How Private Equity is Investing in “Midwest Mavericks” with Susan Ford

from the crossroads of America in the hooer state of Indiana this is get in the podcast focused on the unfolding stories and extraordinary Innovations happening right now in the Heartland I'm Matt hunkler CEO of powdercake and I will be one of your hosts for today's conversation I'm joined in Studio by co-host Nate spangle head of community at powderkeg and on the show today we have Susan Ford who is a partner at Graham Allen Partners a private Equity Firm based in South Bend Indiana and it's funny I had a seller say to me one time this season do you know how many times I'm going to

sell a business in my life how many one Susan Ford is a partner at Graham Allen Partners a private investment firm focused on developing early stage technology businesses into sustainable growth companies and I love this show because it is like a mini MBA this conversation you're going to get a crash course on all things like private Equity important benchmarks for any business massive opportunities in Legacy Industries and so much more it is one heck of a conversation and I'm so glad to share it with you today here's Susan Ford so Grandam melon Partners private Equity Firm in Southbend Indiana we are the only one of

our kind and I think it is important to know that we have a few different pieces we have things that are outside of our traditional fund when people talk about a pool of committed Capital that is money that other people and other institutions have invested so we have a private Equity Fund we also have fund we have companies that are invested in which we call our permanent Capital portfolio and so this gets really interesting when we talk a little bit more later on about the community component because some of our earliest investors in our permanent Capital fund are members of the community businesses in the

community institutions in the community so that I hope we can come back I would love to yes okay cuz M and I both want to start a private Equity Firm oh guys you hear heard it here right now we'll talk about that in a second and we're in the process of preparing to raise our second uh committed pool our second committed fund and so the concept is over a longtime Horizon anywhere from 5 years 10 years 20 years different firms have different metrics around this but our first fund our first committed pool of capital is for 10 years so it's a 10year investment life cycle

and so you think about how you are figuring out what you're going to invest in you then do whatever it is that you are going to do so we can talk a little bit about our strategy and then you go to exit and during that time frame you are able to return to those limited partners who have invested in you and that's what it looks like and our thought is you give us a dollar give us some time believe in our strategy we'll give you $3 back so that's is that good enough keep going question so how is it different from Venture Capital you just

took my okay so that is a great question and I think at the end of the day Venture investors are understanding that not what is it 80% of all venture ideas fail only 20% Hit And so there's a high degree of risk and there's a high degree of reward but you know that you're going to have a lot of failures I think in our private Equity world we have less there's less comfort for risk obviously the experienced investors understand that not everyone is going to be a home run right we might hit a single on- one a double on one and a home run on

one and to collectively that will give us you give us a dollar we'll give you $3 back but it's a little different the ratios are a little different than in a venture fund and I would also say the dollars look a little different as well I think some of the Venture funds go ahead when you say ratios return no I'm just saying in terms of what did I just say there ratios of risk reward risk reward exactly yeah thank you so so like Venture you're basically looking for one out of 10 companies to basically return the have the potential of returning the fund nine out

of 10 of them are going to fail whereas in our world and of course every VC fund will say no but we're doing two out of every five are going to be home runs but the data is still the data the data is still the data and so private Equity is a little bit later stage meaning it's got a little bit more momentum it's probably investing larger amounts of capital that is exactly right and so that is a perfect setup it is and it's also for us specifically and every private Equity Firm and then each of its funds has a particular thesis and so our

thesis is all about Midwestern mid-market businesses and our whole fund actually the whole firm so I'm going to delineate firm and fund our whole firm is is how do you go from bridging that Gap from tradition to Innovation and so something we've talk talked about so this Venture thing as we talk about it and if I can x-axis y AIS I think about the x-axis is here's tradition and here's Innovation and how do you help bridge the gap from companies who are traditional companies which the Midwest has thousands of them I was listening to one of your other podcasters silver tsunami right so all of

these core businesses that have lots of value and so I think about the x-axis tradition to Innovation and then I think about risk and reward and so when we talk about all of these Venture firms up here Uber is a great example right high risk High reward total disruption nothing on the traditional side and so that was great a great return profile for its investors and a lot of VCS and a lot of entrepreneurs startup entrepreneurs let me say delineate and I think that's an important delineation startup entrepreneurs can do really cool things up in that space with great returns we are and I also

think down here you think about Commodities I think about Warren buff it and right everybody was going to stop eating hamburgers and stop drinking Coca-Cola not true people are going to so you're going to have a consistent return down here as well and so when I think about the types of companies we've invested in we are bridging that Gap and what might have under another traditional private Equity strategy hey you have an insurance business we're going to buy 15 insurance companies roll them together make them a little more efficient great there's a potential for a return which is wonderful but it's not necessarily new or

