Private Equity Spotlight: From NFL to Investment Leadership with Rob Konrad

[00:00:00] Sean Mooney: Welcome

[00:00:09] to the Karma School of Business, a podcast about the private equity industry, business best practices, and real time trends. I'm Sean Mooney, BluWave's founder and CEO. In this episode, we have an amazing conversation with Rob Konrad, co founder and managing partner of Alterna Equity Partners. Enjoy.

[00:00:32] It is great to be here with Rob Konrad. Rob, thank you for joining us.

[00:00:37] Rob Konrad: Yeah, thanks for having me, Sean.

[00:00:39] Sean Mooney: I've been looking forward to this conversation for a long time. Rob, you've got, dare I say, one of the more interesting backgrounds of the business world, let alone the sports world and the intersection therein, and then bringing that to private equity, not to tell too much of the story in advance, but it's a really unique path and a really good one.

[00:00:59] So I'm excited to get into it.

[00:01:02] Rob Konrad: I appreciate that. I'm looking forward to spending some time with you.

[00:01:05] Sean Mooney: Why don't we jump right in? To kick things off, Rob, can you just share a little bit of the story of you, kind of how you came up, what are the, kind of the major chapters and then ultimately how you got into this business of PE?

[00:01:17] Rob Konrad: Yeah, sure. Going back to the beginning, I grew up in Boston, was a kid that was always interested in economics, history. I always like to say, we went on field trips in Boston, we jumped on a Bus went to the Freedom Trail, and I went to the Old North Church, Bunker Hill, Paul Revere's house, and instead of reading it in the book you're living that old part of history and old part of the country, and always enjoy history and economics, and that part of the country is, I think education is on an elevated platform there.

[00:01:53] You think of the high schools and Philips Exeter, Philips Andover, MIT, Harvard, the high schools. I want to it was just an expectation that that was something that was important. So certainly enjoyed our time there. I ended up playing collegiate football at Syracuse University, studied finance and economics during my time there.

[00:02:16] I was planning on working on Wall Street at the conclusion of my time there, possibly going to business school. I was unavoidably detained in 1999 by the NFL draft. I was drafted by the Miami Dolphins to jury. Miami, Florida. My wife and I have been down here ever since, but I had a great experience playing seven years in the NFL and really had a tremendous time and what a terrific experience to be able to throughout college and in the pros for that decade of my life to be able to compete the very highest level against some of the best athletes in the world and lessons that you learn and Development as a young man are things that are unique.

[00:03:02] And I think you take with you for whatever it is next in your life. And there's certainly formed quite a bit of who I am today.

[00:03:10] Sean Mooney: It's a great story. It's certainly growing up in Boston, which is, he says, it's kind of the, one of the major birthplaces of America and certainly one of the centers of academia for sure.

[00:03:23] So I can see how that kind of plants a kernel on you and you have really kind of no choice, but to be interested in kind of. business, finance, economics, history, just because you're living and breathing in it. And then as someone who grew up in Texas, the whole football thing is something that I was indoctrinated in.

[00:03:43] And from my perspective, it was more about watching it. I lacked the skill to play it. And so what was that like going from playing in the Northeast, playing at a Great school like Syracuse. I'm a recovering Hoya, so I won't hold that against you too much, but luckily We're not worried about these rivalries too much these days, but but nothing but respect for Syracuse What was it like when you kind of knew you had a chance to play in the NFL?

[00:04:12] How did you kind of process that?

[00:04:14] Rob Konrad: Texas is a different animal played with a lot of guys from Texas I think it's been well documented. It's just a lifestyle down there in Massachusetts, there really wasn't a whole lot of players coming out at the time. And I happen to be one of the top 10 or so recruits coming out of the country.

[00:04:32] It was interesting. There's more hockey players, lacrosse players coming out of there. And I was actually committed to Notre Dame. I was playing fullback, always enjoyed offensive football. And people always ask why I was a linebacker and a running back at the time in offensive football, teamwork's really important.

[00:04:51] You need 11 guys to do the right thing on every play for it to be successful versus when you're on defense, if you have Lawrence Taylor, he's just going to wreck havoc and make a play, you need one guy to do something great. And so I always enjoyed the concept of offensive football. Syracuse, it offered me Jim Brown's number, number 44, which was for anybody that has any connectivity to Syracuse is a really big deal.

[00:05:15] So I ended up attending school there and we had a great team and played with the likes of. Donovan McNabb, Marvin Harris, and Dwight Franey played in the Orange Bowl, the Fiesta Bowl, won three league championships when we were there. So I had a kind of golden years of Syracuse football and recent history and had a whole lot of fun.

