บทถอดความฉบับเต็มของ Chris Chandler, Founder & Managing Partner at Creovia Group - How Procurement Creates Value in Private Equity

of followed suit since then. 00:01:54.400 --> 00:01:59.599 Well, we were heavily recruited because it was the late 90s and and it was kind of the big thing. 00:01:59.680 --> 00:02:14.639 And so I fell into this a little bit because I didn't really I was in the business college, I thought I was gonna be in finance, and then I talked to somebody about supply chain who happened to be graduating that that semester, and they were telling me about it, and I was like, I gotta go check this out, right? 00:02:14.800 --> 00:02:16.879 And so a lot of good job opportunities. 00:02:16.960 --> 00:02:19.039 It was kind of aligned with my interests. 00:02:19.199 --> 00:02:24.319 I think it was, you know, good for me because that's kind of the way my mind worked, and it just kind of fit. 00:02:24.479 --> 00:02:26.639 And so again, I told people I had a boring career. 00:02:26.719 --> 00:02:28.080 I went to school for supply chain. 00:02:28.159 --> 00:02:30.400 I bet in supply chain and for cure my entire career. 00:02:30.479 --> 00:02:37.120 So yeah, General Motors, five and a half years out of Michigan State, and then um they put me through my my business school education. 00:02:37.199 --> 00:02:41.919 I went to Indiana for and um and and ended up going over to Eaton Corporation after that. 00:02:42.159 --> 00:02:50.240 Spent a few years with a privately held German company before I exited auto, took a complete left turn into CPG, where I worked for Kellogg's. 00:02:50.319 --> 00:02:53.520 I traded all their corn commodity, I did a bunch of ingress sourcing. 00:02:53.680 --> 00:02:54.479 That was interesting. 00:02:54.639 --> 00:02:57.680 I I I lived through the 2008 market debacle. 00:02:57.840 --> 00:02:58.560 That was very, very cool. 00:02:58.800 --> 00:02:58.960 Right. 00:02:59.360 --> 00:03:01.680 And so and came out of it mostly unscathed. 00:03:01.840 --> 00:03:03.680 So I must put some good balls. 00:03:04.400 --> 00:03:06.000 Um and then came down here. 00:03:06.080 --> 00:03:08.560 I I moved down to Texas 2009 to work for Dr. 00:03:08.639 --> 00:03:09.680 Pepper Snapple. 00:03:09.759 --> 00:03:24.400 Again, ingredient sourcing for about the first year and a half I was there, moved over and took on their packaging spend and did all the packaging commodity, say for a couple of categories, and then stood up their indirect practice there, about two and a half billion dollars worth of indirect spend to time. 00:03:24.639 --> 00:03:26.800 And this is before the Curig acquisition. 00:03:26.879 --> 00:03:30.560 And now I see they've they're now splitting them apart again, which is interesting to me. 00:03:30.879 --> 00:03:31.120 Right. 00:03:31.360 --> 00:03:39.439 Moved on to MoneyGram, spent six years there, helped stand up, led the stand-up of the sourcing department there, and then operated it for several years. 00:03:39.520 --> 00:03:44.560 And then I got into the advisory space, which is where I got into the PE world, and and it's been really interesting. 00:03:44.639 --> 00:03:49.520 I mean, it it's a different type of lens than what you get working inside of a corporate function. 00:03:49.759 --> 00:03:52.879 So, you know, I think for for people that, you know, how did I get into this? 00:03:52.960 --> 00:03:59.280 Again, it was, I mean, I I was kind of aimed at this anyway, but there's so many different facets of supply chain and procurement, right? 00:03:59.360 --> 00:04:03.280 Like I started off pure place supply chain, inventory, logistics. 00:04:03.439 --> 00:04:06.719 I didn't get into procurement until several years down the line. 00:04:06.879 --> 00:04:08.159 And then I've kind of stayed there. 00:04:08.240 --> 00:04:10.159 But within procurement, there's so many different areas. 00:04:10.319 --> 00:04:10.400 Right. 00:04:10.560 --> 00:04:17.360 I did advanced purchasing at Eaton, and then I went into commodity management when I was, you know, at at the German company. 00:04:17.439 --> 00:04:21.120 I I got into commodity, you know, agricultural commodities and kellogs. 00:04:21.199 --> 00:04:26.000 I was in MoneyGram, it was all indirect, so it was a lot of technology and a lot of temp labor. 00:04:26.079 --> 00:04:28.800 So you just you see so many different sides of the business. 00:04:28.959 --> 00:04:32.319 I, you know, people don't often know that about procurement. 00:04:32.399 --> 00:04:38.399 I think they look at procurement as we're just you know paper pushers and we read contracts and we we yell at Safirs. 00:04:38.480 --> 00:04:42.240 Like that's not that's it's definitely a lot more than that. 00:04:42.560 --> 00:04:47.120 Well, I certainly don't think of it as that, but but I think that's because we're cut from the same cloth. 00:04:47.279 --> 00:04:50.639 What do you think's I mean, what do you think is more fun, direct or indirect? 00:04:50.959 --> 00:04:51.680 Oh man. 00:04:51.920 --> 00:04:55.360 I I think it depends on your taste and your personality. 00:04:55.680 --> 00:04:56.000 Yeah. 00:04:56.160 --> 00:05:02.639 Um, I I probably didn't appreciate direct purchasing until I got into indirect. 00:05:02.800 --> 00:05:12.800 And what I mean by that is you can drive indirects, it's like you drive a huge amount of impact with not as many irons in the fire, right? 00:05:12.959 --> 00:05:17.759 So when you're on the indirect side, for somebody to go say, unless you're at a massive company, right? 00:05:17.839 --> 00:05:20.480 But we'll save a million dollars in indirect. 00:05:20.639 --> 00:05:24.160 You gotta probably run three or four or five different events, right? 00:05:25.839 --> 00:05:31.759 When I was on the direct side, I could go run one RFP and put five million dollars on the table because you have a massive spend, right? 00:05:31.920 --> 00:05:38.959 I think the other challenge with indirect too, and this is where you got to have the right mindset for this, you don't own the budget and and you don't own the agenda. 00:05:39.040 --> 00:05:48.639 You

have to really influence the stakeholders in the business or why procurement is here, why we're helping you, how we can make this better for you and make your budget dollars go further. 00:05:48.800 --> 00:06:10.399 Whereas when I was in commodities and directs, it was like, you know, I set the button, I had full authority over who the vendors were, who gets approved, who we're awarding business to, obviously in connection with finance, but you know, I didn't have to convince anybody about how we were going to manage that particular area of spend where I think there is a little influencing that goes along with indirect. 00:06:10.879 --> 00:06:11.439 Yeah. 00:06:11.680 --> 00:06:12.959 It's really interesting. 00:06:13.120 --> 00:06:15.920 And and here's another question, maybe on top of that. 00:06:16.000 --> 00:06:24.879 I mean, do you think if you were to talk to someone who's like really early in career and they want to build a uh I mean, to be honest, I mean, your career in procurement has been an extremely successful one. 00:06:24.959 --> 00:06:33.920 And I can say that meeting with a lot of different folks across a lot of different companies, would you say, would you recommend to young people in the space that they should start in one or the other? 00:06:34.079 --> 00:06:37.920 Or is it just, hey, take other opportun any opportunity that's available to you? 00:06:38.079 --> 00:06:47.120 And what would be like a good, you know, what's a good starting ground for people to really like prove themselves and test their metal and and get a great education? 