innovated Innovative and where we come in where we help cross over that Nexus point is when we start to talk about hey this is where we are going to get into proprietary data which is what our thesis really is so we can talk more about that in more detail but you look like you have a question oh I didn't mean to put you on the spot you look like question you have a question on the podcast like question um okay so how do you define a traditional business at Gram Allen Partners that's a great question so we are focused in a few different verticals we

think healthcare is really interesting thank you did you see that okay Healthcare is really interesting we think Business Services is really interesting and we will always be fascinated with technology because at the end of the day we think we are uniquely positioned to take the dris technology that is coming from Silicon Valley this is like such a matchup of how you think about the world and how we think about the world and it gets scaled on the East Coast but no one's really thinking about it for these midsize businesses so your question was how do we think about these traditional businesses the two industries that

I mentioned both Healthcare and business services they are are asset light to a degree so they really just have lots of data so they don't have lots of infrastructure and so that's part of our strategy where we think it is Data Rich we talk about data Rich asset light and so that's the part that we think is most compelling so we are able to take those traditional businesses and do more with the data but your question did I answer it how do we think about those traditional business how you define how do you to Define Trad you definitely went into that there and I think

that's super interesting because we've had Bethany on the show ihart Bethany yes so do we and we've had Iris HL on the show as well and they dove into the South Ben Elkart region and talked a lot about there's a heavy presence of manufacturing there Elkart county is a manufacturing stronghold for not just Indiana but for the entire country and where you're talking about when from healthc care and from Business Services I was really expecting like we look for manufacturing companies to roll up and Y and it's not doesn't seem to be that that way at all I am going to correct myself and say

the whole second fund is all about adding manufacturing on the analytic side and we think there's a ton of data in the manufacturing I should tell you I have a couple hats that I wear I wear my grandal and partners hat and I do a lot with the regional partnership and which is the organization Bethany is the president and CEO of and I think that is exactly right so the whole bit about we in South Bend and Elkart we build things that's Mission critical to our understanding to our DNA studer stud Baker Bendix all everybody from South Bend is going to come and tell you

these same stories but I think it's really important um go ahead are there a lot of other PE firms that are jumping in on this right now in our from in our region or not region in general I think of all of these communities that we serve places like Pittsburgh and Chattanooga and Cleveland have a ton of innovation happening there but they also have their economy is still predominantly these traditional Industries are there a lot of other PE firms that are seizing the same opportunity where are we do you think in that life cycle of innovation it's a great question and I think there are

a lot of different ways you could answer it I think yes there are private Equity firms and to your point there's good private equity and bad private Equity I think that there are people you're the good kind that's what we'd like to believe that is what we'd like to believe that there are some that are cannibalizing that right here's this opportunity we're going to come in and I'll give you a great example rally make a plug for rally how cool rally was and one of the speakers I heard talk about an IPO I think it was in Lexington about it was an $8 billion IPO

and there was no local money no local money so private Equity Venture firms coming in from the coast came in did the IPO took their money and left and that's like great for the region that they they had an IPO but also really sad that the money was going out to the coast right and so when I think about your question part of what is interesting I believe about what we are doing is we are talking to businesses that are Midwest values they understand they don't want to sell their business to an evil private Equity Firm that's going to just take the money and run

cannibalize it not withhold the values that they already set out for many years they take care of that and so for us this big piece of what so we Graham Allen care about is also the community right so how do we help sustain these businesses and so not about disruption but more about transformation and so when we talk about when I was explaining private equity and our permanent Capital fund so Graham Allen is an investment firm it is those original large businesses in the region who know we need new technologies we need to know what is happening next and we don't know how to get

it on our own and the other people aren't coming to the coast to be excited about these smaller businesses it's not a match right so we feel very uniquely positioned to understand Midwest business to have a deep understanding of technology to have deepish pockets to be able to support that so that feels a little different is is your that region like specifically in your thesis like we serve this sector of the market like this geographic region secondary and tertiary markets so 100% so thank you for giving me the chance to clarify that because it's not we're not going to be in Chicago we're not going

to be in New York we are going to serve secondary and tertiary markets and being really thoughtful about it 65% of all of our platform companies in our fund are based in Indiana and the remaining portion is in Midwest companies in secondary and tertiary markets so that is where we want to play and that is where we've been really thoughtful about our LPS and even some of the members of our team where we can build around the relationship and build around the reputation you guys hit it at right there's there's stereotypes of good PE and bad PE what are a few indicators of of bad

