:34,433
just valuable insights that they already have

917
00:37:34,466 --> 00:37:36,066
so that's I think the one thing but

918
00:37:36,066 --> 00:37:39,833
really understanding um the reasons for turn

919
00:37:40,733 --> 00:37:43,966
and say okay what's it gonna take for us to fix it

920
00:37:44,533 --> 00:37:45,666
some of the fixes

921
00:37:45,666 --> 00:37:48,266
can be long term it also depends on when you wanna fix

922
00:37:48,266 --> 00:37:49,966
Jr yeah some companies

923
00:37:49,966 --> 00:37:51,666
they goes like we need to fix this by the end of this year

924
00:37:51,666 --> 00:37:52,833
cause we gotta get rid of the company

925
00:37:52,833 --> 00:37:55,666
or we're trying to sell it or whatever the reason is

926
00:37:55,666 --> 00:37:57,033
need to fix it by the end of this year there's

927
00:37:57,033 --> 00:37:59,866
bonuses attached to it whatever it is well

928
00:37:59,866 --> 00:38:01,933
when you put tactics together you gotta define

929
00:38:01,933 --> 00:38:03,500
short term and long term tactics

930
00:38:03,733 --> 00:38:05,166
yeah sometimes it requires

931
00:38:05,166 --> 00:38:08,666
hand to hand combat which means like we have

932
00:38:08,800 --> 00:38:11,966
you know 300 renewals coming up this quarter

933
00:38:12,033 --> 00:38:14,333
we have 100 that we don't feel like it's gonna happen

934
00:38:14,333 --> 00:38:16,033
well guess what there's no

935
00:38:16,133 --> 00:38:19,266
strategy that I can put in place to fix that

936
00:38:19,433 --> 00:38:23,566
this requires let's take those 100 sort them by value

937
00:38:23,800 --> 00:38:25,933
we map them up with a leadership team and

938
00:38:25,933 --> 00:38:29,066
each one of them is gonna call one by one

939
00:38:29,066 --> 00:38:31,000
to ensure that we don't lose those customers

940
00:38:31,000 --> 00:38:31,866
like that's

941
00:38:32,466 --> 00:38:34,366
so in some cases is that versus

942
00:38:34,366 --> 00:38:36,133
in other cases is like well guess what

943
00:38:36,233 --> 00:38:39,066
it's not price increases is actually your on boarding

944
00:38:39,066 --> 00:38:41,600
was not done correctly you haven't onboarded

945
00:38:41,600 --> 00:38:43,866
this customer so let's look at on boarding so

946
00:38:44,066 --> 00:38:47,700
it really depends so assessing their customers

947
00:38:48,133 --> 00:38:51,766
where is um the turn happening by segment

948
00:38:52,166 --> 00:38:55,666
sometimes GR needs to be looked at it by product

949
00:38:55,933 --> 00:38:59,666
or be looked at it by geography maybe it's happening more in North America

950
00:38:59,666 --> 00:39:02,533
than it is in Europe yeah or in some cases

951
00:39:02,533 --> 00:39:04,366
you're selling it through a channel

952
00:39:04,466 --> 00:39:06,133
you're selling it through a partner

953
00:39:06,366 --> 00:39:08,300
versus selling it with your own sales team

954
00:39:08,433 --> 00:39:10,766
well guess what you have less visibility

955
00:39:10,766 --> 00:39:12,033
when you sell it through a channel

956
00:39:12,033 --> 00:39:15,200
they don't tell you everything so is your GR

957
00:39:15,200 --> 00:39:17,633
much higher in the channel than it is in direct so

958
00:39:17,633 --> 00:39:20,333
like getting deep into like

959
00:39:20,333 --> 00:39:22,933
really understanding the root cause of it

960
00:39:23,133 --> 00:39:27,800
then we can put together a plan um AI has definitely

961
00:39:27,800 --> 00:39:30,566
helped us accelerate the initial diagnostic

962
00:39:30,933 --> 00:39:33,733
but there is no way and I'm willing to say

963
00:39:33,733 --> 00:39:38,166
there is no way that no AI tool today can go to

964
00:39:38,166 --> 00:39:40,333
run an AI model and in 30 minutes

965
00:39:40,333 --> 00:39:42,766
give you the answers to all your gr problems

966
00:39:43,033 --> 00:39:45,166
that's just not there yet maybe someday

967
00:39:45,166 --> 00:39:46,700
but I just haven't seen it

968
00:39:46,833 --> 00:39:48,433
yeah I think I agree with you I think that

969
00:39:48,433 --> 00:39:51,266
that goes for for most things though right it's um

970
00:39:51,600 --> 00:39:54,233
you just need there's still work that needs to go

971
00:39:54,233 --> 00:39:55,966
go into it and as you say

972
00:39:56,000 --> 00:39:58,433
at the at the early part of this conversation

973
00:39:58,666 --> 00:40:02,133
AI is great for for doing lots of bits of heavy lifting

974
00:40:02,133 --> 00:40:05,566
but you still need the people involved in it

975
00:40:05,566 --> 00:40:08,966
to to use their experience to ask the right questions

976
00:40:09,166 --> 00:40:11,766
to dig a little bit deeper to really understand

977
00:40:11,766 --> 00:40:13,933
like what's going on because there are different

978
00:40:13,933 --> 00:40:16,466
potential outcomes that can can happen

979
00:40:16,466 --> 00:40:18,600
depending on the setup of the firm

980
00:40:18,600 --> 00:40:20,366
and all sorts of other things

981
00:40:20,933 --> 00:40:21,433
yeah

982
00:40:21,433 --> 00:40:24,000
there's lots of things that that that happen and and

983
00:40:24,000 --> 00:40:25,800
some of it is very silly I'll give you one

984
00:40:25,800 --> 00:40:27,966
one example it's just super silly but

985
00:40:28,366 --> 00:40:31,200
I went into a company and I was helping around G R R

986
00:40:31,200 --> 00:40:34,033
and their number one thing was the number one reason

987
00:40:34,600 --> 00:40:36,233
was price mm hmm

988
00:40:36,233 --> 00:40:38,566
that's the number one reason that the their customers