00:06:47.439 --> 00:06:51.040 My advice, I I think it doesn't matter direct or indirect, in my opinion. 00:06:51.839 --> 00:06:53.360 And I'll give you a great example. 00:06:53.600 --> 00:06:59.519 When I was in automotive and I moved over to the food and beverage industry, I had somebody actually ask me that question. 00:06:59.600 --> 00:07:04.160 They were like, Well, you've done steel and stampings and you know, electronics and all this stuff. 00:07:04.240 --> 00:07:06.000 Like, how are you gonna buy ag products? 00:07:06.160 --> 00:07:11.199 And I was like, Look, I understand the supply chain, I understand procurement, the process and the methodology. 00:07:11.439 --> 00:07:16.319 Learning the commodities is something anybody can do if you put enough time and effort in, right? 00:07:16.639 --> 00:07:28.720 But to find somebody that really truly understands supply chain broadly and procurement and the methodology, so it doesn't matter what commodity you go into, what whether it's direct or indirect, right? 00:07:28.800 --> 00:07:32.240 I think for people just looking to get into procurement, just get into it. 00:07:32.399 --> 00:07:36.560 Just and really and and work somewhere that has good process, good structure. 00:07:36.720 --> 00:07:45.199 I think that's what's benefited me is you look at where I worked, I didn't go into I I would have the benefit of working for really large established

companies. 00:07:45.439 --> 00:07:45.759 Right. 00:07:46.079 --> 00:07:50.399 I really got kind of ingrained in this is best practice. 00:07:50.560 --> 00:08:01.600 Whereas, and I've now taken that the reason I've been probably successful in the advisory side of the house is because I can go into smaller, mid-market, less mature companies and say, look, this is best practice. 00:08:01.680 --> 00:08:03.519 This is how the big guys do it. 00:08:03.759 --> 00:08:09.199 And just because you're a smaller company doesn't mean you shouldn't adhere to this and you shouldn't use it for business better. 00:08:09.600 --> 00:08:24.079 Have there ever been times where those best practices from those sort of iconic larger enterprises haven't been able to be directly patterned onto the sort of mid-market businesses where it, you know, I'm just trying to think about examples where maybe it has to be tweaked to work really well. 00:08:24.319 --> 00:08:28.000 Yeah, I mean, look, you have to be pragmatic about this stuff, is is my opinion, right? 00:08:28.160 --> 00:08:31.920 I I don't think you can just institute process for the sake of process. 00:08:32.000 --> 00:08:35.840 And and I think you really, and this is where some of the expertise comes in, right? 00:08:35.919 --> 00:09:02.639 Where like I can walk into a company and say, look, yeah, we can spend all day, I guess for the next six months building doing spend analysis and building a category plan and doing all of the nits and nats to get us to here's a contract, or we can just go and get into the market and do some negotiation and you're still doing proper sourcing, but maybe you don't have some of those more elegant, you know, the upfront stuff. 00:09:02.799 --> 00:09:04.399 I'm not saying you shouldn't do it, right? 00:09:04.559 --> 00:09:08.720 But I think you have to pick and choose where it's appropriate and where it's not. 00:09:08.879 --> 00:09:16.080 You know, part of that is coming up in that environment of we had to be that formal and we were required to do those things. 00:09:16.559 --> 00:09:29.840 I think you start to understand where it added value and where it didn't, so that when you get into situations, say with a smaller company, and you're like, look, we're not gonna put you through the paces of all this because it doesn't make any sense and the effort worth it. 00:09:30.000 --> 00:09:31.039 But in some things it is. 00:09:31.120 --> 00:09:36.480 You're gonna say, look, for this particular thing, absolutely, we should go through every single step in the process. 00:09:36.639 --> 00:09:39.679 Whereas others, let's just shortcut this and let's get to the right answer. 00:09:40.399 --> 00:09:41.519 No, it makes a lot of sense. 00:09:41.600 --> 00:09:53.200 And I, you know, and I think that that mindset is, to be honest, part of why I tell people that Creovia Group is the uh best kept secret in in private equity uh value creation, because you know, at the end of the day, you're right. 00:09:53.279 --> 00:10:00.879 Like it's you know, all the prep and setup is important, but ultimately what you have to get is results, and that's what you just your team has just been so good at doing. 00:10:01.200 --> 00:10:02.799 I I think that's spot on, Spencer. 00:10:02.879 --> 00:10:17.919 I mean, I look, you know, we and it's not just me, like I and the folks that I have behind me that are helping to do some of this stuff in my team, we've been around the block enough times, and we kind of know how to make those judgment calls on okay, where do we really need to go through the the full pace? 00:10:18.159 --> 00:10:23.039 Or let's just kind of run the end around on this one and say, we know where to go already. 00:10:23.120 --> 00:10:28.000 We already have the playbook, and let's just go get to the right answer and start and put some value into the business. 00:10:28.320 --> 00:10:28.559 Right. 00:10:28.720 --> 00:10:31.519 And doing it look, and and time, you know, time matters, right? 00:10:31.600 --> 00:10:36.399 Doing it six months sooner, it completely changes the the IRR return equation. 00:10:36.480 --> 00:10:41.919 You know, if you can just get that eBit die in the basket now versus, you know, do do too much waiting around. 00:10:42.080 --> 00:10:43.759 So that's you know, it is interesting. 00:10:43.840 --> 00:10:52.559 It begs a different question, which is you know, where do you see some of the differences in you know private equity focused procurement versus corporate procurement? 00:10:52.799 --> 00:10:54.879 It it speed is the biggest thing. 00:10:55.039 --> 00:11:06.080 I I would tell you working in big companies, and that's not to say big companies don't move fast, but I think at times you I I my experience was there's there's a lot of constituents involved. 00:11:06.159 --> 00:11:06.480 Yep. 00:11:06.879 --> 00:11:09.919 You have to make sure that everybody is aware of what's going on. 00:11:10.080 --> 00:11:14.559 I think it takes a lot of communication and sometimes there's a lot of red tape. 00:11:14.720 --> 00:11:23.120 You know, not to say we don't run into that in the private equity space, but I do think that there's this appetite for how do we just get there faster, right? 00:11:23.200 --> 00:11:52.000 And and I'll tell you like some of the conversations I have with the private equity partners that I work with are it's about speed to value and and how to cut through some of that to just how do we really it look investment-wise, I think there's been some analysis and studies that have been done across a lot of these PE funds that say when we go into a new investment, the ones that we act immediately on and start extracting value within the first year of the investment are the ones that end up being the most successful. 00:11:52.159 --> 00:12:02.159 Whereas the ones that may take at a little slower pace and we kind of with the value comes over a two, three, four-year horizon, those end up not being as impactful.