[00:05:36] I realized fairly early on that I would have the opportunity to play in the NFL to the extent that's the route I wanted to go. There was a kind of a mentor of mine, a guy, Daryl Johnston, played for the Cowboys, blocked for him. It's both. Nicknamed the moose. He had told me early on, I think my rookie year, he played, I was drafted by Jimmy Johnson as he was.

[00:05:58] And he said, look, if you played 10 years in this league, that's this position you're going to be playing a long time. So make sure that you're preparing yourself for what comes next. And certainly took that to heart. And I always was intellectually curious and wanted to get involved in doing some other things, which led me to probably year three in the NFL, getting involved with investments and starting to.

[00:06:21] Pursue that career, but I have a whole lot of fun. And you learn a lot of lessons about leadership. You learn a lot about yourself, moving up, playing and competing in professional sports against those sorts of athletes and learning how to prepare, compete, win, lose, how to think under pressure in front of millions of people on TV and tens of thousands of people in the stands, those skill sets that you develop, they come into play.

[00:06:51] Later in life in different situations, so wouldn't trade it for anything met a lot of great people that certainly helped out later on In my second career, but it was a great experience and I wouldn't trade it for anything

[00:07:04] Sean Mooney: When you played a you played with legends at your own school and then legends in the NFL who were on either side of all you say were the most supernatural players that seem to kind of defy the laws of physics.

[00:07:20] Rob Konrad: There's some freaks of nature. And when you combine those guys with dynamic work ethic, those are kind of your hall of fame types of players. I mean, Donovan McNabb, when he was in college, he was just a dynamic football player could throw a run was really hard to get the guy on the ground. And Marvin Harrison for, we have the carrier dome at the time on turf and much like you did with Peyton Manning later in the NFL.

[00:07:46] Those two guys were really tough to deal with and just had some unique skill sets at a very young age. I'd worn Jim Brown's number and I remember meeting him when I was 17 years old was still a physically intimidating individual and but getting to have guys like him and Floyd little kind of be mentors as You're growing up in college.

[00:08:08] It was a real unique experience for me and Wearing that number at that university, there was a lot of added pressure and you realize you were representing yourself, your school, but also the community as well. So you had to do things better, work harder, make sure you were doing things the right way. So you have to embrace those things, which I did.

[00:08:30] I loved every moment of it and ended up being the last individual to award the number before it got retired, but very proud to be part of that fraternity.

[00:08:42] Jim and Floyd passed away over the last two years, but to be able to spend time with them and get to know them at a young age was special. And you go in the NFL. I mean, I tell people I was old enough. I played with Marino, but it was his last year, my rookie year, but he's on the Mount Olympus of guys that can throw a football, right?

[00:09:03] And just incredibly, incredibly talented football player. Great leader. I would love to have played with him when he was younger. Yeah. Yeah. But yeah, there's some guys in that league, Randy Moss is of the world. I remember trying to tackle Deion Sanders on the punt return one time and dove and missed by about five yards and realized that that wasn't normal.

[00:09:29] We moved a little bit differently than other folks, but there's some special athletes in that league to say the least.

[00:09:35] Sean Mooney: That's amazing. Particularly as a Browns fan, I'll focus in on Jim Brown. Did Jim offer you any kind of advice that really stuck with you to this day as you kind of interacted with him?

[00:09:47] Rob Konrad: It was interesting. The first game he came and watched me play, we were playing Boston College my true freshman year. I think I scored three touchdowns as a fullback and had 130 yards and sat with him after the game. His comment to me was, he thinks I need to lose 10 pounds so I could be as strong at the end of the game as I was at the beginning of the game.

[00:10:11] He was great, the advice over the years and the toughness that he had, he was a unique guy versus Floyd, who was such a fun loving individual and smile ear to ear and had that infectious positive nature to him. So really two different individuals, one about life and football in different ways. But to be able to learn from those guys at a young age was special.

[00:10:38] Sean Mooney: What an amazing, very unique experience that. No doubt has probably left marks on you through not only your playing days, but your life so far.

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[00:11:10] Sean Mooney: This would be an interesting thing to talk about. It seems like Anyone like you, or Jim, or you name the person who's excelled at a high level, that very often there's natural ability that's there, but really the defining factor. Whether it's business or sports or both seems to be the coupling of natural ability, but also this kind of like Tenacity this grit this willing to get knocked on your back and pop up and just never give up and I'm curious Rob have you had any stories where you kind of had to overcome this like almost unsurmountable or insurmountable challenge And kind of just find a way.