private Equity firms oh man I don't know if I want to be on record for that I think that at the end of the day your reputation matters do you say what you're going to do our managing principal Tracy Graham is played football with Lou Holtz and it's do the right thing what is it oh I'm going to get it wrong uh you're the right person I'm not a sports guy do your best do the right thing and treat other people the way you want to be treated and I think that is so core to how we operate I think the other piece is you

don't want people to say one thing and do something differently right and so I think that is a term that gets passed around is the Jambo just another Middle Market buyout and when I think about I had heard that that was the one she said This Acronym and it's like J jumbo or jumbo jumbo makes me hungry jumb been like just another Middle Market bio and that's not a bad thing let me be clear it's not a bad thing if the people let's presume people are operating with Integrity yes absolutely but where I feel like we are a little different and a story that I

think about one of the platform companies in our current fund the it was second generation so two sons who have the business from their fathers in the insurance space and they were getting courted all the time with other offers like Hey we're going to build this giant Insurance firm we want you to come in and be part of it and so super interesting super compelling they could take a lot of chips off the table and that would be fine it would be totally fine but that's not necessarily securing the Next Generation that's not that is more about either a little bit of same or some

disruption bad example disruption but it's not transformation and so what they get excited about when you think about the structure of what we've put together it's also hey you have an opportunity to participate in the transformed business as well which longer term we think is going to be more compelling than anything that you might just get if you took a standard deal when you look at the pieces and parts of those businesses I would imagine a lot of that applies to just about any business and the principles are all the same whether you're just a jumbo or yeah or you're just acquiring a mom and

pop shop and saying oh we're going to you know Implement a new POS system and all of the digital marketing tools that this Mom and Pop is crushing it despite not having those things much smaller scale not a private Equity play but something that is accessible to people who are maybe middle class or upper middle class to be able to go and and rinse and repeat or for those of us that have business businesses or work at businesses whether it's a small business or a startup I I feel like understanding some of these principles of how these bigger firms PE firms think about here's how

we take something that's good yep and maybe it's even great y but make it even greater 3xit over the course of 10 years what are some of those like key levers that you personally look at think about for us it's one it's the data and traditional investors have chronically underestimated the value of data in these core businesses it's not even a line item on the balance sheet so when you think about that that there is value to that and but what I think people get wrong or where I think we have the opportunity to help make it right is that we understand what it takes

to harness the data so when you think about the data infrastructure piece and sure every company can go out and hire some tech people and they can get the tech stack right and we can can get all the servers and we can do all these things but I I think about at the end of the day let's say I'm going to pick on a bank but the bank's Core Business is being a bank the bank's core business isn't being the it guys are not the stars of the bank right and so it's a little bit converting that to say hey we what we like to

do is bring the it stars to the table to help them think about the things that they might not otherwise and what we are really working on behind the scenes is to be able to get the data piece right at scale and so like the connective tissue to actually make the data valuable is not just I have 10 servers I spent $50,000 on each server it is actually how do you get the data that is reliable that is uh clean that is accurate and getting it with a level of consistency I think that's a piece that is chronically underestimated and what I find with a

lot of the businesses that are trying to do something I think I'm off from your question but I'm going to keep going on this on this think it is it really they're they they get in over their head and I think probably I'm imagining you guys are experiencing tech people want to be around other tech people and if their leadership and vision is coming from a let's again pick on a bank CEO who may not be able to understand nor should this person have been expected to understand right and so that's the opportunity where we are investing in the data scientists where we are investing

in the data engineers and we have a house at Grandam Allen Partners gram Allen Partners so the strategy to scale and understand and harness the data that's what we are investing in yeah cuz as I sat here and you were talking I was like okay great not a huge Excel spreadsheet guy but everyone talks about the value of data and it's good to have it all but it really comes down to what you do with it yep right so what are you guys doing and how do you see the data that you're collecting from your you call them portfolio companies from the portfolio companies there

are a couple there there a story of how you guys have done something and acted on this data to make a transformational change at a business it's a great question at the end of the day this is where it get gets Venture Capital because it's all about the unit economics and a lot of these traditional businesses have not deeply understood unit economics in the way that a venture firm would expect one of their portfolio companies to operate and so for those not indoctrinated do you mind just defining unit economics like I know that's probably table Stakes for most of our listeners I think hearing it

through the lens of a PE firm of which unit economics are really important sure I'll do my best I I'll do my best but at the end of the day it is understanding how the business is run at a very deep level and so it's if you're going to do this better than I am I want to hear your definition when I think of unit economics I think of the I am at a software company so I think of like software economics like CAC customer acquisition cost uh lifetime value of a customer LTV your ca to LTV ratio is really important all of those those