989
00:40:38,566 --> 00:40:40,733
were turning and I'm like wow I'm like that's

990
00:40:40,800 --> 00:40:43,733
so walk me through your prices and all we went through all that data

991
00:40:43,933 --> 00:40:46,633
the board deck that's all it had all these tactics

992
00:40:46,633 --> 00:40:49,066
around how to do better negotiations better pricing

993
00:40:49,400 --> 00:40:50,566
maybe concessions anything

994
00:40:50,566 --> 00:40:53,333
they were trying to do like just figure out a way how not to lose more customers

995
00:40:53,333 --> 00:40:56,166
over price and as I started digging into it

996
00:40:56,166 --> 00:40:58,533
I realized that when customers were turning

997
00:40:58,766 --> 00:41:02,900
the No. 1 item on the dropdown menu of turn reasons

998
00:41:03,233 --> 00:41:04,966
that the CSMS or the renewals

999
00:41:04,966 --> 00:41:07,733
team or whoever was handling the support or the

1000
00:41:07,733 --> 00:41:09,166
the turn exit

1001
00:41:09,566 --> 00:41:12,333
the No. 1 thing on the dropdown menu was price

1002
00:41:13,933 --> 00:41:17,066
so to get rid of like quickly to move on right you just place

1003
00:41:17,066 --> 00:41:18,666
pricing one to the next time they're like

1004
00:41:18,966 --> 00:41:20,400
alright so I'm like okay let me find

1005
00:41:20,400 --> 00:41:22,033
so it's like 70% of the customers

1006
00:41:22,033 --> 00:41:23,300
Cherry was priced I'm like

1007
00:41:23,533 --> 00:41:25,266
what are you guys doing like why are you guys increasing

1008
00:41:25,266 --> 00:41:27,066
price so like and then we started

1009
00:41:27,066 --> 00:41:28,933
digging into it and what we realized

1010
00:41:28,933 --> 00:41:30,800
because I mean you and I know right we never

1011
00:41:30,800 --> 00:41:32,466
we never leave because of price

1012
00:41:32,466 --> 00:41:35,266
we leave because there's no value yeah

1013
00:41:35,800 --> 00:41:37,566
and so when we start digging into we realize

1014
00:41:37,566 --> 00:41:39,433
it had nothing to do with prices

1015
00:41:39,600 --> 00:41:42,166
but that's what the AI model initially had told them

1016
00:41:42,433 --> 00:41:44,966
because they pull all the data and guess what every customer

1017
00:41:44,966 --> 00:41:46,433
data said and

1018
00:41:46,433 --> 00:41:50,033
even in the even in the conversation through um

1019
00:41:50,033 --> 00:41:52,633
you know the the transcripts of these sort of meetings

1020
00:41:53,066 --> 00:41:55,766
customer mention price like 10 times

1021
00:41:56,266 --> 00:41:58,366
but when you start digging into it

1022
00:41:58,466 --> 00:42:01,366
you realize that actually the issue was on boarding

1023
00:42:01,533 --> 00:42:04,666
yeah custom were sold and literally

1024
00:42:04,666 --> 00:42:06,733
three four five months later hadn't even

1025
00:42:06,733 --> 00:42:09,500
installed the product hadn't been configured

1026
00:42:09,533 --> 00:42:10,933
yeah hadn't been set up users

1027
00:42:10,933 --> 00:42:14,266
hadn't been set up like just this is like the dumbest

1028
00:42:14,266 --> 00:42:16,933
smallest thing you can possibly think of and so

1029
00:42:16,966 --> 00:42:19,466
it had nothing to do with prices

1030
00:42:19,466 --> 00:42:22,633
yeah I'm sure some were I'm not gonna say never but

1031
00:42:23,600 --> 00:42:26,366
but it wasn't the crux of the the problem right no

1032
00:42:26,366 --> 00:42:28,866
the issue was on boarding and so leveraging

1033
00:42:28,866 --> 00:42:30,000
good technology products

1034
00:42:30,000 --> 00:42:31,833
out there there's tons of them out there that exist

1035
00:42:31,833 --> 00:42:34,900
or even just working with engineering like what can we do

1036
00:42:35,200 --> 00:42:36,900
and actually the issue was the handoff

1037
00:42:37,566 --> 00:42:39,766
you know sales kind of finished it collected

1038
00:42:39,766 --> 00:42:41,633
their P O moved on they're partying

1039
00:42:41,633 --> 00:42:43,666
in Vegas or Hawaii wherever they're

1040
00:42:43,866 --> 00:42:45,266
celebrating my big win

1041
00:42:46,166 --> 00:42:48,066
and customers like no one's calling me back

1042
00:42:48,066 --> 00:42:49,833
what do I do now yeah yeah

1043
00:42:49,833 --> 00:42:52,833
and it's so it's as simple as onboarding yeah

1044
00:42:52,833 --> 00:42:54,666
and so suddenly we paid that quite a bit and started

1045
00:42:54,666 --> 00:42:55,933
working on onboarding and

1046
00:42:55,933 --> 00:42:57,566
installing we were able to see reduction

1047
00:42:57,566 --> 00:42:59,700
kind of in the first six months like quickly

1048
00:43:00,133 --> 00:43:02,333
cause communication went out we put a plan in place

1049
00:43:02,333 --> 00:43:04,633
we communicate with the customers we got involved

1050
00:43:04,633 --> 00:43:06,633
we start looking at these customers and it like

1051
00:43:07,000 --> 00:43:07,666
cause there were

1052
00:43:07,666 --> 00:43:10,033
if you don't get customers to get value in the first

1053
00:43:10,766 --> 00:43:14,033
90 days six months yeah it probably the the

1054
00:43:14,033 --> 00:43:17,033
the chance of them leaving you is probably in the 50%

1055
00:43:17,400 --> 00:43:18,333
like in the first you know

1056
00:43:18,333 --> 00:43:20,500
if you don't do that in the first three to six months