[00:11:54] Rob Konrad: I've had a few. I think in football, I was one of those guys who was talented, but had to work at it. And I talk about learning how to work, learning how to prepare, and was fanatical about it. Even at a young age and through college and into the NFL. And I think of guys like Zach Thomas, who I played with, who just went into the Hall of Fame, and was an undersized guy, Texas guy.

[00:12:19] There's those guys that, they're talented, at the end of the day. Football is a game of physics and that matters, but they are particular about perfecting their craft and working at it in the process. He was one of those guys. And from my standpoint, I had to be one of those guys to make it as far as he did.

[00:12:39] And as far as the NFL goes, everybody thinks being a professional athlete, it's a very glamorous life. And there was a lot of great things about it, the friendships and the competitive nature of it wouldn't trade it for the world, but it was tough. On a day to day basis, and you have to grind it out. So, one thing about football and life and business is you learn how to push through and not quit.

[00:13:03] You work through that adversity, and you don't know how close you are to success. It's a great tool to teach young men to be able to overcome adversity, and you don't know how close you are to achieving that success.

[00:13:16] Sean Mooney: And it's a great lesson, like you said, not only in sport, but life. It's just one of those things, like, you're never reaching a finish line.

[00:13:23] And as soon as you think you've kind of figured it out, the world changes, or you change, or the times change, or the offense or the defense, it's just this constant influx. And just having that kind of resiliency seems to be just critically important, I think, in no matter what field you're in. One of the things, Rob, that I'd love to hear the story about That's made the rounds is like the ultimate kind of tenacity and grit story I had heard about the story of you where you had a boat accident where Everyone probably had rest in peace.

[00:13:58] I don't mean to be dramatic, but it's quite an insurmountable feat I'd love if you could kind of share that story.

[00:14:05] Rob Konrad: It's interesting We're I think this January is your anniversary of that event and I'm happy to talk about it. It was actually In hindsight, a real positive experience in my life. I would encourage anybody listening not to necessarily do this, but a lot of people fish by themselves here in South Florida.

[00:14:24] Caught a fish, boat was on autopilot, thought I had the engines off, one of them was in gear, and hit a wave, a large fish, and ended up outside the boat in the water, and the boat was Heading due east towards the west end of the Bahamas, is about 10 miles offshore and to save all the details of a 16 hour swim overnight in the ocean through some pretty interesting weather and was able to make it back to shore and it was a situation where we have a lot of time to think about things and reflect on things and I think about, and people have asked me before if I had not played football before, Do I make that swim?

[00:15:07] And I'm not sure if I do, to be honest with you. I mean, you know, the one thing the game does for you is it teaches you that you can push yourself and you can push your body farther than you would think possible. It teaches you how to make critical decisions under pressure. For you're out in the middle of the ocean, you can't see land, which way do you swim?

[00:15:29] You're out in the ocean in the middle of the night. How do you keep your mind focused and clear? Be able to think critically about swimming at the right tempo, not cramping up, heading in the right direction and trying to pace yourself to have the best opportunity to have a outcome where you survive. So all those things came into play and a lot longer story than we probably have to tell here.

[00:15:51] But for me, I had 2 young girls at the time. I think I hit shore at 5 30 in the morning. I was in pretty bad shape to be here 10 years later to be able to watch my girls grow up. I tell people, I wish I could share this with them, but to wake up every day and be on borrowed time and really feel blessed to have every day to spend with your family, to Work with your partners to be present and actually enjoy it and appreciate it every day is something that's really special and something I've taken away from it.

[00:16:22] It really was a positive experience in my life. It's hard to believe it's been 10 years. I can remember like it was yesterday, but it puts things certainly in perspective. And I'm sure a lot of people have had similar sorts of. Incidents would tell you the same thing

[00:16:38] Sean Mooney: when the initial shock hit. How did you just find the calm.

[00:16:42] To kind of orient and put a plan together.

[00:16:45] Rob Konrad: You're in the water, you realize that there's no one around you, there's nothing to necessarily swim to. Again, I'll go back to being in a lot of pressure situations and having to think clearly and try to think about what you can do to put yourself in the best scenario to be successful.

[00:17:05] For me it was, first things first, okay, no one knows I'm in the water, I didn't get a chance to call off, I don't have a phone in my pocket. And my boat's off to the Bahamas, so what do I do? Coast Guard would tell you to sit there and wait to be rescued. I didn't have a life preserver or anything on. That wasn't going to happen.