kinds of things are like the key performance indicators in SAS software as a service it's the same it's the same I again love Dan hram podcast and I love how he told the story all of those all of that terminology yes for mulch for mulch it was so good I thought that was so good and so it is exactly that piece of it but it is these that director listeners to that podcast as well because he explained it really well so something that companies could do immediately to make their business more valuable is if they don't already have their unit economics dialed in just get

a benchmark or get a baseline just get a baseline And I think where I was a little dear in headlights as you were thinking about this I was going two steps ahead because for us when you a lot of the traditional businesses have been thinking about their own business for all of these years and where the private Equity Lens comes in it says okay the unit economics the potential for the unit economics looks very different because we don't need five leadership teams right you only need one leadership team and so like the I think the traditional business owners what looking at so when you bring

two businesses together you don't need two heads marketing and so then when you think about the kpis that are really important you're they're going to change a little bit because you're going to make some changes IMM p PE is making huge impact on overhead and just overall capital expenditure yes so that's helping margins immediately yes exactly and that's before you're even tapping into the data that's before you're even tapping into the data so I think to your point it's a bit table stickes just to get it and understand it but then what are we using the data for so then it's being able so those

are the baselines right but then you get into I'll talk about one of our businesses which is an orthopedic billing fascinating to go through that and back office bill not necessarily sexy but oh my goodness it is people's lives and you have to take it very seriously and the way some of the big insurance companies work you have an amount of time that you have to file a claim on something if you are not able to sort through all of the data to figure out which claim you need to process first then the amount of dollars that could be lost is significant but the way

the system works right now within different emrs it's okay this one is a $100 bill this is a $2,000 one this is a $30,000 one but it's presented to to each of the individual workers in that order and it's gosh we need to use our data to look ahead to make sure that we are going to be able to process the claims that are going to retire or expire so that we can collect fully on behalf of our client does that make sense yeah so that's using like harnessing the data and using the data to help the company expand its margin and ultimately grow Revenue

but where we think it gets even more interesting is then once you have all of this data there are other buyers when we think about what we want to do who will find that data and this totally plays into your Tech and as you guys think about using it but one of our foundational beliefs again back to what I said earlier a lot of the traditional investors have just underestimated this in the businesses that we these traditional businesses it's just under way things have been done it's not previously I I'd like to do a quick segue into you're talking about bringing two businesses together you

only need one head of marketing and I think that is a common maybe misconception or maybe just like stereotype of PE is like PE comes in and cleans house and it's all about hitting the number and if the profitability is it's the number is the number is the number what are you guys doing to prioritize culture in these companies that you're making an investment in thank you for asking that question I would say when we think about the values of Graham Allen Partners when we think about the community but also when we think about our engagement with these p with the portfolio companies people in

culture is number one at the end of the day nothing is going to happen without trust right nothing is going to happen without trust so we are very thoughtful we use Office vibe to track the culture scores of all of our portfolio companies so we can see office Vibe it is a culture measurement tool and it looks engagement over 10 different areas and it's a it rather than an annual engagement survey and then by the time you go back to do something with it it's changed it's just a weekly pulse it's a pulse it's a pulse it's great and it kind of all about the

data it's all about the data you get into a net promoter score and so that so we're always talking about that and before we and so this is interesting when you think about private equity returns and what people are expecting it takes time to do to make any sort of massive change or transformation right and so for the first year or two when we are working with a portfolio company it is about building trust it is about the basics it is about the blocking and tackling and so always we're working behind the scenes on the data platform and what we think can happen but that

our goal is not to disrupt that Core Business and I think that's really important when we talk about what we're trying to do it is I cannot say this enough it's not disruption it's transformation and so that makes a lot of sense because you you can't come into a business and change things all of a sudden because that's going to be traumatic it's going to affect the culture and then the culture change is going to have that trickle down effect on the business so it's really interesting to hear that you're in the background for the first couple years after a Strategic investment yep why do

they call it Strategic investment and not acquisition it's a great question it's nuanced and the people like we're not trying to pull anything back on anybody but pull what is it pull the wool over anybody's eyes but it's it's a strategic partnership at the end of the day we and the way we set sure people use the word acquisition but but I think it is you hit the nail on the head because it is a partnership and the way we structure our transactions is we want to win together right and our incentives are we're going to do well when you do well and you're going