00:12:02.320 --> 00:12:02.480 Right. 00:12:02.639 --> 00:12:02.960 Yeah. 00:12:03.120 --> 00:12:05.519 So I I think speed is is really the biggest thing. 00:12:05.840 --> 00:12:08.000 Yeah, it makes a lot of it makes a lot of sense. 00:12:08.080 --> 00:12:14.159 I mean, and mathematically, that literally just a f directly changes the x-axis on the return graph. 00:12:14.240 --> 00:12:20.559 You know, it's like if you just do the same thing you were going to do in three months instead of nine months, I mean, that's like you know, doubling your outcome. 00:12:20.720 --> 00:12:37.919 I I guess I'm kind of curious, you know, in your experience in the private equity world, you know, what portion of investments that get made, not specifically at the firms you're working with now, but by and large, involve procurement transformation or procurement cost takeout as part of the central investment thesis, right? 00:12:38.080 --> 00:12:53.440 Because every invest investor comes in, they say, we're gonna buy this company, we're gonna build into the valuation we're willing to pay, you know, some acquisitions or some cost takeout or some reward or some spin-off, or maybe we're just gonna pray that the market gets better and then we just chill. 00:12:53.679 --> 00:13:06.399 But you know, it is procurement uh, you know, cost optimization is that like in 100% of things, just at varying levels, or is it that some it's like, no, that's a really big part of the intention coming in, and some it's much less important? 00:13:06.799 --> 00:13:09.279 So every almost every single invest. 00:13:09.679 --> 00:13:20.639 So the the the PE fund that I work for primarily uh these days, every single deal that they do, at least the ones that are wholly owned or majority owned, like we're we're plugged into everyone. 00:13:20.879 --> 00:13:22.240 Yep, great on the table. 00:13:22.320 --> 00:13:27.519 And and part of it is because we built this portfolio program and there's no reason to not take advantage of it. 00:13:27.600 --> 00:13:28.960 Now, is it the top priority? 00:13:29.200 --> 00:13:30.320 No, it's not, right? 00:13:30.399 --> 00:13:31.440 Now, and some of them it is. 00:13:31.519 --> 00:13:39.679 I would tell you that as of late, the last couple that have come through, it it's a cheap part of the VCP, and there's a lot of levers that we're pulling on to deliver that. 00:13:39.759 --> 00:13:41.120 But in every deal, no, it's not. 00:13:41.200 --> 00:13:43.120 I mean, and I think it's deal by deal. 00:13:43.279 --> 00:13:47.279 There's some where, you know, they're there's smaller technology firms. 00:13:47.440 --> 00:13:49.759 You know, is procurement going to be the biggest piece of this? 00:13:49.840 --> 00:13:57.919 You know, like the biggest piece of the value equation for those kind of companies is probably scaling them, building top line kind of thing, right? 00:13:58.000 --> 00:14:08.960 And and the the the procurement side of it is a little more limited, whereas maybe you gave it to a manufacturing company, procurement is a much bigger focus because it's it it that's what's helping. 00:14:09.120 --> 00:14:14.559 I mean, there there's exponential impact of driving margin improvement by lowering your cost base. 00:14:15.120 --> 00:14:26.799 I I was it there was always this fight when even when I was in the corporate side of things and working for the in corporate procurement, where I used to always make the argument, like I understand top line is important, and it is like I'm I'm a business person too, right? 00:14:27.519 --> 00:14:32.240 It's important, but for every dollar of top line that you get, you only get 30 cents on the dollar. 00:14:32.399 --> 00:14:35.039 For every dollar of procurement improvement that I get, I get a dollar. 00:14:35.200 --> 00:14:35.519 Yeah. 00:14:35.679 --> 00:14:35.919 Right? 00:14:36.000 --> 00:14:40.559 That's kind of the the procurement value prop here is a dollar is a dollar in procurement. 00:14:40.720 --> 00:14:45.919 So I I think, you know, again, I look at it from a different lens because I'm a pursuing guy. 00:14:46.080 --> 00:14:48.320 I I think it's true when you think about it from a 30 cents. 00:14:48.879 --> 00:14:49.200 100%. 00:14:49.600 --> 00:14:54.080 And I mean, it's funny because I mean again, maybe this is also because I'm a procurement guy. 00:14:54.159 --> 00:14:57.120 I have a for me, it's much more transparent. 00:14:57.200 --> 00:15:02.240 I can see how we can get a dollar of savings to get a new dollar of sales that wasn't there before. 00:15:02.399 --> 00:15:05.600 That's feels like a much harder equation for me personally. 00:15:05.759 --> 00:15:10.320 And then by the way, that 30 cents on the dollar, it could be even more extreme than that, right? 00:15:10.399 --> 00:15:16.799 If you're in a 5% margin business, as you know, it's you know, you have five cents of uh of of of eBITA. 00:15:17.039 --> 00:15:27.519 But you know, I I'm kind of I'm kind of curious a little bit about, you know, if you were, you know, if you were to advise somebody in getting involved in procurement within the PE landscape, right? 00:15:27.600 --> 00:15:31.759 I think there's sort of maybe three different roles that I tend to see people take. 00:15:31.919 --> 00:15:39.840 They'll either be like an operating partner at a, you know, at the private equity firm, they'll be an advisor or consultant. 00:15:39.919 --> 00:15:42.879 You're actually sort of more toward the operating partner side. 00:15:43.279 --> 00:15:47.200 And then the third is uh, you know, the plug-and-play CPO. 00:15:47.360 --> 00:16:03.759 I've seen this persona a few times where there will be chief procurement officers, they come in at the beginning of an investment cycle, they do a bunch of cost takeout, they do a bunch of work, three years later, the company's you know ready for you know, starting an exit process and maybe they move on to the next one. 00:16:03.840 --> 00:16:06.480 And the nice thing

about PE is there's so many reps you can get. 00:16:06.559 --> 00:16:11.279 So if you really prove your value, like you have, they just want to keep going back to the ATM, right? 00:16:11.440 --> 00:16:15.120 So yeah, so so but what you know, how do you think about those three different roles? 00:16:15.200 --> 00:16:18.480 And how would you advise people to you know think about getting involved? 00:16:18.559 --> 00:16:22.879 Or you know, again, this is only really the top performers in procurement, or frankly. 00:16:22.960 --> 00:16:24.799 But yeah, I'm I think so. 00:16:24.879 --> 00:16:30.080 If you think about those three different tranches of of procurement and PE, I I'll I'll say this. 00:16:30.240 --> 00:16:45.279 The the the trend over the last, I'm gonna say five years, maybe even a little bit longer, is almost every private equity group that I have connections with and that I talk to, there's a lot of people that do what I do for other private equity funds, right? 00:16:45.360 --> 00:16:49.440 And there are some of them who are like in the operating partner role like I am, or they're full-time. 00:16:49.600 --> 00:16:55.679 There's a lot of funds out there that are hiring a full-time portfolio procurement leader to try to do all this stuff, right? 00:16:55.919 --> 00:17:03.440 And so, you know, I think there's a pathway there where you can actually be a W-2 inside of a firm leading procurement for their portfolio. 00:17:03.679 --> 00:17:06.720 I think that's becoming a much more prevalent type of role. 00:17:06.880 --> 00:17:11.039 But again, to your point, those are probably gonna be the most experienced. 00:17:11.119 --> 00:17:23.200 I mean, you're talking people that have 20, 25 years of industry experience, have probably done a lot of different things, a lot of different commodities, indirects, directs, and they understand just about everything in the procurement space. 00:17:23.359 --> 00:17:23.599 Right. 00:17:23.759 --> 00:17:25.359 Because they're gonna touch every company, right? 00:17:25.519 --> 00:17:26.640 Yeah, they need the bread. 00:17:26.960 --> 00:17:27.359 That's right. 00:17:27.440 --> 00:17:29.200 And so there's that, right? 00:17:29.440 --> 00:17:37.039 Um now, underneath that, you know, if you have companies, I mean, you think of some of the bigger PE funds, they've got large built-out procurement teams. 00:17:37.279 --> 00:17:40.079 So it's not just a person, you may have some people under. 00:17:40.319 --> 00:17:52.720 So, I mean, that for somebody if you're exactly if you're a yard or in your career and you can get into an organization, a PE fund like that and really build your experience, I think you know, that's really, really valuable. 00:17:52.880 --> 00:17:59.279 But then I'll revert back to, you know, if I'm I think about this, my career path, I wouldn't have had it any other way. 00:17:59.440 --> 00:18:01.519 I feel like I started at ground level. 00:18:01.599 --> 00:18:03.920 I learned everything from the

