Elements of Value in Private Equity: Insights from Top Business Builders

[00:00:00] Sean Mooney: Welcome 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 founder and CEO. In this episode, we have a really cool special episode where we're compiling The answers that we often ask these amazing business builders on this podcast about what are some of the elements of value that you look for in a company that either are there or could be there when considering an investment.
So this is going to be kind of an MBA class on what the top business builders are looking for when they're considering investments in companies. And by extension, what CEOs, CFOs, other founders and builders of businesses should also be looking to build within their companies. So, Have fun with this one.
Enjoy.
So as we shared in the preamble, this is going to be a really interesting one where we're compiling the yardsticks that many of the top business builders in the world use to assess companies. And this is going to be a great roadmap for CEOs, for CFOs, for founders of companies to really instruct how they should build their companies as well.
And if you've listened to our podcast over time, you'll see this is also pretty similar to some of the other compilation episodes that we've done, you know, related to the best books that you should be listening to some of the life hacks that people like. And so this 1, I think will be another 1 in these series that will go on in time that will be, I think, very instructive for those who've listened to this.
So let's jump into it and kick off with Carl press partner of Thoma Bravo, who talks about. The things that he looks for in a company.

[00:01:55] Carl Press: When we meet a company, there's developing a vision for what it could be. Right. And that's kind of part of our job is how to allow that company to achieve its potential, to become what we think it could be as far as scale and market leadership and margins and so forth. There are some critical things we need to see in order to even attempt to go on that journey with that company.
Right. I was talking about screening companies quickly. Well, there's three things we have to see. In every deal that we invest in. And it sounds so simple, but it remains true. It's been true forever, as long as we've been doing this, one is just having a really strong leader at the top, having a CEO that you can partner with that is like minded that will challenge you that you can challenge and that you can grow together with on this journey.
That is so, so, so important. If you don't have that, you will not succeed. Period. And so that's number one. I think second is, is this company a category leader in whatever category it's in and however big or small you want to define that subset? Are they the best at what they are doing at their core or a close number two?
And if the answer is yes, then we know we're on the right track. And if you look across our portfolio of the a hundred odd plus platforms we've done in enterprise software, virtually every single one of those fits that category of being a category leader. And so that's super important. And then the third is just really, really high quality revenue.
That's defined in a lot of ways. It can be the renewal rates, the quality of the customers that they're serving, the ability to upsell those customers over time and how that revenue grows sort of on an effortless basis within your base. But fundamentally is the revenue high quality. If you've got high quality revenue with a strong leader in a category leading platform, we'll take it.
And then we'll go and try and make that company as great a business as it can be. Over time, but those are kind of unassailable qualities of a business that we want to see.

[00:03:49] Sean Mooney: I think that you nailed it in terms of if you get those things right, like how do you not win?

[00:03:53] Carl Press: There's still a bunch of ways you can not win as it turns out.
And we've learned those lessons too, but those are necessary, but not sufficient qualities. Of a winning investment,

[00:04:03] Sean Mooney: I'd love to dive a little bit deeper into the first one in one is you look at this current now that we're living in, there's ongoing kind of talk consternation about AI and the robots taking over and what we see through our lens here is the more and more people talk about kind of those type of things.
The more and more calls we get about leadership and the more and more we talk about on this podcast and people in some ways matter even more now as we're going through probably one of the bigger shifts in kind of in. the kind of commercial history of certainly the modern era we live in now. And maybe that's a topic for another day.
When you say you're looking for a strong leader, can you unpack that a little bit? Like what are the attributes and characteristics, kind of a level further down?