to do well you being the seller right and so that that's and Founders or executives are still maintaining upside yes AB not like it's a complete okay we're acquired we're done no it's not that at all and I think the other thing that is really important is to talk about they they need to know where we're going right like they have chosen to sell based on our shared belief in the future and our shared belief in the vision and if there's not a match there then there's not going to be a transaction like that's the important piece of it what is your biggest piece of

advice to Founders or Executives who are considering an exit via private equity versus keep growing on your own versus get that next wave of of funding from VC or other routes versus getting acquired by a strategic you know acquirer it's a great question I don't think there's one Silver Bullet answer I think it depend what are some of the things that those Founders or Executives should think about so I just had this conversation with a potential seller the other day and he was self-aware about what he didn't know he didn't know and I think that's probably one of the most important things that you can

do when you're in a selling position and making sure that you have people who are giving you the right questions to ask I think that is probably the most important thing getting a group of advisers around you to help you know what questions to ask I think conflict what 95% of all conflict is a communication issue right and so how much can you resolve upfront how much can you understand and I think also having some sort of framework for how you're going to answer how you're going to solve problems when they come because you can't know all the questions you need to ask but you

can have a thought for how we're going to do how we're going to solve those questions you guys talked about unit economics being super important from the seller perspective are there other tips for potential sellers to get their ship in order before going out to look for an acquirer or a Strategic investment or however you want to call it like things that they can be doing to perhap for a sale yes and it's funny I had a seller say to me one time he Susan do you know how many times I'm going to sell a business in my life I was like how many one

right and so I so all of the things you just mentioned I think part of it though and it depends it's a hard question to answer is what I would say because part of it depends on what the future is going to look like as well and I think that's why it matters just to have trusted Partners I will say I think for us it is just Mission critical that the incentives are aligned and that would be my advice to sellers that you want a partner where your incentives are aligned I think that's I think that another thing we see if like there's a ton

of like social media influencers that are like start this PE fund of boring businesses and they talk about EA it's all just like the number like look for a business that's printing cash and put a bunch of those together when you guys are looking to make investments um what are those other things you look for obviously the numbers let's say the numbers all check out it's great but what are you looking for in Founders in teams that really set your Investments apart or set the sellers apart from potential to make it happen so that's great question a term we have talked about is this concept

of a Midwest Maverick and so I am going to probably repeat myself a couple of times here but it's people who understand that you have to honor the tradition and you have to honor the Legacy we live in the midwest this is where we live this is about transformation not disruption and so one of the sellers that we worked with is a medical doctor right and so he is a phenomenal doctor he is staying up on everything that is happening in his world in his his practice in cuttingedge technology and how he can best serve his patients that means he's not spending his time thinking

about new technology and how to harness his data and what does that look like and so he is like these Mavericks the the things that we are looking for people who want to honor both honor the past and move toward the future and probably not probably I think there is absolutely humility around knowing what you know and knowing what you don't know I think that is really important and I think the other piece of it in all of it is it's the community right if I don't it it let us not be the IPO that goes to the coast right let us find a way

to keep that locally so I I really like the pairing of those two words because when you think Maverick and there's a great book called Maverick that you probably read um have not um you think Pioneer can't be told what to do they're doing their own thing and you don't think things like humility you think things like confidence willing to break break through walls they're going to bang their head they're going to go across the Oregon Trail should we fly by the tower yeah we may lose some some families along the way but we'll get Maverick can have some of that connotation and also of

course has all of the positive sides of opportunity growth tapping into tapping into things that weren't tapped into before but when you pair that with Midwest which has all the values of humility and hardworking knowing what you don't know but also still like wanting to learn and not just being like Oh I don't know that you pair that with Maverick and it's this really cool pairing so I I I like that thesis that's awesome and this is credit to Tracy Graham and this is how he thinks about the world and so he has a super interesting Midwest story and I my background prior to joining

Graham Allen Partners was retained executive Search so I have interviewed over a thousand Executives over the course of my career and so have perspective on The Good the Bad and the Ugly and I always let's get into The Good The Bad and The UG and so when I always say about Tracy Graham where I was compelled to join him on what he was what he's been thinking about for 15 20 plus years is he is exceptional with vision and I if you were here I would say this he doesn't get 1% on everything but he gets top 1% on vision and his whole story which

then ultimately becomes the trajectory of what we are up to is all about seeing around this corner and so his famous story is he wanted to put the phone book online back in the early early mid 90s and he was actually too far ahead because he realized not enough people had internet so after he ran out of money putting the phone book online then he's hey I need to go find a way to get in more people with internet and so he built an internet services provider business and so that's what he did but it's always been around what's the next thing that's coming and