[00:17:24] So the decision to A, swim. B, what direction to swim. Which was, in hindsight, was something that was challenging and was quite important. But was able to figure out, at the end of the day, chasing the sun west. My new land was west, kind of keeping the weather that was coming from the north on my right hand side.

[00:17:46] And then at nighttime, I'd recommend if anybody wants to be slightly scared to go out in the boat at two in the morning, jump out in the middle of the Gulf stream and have that driver drive away. Sitting there in the middle of the ocean, the dark, it was quite an experience. And so it was a lot of mental gymnastics to get yourself to a place that you can keep.

[00:18:13] Working the effort and making progress and trying to find the light pollution on shore to keep heading in the right direction. And for me, look, I had two young daughters and anybody that has kids and especially daughters, I was gonna do everything humanly possible to get back to shore, to be with them.

[00:18:33] And luckily I did, I'll tell you this, I wouldn't want to try it again. I've been through some challenging things in my life. That was certainly. The most challenging, but at the same point, look back now and no one got hurt. I look back at it as a real positive experience and something I'll take with me for the rest of my life.

[00:18:55] Sean Mooney: Well, thanks for sharing that story, Rob. We'd heard of it and it was kind of. This legendary story, but I can't imagine being put in a similar situation and how I'd respond. So thank you for sharing that. Hey, as a quick interlude, this is Sean here. I wanted to address one quick question that we regularly get.

[00:19:15] We often get people who show up at our website, call our account executives and say, Hey, I'm not private equity. Can I still use BluWave to get connected with resources? And the short answer is yes. Even though we're mostly and largely used by hundreds of private equity firms, thousands of their portfolio company leaders, every day we get calls from every day top proactive business leaders at public companies, independent companies, family companies.

[00:19:40] So absolutely you can use this as well. If you want to use the exact same resources that are trusted and being deployed and perfectly calibrated for your business needs, give us a call. Visit our website at BluWave. net. Thanks. Back to the episode. We'll see you next time.

[00:19:58] We'll turn the page and we'll go back to the everyday stuff that we talk about here on this podcast. And you've gone through this great career in athletics, you enter into business, you have a private equity firm. Now, today, you're looking at lots of companies, you no doubt have come up with the things that you look for, right?

[00:20:21] In a business that have been informed by all your life experiences and prior business career. What are some of the things that you look for in a company today when you're thinking about this could be an Alterna Equity Partners company and a really good opportunity?

[00:20:37] Rob Konrad: I'll step back quick and I'll say one of the things that I think was formative in my investment experience when I was probably in my third year in the NFL, there's only so many plays you can run.

[00:20:49] Having some intellectual curiosity and wanting to get into business, I, with the connectivity through Syracuse, knew some GPs and was lucky enough as a young man to have some money in my pocket from playing football. And today, look, I'd love to co invest. I'd like to get involved in the business in some capacity down the road.

[00:21:09] If there's the opportunity, we'd love to co invest, maybe be board observer and learn the business. So I was able to do that for about four years. And this is a vintage year, probably 2003, 4. I would say you throw a dart at the wall, whether it's in real estate and PE or what have you. And we had a lot of really good success to the point where essentially I started acting.

[00:21:34] I would call now is almost an independent sponsor where I use my own capital. Uh, sponsor a deal, pull some capital from some other folks and kind of how I got started off into the business. And with that, made some really good contacts and ended up being a gubernatorial appointee for the Florida SBA with their investment advisory council.

[00:21:55] And this was from 2008 through 11. So right in the heart of the financial crisis. So we go through. Senate confirmation, I think the first meeting we had, we end up getting rid of the executive director that was a previous appointee, hired an individual by the name of Ash Williams, who I believe is at JPM right now.

[00:22:20] I'll tell you, I've been around some great leaders from a coaching standpoint, Jimmy Johnson's of the world, and Ash just did an absolutely terrific job when we were with the SBA. I'll tell you, our first meeting, I thought I was signing on for the defined benefit plan, essentially the large Florida pension system.

[00:22:40] There were 30 investment initiatives to find benefit, to find contribution, Lawton Childs Endowment Fund, which was tobacco settlement. We had a, something called Florida Prime that was a money market fund for the municipalities that broke the buck on our first meeting. So from my standpoint, those four years were interesting, informative, and really just a wonderful and terrifying experience at the same time.