[00:04:49] Carl Press: There's so much there to unpack. I mean, part of it is, is this person driven by a passion to grow and make this company special? There's sort of two types of CEOs we tend to see in this market.
I'm going to weigh over generalize. One is someone who is driven by that mission. And yes, they're economic animals and yes, they want to make money, but they are absolutely committed to making that company special and they are tireless towards that end. That's one type of CEO we meet. The other is more of the mercenary.
You come in two or three years, you do what you need to, and you get out. And that doesn't work for us. We almost never succeed in that setting with that type of partner. And as a result, we tend not to look for opportunities with those types of folks. I think two is, is this person aligned with our vision of how to build a great company?
And I think in the absence of that alignment, you're going to have friction for the next many, many years. They may think more about growth at all costs. We may not. They may think only about organic opportunities. We want to pursue M& A or vice versa. They may only want to do deals. And we think there are opportunities to grow our margins organically just by being thoughtful and more efficient in sales and so forth, having somebody that's like minded.
I think is really, really important. And then more than maybe both of those is just a CEO sets the tone of the organization. Are we going to be focused and resolute in our goals for the year or are we going to chase shiny objects? Are we going to be measured in how we hire and promote from within? Or are we going to grow at all costs and grow too fast?
And as a result, take on too much and have responsibility diffusion across the organization. And so setting that tone at the top is just so important. And so as a result, you just, you can't. Overvalue a great leader. You just cannot. And we have so many examples of that.

[00:06:47] Sean Mooney: I really like how you kind of frame that.
And you're so right on. Is someone committed to this mission? Are they going to be focused? Are they going to be aligned? All of those things. It's almost like in many ways, I think you're entering into a marriage with your partner. And you're going to have to work together. You're going to have to be better together than apart.
You're going to go on this marriage and maybe this is a three to seven year marriage, but it's still going to be something where it's so important to get all of that right and spending time in those preconditions. And if you do that magic can happen, but when you, but sometimes when you compromise your principles or your standards, things can go off track.
And I think we've all experienced that in probably a whole variety of our aspects of our lives and work. And so the way that you framed it there, I thought was really nicely done in terms of not only for people who are aspiring to be future private equity investors, but also executives of companies who are hoping to work with private equity firms to understand what's important in terms of how to be successful in kind of this transformational type of investing that takes place in private equity, which has historically been highly successful, more so than almost every other asset class, if not all others.

[00:07:59] Carl Press: Yeah, absolutely. And part of why we love working with the existing teams. of the companies that we invest in is you don't lose time. You said it. These partnerships are like marriages and the breakups are really messy. And then bringing someone new on board. Well, that takes six months at least for that person to acclimate to the business, for the business to acclimate to his or her leadership style.
That's time burned. That's time that could be spent building new products, doing acquisitions, getting into new markets, cross selling customers, et cetera. So we tend to want to say, let's go find those great businesses that happen to have the leaders that we can work with. And they may not have all of the weapons that we want them to have, but if we're aligned and they're mission driven and they set the right tone, we'll work with them.
We'll figure it out from there.

[00:08:43] Sean Mooney: Yeah. I really appreciate your thoughts there because it makes a ton of sense. And it's something I think everyone should really think about in terms of like, how can you be successful together? This idea that if you can, but you're going to go further together, you might go faster alone.
And then you can think about calling Carl or Thoma Bravo and transforming these companies into something probably much better than a lot of people could even envision in their mind before they kind of enter into these, you know, quote unquote, marriages together. All right, here we come next with Suzanne Yoon, founder and managing partner of Kinsey capital.
Who shares her perspectives on this topic?

[00:09:22] Suzanne Yoon: I am now at over 25 years of experience which you know, I would see that on people's resumes and when I was younger And i'm like, oh wow, they're really old right but You know when I think back through That time frame and what has made real successful investments and really what we're looking for today are, you know, companies that have a clear differentiated product or service.
Right. They're necessary for their customer base. I think culturally they are customer centric. They care about their customers and their vendors. And I think third for us, which is a little more cultural in the terms of, you know, cause we want to see companies that will continue to grow. So we want to see a management team or, you know, some culture of a desire to improve desire to improve desire to grow.
And, and why are we coming in? And it's usually because they want to, they know that they need to make changes, but they don't know how, and they need help doing it, and they need help, you know, finding the right partner. And so, I mean, those are probably the key area initially that we, we look for. Obviously there's so many other things like, do they have good financial controls or can they have good financial controls if we get there?
Obviously profitability, history of growth, but I think in order to. Get to the type of returns that we are chasing. It does require a mindset, very much a growth mindset, which means you are open. to changes and growing no matter how difficult they might be.

[00:11:16] Sean Mooney: I think that's, those are 100 percent spot on perspectives that I wish I could have summarized that succinctly in my earlier life.
For me, life's a journey. It's not a destination. It's like little bits. It's the desire to improve, but not necessarily improving. But the, but I'd love to maybe double tap on some of those. And so if we think about, you know, Business owners who are listening to this and they think, okay, Suzanne's looking for a differentiated product or service.
What does that mean in your mind? What does this, what does differentiation mean?