ground up. 00:18:04.079 --> 00:18:13.200 I was walking around on the plant floor, I was in warehouses, I was in manufacturing facilities, I understood the things I was buying. 00:18:13.279 --> 00:18:23.839 Um I think that's really important because you cannot, and when I led procurement in a corporate world, I used to tell the people on my team this you can't just sit behind a screen all day and effectively manage this. 00:18:23.920 --> 00:18:32.720 You have to get out, talk to your stakeholders, be on the shop floor, understand what you're buying, go to your suppliers' facilities and kind of get out of the office a little bit. 00:18:32.799 --> 00:18:34.559 So I think that's really important. 00:18:34.720 --> 00:18:46.000 And then, you know, obviously the operating partner role, again, is probably even these are people that have had long, long careers in procurement and supply chain and have seen just about everything. 00:18:46.160 --> 00:18:48.240 Like I think how you get into this. 00:18:48.480 --> 00:18:58.640 And and to your point, once you get in and they kind of give you a shot at it, then it's you know, you prove your medal, and if you continue to deliver results, they keep coming back to the well. 00:18:58.799 --> 00:19:02.480 Because if if you if you deliver results, there's no reason for them not to. 00:19:02.559 --> 00:19:05.200 Why, why waste time looking for the next mousetrap? 00:19:05.279 --> 00:19:06.640 Just use what's working. 00:19:06.960 --> 00:19:08.079 I completely agree. 00:19:08.240 --> 00:19:13.839 I mean, I feel like it's sort of interesting, and and and you know, this is a uh a very, very nuanced subject. 00:19:14.000 --> 00:19:36.799 But one, you know, when I've met with other folks who are in private equity ops teams procurement focused, one of the biggest determining factors of the success of a procurement cost takeout transformation program is actually not their skill, but it's the willingness of the CPOs at the portfolio company to partner. 00:19:37.200 --> 00:19:51.680 And I have seen, I think there's a whole spectrum of PE firms from we're very hands-off and have no operating support to soft power and influence, to we're gonna volunt you exactly what we're gonna do because we own the business, period. 00:19:51.920 --> 00:19:54.559 If you don't like it, the next person we replace you with will. 00:19:54.960 --> 00:20:07.519 So I I'm sort of curious about the nuances of of working with with the portfolio leaders, you know, as a as an external party, and and you know, what do you see like are the the situations that work really well or the situations that are challenging? 00:20:07.599 --> 00:20:08.799 How do you solve those things? 00:20:09.119 --> 00:20:16.880 Yeah, I mean, I think you heard me talk earlier about directs versus indirect and how on the indirect side you have to be a bit more of an influencer. 00:20:17.119 --> 00:20:17.519 Yep. 00:20:17.759 --> 00:20:29.039 You amplify that by a lot when you get into

the PE space and you have to deal with CPOs and procurement teams inside of these companies because again, they're they're running their own show. 00:20:29.200 --> 00:20:30.480 And so now you're coming. 00:20:30.559 --> 00:20:35.759 Now, look, I that's not to say we walk into a lot of companies and they're like, oh my gosh, like thank God you're here at help. 00:20:35.839 --> 00:20:36.559 This is awesome. 00:20:36.640 --> 00:20:39.279 Like, we didn't know this, or I just need extra hands. 00:20:39.359 --> 00:20:39.920 This is great. 00:20:40.000 --> 00:20:44.799 I'm I it's so awesome that our PE sponsor is able to provide us these kind of support resources. 00:20:45.039 --> 00:20:51.680 But you do run into those challenging situations where it feels like they're competing, right? 00:20:51.839 --> 00:20:55.039 Where you're coming in and saying, I have these solutions to offer you. 00:20:55.200 --> 00:20:56.640 I'm trying to help you. 00:20:57.119 --> 00:21:03.119 And they're saying, Okay, got it, but I'm gonna go over here and do my thing first because I'm gonna show you where I can beat you. 00:21:03.440 --> 00:21:03.759 Okay. 00:21:04.000 --> 00:21:07.119 Now they don't say that, but sometimes it feels like that, right? 00:21:07.200 --> 00:21:14.079 So you have to, I think the approach is you can't go in and be like, hey, I'm Chris, I'm here to show you how to do procurement better. 00:21:14.160 --> 00:21:15.359 Like, I would never do that. 00:21:15.519 --> 00:21:19.599 Yeah, it's I think it's it's much more of an influencer approach. 00:21:19.839 --> 00:21:23.039 Somebody once told me they're like, you have very high EQ. 00:21:23.200 --> 00:21:23.440 Yeah. 00:21:23.599 --> 00:21:34.880 And like I never thought about that, but I guess it's right because I do when I walk into companies, I don't walk in there with like armed with a PowerPoint and a laptop and go, Hey, here's what you need to do. 00:21:35.039 --> 00:21:38.640 Um, it's a little bit of that, but it's it's how you deliver that message, right? 00:21:38.720 --> 00:21:41.359 And I think it's more like, hey, tell me about what you're doing today. 00:21:41.519 --> 00:21:42.400 What are your challenges? 00:21:42.559 --> 00:21:43.599 How can we help you? 00:21:43.759 --> 00:21:47.200 You know, we have all of these things for you to pick and choose from. 00:21:47.519 --> 00:21:52.000 You tell us where you think we could be most valuable in in helping and supporting you. 00:21:52.079 --> 00:21:54.319 And I think you get a better response to that. 00:21:54.880 --> 00:21:59.519 If you start going in there and saying, look, I know I have a better deal here, here, and here, and here, they're gonna immediately. 00:22:00.160 --> 00:22:02.000 People, people are competitive by nature. 00:22:02.160 --> 00:22:08.880 Well, hold on, give me like five weeks because now I'm gonna go hurry up and go do a bunch of negotiation on my own and show you where I did better than you. 00:22:09.119 --> 00:22:13.680 And I mean, quite frankly, it doesn't, and because of the scale of PE, it doesn't happen very often. 00:22:13.759 --> 00:22:15.359 So now we just wasted six weeks. 00:22:15.440 --> 00:22:21.039 But yeah, I think it's really important for both sides to have the right approach so that you have the right outcome. 00:22:21.279 --> 00:22:28.720 Well, I guess this gets to another question, which is, you know, what are the incentives like for the the leadership of procurement within portfolio companies? 00:22:28.880 --> 00:22:41.759 Like, do they have, you know, because it it's sort of one of these things, like, you know, if I let's say I have my my own perspective and and ego, and someone comes in and says, hey, I'm gonna give you an uh an additional option that you can work with. 00:22:41.920 --> 00:22:47.279 You know, if I just am like, you know, if I'm just happily happy go lucky doing my thing, maybe I'll ignore it. 00:22:47.359 --> 00:23:00.720 But if I'm like, well, the outcome affects my personal compensation, you can put an extra 100K in my pocket because I let you, I just don't obstruct you in doing your work, then heck yes, I'll take you, I'll take you every day and twice on Sunday. 00:23:00.880 --> 00:23:06.000 So I guess my question is, you know, I'm a believer that people play by and large to their incentives. 00:23:06.160 --> 00:23:10.880 I mean, what do you see the incentive structures like for procurement leadership and in portfolio companies? 00:23:10.960 --> 00:23:15.200 And how does that help or or harm the collaboration of the operating partners? 00:23:15.519 --> 00:23:25.279 You know, it's it's kind of the age-old debate because I remember years ago we used to talk about this that salespeople are compensated by commission on what they sell. 00:23:25.519 --> 00:23:32.000 You almost nearly never find procurement people that are directly compensated based on what they say. 00:23:32.319 --> 00:23:33.839 Now we have goals, right? 00:23:34.000 --> 00:23:41.920 They go into our annual plan and you have to meet your goals to get your bonus and all these things, but it's not a direct kind of commission structure. 00:23:42.079 --> 00:23:43.759 And I'm not advocating for that at all. 00:23:43.839 --> 00:23:44.960 So don't get me wrong. 00:23:45.119 --> 00:23:49.599 I think you get a lot of procurement people that might look at things differently if that were the case. 00:23:49.759 --> 00:23:58.240 Because again, if I walked in the door and said, I think I have a better solution for you that can drive X dollars over and above what you're already doing, there would be no debate. 00:23:58.319 --> 00:24:03.920 They would be like, Great, show it to me, because they know that every dollar they save, they're gonna get paid on it. 00:24:04.640 --> 00:24:06.559 That's a whole different ballgame, right? 00:24:06.720 --> 00:24:11.920 They there's there won't be any debate there because now they're getting to those dollars without any additional effort.