1057
00:43:21,033 --> 00:43:22,066
they're gone

1058
00:43:22,600 --> 00:43:24,000
yep cause they never get on board

1059
00:43:24,000 --> 00:43:25,366
with it they never keep they

1060
00:43:25,366 --> 00:43:27,366
they don't build the habit of using the product

1061
00:43:27,366 --> 00:43:30,066
cause they go I'm frustrated it's been 90 days

1062
00:43:30,133 --> 00:43:31,600
you know what I'm just moving on

1063
00:43:31,600 --> 00:43:33,933
I'm going then it comes to renewals and

1064
00:43:33,933 --> 00:43:35,933
you go are you gonna renew they go nope

1065
00:43:36,533 --> 00:43:38,566
nope and they probably put I'm like why

1066
00:43:38,566 --> 00:43:40,966
first thing on the the category and then

1067
00:43:41,366 --> 00:43:42,933
you get into this circle

1068
00:43:43,466 --> 00:43:45,566
I was just like that is like that was the most

1069
00:43:45,566 --> 00:43:48,366
amazing thing I've ever seen I was just like wow

1070
00:43:49,266 --> 00:43:52,733
and and so moving on from um

1071
00:43:53,266 --> 00:43:54,133
as of where

1072
00:43:54,133 --> 00:43:56,733
where we've been talking about now so in terms of like losing

1073
00:43:56,733 --> 00:43:57,966
customers to

1074
00:43:57,966 --> 00:44:01,966
that strategy of like go to market and investing in

1075
00:44:01,966 --> 00:44:05,066
your go to market strategies right when you're taking

1076
00:44:05,066 --> 00:44:08,933
a new product or new features out to market um

1077
00:44:09,466 --> 00:44:10,366
sometimes

1078
00:44:10,466 --> 00:44:12,733
well companies don't get it right all the time

1079
00:44:13,033 --> 00:44:16,000
uh and they misallocate their investment

1080
00:44:16,000 --> 00:44:18,166
so what have you what have you seen where companies

1081
00:44:18,166 --> 00:44:20,900
have misallocated like go to market investment

1082
00:44:21,066 --> 00:44:24,200
uh on products they've been been trying to sell

1083
00:44:24,200 --> 00:44:24,766
it's probably

1084
00:44:24,766 --> 00:44:27,466
it's probably more not so much on portfolio LED

1085
00:44:27,466 --> 00:44:29,433
companies it's probably some of these new AI

1086
00:44:29,433 --> 00:44:30,133
startups so

1087
00:44:30,133 --> 00:44:31,800
one of the things that I've been doing for the last

1088
00:44:31,800 --> 00:44:33,866
three years too not just working with P firms

1089
00:44:34,000 --> 00:44:36,366
but working very closely with these AI startups

1090
00:44:36,366 --> 00:44:37,166
right uh

1091
00:44:37,800 --> 00:44:38,866
super smart

1092
00:44:38,866 --> 00:44:42,033
founders who are getting these companies started and

1093
00:44:43,466 --> 00:44:44,666
they have a lot of courage

1094
00:44:44,666 --> 00:44:47,166
I don't know if I could do it but they do and so it's pretty

1095
00:44:47,166 --> 00:44:48,066
amazing but

1096
00:44:48,166 --> 00:44:53,433
I would say the number one thing I think you and I talked a little bit about this the analogy of the being a general contractor

1097
00:44:53,433 --> 00:44:56,166
mm hmm is in many cases

1098
00:44:56,166 --> 00:44:58,500
when I work with these AI companies is

1099
00:44:59,333 --> 00:45:00,966
there's so many of them out there

1100
00:45:01,066 --> 00:45:03,333
but I feel like they're missing the point

1101
00:45:03,333 --> 00:45:06,366
around their messaging and their value proposition

1102
00:45:06,666 --> 00:45:11,633
they spend 60% 70% of their time explaining

1103
00:45:11,833 --> 00:45:15,266
how it works how the sausage is made

1104
00:45:15,933 --> 00:45:19,166
versus focusing on the value that they can create

1105
00:45:19,866 --> 00:45:22,100
and so I was speaking at an event last year

1106
00:45:22,200 --> 00:45:24,633
with some AI founders I think it was the same event

1107
00:45:24,666 --> 00:45:28,233
and I use this analogy of like most of them come

1108
00:45:28,233 --> 00:45:31,433
I go you can't just be a general contractor when

1109
00:45:31,800 --> 00:45:34,433
the faucet in my bathroom is leaking

1110
00:45:34,666 --> 00:45:37,066
yeah like that's my pain point

1111
00:45:37,766 --> 00:45:40,400
don't come in and tell me you're gonna remodel my house

1112
00:45:40,400 --> 00:45:41,733
tear down the put a second

1113
00:45:41,733 --> 00:45:44,133
story and put a new pool and a barbecue and a

1114
00:45:44,266 --> 00:45:47,266
you know a man cave in the garage yeah

1115
00:45:47,566 --> 00:45:50,100
I don't care I want you to fix

1116
00:45:50,233 --> 00:45:53,066
the leaky faucet in my bathroom yeah

1117
00:45:53,566 --> 00:45:57,700
and so they all come in with this very much this like I can do it all

1118
00:45:57,933 --> 00:45:58,933
structure and unstructured

1119
00:45:58,933 --> 00:46:02,166
data I can create a genetic AI I can do this I

1120
00:46:02,166 --> 00:46:03,033
can like all these like

1121
00:46:03,033 --> 00:46:06,233
really wonderful things and let me tell you how we do it and

1122
00:46:06,233 --> 00:46:08,166
they're all very proud about when they should

1123
00:46:08,166 --> 00:46:10,800
very proud of what they've built yeah

1124
00:46:10,800 --> 00:46:13,600
but they don't focus on the actual value creation

1125
00:46:13,600 --> 00:46:16,933
the value proposition so to me I think that's where um

1126
00:46:16,933 --> 00:46:18,966
you can tell when you're assessing

1127
00:46:18,966 --> 00:46:21,066
AI companies cause there's so many of them there is