[00:11:48] Suzanne Yoon: So we're usually the first time institutional capital into a deal or maybe the second, you know, so that means that the founders or the, you know, management team that grew the business to wherever it is, is still heavily involved.
And so, you know, one of the things that I'm, I know, you know, especially for a lower middle market business, if they have a strong customer base, especially an enterprise level customer base, they usually have some type of differentiated product or service, right? They, They're either more nimble, like they've been able to create or better product, they're solving a problem for a customer that is, that is difficult, that would be difficult for that customer to solve without.
So you know, great example is we, we own a display, a large scale display company, customized displays, but for specific, most of their work is in the home improvement

[00:12:47] Sean Mooney: space.

[00:12:48] Suzanne Yoon: And what we loved about the business when we were just founder led, when we, you know, founder, the founder was selling the business, they had a really differentiated service model relative to the industry.
And they were able to build that because it was so nimble. And then how could we really leverage off of it to continue to grow? Which we have. And so, or, you know, we own a sporting goods, very specialized in golf. distribution business and they, we, we are the largest green grass. sales team in the country, meaning we actually have one on one customer service for our green grass, which is the clubs themselves and act essentially as the catalog, the office or business catalog for the golf club.
So that They can buy everything they need to run the golf course from us. And no one else is doing that at the scale of, of this particular business. So it allows us to do additional acquisitions and get into different product lines and they did an amazing job building that business. And it was again, a founder led business that sold to us.
So, you know, and I, as I think about. That, you know, that, that's one. And then second reason why they grow is because they did a great job for their customers. And there's no way to continue to grow on that if you don't have a customer centric or customer first culture. So we, we, we certainly look for that.
And then I think the third is. They know that they have something special. They don't know how to scale it.

[00:14:28] Sean Mooney: Yeah. And I love that. And so if you're, you're building a business, you know, the top investors like Susanne, I say, have you built a mousetrap that's different, that's unique, and are you demonstrating your value by having, you know, uh, enough of the best potential customers in the world say this is valuable.
And then do you, do you utterly delight them? And then good things happen with more fuel and help. So I think, I think it's a very excellent way to, to, to succinctly describe like what's going to make a great company and make it even better. And then

[00:15:03] Suzanne Yoon: I think that's one of the reasons why I love the lower middle market.
You know, it's, it's not, it's not venture, you know, in the traditional venture sense. But lower middle market businesses were generally started by someone, right? It's not, it hasn't been sold yet. They've built it to 30, 50, a hundred, you know, 200 million of revenue. And there is that like the entrepreneurial desire, creativity, you know, growth mindset is what creates new ideas and new services for, and, and, and draws customers away.
From established businesses.

[00:15:46] Sean Mooney: I totally agree. I mean, you're in the good to great business. You can take a really good business and make it great. And you can do it in a foreseeable timeline. And, and I, that's what drew me to lower middle market as well. And it's not that you can't do really well in the large cap private equity, but you're in more of the tanker ship business where you're like, you're changing things more kind of evolutionary.
You're taking, you know, more gradual turns. And, and, but, you know,

[00:16:11] Suzanne Yoon: And I've been. In larger businesses as well, the portfolio management of larger businesses is very different than a lower market business. It is more governance management of the executive teams versus in the lower middle market, where it does take a significant amount of collaboration with the management teams, and also sometimes having to bring in your own people, which is why having operating partners, strategic advisors, strategic executives.
And having organizations like BluWave are so important so that we can resource our portfolio companies properly.

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[00:17:08] Sean Mooney: Next up, we have John Caple, partner with Hidden Harbor Capital Partners who talks about his yardstick.