so the first business um we talked about analytics which is the company that we in our permanent Capital portfolio in Southbend that was initially invested in by Regional players who knew we needed to have a data center in South South Bend Indiana okay that was cool huge now they're huge but when we were doing that data centers were already a big thing on the coast but they weren't a thing in the midwest yet so we did a Data Center and then what happens after that then you need managed servfaces because people are trying to figure that out so that becomes part of the analytics story

and then you need to have analytics and that becomes part of the story and then you need to be able to do more processing with the data and so that is a really important part of our thesis and bringing what's next to these Midwest businesses and and that's to be able to have the gift of focus to say that's what this piece is going to be doing and then that plus gram Allen then we are able to bring a full Suite of resources and that sounds really cheesy I don't mean that in a salesy way but I mean that and we've done that hard work

to make it so that when we want to work with a new type of business can scale quickly we can scale very quickly are you ready to transform your brand with award-winning video content that captures your vision and connects with your audience check out Alchemy the experts at building your brand using video from story-driven social media Snippets that leave a lasting impression to compelling F length documentaries they have got the expertise to take your brand to the next level Alchemy is actually our video partner here on get in they do amazing work all the videos across social across YouTube all that is done by Alchemy

and and they're an amazing partner to work with reach out to me Nate at powderkeg or check out Alchemy film code.com to get connected with Alden and his team they will take care of all your video needs I'm not going to let you get away with just mentioning that you're in executive search and you helped thousands of Executives get hired uh without digging a little bit deeper um tell me a little bit about that what are some of the things that you learned while interviewing thousands of Executives for companies uh and some of the things I'd be particularly curious about are what are those things

that are just deal breakers across the board with the executives the bad and then one of those things that it's just this is Magic and if you not every candidate's going to have it and maybe not even every placed executive candidate is going to have it but when they when you have that it's the top 1% it's a great question it is a great question and I live I live my life I don't really see black and white in a lot of things so I'm a it depends person because and again listening to your other great podcasts and hearing how you've talked about what different

Executives do and what they don't do well I think the most important thing like the most important thing for me is do you know yourself do you know yourself and do you know what your particular gifts are do you know what you do that annoys people like that gift of knowledge and self-awareness to me is probably the most important thing what are some of the best tools oh did you set me up to talk about the anagram I do love the anagram but if you don't know or love and my one plug for why I love the anagram because there are thousands of different tools

and tests and different things that you can do under I've taken them all so we can talk about that later but the anagram is more powerful about your why it is why you do the things you do so you may be great at 42 different things you um I think people I I like big parties I can go to them I have fun I can talk to lots of people but what I actually care about more is having a really good one-on-one conversation with someone so it's a misperception and so like when you understand the wise about people and what they do I think that

is so powerful and so compelling so just self- knowledge I think is Mission critical and then of course it's what the particular job need I'll tell you one of my favorite parts of executive recruiting actually was working it wasn't hey Susan go find this person it was the time I I love connecting with the people don't get me wrong but it was more what is the business problem that this business is trying to solve and so talking to having interviews with five other Executives and turns out they haven't actually all agreed what the problem is that they're trying to solve or what that person needs

to bring and so that that is step zero almost to understand that and so any great tools or books in particular that you would recommend no I that's a great question I don't have one that comes to mind immediately yeah how would you facilitate that with a team of Executives so I love the five dysfunctions of a team Patrick lenon is that how you say it and so I have no idea so that but I always find the five dysfunctions of a team to be really compelling and I think also just like the Simplicity of alignment I think is so Mission critical I've always thought

I'm going to go back to one of the things you asked me a minute ago when like talking to advice you would give to someone considering selling a business I think that you should take every person on the private Equity team aside individually and ask them about their colleagues I heard a story talking in the network to some other private Equity folks who said that they didn't know their Partners very well and so there was conflict amongst the partners because they weren't having conversations with each other having the Deep hard conversation and it's so interesting because I think in the Venture world there's a ton

of conversation about this right pick your co-founder make sure you know this agree all these things upfront and interestingly I don't think some of the private Equity firms do that as well or do that as much and we I think as a team do a pretty good job with that like down to favorite quotes right holds quote yes that that's in the water down there up there but if you're an executive and you're scoping out a team to potentially join yes a great thing to make sure you do is talk to every other leader at that company and not just talk to them to get

know them talk to them to get to know how they relate to their other leaders 1% and one of my favorite questions to ask is what are misperceptions that people have about you I think that to me that was always my final question what are misperceptions people have and there's not one right answer but it's just that to me is the selfnsfw really what you care most about is that are these one-on-one conversations totally what are some of the other misperceptions that people might have about you oh about me personally I think because I am such an optimist that I am afraid to make tough