1128
00:46:21,400 --> 00:46:23,200
the their level of maturity is when they're

1129
00:46:23,200 --> 00:46:24,533
spending way too much time

1130
00:46:24,566 --> 00:46:27,933
telling you how the sausage is made and how it works

1131
00:46:28,333 --> 00:46:28,800
versus

1132
00:46:28,800 --> 00:46:31,633
like on the impact that they have or what they've been able to accomplish

1133
00:46:31,633 --> 00:46:34,233
and do and what they're learning from

1134
00:46:34,400 --> 00:46:38,000
I think that gives you quite a bit of a sense of like their level of maturity

1135
00:46:38,000 --> 00:46:39,766
around how they're thinking about it and so I think

1136
00:46:40,233 --> 00:46:45,066
uh when I see slides that spend 60 70% of the

1137
00:46:45,166 --> 00:46:47,666
sausage making and all the integration all the APIs

1138
00:46:47,666 --> 00:46:51,866
they can integrate great I don't care yeah

1139
00:46:51,866 --> 00:46:56,166
I care about the value that if I'm a CCO or CEO or CFO

1140
00:46:56,233 --> 00:46:58,500
what value can you bring to me

1141
00:46:58,600 --> 00:47:01,000
by implementing AI and I think that's where

1142
00:47:01,000 --> 00:47:03,966
there's so much noise for a lot of these companies

1143
00:47:03,966 --> 00:47:04,366
and they're

1144
00:47:04,366 --> 00:47:06,533
struggling and so that's kind of where I try to help

1145
00:47:06,600 --> 00:47:08,233
mentor the AI startups

1146
00:47:08,233 --> 00:47:10,733
to kind of think about it that way right what is your messaging

1147
00:47:10,733 --> 00:47:12,366
what is your value proposition

1148
00:47:12,433 --> 00:47:14,166
how you should think about it like that

1149
00:47:14,466 --> 00:47:16,333
and I think that also then begins to translate

1150
00:47:16,333 --> 00:47:17,833
into the big enterprise companies

1151
00:47:18,166 --> 00:47:19,933
yeah they already have kind of a

1152
00:47:19,933 --> 00:47:22,133
traditional product or traditional SAS

1153
00:47:22,133 --> 00:47:24,466
based three tier architecture kind of product now can

1154
00:47:24,466 --> 00:47:26,300
now let's bring AI into it

1155
00:47:26,633 --> 00:47:28,233
what should your go to market

1156
00:47:28,233 --> 00:47:32,766
motion should be mm hmm to complain changes yeah like

1157
00:47:33,500 --> 00:47:35,033
you know it's it's very disruptive

1158
00:47:35,033 --> 00:47:37,500
I love our sales teams I love our sales

1159
00:47:37,766 --> 00:47:40,566
market teams but you have to begin to adjust

1160
00:47:40,566 --> 00:47:42,833
cause we're in a very different world today

1161
00:47:42,833 --> 00:47:46,000
and and what are the the other sort of common mistakes

1162
00:47:46,000 --> 00:47:48,633
that you're seeing these some of these AI start

1163
00:47:48,633 --> 00:47:50,833
AI startups make when they're

1164
00:47:50,833 --> 00:47:52,333
they're selling to enterprise that's what

1165
00:47:52,333 --> 00:47:54,833
they're trying to get in with on the most part yep

1166
00:47:54,833 --> 00:47:57,766
to get in with enterprise level organizations or

1167
00:47:58,000 --> 00:47:58,966
consumer

1168
00:47:59,033 --> 00:48:01,200
but I think you're pretty well positioned to probably

1169
00:48:01,200 --> 00:48:04,533
talk more about the enterprise side of things um yeah

1170
00:48:04,533 --> 00:48:04,833
what are you

1171
00:48:04,833 --> 00:48:06,833
what are you seeing as some of the mistakes there

1172
00:48:07,866 --> 00:48:09,500
um I think they um

1173
00:48:10,066 --> 00:48:11,500
they all have a uh

1174
00:48:11,966 --> 00:48:15,666
a playbook to say let's go take out x incumbent

1175
00:48:16,033 --> 00:48:17,966
so if you're like doing CRM stuff

1176
00:48:17,966 --> 00:48:20,933
like let me go figure out how to take out Salesforce or

1177
00:48:21,000 --> 00:48:22,433
you know compliment Salesforce

1178
00:48:22,433 --> 00:48:24,133
I'm like that's that's a little tough

1179
00:48:24,133 --> 00:48:25,600
or on the customer

1180
00:48:25,600 --> 00:48:27,266
experience side of let me go take out gain

1181
00:48:27,266 --> 00:48:29,266
side or to tango and like so they have like

1182
00:48:29,333 --> 00:48:33,000
they have like almost a like the big David and Goliath

1183
00:48:33,000 --> 00:48:33,766
story where they're like

1184
00:48:33,766 --> 00:48:35,866
that's who I'm gonna go after and I just think they

1185
00:48:35,866 --> 00:48:38,533
they should just shift to more like focus on the value

1186
00:48:38,800 --> 00:48:41,166
focus on the persona on the messaging

1187
00:48:41,333 --> 00:48:45,100
and not try to boil the ocean um I think in many cases

1188
00:48:45,533 --> 00:48:47,666
the stuff that they're doing today is stuff that

1189
00:48:47,666 --> 00:48:49,866
I've been trying to do this forever like there's

1190
00:48:50,133 --> 00:48:51,100
there's nothing

1191
00:48:51,533 --> 00:48:53,933
somewhat new to this like we've been trying to do

1192
00:48:54,133 --> 00:48:57,166
data integration consolidation of data

1193
00:48:57,200 --> 00:48:59,666
so we pull it up in a dashboard so we can render

1194
00:48:59,666 --> 00:49:02,100
content to somebody and somebody can go make decisions

1195
00:49:02,200 --> 00:49:05,733
yeah like that's that's what you call data warehouses

1196
00:49:05,733 --> 00:49:08,333
like that all these things have happened over time