00:24:12.079 --> 00:24:12.240 Yeah. 00:24:12.480 --> 00:24:22.319 Whereas, you know, if they're not getting compensated on it, then all they really have to rely on is the fact that they can go stand in front of their CFO and say, I had a better deal, right? 00:24:22.880 --> 00:24:24.480 And so I think that's part of it. 00:24:24.720 --> 00:24:38.160 It it's part of the the hesitation that you run into sometimes is they want to make sure that they're viewed as the procurement expert and that somebody else didn't come in and show them that they can do better. 00:24:38.319 --> 00:24:38.640 Yeah. 00:24:38.880 --> 00:24:39.680 Which is not right. 00:24:39.839 --> 00:24:52.000 So I'll just tell you my approach on that, the way I get around that is when I walk in the door, the first thing I tell them is like, I'm not gonna go in front of your CFO and say, look at all the great things that I did for your procurement team. 00:24:52.160 --> 00:25:00.880 You're gonna go in front of your CFO, and the messaging should be, hey, our PE sponsor brought us all of these opportunities and all of these solutions that were pre-vetted. 00:25:01.039 --> 00:25:06.400 And I'm so smart, I didn't waste any of our internal resources or any of my time. 00:25:06.559 --> 00:25:11.920 I just took them and I just delivered you X millions of dollars in savings, and it didn't really cost us anyways. 00:25:12.079 --> 00:25:12.240 Yeah. 00:25:12.400 --> 00:25:12.640 Right? 00:25:12.720 --> 00:25:23.839 Like that that to me shows procurement leadership because you you took the opportunities that were offered to you and quickly acted on them, and you didn't expend any internal resources to do it. 00:25:24.000 --> 00:25:25.359 Like that seems to make more sense. 00:25:25.680 --> 00:25:26.880 Yeah, it makes perfect sense. 00:25:26.960 --> 00:25:29.359 And it, I mean, like that's wins all around, right? 00:25:29.599 --> 00:25:32.880 It's it's I mean, at some level, everyone here is on the same team, right? 00:25:33.039 --> 00:25:40.319 You want to get the best outcome for the company, the procurement leader wants to get the best outcome for the company, the investor wants to get the best outcome for the company. 00:25:40.400 --> 00:25:44.000 And and if you can say, hey, look, I'm you know, what what what's that old? 00:25:44.079 --> 00:25:48.720 There's that old quote that's like, it's amazing what you can accomplish if you're willing to forego credit. 00:25:48.799 --> 00:25:50.720 I think that might have been like Truman or something. 00:25:50.960 --> 00:25:58.319 And so you can make if you can make the people you work with look like a superhero, you know, then then there won't be as much of an allergic reaction, right? 00:25:58.559 --> 00:26:02.960 You know, and it's funny, I see the same thing on the tech side, just a slight tweak, sort of different. 00:26:03.119 --> 00:26:06.960 We tell people, hey, you know, it's it's not your fault. 00:26:07.279 --> 00:26:09.440 You just didn't have the best technology before. 00:26:09.599 --> 00:26:16.480 And so if you start to see better results, hey, it's not that you're at the sleep at the wheel, it's that you know, you can't, you know, a chef can't cook without an oven, right? 00:26:16.559 --> 00:26:26.720 You know, uh, it's like uh a software engineer can't, you know, they can code really badly on pen and paper, but once you start giving people the right technologies and tools, you know, they can start to get better outcomes. 00:26:26.799 --> 00:26:32.880 So it's not an indictment of your previous work, it's just you know, finally you're you're you're finally you've been under-enabled, now you're fully enabled. 00:26:32.960 --> 00:26:36.960 And look at the difference of the wind be beneath your, you know, behind your sales. 00:26:37.119 --> 00:26:45.920 So, you know, I'm I'm kind of curious, like, you know, how often when you're coming into a company, are you are you doing something where you're touching the tech versus versus not? 00:26:46.160 --> 00:27:08.400 And you know, one one you know sort of interesting difference that I see also between private equity and corporate world is that corporate world, I find a lot more of these kind of like long lead transformations, like we're gonna implement a new Europe, we're gonna implement a new P2P, and this is a three-year project, plus or minus two years. 00:27:08.640 --> 00:27:26.480 And in private equity, actually the pitch has to be very flipped, which is hey, we want to implement a tool that's lightweight, that we can get something done in the next two quarters, and then anything beyond that, like let's not focus on, you know, how how do you see the tech world interplaying with the work that you're doing with portfolio companies? 00:27:26.720 --> 00:27:31.759 I I think it's at the forefront these days, especially with the AI revolution. 00:27:32.000 --> 00:27:37.039 It it's probably the number one conversation that we have is is the technology portion of this. 00:27:37.119 --> 00:27:39.759 And and I'll tell you, and I've held this opinion for a long time. 00:27:40.000 --> 00:27:43.920 We go into a company and they say, okay, where can you go save us money? 00:27:44.160 --> 00:27:49.359 And we come up with a roadmap and and it shows you where that's gonna happen. 00:27:49.440 --> 00:27:57.279 But the one thing I always caveat it with is in parallel with all of this cost out activity that we're gonna do, we have to address process and policy. 00:27:57.359 --> 00:27:59.039 And within that is technology, right? 00:27:59.200 --> 00:28:07.039 Because what happens is we can go out and source everything in the company and come up with really great agreements and show you on paper where they're gonna save you money. 00:28:07.119 --> 00:28:20.559 But if you don't have good process and good policy and good technology to drive people to those agreements and force them to use them, you're never going to realize the savings because now you're

people buying from wherever they want to buy from. 00:28:20.880 --> 00:28:25.599 So I think the the technology question is always at the forefront of this. 00:28:25.759 --> 00:28:48.559 And it's always about how do you get people, you know, for lack of a better way to say it, like how do you get them off of email and spreadsheets and and get them actually using tools that guide the process, that automate some of this, you know, manual activity and really just make it seamless so that people can think about working on their jobs instead of wrestling with a process, right? 00:28:48.640 --> 00:28:50.000 It's got efficient. 00:28:50.079 --> 00:28:54.160 And so, you know, I would say I think you're right on the ERP thing. 00:28:54.400 --> 00:28:59.519 I do think sometimes companies will overbake it and they'll make it more complicated than it needs to be. 00:28:59.759 --> 00:29:01.119 But it depends on the company, right? 00:29:01.200 --> 00:29:18.400 Like I can give you an example of one here just recently where we we probably we spent four months just negotiating for an ERP deal with them, and it was a lot back and forth with two of the, I won't tell you who they were, but they were two of the large ERP providers that we'd narrowed down to, and the company said these are the two we thinks we want to go with. 00:29:18.559 --> 00:29:27.279 We didn't just pick one for obvious reasons, negotiation-wise, competitive or side, but at the end of the day, we picked one, and now it's it's probably a two-year roadmap. 00:29:27.359 --> 00:29:37.359 But we also have to remember these guys are in a lot of different countries, they they're coming off of multiple different systems in a lot of business units. 00:29:37.599 --> 00:29:43.039 Yeah, those kind of things are so many tentacles to it that you you can't get that done in nine months. 00:29:43.119 --> 00:29:51.359 Whereas another company, no, no real ERP, one business unit US based, yeah, we can put that thing in in six to eight months. 00:29:51.440 --> 00:29:52.640 Like, yeah, it's a good point. 00:29:52.880 --> 00:29:54.000 It's a very good point. 00:29:54.160 --> 00:30:05.839 It is interesting, and I wonder if any of the, you know, I wonder if any of the strategic buyers of portfolio companies at end of life would like think about the ERP, you know, upgrade as being like valuable. 00:30:06.000 --> 00:30:13.200 Because I you know, I'm just imagining like if someone was selling me an iPhone and they said, by the way, we just upgraded to iOS 11, I'd be like, oh, sweet. 00:30:13.359 --> 00:30:16.160 So I can I can use the the tool a little bit better. 00:30:16.319 --> 00:30:24.720 You know, if somebody comes in and says, hey, we just upgraded our ERP and the whole business is humming well, I feel like that's you know, that is an operational advantage. 00:30:24.960 --> 00:30:28.240 I certainly see it in one circumstance very pointedly. 00:30:28.319 --> 00:30:42.960 I'm thinking about one of our customers that's