[00:23:06] Whereas we were the fourth largest pension system and things were going haywire, but it was there. And I talk about Ash only because he was just a tremendous leader at that time. If you remember, then CalPERS was running towards cash and you had major pension systems. You're dealing with firefighters and teachers and public employee money, and we're running away from risk assets left and right.

[00:23:31] Ash, I give him so much credit for this, planted his feet, and one of the best quotes I had ever heard, but said, look, we're not betting on the end of the world. It only happens once, and it doesn't really matter if we're right. Ha ha ha! Which I always thought was great. Stood steadfast, and we had a disciplined plan and invested through it.

[00:23:51] And for the next eight years, the plan Had been one of the top performing plans out of the major pension systems as a result of that. But during my time there, got involved in a bunch of different asset classes. I mean, we had Hamilton Lane at the time was our pension consultant. I remember spending quite a bit of time with Mario, who was heading HL at the time.

[00:24:15] Really got to see what great was, had access to all the major consultants, all the major managers were working through a whole lot of issues at the time we're trading billions of dollars of equity through 11 different broker dealers to kind of hide the other side of the trade from marketable alternative funds that would be monitoring what we were doing.

[00:24:37] So it was a really formidable time those years in that experience. So coming out the back end of that was really when we started growing alterna. To what we are today, and I would look back and say we were an independent sponsor. We had grown a multifamily office that we sold recently. The Corian we had.

[00:24:58] A commercial finance factoring business, we had sold the paychecks and got to the point and had planned for some time to be able to create a lower middle market fund. And I'll go back to the pension system. You got to see what large institutional capital was doing, how they were competing against each other.

[00:25:17] I think I came to the conclusion. You either have to make a choice to be a great investor or to build a money management firm. And in my mind, those are kind of two different things. I wanted to be in a place where I could compete and play in gaps where you could bring institutional knowledge, capital structures, and processes to more inefficient markets.

[00:25:40] So had a lot of success in the lower middle market and launched Alternative Equity Partners Fund One, which we're about three years into right now. A lot of folks in the lower middle market for us, we are very much focused on business services. We like asset like companies. We are very focused on people and leadership.

[00:26:03] When you're at this end of the marketplace, you're investing as much in people as you are the companies. There are quite a few reasons to that, but we're big on alignment, whereas we'd like situations where there's heavy equity role. With founders or entrepreneurs. So we're all in the boat together, rowing in the same direction.

[00:26:23] We're all communicating. You have the same objectives that can talk through a little bit, how we effectuate that. Later, but we're looking for companies that may be overlooked, but more importantly, are looking for founders, family, business owners that have maybe reached their cap or their potential of either their balance sheet or their knowledge of the ability to, where they might know of three or four add ons that they would like to execute upon, but they've never done MNA.

[00:26:52] They don't have access to the capital markets and is a place that we can step in. They know that they can create a lot of value and, or there's the ability. The greenfield opportunities, there's a white space there, but they've never really institutionalized the business and brought in the systems and the processes and kind of top graded and build redundancy for the teams to prepare the company for robust growth.

[00:27:17] I'm sure it's a similar story to a lot of folks you've talked to on the show. And a lot of what you do in your business is providing some of those resources to help build out that redundancy and build those systems and processes for these sorts of businesses. So we look for those situations. We don't participate in a tremendous amount of widely auction deals.

[00:27:38] The deals we participate in are not widely marketed a lot of time proprietary deals, which are tough. They're deals that take a long time to get through kind of the gestation period. You're part counselor at times, part trying to walk the deal and the value proposition of why possibly selling half the company at a five or six X times and having us triple or quadruple earnings in the company might lead to a multiple expansion of 10, 11 times and why that's a benefit to that founder and the team that we've put together and it took a better part of three years to really identify and I couldn't be more pleased with The team we have together today, but I've been in that marketplace have been used to dealing in this space and frankly, enjoy it.

[00:28:26] You have to enjoy at this level in private equity, you really need to enjoy people. You need to enjoy working with leadership, developing leadership, and to some degree being a teacher with these groups. So a lot of things that we enjoy doing at our firm and to date have had. Part of the success doing

[00:28:47] Sean Mooney: and I love that and so much of what you say rings true from my experience in private equity What we see here in what you're talking about is so much of the artistry of the business that you're in Involves if you get the people right first, you know get your team right and then you give them some fuel to do the thing And you let them be the leaders they can be, but also give them leadership and partnership at the same time.