1197
00:49:08,533 --> 00:49:10,566
the difference now that is that you know

1198
00:49:10,566 --> 00:49:14,033
we're shifting from this is what happened

1199
00:49:14,166 --> 00:49:17,166
to why don't we stop it from happening

1200
00:49:17,733 --> 00:49:20,366
that's the shift and I think so I think that's where

1201
00:49:20,466 --> 00:49:21,566
they need to start thinking

1202
00:49:21,566 --> 00:49:23,666
that like yes you have AI technologies

1203
00:49:23,666 --> 00:49:25,333
you have sort of a new

1204
00:49:25,366 --> 00:49:28,300
paradigm shift that you can take advantage of it

1205
00:49:28,466 --> 00:49:30,200
but just be careful and be humble that hey

1206
00:49:30,200 --> 00:49:32,266
these are problems especially when you're talking to

1207
00:49:32,266 --> 00:49:35,433
a CRO a CFO who's been around yeah

1208
00:49:35,433 --> 00:49:37,633
you know everybody's trying to pitch this like this is brand

1209
00:49:37,633 --> 00:49:38,333
new

1210
00:49:38,333 --> 00:49:41,233
you've never seen this before I'm like well no we have

1211
00:49:41,233 --> 00:49:43,066
yeah it's just a faster

1212
00:49:43,066 --> 00:49:45,933
more modern electric car than my traditional

1213
00:49:45,966 --> 00:49:50,933
1966 Mustang yeah it's a little different but but I

1214
00:49:51,200 --> 00:49:54,833
but I still like my 1966 Mustang so yeah yeah exactly

1215
00:49:54,833 --> 00:49:57,966
you can still like the old stuff right the way it was done before

1216
00:49:57,966 --> 00:49:59,766
it's okay yes I think there's some

1217
00:50:00,033 --> 00:50:02,933
there's definitely some patterns and some good lessons

1218
00:50:02,933 --> 00:50:03,233
Learned

1219
00:50:03,233 --> 00:50:05,733
that happened in the past that could be leveraged in the forefront

1220
00:50:05,733 --> 00:50:09,966
um but I do think AI is gonna is continues to change

1221
00:50:09,966 --> 00:50:11,900
and dramatically change

1222
00:50:12,733 --> 00:50:13,366
software companies

1223
00:50:13,366 --> 00:50:14,800
I mean there was an article on the Wall Street Journal

1224
00:50:14,800 --> 00:50:15,933
around the whole what

1225
00:50:16,200 --> 00:50:20,800
$1 trillion or $1.6 trillion meltdown

1226
00:50:20,800 --> 00:50:22,766
swept by the new AI announcers

1227
00:50:22,766 --> 00:50:26,233
whether it's anthropic or open AI or you know Google

1228
00:50:26,633 --> 00:50:29,166
but just things think about things have shifted um

1229
00:50:29,166 --> 00:50:32,166
in 2021 20 when I was at Google

1230
00:50:32,833 --> 00:50:37,233
the three big battles was Microsoft Amazon and Google

1231
00:50:37,233 --> 00:50:39,866
yeah that was it who's gonna own the cloud space

1232
00:50:39,866 --> 00:50:41,666
yeah and who do we look at today

1233
00:50:42,033 --> 00:50:45,833
Google and Tropic and open AI you know

1234
00:50:45,833 --> 00:50:47,866
and so it's just very interesting that things

1235
00:50:47,866 --> 00:50:48,900
continue to shift

1236
00:50:49,133 --> 00:50:52,100
um so there's always gonna be the the three

1237
00:50:52,133 --> 00:50:55,000
the top three you know but you know things

1238
00:50:55,000 --> 00:50:56,933
evolve and change but there's definitely some lessons

1239
00:50:56,933 --> 00:50:58,333
Learned that we can take from the past

1240
00:50:58,433 --> 00:51:00,866
yeah nice there's there's enough room for everyone to

1241
00:51:00,866 --> 00:51:03,300
play as well that's the main thing as well that

1242
00:51:03,366 --> 00:51:05,333
I it's not have doesn't have to be

1243
00:51:05,333 --> 00:51:07,033
just the top three right there's plenty

1244
00:51:07,033 --> 00:51:08,966
of plenty of room for other organizations

1245
00:51:08,966 --> 00:51:11,033
to other things um

1246
00:51:11,600 --> 00:51:14,400
before we sort of run out of of time I wanna actually

1247
00:51:14,400 --> 00:51:16,666
go back to talking a bit more about

1248
00:51:16,666 --> 00:51:19,733
um P businesses and maybe uh

1249
00:51:20,533 --> 00:51:22,466
doing a bit of myth busting or

1250
00:51:22,466 --> 00:51:25,166
or however you wanna frame it because I think there are

1251
00:51:25,166 --> 00:51:27,133
there'll be people listening who

1252
00:51:27,633 --> 00:51:29,800
never worked in a PE organization

1253
00:51:29,800 --> 00:51:33,066
maybe they have but not knowing the difference between

1254
00:51:33,066 --> 00:51:37,200
what it's like to to work in a a PE backed organization

1255
00:51:37,200 --> 00:51:40,700
versus a VC backed organization etcetera um

1256
00:51:41,133 --> 00:51:44,300
I think PE more recently and

1257
00:51:44,566 --> 00:51:47,066
some in some ways rightly so has had

1258
00:51:47,933 --> 00:51:51,466
a bit of a crown on its head as this place that people

1259
00:51:51,466 --> 00:51:54,100
certainly tend to want to work um

1260
00:51:54,866 --> 00:51:57,766
whether that's through job security or whatever

1261
00:51:57,766 --> 00:52:01,633
whatever it might be but what do you see that changes

1262
00:52:01,633 --> 00:52:04,966
when a software business becomes PE backed from

1263
00:52:04,966 --> 00:52:08,266
maybe being you know found found around or even

1264
00:52:08,366 --> 00:52:12,766
uh like VC to to PE PE backed as an organization

1265
00:52:13,600 --> 00:52:15,433
yeah I I mean obviously

1266
00:52:15,666 --> 00:52:16,800
you know you always think about

1267
00:52:16,800 --> 00:52:18,666
I think it was the three tiers of investments

1268
00:52:18,666 --> 00:52:20,400
you start with you know if you're a small company