in the uh the uh aerospace and defense arena, where the ERP implementation is actually not just operational, but the value that they're seeing is that they think that it will be helpful for uh IPO readiness. 00:30:43.119 --> 00:30:56.720 Like if we can get an ERP that's that's a clean instance, very easy to audit our financial trails and stuff like that, our ledger, then we can we can go to you know filing with much more confidence than if we had a scatter shot system. 00:30:56.880 --> 00:30:59.440 So, you know, there might be there might be some values there. 00:30:59.519 --> 00:31:04.240 And I, you know, you're right, maybe two years is actually a reasonable amount of time, depending on the level of complexity. 00:31:04.400 --> 00:31:05.680 So yeah, it's a very good point. 00:31:05.920 --> 00:31:19.200 And and look, to your point, the whole IPO readiness thing, that's the when you think about private equity in particular, you make you invest in a company that is maybe immature at the time, it's growing, it's scaling rapidly. 00:31:19.440 --> 00:31:27.680 There you have companies that come in and they're operating, they're$100 million companies, and they want to scale to a billion dollars in the next two to three years. 00:31:27.839 --> 00:31:38.960 If you don't address the technology and the process and the policy when they're still a hundred dollar company, yeah, buying to move it, it's you know, it's the old adage of you know, trying to turn turn a freighter around. 00:31:39.119 --> 00:31:43.039 Yeah, the bigger the boat, the longer it takes to turn the boat, right? 00:31:43.119 --> 00:31:54.160 And so you can be more agile and and and decisive when you're a hundred million dollar company versus I've gotten to a billion, I'm gonna break a lot of things when I now try to adjust and do. 00:31:54.319 --> 00:32:00.640 So that's I'm always a I'm always a big proponent of that, which is you know, when you're think about this stuff when you're still small. 00:32:02.000 --> 00:32:04.640 Because some people go, Oh, I don't need to think about that until I'm bigger. 00:32:04.880 --> 00:32:07.680 Once you're once you're bigger, it's a lot harder to do. 00:32:07.759 --> 00:32:09.279 You have a lot more things to untangle. 00:32:09.519 --> 00:32:10.160 It's true. 00:32:10.319 --> 00:32:15.759 Well, so okay, well, last question about the private equity space that I was just sort of thinking about. 00:32:15.920 --> 00:32:28.160 You know, you you you'd mentioned, you know, some of the work related to indirect involved, and I'm just going back, one thread is involved in like finding the agreements that are already in place and helping make sure that people are complying to those agreements. 00:32:28.240 --> 00:32:30.319 And that's the sort of, you know, we found this great price. 00:32:30.400 --> 00:32:32.640 Let's now make sure that people are doing it. 00:32:32.880 --> 00:32:49.440 You know, how do you think about going in and you know, helping people do indirect sourcing better versus just saying, hey, we're going to outsource our price list to a GPO and just say, hey, look, here's a uh an agreement that is available to you. 00:32:49.680 --> 00:32:55.599 That's not just all of our portfolio companies, but all of ours and many other people's portfolio companies. 00:32:55.759 --> 00:32:59.759 You know, what do you think about the GPO play for you know the tale of indirect? 00:33:00.400 --> 00:33:05.119 I would tell you the the GPO relationship is extremely important. 00:33:05.359 --> 00:33:08.559 We we have many of them, we use them quite often. 00:33:08.799 --> 00:33:11.599 Yep, but I don't think it's an all or nothing. 00:33:11.759 --> 00:33:12.000 Right. 00:33:12.079 --> 00:33:20.720 And what I mean by that is I'm I would not suggest anybody picks up their entire spend set and goes, here, GPO partner, go do all this for me. 00:33:20.880 --> 00:33:33.119 Yeah, I also would tell you that if you're doing it the right way, you've done some investigation on which GPOs in the market are best of breed in specific categories. 00:33:33.359 --> 00:33:41.279 Because while they all have a broad range of category offerings, they don't always all have the best deal in every category. 00:33:41.440 --> 00:33:51.920 And that's kind of how we've thought about it, how we structured it in this playbook that I talk about is we know which GPOs have proven to be most competitive in each specific category. 00:33:52.079 --> 00:33:57.920 And then we also know which categories we know where we can be more competitive in outside of a GPO. 00:33:58.480 --> 00:34:04.240 So I think that's this is when you start talking about procurement strategy and category strategy and things like that. 00:34:04.400 --> 00:34:07.119 You kind of have to know where to go and who the players are. 00:34:07.359 --> 00:34:11.760 And it's not, and again, I'm not knocking GPOs because they're very good partners for us. 00:34:11.920 --> 00:34:16.639 We we have very close relationships, we use them a lot, and we couldn't do a lot of this without them. 00:34:16.800 --> 00:34:26.000 But I do think that we're very prescriptive in where we use GPOs and where we don't, because that's how we're maximizing the value and maximizing the cost takeout. 00:34:26.239 --> 00:34:27.280 Yeah, for sure. 00:34:27.440 --> 00:34:29.360 And I definitely don't think you're knocking GPOs. 00:34:29.440 --> 00:34:35.119 In fact, you're saying very nicely about so I don't no need for the caveat, but I I think it makes a ton of sense. 00:34:35.360 --> 00:34:40.960 Okay, so so transitioning a little bit, I you know, and I would I would call this sort of a last question. 00:34:41.280 --> 00:34:48.079 You know, where do you see procurement showing up in your day-to-day life, you know, outside of the professional world? 00:34:48.320 --> 00:34:51.599 You know, you're negotiating for your your next car lease. 00:34:51.840 --> 00:34:53.920 You know, you hit it on the head, Spencer.

00:34:54.000 --> 00:35:00.079 If I had if I had five dollars for every time somebody asked me to go with them to buy their next car, I wouldn't even need to do this anymore. 00:35:00.400 --> 00:35:00.800 Joking. 00:35:00.960 --> 00:35:04.719 But no, I mean, really, it's it is, it shows up, it shows up everywhere. 00:35:04.880 --> 00:35:08.079 I mean, I think you just think about everyday life. 00:35:08.239 --> 00:35:16.880 I mean, something as simple as like, you know, you you paid somebody to do a service at uh at your house and they didn't do a great job. 00:35:16.960 --> 00:35:17.679 Well, what is that? 00:35:17.760 --> 00:35:18.639 That's procurement. 00:35:18.800 --> 00:35:23.679 What happens when we go contract with a vendor to deliver a good, right? 00:35:23.840 --> 00:35:25.440 And it comes in and it's defective. 00:35:25.599 --> 00:35:33.039 Well, I have to call them as procurement and say, hey, this was a defective quality product, and we have to work out, right? 00:35:33.119 --> 00:35:36.880 Or there's some contractually binding terms. 00:35:37.039 --> 00:35:46.159 I'm sure people like service providers that come to my house probably hate me because I'm like, like I I have to read the terms and conditions and like mark the I've I've physically done this. 00:35:46.239 --> 00:35:52.719 I had somebody put a roof on my house once and I marked up their terms and conditions, and they were like, nobody has ever done this to us before. 00:35:52.880 --> 00:35:54.320 And I'm like, sorry. 00:35:54.480 --> 00:35:54.639 Right. 00:35:54.800 --> 00:35:55.440 So it does. 00:35:55.519 --> 00:35:58.559 I mean, I think there's a lot of applicability in everyday life. 00:35:58.639 --> 00:36:06.639 And I try to teach, you know, I have two teenage boys and I try to instill that in them too, which is, you know, the worst somebody can tell you is no, so why wouldn't you ask? 00:36:06.800 --> 00:36:16.880 I mean, right, you're negotiating, you're not being a jerk about it, but you're just asking and you're being polite about it, and you're saying, well, I feel like there's something better to be had here, and so we should talk about it. 00:36:17.119 --> 00:36:18.800 Yeah, it makes a ton of sense. 