[00:29:12] That's a recipe for success, particularly when you combine it with kind of these lessons of tenacity and grit and resilience that we've talked about. Because even in companies, maybe not nearly as daunting from a life story perspective perhaps that you experienced. They're going through these trials and tribulations every single day and no doubt the experiences they've had as a world class professional athlete and teammate going through some of these really kind of acute situations, sounds like they've equipped you and your team well to kind of partner with these family owned businesses that are trying to NFL and what they do.

[00:29:53] Rob Konrad: We look at a lot of transactions, spend a whole lot of time reviewing. Obviously industries, companies, and founders. And we'll, we'll get involved from a value standpoint with, we love the situation, our first transaction bought roughly 55 percent of the company. The entrepreneur turned down a nine times deal for a five times deal with us where he was selling 90 percent of the company.

[00:30:18] He saw the runway and saw the value proposition of working with us. And we've done nine add on transactions and have, increased EBIT up. By a factor of six in the course of two years, I've had a really strong outcome there. And so it's again, going back to the people and having an understanding. It's that component of it that's really important from a teaching standpoint.

[00:30:44] There's a lot of folks that might have owned family businesses. Our second platform was a 30 year old business and the larger business. But as it relates to the needs of that particular company. They're very different, somewhat the same, but a thousand person company, a lot larger organization and from a integration standpoint and the overall organizational management, the redundancy and the top grading of the team has been a very heavy lift.

[00:31:17] But again, in the lower middle market, especially in kind of the secondary and tertiary markets, you got to get the people right. A lot of times, if you get in the situation and you get the people wrong, you get the leadership wrong. First of all, your team has to be able to step in and operate to the extent something goes wrong.

[00:31:36] We have that ability at our place. But if you're in some locations, it's difficult to recruit quickly a high top tier executive management or part of the ELT to come into a smaller business. So that's really a big part of it for us is making sure on the front end from a human capital standpoint that we're.

[00:31:55] Getting that part right. And then we have a pretty disciplined process of how to take that business and build that platform and get it to a point where I have a good buddy of mine. I'm sure you've seen, there's a lot of guys in private equity that come from the military. A good buddy of mine was captain of the Syracuse lacrosse team, but it taught me about one of the seal sayings, two is one, one is none, which is basically talking about redundancy for critical systems and.

[00:32:24] Critical missions always have a backup, always have redundancy. So things that we're always looking to do with the smaller platforms are to build that redundancy, to build that platform, to do the tech integration, digitally transform, make sure we have the ELT in place before you start trying to integrate and add on companies and indoor greenfield, you're setting yourself up for disaster.

[00:32:49] If you don't do those things first. So very much a focus of what we do when we're requiring companies uses. The people building that platform and executing on our investment thesis after that,

[00:33:02] Sean Mooney: you have this interplay clearly between your team, the operating resources you're bringing in the portfolio company, leadership team, and you're managing those to build a greater whole.

[00:33:13] As we talked about, it's a team sport here. And so if you look at today and see how the field kind of is set, what are some of the value creation opportunities that you all are really thematically engaging in with your portfolio companies today?

[00:33:28] Rob Konrad: There's some of the things we talked about, obviously, that are common sense for a lot of these sorts of businesses.

[00:33:35] I will tell you, one of the things that have been terribly meaningful for our team is we incorporate, I'm sure most people listening have. I've heard of OKRs and John Doerr and that process alone, and I think everybody has their own spin on it. And I think it's developed over time since he kind of has come out with it.

[00:33:55] But fundamentally speaking, the communication of the investment thesis, the plan, having the executive leadership team and the layer below that, all understanding where the company is going and all being able to measure it on a real time basis. Monday morning, you go back, head coach has an offense, defense, and special teams, and you go through every single play in front of the whole team.

[00:34:19] Why are you doing that? I don't need to know what the defense or the special teams is doing, but it's a way of accountability. And you don't want to be the guy getting knocked on his butt on a play where the whole team's watching you and you're not getting your job done. From an LKR standpoint, I think it's really a basic system and you can twist it.

[00:34:40] Then you can have your own spin on things, but for me, from a strategic leadership standpoint, I think it means the world to some of these smaller businesses. So you're communicating clearly what the investment thesis is, what the plan is, what sort of metrics that need to be met in order to meet those objectives to reach your ultimate goal.

[00:35:02] We've used that within our firm. I try to run our firm as a business, not as a deal shop. We live what we preach with our portcos, and we do the same thing. That communication alone, and I think just the regular updates as a group and we, all of our CEOs incorporated, it's been quite meaningful and it makes sure everybody knows what we're doing.