1269
00:52:20,400 --> 00:52:22,366
startup you're looking at angel investments you're

1270
00:52:22,533 --> 00:52:23,966
you're borrowing money from uncle

1271
00:52:23,966 --> 00:52:26,233
and aunt and grandpa and grandma to get your company

1272
00:52:26,233 --> 00:52:27,366
started which is great

1273
00:52:27,600 --> 00:52:29,000
and then you get to sort of the VC

1274
00:52:29,000 --> 00:52:31,233
phase where you're like okay you know 3 million

1275
00:52:31,233 --> 00:52:32,866
5 million dollar checks are being written

1276
00:52:32,866 --> 00:52:34,866
so then that's when you get into the VC phase

1277
00:52:35,066 --> 00:52:36,600
and then eventually you get into the P

1278
00:52:36,600 --> 00:52:38,466
world and depending on the kind of P

1279
00:52:38,466 --> 00:52:40,866
you're working with they can be looking at growth

1280
00:52:41,266 --> 00:52:43,166
some of them have more focus on particular

1281
00:52:43,166 --> 00:52:46,066
industry things like that so I think if anybody

1282
00:52:46,066 --> 00:52:48,600
is considering or thinking about working

1283
00:52:48,600 --> 00:52:52,933
um in a P backed software company um

1284
00:52:52,933 --> 00:52:56,266
I think it's it's a great opportunity to create a

1285
00:52:56,266 --> 00:52:59,033
wealth creation for you if you are with

1286
00:52:59,033 --> 00:53:01,433
the right company so for me the questions

1287
00:53:01,433 --> 00:53:04,233
I would always ask and I ask them today cause I do get

1288
00:53:04,233 --> 00:53:06,266
asked quite a bit to like would you like to join this company

1289
00:53:06,266 --> 00:53:10,100
so for me it's very simple No. 1 is understanding

1290
00:53:10,433 --> 00:53:14,166
the P E philosophy when it comes to their investments

1291
00:53:14,933 --> 00:53:16,333
there's no right or wrong

1292
00:53:16,466 --> 00:53:19,466
it just more does it adjust to your style okay

1293
00:53:19,600 --> 00:53:22,500
my style could be very different than yours and so

1294
00:53:22,933 --> 00:53:23,400
a P E

1295
00:53:23,400 --> 00:53:25,966
firm may work well for me but it may not work for you or vice

1296
00:53:25,966 --> 00:53:28,700
versa so I think that's really really important

1297
00:53:28,866 --> 00:53:31,100
the second thing is to ask is

1298
00:53:31,200 --> 00:53:33,933
how long have you had this asset yeah

1299
00:53:33,933 --> 00:53:35,433
because think about this right

1300
00:53:35,433 --> 00:53:36,933
most PE firms are thinking

1301
00:53:36,933 --> 00:53:39,033
kind of in the three and a half to 5 x

1302
00:53:39,666 --> 00:53:42,566
years three and a half to 5 x return

1303
00:53:42,633 --> 00:53:45,366
that's that's their window kind of three to five years

1304
00:53:45,466 --> 00:53:49,266
3 to 5 x return so if you join a company

1305
00:53:49,266 --> 00:53:51,133
when they first got acquired the company

1306
00:53:51,133 --> 00:53:52,433
let's say in the first year

1307
00:53:52,800 --> 00:53:54,700
then you have an opportunity to go build

1308
00:53:55,000 --> 00:53:57,966
three or four years build a plan build a strategy

1309
00:53:58,033 --> 00:53:59,200
evolve the organization

1310
00:53:59,200 --> 00:54:01,366
transform the organization and get there

1311
00:54:01,400 --> 00:54:04,033
yeah but if you join sort of in the

1312
00:54:04,033 --> 00:54:06,400
last five minutes or in extra time

1313
00:54:06,400 --> 00:54:07,933
using football analogy

1314
00:54:09,200 --> 00:54:11,366
depending what the score is you either

1315
00:54:11,366 --> 00:54:13,566
gonna come in as a defender or you wanna put another

1316
00:54:13,566 --> 00:54:14,066
striker

1317
00:54:14,066 --> 00:54:16,666
so we can go score to tie the game or win the game

1318
00:54:16,966 --> 00:54:19,500
and so it really depends on

1319
00:54:19,833 --> 00:54:22,366
where they're at in their acquisition journey

1320
00:54:23,066 --> 00:54:25,533
if they're in the latter part of it then

1321
00:54:26,266 --> 00:54:28,333
the guiding principles and what you're thinking

1322
00:54:28,333 --> 00:54:29,733
about might be a little bit different cause I

1323
00:54:29,733 --> 00:54:32,633
I can come in with a three to five year strategy plan

1324
00:54:32,933 --> 00:54:33,533
with a company

1325
00:54:33,533 --> 00:54:36,833
that is trying to exit by the end of 2027 or 2026

1326
00:54:37,566 --> 00:54:39,466
just it's very different right so

1327
00:54:39,466 --> 00:54:40,666
yeah I think understanding

1328
00:54:40,666 --> 00:54:43,133
those two key dynamics are super important

1329
00:54:43,333 --> 00:54:45,666
and for me the third one too is that I think as you're

1330
00:54:45,666 --> 00:54:47,500
interviewing for a job

1331
00:54:47,766 --> 00:54:49,833
you shouldn't just interview with the CEO

1332
00:54:49,833 --> 00:54:52,233
and the CRO and the CFO and the

1333
00:54:52,233 --> 00:54:54,333
Cho like everybody within the portfolio company

1334
00:54:54,733 --> 00:54:56,300
but I would also ask

1335
00:54:56,333 --> 00:54:58,133
let me talk to the investment team

1336
00:54:58,400 --> 00:54:59,766
you know the deal team

1337
00:54:59,766 --> 00:55:02,166
yeah let me get to know them too because they are very

1338
00:55:02,166 --> 00:55:03,800
they have a huge influence and

1339
00:55:03,800 --> 00:55:07,566
I would say majority of the P firms have a a good