00:36:19.039 --> 00:36:21.760 I I agree with I agree with you a hundred percent. 00:36:22.000 --> 00:36:30.960 And and I think that it's I think that it's it's okay to have those expectations as long as you set them up front and you say, Hey, look, here's my my performance expectations. 00:36:31.199 --> 00:36:37.440 And procurement people are often, I think, you know, there is obviously it's like you know, one bad apple spoiled a lot. 00:36:37.519 --> 00:36:41.679 People think, oh, you my job is to just, you know, basically do a prisoner negotiation. 00:36:41.920 --> 00:36:46.960 But a lot of times I've seen procurement folks will have the good ones, will have a very savvy perspective. 00:36:47.119 --> 00:36:56.159 They'll say, they try to understand, hey, what matters to you, what matters to me, what matters to you is, you know, your your time and not being out materials. 00:36:56.320 --> 00:37:02.480 What if I'm willing to pay whatever the material cost ends up being, but I just need a guarantee that the roof will work. 00:37:02.639 --> 00:37:06.000 And, you know what, instead of$40, I'll pay$45. 00:37:06.480 --> 00:37:23.840 But I need you to be willing to come back as many times as you need to get it right, or I need some kind of, I don't know, you know, it depends on the the outcome, but there's often like this sort of pattern matching of, you know, what do you, what does the vendor really care about, and how can I satisfy their needs, and what are we really getting out of this and what do we care about? 00:37:24.000 --> 00:37:29.199 And and sometimes finding that sort of slightly off the off the chart thing, you know. 00:37:29.599 --> 00:37:31.440 I I I completely agree with you. 00:37:31.519 --> 00:37:40.000 And and I think it's something I'm very passionate about is this whole idea of like supplier management, how to negotiate, right? 00:37:40.159 --> 00:37:44.880 I think a lot of people in in the procurement profession sometimes miss on this. 00:37:44.960 --> 00:37:46.400 And it's not their fault. 00:37:46.480 --> 00:37:55.519 I think because we've I think we've been given the reputation of when somebody in the business needs something, we're the guys, we're the heavy, so to speak. 00:37:55.599 --> 00:37:55.760 Yeah. 00:37:56.000 --> 00:37:57.679 Come in and we're gonna beat the supplier up. 00:37:58.000 --> 00:37:59.280 I don't operate that way, right? 00:37:59.360 --> 00:38:07.119 And and I'll tell you, I I learned very early on in my career the pitfalls of that type of approach, and that bumper why I don't subscribe to it. 00:38:07.360 --> 00:38:07.519 Right. 00:38:07.599 --> 00:38:10.320 And you came up in the same industry to some extent, right? 00:38:10.400 --> 00:38:12.559 So you probably know what I'm referring to. 00:38:12.880 --> 00:38:24.079 And of course, I I am a big proponent of and I'll tell you, and I won't go into specifics, but the probably the best deal I ever put together in my career, and it still stands. 00:38:24.320 --> 00:38:32.400 It was in the CPG industry, and I had a really good relationship with my vendor rep, and it was one of the biggest deals in the company. 00:38:32.559 --> 00:38:37.760 And I literally said, Look, I need you to come to the office and we're gonna spend a half a day and we're gonna hash this out. 00:38:37.840 --> 00:38:38.880 And it was a big deal. 00:38:39.119 --> 00:38:48.320 And we sat in a room for about three or four hours, and the conversation was open and transparent, which some people would look at me and be like, Why would you tell them all of that? 00:38:48.480 --> 00:38:55.840 And I said, Because I got reciprocity from him, and I said, I'm gonna tell you exactly what I need, and I need you to tell me exactly what you need. 00:38:55.920

--> 00:38:58.320 And at the end of this, we're gonna get a deal, right? 00:38:58.400 --> 00:38:59.519 And that's exactly what happened. 00:38:59.679 --> 00:39:11.280 That contract, I and I know this for a fact because I know people that know for a fact that contract still stands today, and it's probably at this point approaching 17 or 18 years. 00:39:11.440 --> 00:39:11.920 Wow. 00:39:12.079 --> 00:39:15.519 That it's still there, it's been renewed like four or five times. 00:39:15.679 --> 00:39:16.559 It's crazy, right? 00:39:16.719 --> 00:39:20.400 But when you put together that good of a deal and you have that good of a partnership, why wouldn't you? 00:39:20.559 --> 00:39:20.800 Right? 00:39:20.960 --> 00:39:21.199 Right. 00:39:21.440 --> 00:39:23.679 No, I mean, look, I I agree with you 100%. 00:39:24.000 --> 00:39:40.480 I had a situation recently that is causing me some real anxiety, which is that I negotiated too good of a deal on an office for our new HQ, and we signed an LOI and then the landlord backed out because they were just like, you know, this doesn't it actually isn't too good. 00:39:40.639 --> 00:39:42.239 It doesn't really work for us, you know? 00:39:42.480 --> 00:39:44.320 And then it was hard to get them back to the table. 00:39:44.400 --> 00:39:51.440 And and, you know, and a lot of times, you know, I feel, but it's it's this is the the thing I think that's very challenging is that like you're right. 00:39:51.599 --> 00:39:58.320 Like you just sometimes you just call somebody up and you're like, hey, look, I just want to understand without just going back and forth on email. 00:39:58.480 --> 00:40:01.599 I want to understand like what what what matters to you? 00:40:01.760 --> 00:40:04.079 And you know, what do you need to get to here? 00:40:04.239 --> 00:40:05.760 You know, and you can hear it in their voice. 00:40:05.840 --> 00:40:07.360 There's a lot of like subtlety, right? 00:40:07.440 --> 00:40:16.960 To be able to see, like, if they're really like, look, trust me, like, I'm not gonna be able to get them to agree to that, or like, well, you know, maybe I could get that if if you guys could do something. 00:40:17.039 --> 00:40:21.440 And then you can you can find that like sort of narrow path that really works for everyone. 00:40:21.599 --> 00:40:22.800 But how do you teach that? 00:40:23.039 --> 00:40:27.760 Because, you know, some people like I feel like some people genetically have it and some people do not. 00:40:27.920 --> 00:40:36.480 And that's the question is like that's where I think process and technology come into place to be like, all right, there's gonna be a whole spectrum of people's capability on the negotiating front. 00:40:36.719 --> 00:40:40.960 Let's just like clip both ends of the spectrum and just bring everyone to the meeting. 00:40:41.119 --> 00:40:53.199 Which is if you get three bids, you run this analysis, you do this three rounds of negotiation, you make an award, that process like loosely

approximates you know what a really talented negotiator can do. 00:40:54.079 --> 00:40:56.320 So, yeah, I'm just throwing a lot at you. 00:40:56.559 --> 00:40:58.639 I know, I mean, I think and I think you're right. 00:40:58.719 --> 00:40:59.760 I agree with all of that. 00:40:59.920 --> 00:41:07.039 It for me, what it boils down to is when you're negotiating anything, and I I I don't care if it's you're negotiating something in your personal life. 00:41:07.119 --> 00:41:08.960 I I I stand by this. 00:41:09.039 --> 00:41:09.280 Yep. 00:41:09.599 --> 00:41:13.679 So I'm passionate about this because I think it elicits the best outcomes. 00:41:14.000 --> 00:41:20.480 You have to be transparent, you have to be credible, and I think you have to be respectful. 00:41:21.119 --> 00:41:25.360 Those are those for me are like, you know, I I and and be direct. 00:41:25.519 --> 00:41:30.880 Most people think that negotiation is holding your cards close to the best and take the other side. 00:41:30.960 --> 00:41:32.320 No, like there's some of that, right? 00:41:32.400 --> 00:41:36.159 Like, I would tell you, like a lot of years ago, there was people I dealt with that. 00:41:36.239 --> 00:41:41.599 I was like, I could go into the meeting and I would just say a few things and I would just shut right up because they were just gonna spill. 00:41:41.760 --> 00:41:47.440 Yeah, they would they would support whatever position I needed because they gave up too much, right? 