calls or have hard discussions and I think that's a misperception because if we've worked closely together that's not true yeah oh that's what's the way that you can open up to others like let's say they don't ask you what your misperceptions are but like to say hey you might think that I'm an optimist in can't have these hard discussion like is there a good strategy for that to open up to your other exec members of your team that's a great question I think at the end of the day people fund I think all business is about people and it is about communication and I think

people fundamentally want to be understood on some level I think that's it and so it's I presume good intention with everybody I'm operating with so what you said may not have come out right or it might have hurt my feelings or whatever I'm going to give you the benefit of the doubt to say I'm sure you did not mean this but this is what happened let's talk about it and so I'm just always scratching Matt does that very well he does the so what I'm hearing is XYZ thing and I'm like wait you took what I just said as that no that's not what I

meant there was an article that just came out which said like some of the best communicators that's an important line so what I'm hearing five years of relationship therapy with my wife has done wonders for my leadership yes that's very good what I heard you say did I get it right some of the best some of the best marriage advice is repeating back what and even if it's as it's like clearly you got what they said even just repeating it back to someone like it makes sure that they know you're listening and if you can use their own language too and then sometimes it'll be

like oh that came off maybe the wrong way so what I heard you say was XYZ thing and the person o yeah but I think what I'm really feeling is it's also super effective in hostage negot so marriage and hostages good to know what is the book about negotiation that was written by the old FBI yeah I read that and we'll link it up in the show notes oh my gosh what is it's like the most you'll remember it once you guys don't know what I'm talking about I know what you're talking about he's got a master class on the masterclass platform we'll link it

up in the show notes but it's a good one and they talk about that I want to make sure I asked the question because you don't shy away from having the tough conversation you've interviewed thousands of Executives which means you've told probably thousands of Executives that they didn't get the job you're now coo at a private Equity Firm where you're probably having tough conversations all the time what are your top tips for having those top those tough conversations I think it has to happen quickly so people you need to do it in the moment don't beat around the bush I think you have to do

it kindly I think you have to presume good intention um kindly that's like very easy you do it kindly is there a really kind way to reject somebody I two different things tough conversation versus telling someone they didn't get a job and it but in both right I think you have to it's your marital advice right acknowledge what the other person said and then say this doesn't fit or this doesn't work and here is why so I think for the here when a candidate doesn't get a job I think that's really important but I think in a tough conversation I think it has to be

done swiftly I think it has to be done privately and I think you really have to show a generous Spirit of wanting to understand the other person they what is it seek first to understand and then to be understood I think that principle is really valuable those are great tips and I think one of the things that stands out to me when I think about what is kind when you're quote unquote rejecting someone is something Meg on our team says all the time which I think is from bernee Brown which is clear as kind I was just going to quote some bernee brown so I'm

glad you have someone who's doing that for yes of course I love all of her books and Megan and I share that love I don't think it's in Nate's wheelhouse yet yet soon right after this did you do the values exercise I think so I it's I like that one as well where it because I did it with a smaller group of team members there were four or five of us and it was one of the most powerful conversations we had in the past year so it's like looking at all here are 100 different values but what are the two at the end of the

day through which your lens is we did a version of that but I think that would be worth revisiting do you remember which book that's from dare to lead toare to leave yep great which is all right get ready Friday exercise are you excited I'm so pumped oh it'll be fun I like fun I like to stretch Nate really likes the soft things like vulnerability yeah I was just my absolute favorite we could talk to anyag after that I have a hunch so much we'll have to we're put you in your a little bit outside your comfort zone which you do you don't grow if

you don't go outside your comfort zone I like though I might like not gravitate towards Ward these things and hope listeners out there there might be things we don't gravitate towards but I do enjoy like expanding to new things and trying it and I uh if I like I'll try anything once twice if I like it so there we go that's my model that I live by I'll do some Berne Brown dare to lead all fun stuff you you heard it here first listeners but I do always like to revert back to my safe and happy and fun place and that is the lightning round

of the podcast oh my goodness seg what a transition guy's a master we have the lightning which is my favorite round of the podcast and where we talk through quick hitting three questions no wrong answers as Matt always says but first thing that comes to your mind and we might dive into a little of them if if we need some clarification but first thing that comes to your mind okay outside of the amazing entrepreneurial ecosystem what is Indiana known for we build things we build things favorite thing that's been that's being built in Indiana you guys both your head the same way at the same