1340
00:55:07,566 --> 00:55:09,933
support system to support the leadership team

1341
00:55:10,000 --> 00:55:12,866
they're very good at providing all the tools

1342
00:55:12,866 --> 00:55:14,133
and things that they need

1343
00:55:14,466 --> 00:55:16,766
but also understanding that cause they're a very

1344
00:55:16,766 --> 00:55:21,066
key stakeholder in whether or not you taking on a job

1345
00:55:21,066 --> 00:55:22,833
will you be successful or not

1346
00:55:22,966 --> 00:55:25,000
so kind of those that I would say are my three

1347
00:55:25,000 --> 00:55:27,833
always criteria you know besides what you normally

1348
00:55:27,833 --> 00:55:30,766
would do and due diligence of yourself right it's like

1349
00:55:30,933 --> 00:55:31,933
is this the right company

1350
00:55:31,933 --> 00:55:34,066
is this the right space is this where I wanna be

1351
00:55:34,133 --> 00:55:35,966
but I think those three things for me are always

1352
00:55:35,966 --> 00:55:38,900
very critical that I think in the last three years I've Learned that are

1353
00:55:38,966 --> 00:55:39,800
very very

1354
00:55:39,800 --> 00:55:41,666
important whether or not somebody can be successful

1355
00:55:41,966 --> 00:55:45,533
and you talked about it being a potential right fit for

1356
00:55:45,533 --> 00:55:48,566
the person depending on values etcetera

1357
00:55:48,566 --> 00:55:50,666
all sorts of different things that make make up

1358
00:55:50,766 --> 00:55:52,800
whether it's right or not but

1359
00:55:52,800 --> 00:55:55,400
what are some of the the packs sort of warning signs

1360
00:55:55,400 --> 00:55:57,766
if you like that you've seen in the past to go

1361
00:55:57,766 --> 00:55:59,533
this isn't gonna be a right fit

1362
00:55:59,533 --> 00:56:02,300
rightly or wrongly depending on who the person is

1363
00:56:03,066 --> 00:56:05,033
yeah I I don't know if it's

1364
00:56:05,266 --> 00:56:07,533
I don't know if the warning signs are just P

1365
00:56:07,533 --> 00:56:10,966
focused but they probably have seen it a lot is that

1366
00:56:11,033 --> 00:56:13,900
um you know if you go are joining a company

1367
00:56:14,333 --> 00:56:18,233
and they've had two CEOs in the last three years

1368
00:56:19,966 --> 00:56:21,633
or you're the fourth CC

1369
00:56:21,666 --> 00:56:23,533
that is being brought in or the third

1370
00:56:23,533 --> 00:56:25,700
CRO in two years or three years

1371
00:56:26,133 --> 00:56:27,700
then there's something there

1372
00:56:28,166 --> 00:56:29,900
either you don't have a product fit

1373
00:56:30,466 --> 00:56:31,900
uh or you know

1374
00:56:32,066 --> 00:56:33,766
there there's so many different things I think

1375
00:56:33,833 --> 00:56:34,733
understanding

1376
00:56:34,733 --> 00:56:37,566
the dynamics so I don't know if it's just a P backed

1377
00:56:37,566 --> 00:56:40,266
concern that you should have but those to me are the

1378
00:56:40,266 --> 00:56:43,166
the typical warning signs where you do that cause

1379
00:56:43,233 --> 00:56:44,366
you know in many cases

1380
00:56:44,566 --> 00:56:47,833
PS are there to make money I mean like less that's

1381
00:56:48,033 --> 00:56:49,133
there's no

1382
00:56:49,433 --> 00:56:51,400
you know they're not a non profit organization

1383
00:56:51,400 --> 00:56:55,233
okay they're they're there to make money so anything

1384
00:56:55,233 --> 00:56:57,333
you can do to help them achieve

1385
00:56:57,333 --> 00:56:58,633
and kind of make the money it's

1386
00:56:58,633 --> 00:57:00,100
important for them and so

1387
00:57:00,166 --> 00:57:01,533
making sure you're aligned

1388
00:57:01,533 --> 00:57:03,066
to their objectives and their goals

1389
00:57:03,066 --> 00:57:05,233
and then they're aligned to your objectives and goals

1390
00:57:05,333 --> 00:57:06,633
yeah are super important

1391
00:57:06,633 --> 00:57:09,333
um I've seen it where they're they're not aligned

1392
00:57:09,466 --> 00:57:12,266
and lots of turnover lots of things are happening

1393
00:57:12,400 --> 00:57:13,733
um but it doesn't

1394
00:57:13,766 --> 00:57:15,233
sometimes it's just not the right fit

1395
00:57:15,266 --> 00:57:18,300
it's not cause someone's bad someone's you know mean

1396
00:57:18,566 --> 00:57:20,800
or it's just sometimes it's not a bad fit like anything

1397
00:57:20,800 --> 00:57:22,466
else but I go but you just have to

1398
00:57:22,666 --> 00:57:23,733
you just have to expand

1399
00:57:23,733 --> 00:57:26,100
your due diligence beyond just the company

1400
00:57:26,233 --> 00:57:28,800
yeah but the things around it that sort of align

1401
00:57:28,800 --> 00:57:30,266
to the company and sometimes

1402
00:57:30,533 --> 00:57:32,700
a company is owned not just by 1 p

1403
00:57:33,266 --> 00:57:35,533
yeah true that they're owned by two or three

1404
00:57:35,533 --> 00:57:38,733
yeah so now understanding that dynamic

1405
00:57:38,966 --> 00:57:41,066
becomes super important whether you're majority state

1406
00:57:41,066 --> 00:57:43,733
minority state what's the percentage what's the that

1407
00:57:43,733 --> 00:57:46,233
that also give you a little bit of a sense of like which

1408
00:57:46,233 --> 00:57:48,233
which one is the right you know if that's really

1409
00:57:48,233 --> 00:57:49,333
the right fit for you

1410
00:57:49,566 --> 00:57:52,366
but it's a it's a big change isn't it and when the P

1411
00:57:52,366 --> 00:57:55,200
firm comes in and you're working with the P firm