[00:35:24] They're all on the same page. They have an understanding why they're coming to work every day and why we have these KPIs and why they matter. The alignment of interest where we're trying to have ownership across most of the major players in the firm. Same thing with Alterna. We're big believers in.

[00:35:42] Having participatory structures, even down at the associate level, everybody has a stake in the game. Everybody understands what's going on, what we're doing, why we're doing it. And is held accountable on a weekly and quarterly basis. And especially for a lot of family owned businesses has not been done previously.

[00:36:01] A lot of it's been, you have a founder that walks around every day and knows the business and probably knows the, I'll call it the game within the game. More than other folks, and I like to say, look, we need to build this into an institutional company where that knowledge is passed and we need to build redundancy in case someone falls off a boat and they don't make the swim back.

[00:36:24] That next person in line has that ability to step in. And I think that system, those processes we build in place, top grading management across the board is meant a lot to the companies that we built over time and exited and. The companies that we have in the fund right now.

[00:36:42] Sean Mooney: I think you're so right on those points there in terms of, hey, I love also John Doerr's measure what matters.

[00:36:49] If you say here's where we're going as a team, here's our objective, here's how we think we're going to get there and we're going to measure progress and democratize it and let everyone see. This is something that I would try to do when I was in private equity. I'm up at 35, 000 feet, and when I started BluWave, I was like, okay, I'm gonna skunkworks this thing on all the stuff I talked about.

[00:37:14] Let's see if it actually works and damned, if it didn't work, it's like, so people, and maybe in some ways people think we take it too far because if you walk around our offices here, there are measures of what otherwise people would think would be pretty sensitive data. And it shows how the whole company is doing and how everyone's doing within those measures.

[00:37:35] And it's a means of gamifying the business, making things I'd say cooperatively competitive. You're not calling out those who are poorly performing, you're understanding those who are really good and then giving them the opportunity to almost Montessori it and then help those who in their same fields kind of in the areas where they're struggling to bang up.

[00:37:56] So you're raising the whole team versus creating like a game of thrones.

[00:38:01] Rob Konrad: The thing I found too, is they're not always right. You sit down as a group, you build out your OKRs and your pillars and the KPIs. Sometimes you might not be meeting. Those goals sometimes are wrong. And so I think the job of a strategic leader is number one, you got to get the big things right.

[00:38:21] You think about like Netflix, right? If Netflix never decided to go digital streaming and they were competing with Blockbuster still with VHS or DVD cassettes, that'd be a problem. They wouldn't be Netflix. You gotta get the big things right. And so getting the big things right is an executive or someone from the PE team just saying, Hey, this is what we're doing.

[00:38:44] It's getting in a room and getting the whole team together and deciding on what the right way forward is, getting that big idea right, what that investment thesis is. After that, figuring out exactly what it's going to take to get there from an objective standpoint, what do we need to do? To reach that goal, that big picture, then you got to communicate it.

[00:39:05] You got to communicate it down throughout the organization and good strategic leaders are going to review it and they're going to say, is this right? Are we getting this right? And then go back up to the top and you got to do it again and go through the review process, changes are going to be made. The good strategic leaders, that's the way they go about it.

[00:39:25] And that's the way we try to work with our CEOs to look at the company and the way they manage these companies. It's typically turned out to be a good thing and to be flexible with some of the things we're doing and to be able to make changes and adjust on the run. Not sure who said. No plan survives first contact with the enemy, but

[00:39:46] Sean Mooney: yeah,

[00:39:48] Rob Konrad: changes are needed at times.

[00:39:49] So

[00:39:49] Sean Mooney: see Mike Tyson ask, everyone's got a plan until they get punched in the nose as you're talking about. There's a military theorist who I really, really appreciate and I've kind of studied named Colonel John Boyd and he came up and I've spoken with this and this podcast before, but it's just such an elegantly amazing kind of framework really around us military air doctrine during World War II.

[00:40:13] And it was this whole idea of like, you've got to have the measures in place, you've got to analyze them to inform decision. But the key thing is what you exactly pointed out, is like, you have them, but sometimes they're not right at the beginning, sometimes they're not right later. We all exist. In a multiplayer game here.

[00:40:30] And so what he would always espouse is, it's called an OODA loop. You're going to observe what's going on. You're going to orient, which means analyze. You're going to decide what to do when you do it. You see what happens and then you take action and then you do it all over again. And so I think you drew out a really, really important message for those of you business builders out there listening to this.