time is that've a lot done this before we're like twinning too with our shirts and our hats it looks great I can't be from South Bend and elart and not say RVs RVs I love it oh it's a mea up why is that for the people that don't know elart Indiana is the RV capital of the world which is very exciting more RVs manufactured there than anywhere else in the United States I had a friend who just got back from Australia and she said you would not believe the number of Elkheart made RVs are in Australia right now which is pretty cool to think about

that is cool that is wild and like to think that they roll off of the line or whatever in elart and end up in Australia yeah it's amazing before it was cool too before it was cool too side not while we're this is I'm taking us off our lightning round just for a quick second but as we talk about things happening in Australia I heard I think it was to day who told me that people don't know that Notre Dame is in Indiana I know no chance yeah no I'm serious I'm from like I'm from in the area I'm from just south of South Bend

originally up by Notre Dame and they're like oh you're from the East Coast no so we have to find a way to change that because when you think about Notre Dame and its convening power and the people who are coming through and what that looks like it's unbelievable so we need I I did not go to Notre Dame same with Purdue Rose hullman like all of these extraordinary institutions but people don't know let's do it we need a campaign yeah let's get the marketing director or VP of marketing from Notre Dame and Purdue and IU and let's just like Workshop hey how do we get

this out there out yeah make sure people know it's a good thing you didn't say Ohio State cuz they're not in Indiana I mean there was a big there was Matt wasn't Matt's not a sports guy but there was a lot of Notre Dame beef recently like two or three weeks ago after the Ohio State game which was the craziest football game i' had ever seen it was one of them heartbreaking I talked to a colleague on the Monday after the game and I was like how'd you feel about that like I mourned on Sunday we're not talking about it today all right and we're

moving on the entire Southbend Elkart Northern Indiana now even further hates Ohio State and particularly Ryan Day the coach of State who called Lou holdz out after the game Crazy just like cuz L holds there was like some banter back and forth and he's L holds what do you think about us and everyone's this poor old man why are you coming at him this crazy this is definitely the longest lightning round oh yeah we history of getting back to it what is a Hidden Gem in Indiana I can't get over your synchronized movement uh a Hidden Gem and Indiana I'm going to go with Notre

Dame again right on some level we're trying to take this out to the world what's one hidden Jam at Notre Dame uh obviously people go to The Grotto I think that is an important piece of it um which is the place where people go to pray and it is very spiritual and whether you are religious or not it is just a sacred quiet place um that I think means a lot to a lot of people so I have adopted Notre Dame I I went to vanderbel and vanderbel and Notre Dame have only played each other once in the entire time that we have lived in

Southbend and we're raising Notre Dame fans my family has moved to to Southbend so I'm I'm all in this is good so there was Zero who am I going to cheer for we went to the game I wore my blue and gold or blue and green at that point I probably went to just as many Notre Dame games as I did Purdue games growing and I grew up in West yet yes okay so you know how this goes but this was the important dinner table conversation that I said to my children which was all you need to know is vanderbild is always one head academically

so as long as we know that Dad went to Notre Dame we're good that's great I love that gr is a great recommendation I think there's a is there a scene in Rudy where he goes to there a scene in Rudy of course all right next final question of the whing round who is someone we need to keep on our radar someone who is doing big things there are so many people in our region right now who are doing big things I would give a shout out to the folks at invanti Maria Gibbs and Dustin mix they have a venture fund and they are caring

about big problems in small cities and there's a huge Market there so I think what they are doing is absolutely awesome I think what iris Hamill is doing I think what Bethany Hartley is doing I'm going to make a plug for my husband Scott Ford at industry labs and what Notre Dame is doing to connect the university and all of the manufacturing in town I think is really interesting I think the idea Center is doing cool stuff I think I'm not going to not mention my partner Tracy Graham and how he is thinking about what we can do and change in our region I could

go on and on but love it that was a great answer that's like the Mount Rushmore of Northern Indiana right now we got to put that together that was amazing this was an awesome episode great to get a little PE 101 great to learn more about what's going on in Northern Indiana and always recap How the Irish are doing I particularly liked how to have tough conversations and be vulnerable as well my favorite I can totally tell that that's awesome thank you for coming on the show this was amazing thank you very much for having me I love what you guys are doing and I

feel very Mission aligned as we continue to think about like talking about the Midwest so thank you thank you this is great this has been get in a powder kick production in partnership with Elevate Ventures and we want to hear from you if you have suggestions for a guest or segment reach out to Matt or Nate on LinkedIn or on email to discover top tier tech companies outside of Silicon Valley in hubs like Indiana check out our newsletter at powder.com newsletter and to apply for membership to the powder executive Community Check out powder.com premium we'll catch you next time and next week as we continue

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