00:41:47.760 --> 00:41:52.320 But that's not to say that when I go into a negotiation, I'm not holding things back. 00:41:52.559 --> 00:42:02.320 If I feel like I'm getting that reciprocity and I'm getting that transparency from the other side, then you should give it back to them because that's how you get to a deal faster. 00:42:02.480 --> 00:42:04.400 That's how you get to a good deal faster. 00:42:04.480 --> 00:42:06.159 It's not because you're giving things up. 00:42:06.320 --> 00:42:11.199 And what goes along with that is I have a template that we still I use to this day, I've used it for years. 00:42:11.360 --> 00:42:13.920 It's a template, uh negotiation strategy template. 00:42:14.000 --> 00:42:17.840 And a big component of it is what does the other side want? 00:42:18.079 --> 00:42:19.199 You have to understand that. 00:42:19.360 --> 00:42:24.000 I think most people go into a negotiation if you ask them and say, How do you prep for negotiation? 00:42:24.159 --> 00:42:28.960 Well, I line out all the things I have to get, all the things I have to get. 00:42:29.119 --> 00:42:31.599 What you're missing is what do they have to get? 00:42:31.760 --> 00:42:35.599 You need to understand that, and you can either understand it two ways. 00:42:35.760 --> 00:42:42.800 You either know it or or think you know it, and you can make some assumptions about what they want, or you can ask them, right? 00:42:42.960 --> 00:42:47.039 I mean, you said it earlier, open it up a negotiation and say, just tell me what you need out of this. 00:42:47.199 --> 00:42:48.480 Where do you need to get to? 00:42:48.639 --> 00:42:49.039 Right. 00:42:49.199 --> 00:42:56.400 And understand their side of it because now what you want is likely very different than what they want, right? 00:42:56.480 --> 00:43:01.119 And so now you're horse trading and you're saying, Well, look, this doesn't matter to you, so just give it to me. 00:43:01.280 --> 00:43:04.320 And I don't really care about this over here, so I'll give that to you. 00:43:04.480 --> 00:43:09.519 And you and then you kind of boiled it down to this is the last one or two things that we have to agree on. 00:43:09.679 --> 00:43:11.760 So now we have to find a middle ground, right? 00:43:11.920 --> 00:43:12.159 Right. 00:43:12.320 --> 00:43:12.960 It's true. 00:43:13.199 --> 00:43:17.760 But again, this is the challenge I struggle with is like, I don't know if if everybody can do this. 00:43:17.840 --> 00:43:18.480 You know what I mean? 00:43:18.559 --> 00:43:19.280 Like, I don't know. 00:43:19.519 --> 00:43:29.519 I mean, maybe, maybe the framework that you're describing it will allow people to do that prep work and figure stuff out, but also, you know, not everybody has that mindset. 00:43:29.599 --> 00:43:30.559 I think I don't know. 00:43:30.639 --> 00:43:32.559 It's it's this is something I have to think about. 00:43:32.639 --> 00:43:36.880 Like, can can some like, you know, is it nature versus nurture, or is it a little bit of both? 00:43:36.960 --> 00:43:46.000 Like you have to take someone who's a ta who has got good physicality and then teach them to be an athlete, or is it like, hey, anyone can be taught to do this really well? 00:43:46.239 --> 00:43:48.000 And there's a lot of judgment. 00:43:48.159 --> 00:43:50.639 Like every little sentence is judgment. 00:43:50.719 --> 00:43:55.679 You know, do I think that this is going to make them trust me in a you know in a real way? 00:43:55.840 --> 00:43:56.960 And also cultural. 00:43:57.039 --> 00:44:08.639 Like, I feel like, you know, not to not to say that the people are different, but I feel like if there's someone that I can kind of understand who they are, what they're kind of like, I'm like, okay, we can have a real conversation, we can figure it out. 00:44:08.960 --> 00:44:21.440 If someone's really different from me, it's sort of a little bit more difficult to know like, is the norm going to be that I, you know, I give something up and then they're gonna be like, ha, you know, I'm gonna keep, you know, and like, okay, well, you know, fine. 00:44:21.599 --> 00:44:23.199 You know, that's human nature, right? 00:44:23.280 --> 00:44:27.119 I think if you if you get something from somebody, you're like, well, let's see how far I can push them. 00:44:27.519 --> 00:44:29.119 Yeah, and that is part of negotiation. 00:44:29.199 --> 00:44:43.199 I mean, look, I'll tell you, I do that, but you also do it, or at least I do it with in the the end in mind, which

is let's see how far we can push it, but also knowing that I'm gonna have to give something up and I'm willing to do that, right? 00:44:43.360 --> 00:44:45.599 And it's right, it is, it's a give and a take. 00:44:45.679 --> 00:44:46.880 It's a change process. 00:44:46.960 --> 00:44:51.199 And and so the nature versus nurture question, I I think it's a little bit above. 00:44:51.440 --> 00:44:51.760 Yeah. 00:44:52.000 --> 00:44:57.119 There's some people that maybe are not gonna get there because they just don't, maybe they don't have that capacity. 00:44:57.280 --> 00:45:04.239 But I do think, I mean, I'll tell you, my negotiation philosophy and my negotiation expertise has changed a lot over the years. 00:45:04.400 --> 00:45:10.880 When I was younger in my younger years, I probably subscribed to the whole I'm gonna walk in the door because I work for big companies. 00:45:10.960 --> 00:45:16.480 I'm gonna walk in the door and I'm gonna pound them over the head and tell them you better give me what I want because I'm whoever, right? 00:45:16.559 --> 00:45:17.519 I'm the big company. 00:45:17.679 --> 00:45:19.440 And and we thought we could play that card. 00:45:19.519 --> 00:45:24.719 But you know, even if I could go back and drill over again, knowing then what I know now, I probably would have had a different approach. 00:45:24.960 --> 00:45:25.679 Right, of course. 00:45:25.840 --> 00:45:26.880 I've everybody would. 00:45:27.119 --> 00:45:28.559 I mean, it's no one's perfect. 00:45:28.639 --> 00:45:30.400 You you do the best you can at the time. 00:45:30.639 --> 00:45:35.599 My last question for real though, Chris what do you what's the weirdest thing you ever had to source? 00:45:36.400 --> 00:45:38.400 Well, we all remember the COVID days. 00:45:38.639 --> 00:45:38.960 Yeah. 00:45:39.199 --> 00:45:45.440 I I became like the the mask and hand sanitizer czar for like a year and a half. 00:45:45.679 --> 00:45:45.920 Okay. 00:45:46.239 --> 00:45:46.480 Joke. 00:45:46.559 --> 00:45:48.320 Like I literally I'd never sourced it in my life. 00:45:48.400 --> 00:45:49.840 I didn't know the first about it. 00:45:50.079 --> 00:45:57.679 But as it happens, I had some personal connections with people that were rooted in manufacturing of some of those things. 00:45:57.840 --> 00:46:02.880 And I had everybody and their brother calling me about, I heard you're the hand sanitizer guy. 00:46:03.039 --> 00:46:04.239 Like, yeah, I got it. 00:46:04.400 --> 00:46:09.599 And I was literally delivering like truckloads of hand sanitizer to people because we couldn't, you couldn't get it. 00:46:09.679 --> 00:46:20.559 And I had a line on a company that at the time had FDA approval for a formula variance that none of the other bigger companies had. 00:46:20.719 --> 00:46:25.199 And so, yeah, it's they tell you that your network is the most important thing in your career. 00:46:25.360 --> 00:46:29.039 It absolutely is because the networking is is what you know. 00:46:29.119 --> 00:46:33.599 I I had people calling me like, I heard you have a guy, and I'm like, Yeah, I guess hi, he'll help you out. 00:46:33.679 --> 00:46:34.880 Yeah, yeah. 00:46:35.199 --> 00:46:36.000 That's amazing. 00:46:36.239 --> 00:46:39.760 Well, Chris, thank you so much for being on the uh being on the podcast. 00:46:39.920 --> 00:46:47.039 This is, you know, uh like all of our conversations, this has been extremely fun for me and so informative. 00:46:47.199 --> 00:46:49.840 And you've left me and our audience with a lot to chew. 00:46:49.920 --> 00:46:52.079 And I'm glad we actually captured this, you know. 00:46:52.400 --> 00:46:53.199 Well, it was great. 00:46:53.280 --> 00:46:54.320 This is really fun, Spencer. 00:46:54.400 --> 00:46:55.760 I always enjoyed talking to you. 00:46:55.840 --> 00:46:57.760 Um, great questions, great topics. 00:46:57.840 --> 00:46:59.440 Uh, really enjoy it.