[00:40:52] What Rob pulled out as the key thing here is, I think a lot of people build these things and it's the static God's honest truth that persists over time, and the reality is it persists at a time. And you have to have that agility, you pointed out, to kind of constantly look and see how the world is changing, and is it driving the right results?

[00:41:10] Because I sure have learned here that sometimes you put these things in, you measure what matters, and then you put incentives around it, and then you see the wrong thing happens. And it's either the measurement wrong, the incentives wrong, or the times changed. And so I think you just drew out a really important point there.

[00:41:27] Rob Konrad: I think it's also important to have a sense of humility. The best leaders I've been around, something I really try to do is take an input and be self reflective. Things that I can do better, that I can make changes on, and same thing with our CEOs that we work with. Success is not a momentary thing. You have to do it again and again and be able to take in input and make those changes when necessary.

[00:41:54] And I think from my standpoint personally, from what we're doing here at Alterna, it's something that. We pay a lot of attention to and try to focus on as a process.

[00:42:04] Sean Mooney: I think, once again, you're spot on with the humility, the humbleness of a servant leader is really important, and something that, over time, I've tried to be as self aware as possible, knowing that if my life and career were solely up to me, I would have been in a lot of trouble.

[00:42:21] And so, so one of the things, like, that I love on this podcast, I get to speak, like, with people, you're like, Rob, and I just borrow all these things, and this has become, like, A frankensteining of me, where I just grab these things, I call it the Walmart form of innovation. I just kind of just grab stuff and like plop it onto me.

[00:42:39] One of the things that we've talked about, Rob, and certainly we've talked about this podcast is I love just life hacks and little gizmos or gadgets or things or processes that just make your life a little bit easier, a little more fun or piece of wisdom you can part any of the above. And I'm constantly borrowing these things and I'll play with them and then.

[00:43:00] Make myself a little better. So Rob, what would be one of the things that you have in this category that would be fun to share?

[00:43:07] Rob Konrad: I talked a little bit about earlier about waking up every day and being thankful But I'll go back to there is a coach I had with the Dolphins by name of Pat Jones It was the head coach at Oklahoma State coach Barry Sanders and Thurman Thomas and this is the old school NFL seven weeks of double sessions in Miami and The team was dead, but he used to every day would walk out in the field at 7 a.

[00:43:33] m. and talk about, All right, boys, a little bit of false enthusiasm today. And as my girls were growing up, it always brought back, you have a choice every day. Are you going to make it a good day? It's going to be a productive day. No matter what's going on, a little false enthusiasm will go a long way and will go a long way for those around you.

[00:43:55] Sean Mooney: I love that advice. It's just so much of like, You are kind of what you feed yourself, like, if you're not feeling good, just tell yourself you're feeling good and that probably goes a long way. My kids are not going to like hearing this, but they're going to get the false enthusiasm line probably starting today.

[00:44:14] It's a great kind of mindset and kind of observation of. Not only just the reality of sometimes you got to hype yourself up a little bit, but also tends to work Rob, this has been an amazing conversation I've learned all sorts of things that I wish I knew before and so that's tremendously generous of you to share here today So wanted to thank you to take some time out of your calendar, which is no doubt busy Always.

[00:44:41] So I appreciate you taking time here.

[00:44:43] Rob Konrad: Great catching up today and it was a lot of fun. Certainly.

[00:44:46] Sean Mooney: Thanks again. And we will talk soon.

[00:44:58] That's all we have for today. Special thanks to Rob Konrad for joining. If you'd like to learn more about Rob and Alterna Equity Partners, please see the episode notes for links. Please continue to look for the Karma School of Business podcast. Anywhere you find your favorite podcasts. We truly appreciate your support.

[00:45:15] If you like what you hear, please follow 5 star rate review and share. This is a free way to support the show and it really helps us when you do this So thank you in advance. In the meantime, if you want to be connected with the world's best in class private equity grade professional service providers Independent consultants and our executives that are deployed and trusted by the best business builders in the world.

[00:45:37] And you can do the same. Give us a call or visit our website at BluWave. net. That's B L U W A V E and we'll support your success. Onward.

Private equity insights for and with top business builders, including investors, operators, executives and industry thought leaders. The Karma School of Business Podcast goes behind the scenes of PE, talking about business best practices and real-time industry trends. You'll learn from leading professionals and visionary business executives who will help you take action and enhance your life, whether you’re at a PE firm, a portco or a private or public company.

BluWave Founder & CEO Sean Mooney hosts the Private Equity Karma School of Business Podcast. BluWave is the business builders’ network for private equity grade due diligence and value creation needs.