1412
00:57:55,200 --> 00:57:55,966
there are metrics

1413
00:57:55,966 --> 00:57:58,000
that you need to hit there's pressure right

1414
00:57:58,000 --> 00:58:01,100
it's not it's not for everyone as we discussed earlier

1415
00:58:01,233 --> 00:58:03,833
um and you get the same with

1416
00:58:04,133 --> 00:58:08,700
any any investor but I think P firms tends to be uh

1417
00:58:08,733 --> 00:58:11,633
another level of uh of pressure

1418
00:58:11,633 --> 00:58:13,333
with with targets to really

1419
00:58:13,333 --> 00:58:15,166
to really sort of drive because there's a

1420
00:58:15,366 --> 00:58:17,566
there's a real end goal and there's

1421
00:58:17,566 --> 00:58:18,566
there's quite frankly there's

1422
00:58:18,933 --> 00:58:22,366
a ton of money at stake yeah it doesn't go well

1423
00:58:22,833 --> 00:58:23,666
yeah yeah no

1424
00:58:23,666 --> 00:58:25,733
and it's a very good point actually when I was helping

1425
00:58:25,833 --> 00:58:28,600
uh interview for different roles um and I've helped

1426
00:58:28,600 --> 00:58:31,133
got for the last three years done so many interviews

1427
00:58:31,233 --> 00:58:33,366
uh you know interviewing people that

1428
00:58:33,366 --> 00:58:36,133
you are in my role or colleagues are in my own network

1429
00:58:36,333 --> 00:58:37,000
um

1430
00:58:37,000 --> 00:58:39,833
that's a big thing is that you know do they actually bring

1431
00:58:39,833 --> 00:58:41,466
PE experience

1432
00:58:42,666 --> 00:58:48,400
because the the the request the board meetings are

1433
00:58:48,400 --> 00:58:50,666
very very different when you're asking for funding

1434
00:58:50,666 --> 00:58:53,333
to your CEO cause you need a new tool to drive

1435
00:58:53,966 --> 00:58:54,466
customer

1436
00:58:54,466 --> 00:58:57,233
success versus you go to the board to ask for money

1437
00:58:57,233 --> 00:58:58,733
to drive customer success

1438
00:58:59,400 --> 00:59:00,933
it may be the same ask

1439
00:59:01,233 --> 00:59:03,466
but there's two different messages right two different

1440
00:59:03,466 --> 00:59:04,433
metrics that they're thinking

1441
00:59:04,433 --> 00:59:07,300
about so you have to be very operationally focused

1442
00:59:07,433 --> 00:59:08,900
very metrics driven

1443
00:59:09,633 --> 00:59:10,800
like a true operator

1444
00:59:10,800 --> 00:59:12,866
like you can't just come in and fake it

1445
00:59:14,266 --> 00:59:16,266
that that's also I think a little bit of of

1446
00:59:16,266 --> 00:59:18,033
like I think what peas bring which is great

1447
00:59:18,033 --> 00:59:20,200
I love numbers so it's it's really good

1448
00:59:20,200 --> 00:59:21,866
they're way better than me but but

1449
00:59:21,866 --> 00:59:23,100
yeah they definitely a a

1450
00:59:23,666 --> 00:59:24,966
there but there's it's definitely

1451
00:59:25,733 --> 00:59:26,333
a skill

1452
00:59:26,333 --> 00:59:29,500
that you have and if you don't have you need to be very good at it

1453
00:59:29,800 --> 00:59:31,566
nice to you know learn it

1454
00:59:31,733 --> 00:59:34,600
yeah well look Carlos it's been absolutely fascinating

1455
00:59:34,600 --> 00:59:35,633
talking to you today

1456
00:59:35,633 --> 00:59:38,466
I really appreciate you giving up your time and sharing

1457
00:59:38,566 --> 00:59:40,966
uh some of your your infinite wisdom

1458
00:59:41,233 --> 00:59:44,066
uh for today I think we could have done about another

1459
00:59:44,066 --> 00:59:45,733
another five episodes given

1460
00:59:45,733 --> 00:59:49,066
all the the things that we can probably talk about um

1461
00:59:49,233 --> 00:59:52,733
so have to have to have you back on again I think uh to

1462
00:59:52,733 --> 00:59:54,200
to talk about some more stuff

1463
00:59:54,200 --> 00:59:58,033
as we see all of these things evolve and advance

1464
00:59:58,366 --> 01:00:00,833
um it's gonna be pretty fascinating

1465
01:00:00,833 --> 01:00:03,700
to see where we land in the next few years

1466
01:00:04,233 --> 01:00:07,333
yeah it's been a pleasure to to share this is fun

1467
01:00:07,333 --> 01:00:08,933
and you're right we probably can talk for

1468
01:00:08,933 --> 01:00:11,066
another couple of hours of so many different topics

1469
01:00:11,066 --> 01:00:12,033
around this area

1470
01:00:12,366 --> 01:00:14,766
but thank you for having me I really appreciate it and I hope the

1471
01:00:14,766 --> 01:00:16,233
hope the audience got some

1472
01:00:16,400 --> 01:00:19,233
at least a few few nuggets that they can take to

1473
01:00:19,233 --> 01:00:21,233
if if they're making this transition as well

1474
01:00:22,133 --> 01:00:22,800
perfect

1475
01:00:28,300 --> 01:00:29,600
you've been listening to the Far

1476
01:00:29,600 --> 01:00:31,600
Side with founders and leaders podcast

1477
01:00:31,766 --> 01:00:35,133
we really hope you've enjoyed this episode if you have

1478
01:00:35,133 --> 01:00:37,700
make sure that you hit the subscribe button now

1479
01:00:37,700 --> 01:00:39,166
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1480
01:00:39,166 --> 01:00:41,600
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1481
01:00:41,633 --> 01:00:44,733
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1482
01:00:45,433 --> 01:00:48,000
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1483
01:00:48,000 --> 01:00:49,500
again for listening to the fireside

1484
01:00:49,500 --> 01:00:51,300
with founders and leaders podcast