[00:17:17] John Caple: We take a little bit of a different view, I think, than even most of the private equity world. We're a value investor, and so there's always a reason why things trade at a value. And the question that you have to ask yourself is, What are the things that are costing you to trade as a value that are really hard to change versus what are the ones that are easier to change?
And so as an example, it's really hard to change the industry you're in. It's really hard to change the products you sell. If you don't have quality products, if you don't have quality services, if you're losing market share, those things are really, really hard to change. Frankly, even if you're not making good returns, those things are hard to change.
On the other hand, there's some things that are easier to change. They're not easy in the sense that most private equity firms are set up to change them, but they're changeable in a reasonably straightforward manner. As an example, we buy a lot of founder owned businesses where the founder wants to retire.
So essentially you're buying a business without a management team because oftentimes there's a reasonably unsophisticated bookkeeping person that maybe does the books. It's almost always running QuickBooks, obviously not audited, all these kinds of things, right? And so as an example, that's actually something that's very fixable.
You can go recruit a great CEO to run that business. You can recruit a great CFO. You can move from QuickBooks to Sage. You can do a lot of those things. And so one, that's a risk we're very willing to take. We buy a lot of less sophisticated businesses. Oftentimes they're really good businesses. They're run well, their products and services are really good.
Customers like them. Their employees are happy. But for a variety of reasons, they're going to be hard for a typical private equity firm to buy. And then we're also very focused on buying businesses in markets and with business models that at least have the potential to trade for kind of double digit multiples.
So as an example, an easy one that most private equity people would recognize as HVAC services, right? Who doesn't love residential HVAC services? Well, we have a business called air conditioning specialist. We started at 2 million of EBITDA there. Actually a really good management team in that case, but not super sophisticated.
We've done 10 add ons. We've put in a ton of systems. We've built it up. So that's an example of a really good subsector that everyone likes. We were able to find a reasonably small place to start and get going. And so we're really looking for the right businesses and the right business models and not nearly as focused on the system processes and people they have now, because we're going to build that over our ownership here.

[00:19:50] Sean Mooney: I think that's a great way to think about it and articulate it. It's kind of like, as I think everything in my life, I have to think through a metaphor.
Yeah.

[00:19:57] Sean Mooney: As a part of growing up in Texas. And it's kind of like, if you're buying a house, you can't change the block that it's on. You maybe can change the foundation, but that becomes a really big lift.
But you can do the kitchens and you can do the bathroom and you can add a pool and those types of things where it's like, as long as you have something that has a solid foundation, there's a lot you can do. To help these companies reach full potential.

[00:20:17] John Caple: That's right. And the management team isn't like just the kitchen, you know what I mean?
I think it's really important, but it is something that you can go find the right set of people to run these businesses. And so as an example, that's something that we've had a lot of success in changing over time and improving. And we're not like firing everyone, right? Like almost always it's, we do a lot of corporate carve outs as well, which actually is very similar.
It's actually shocking how similar corporate carve outs are to sort of professionalizing. A founder on business. It's almost all the same steps in almost every case. We find really good people at these businesses. And so it's really a matter of augmenting the team and getting the team ready for growth, right?
Because oftentimes the businesses we buy are kind of like one location founder run businesses. The founder's really good, but. They do what I call managed by walking around, right? Like they started the business, they started from customer one. They know every employee, they know every customer. They don't need systems and reports, right?
That works really great. Up to a certain size and in one location. And so then when you want to have locations, two, three, four, and five, when you want to do add ons, all of a sudden you need systems and processes, but making sure that you're starting with a really strong foundation, as you put it, being in the right industry, but then a pretty well run business.
I mean, just cause they don't have. Sage and service Titan and a CRM system doesn't mean they're not well run. And so that's something we're often doing.

[00:21:41] Sean Mooney: And I think that's some other really good points that you bring up. And even as I think through kind of the journey here at BluWave, we're about the size of, or at least maybe the size of portfolio companies that I used to have.
But when we started this thing, I could walk around and I could just had a sense for the business. I'm like, okay. It would outsource my accounting in the first couple of years. Cause like, Oh yeah, I know exactly what's going on. Just give me my financial spreadsheet. And then two things that I would feel is one, it starts getting more complex and you start losing that intuition.
And then I always feel like we're on this plane that we're building as we're gaining altitude. And then you just read these phases where you feel the wings wobbling and you can't gain altitude anymore. And until you put in that next. Layer of infrastructure and rivets and kind of capabilities. There's no way you're going to gain that altitude any further than what you have done.
And so what you're sharing there kind of viscerally makes me recall kind of our phases as we've kind of come along and just knowing that if you don't do those things, you're not going to get any more altitude.

[00:22:37] John Caple: Yep. That's right. That's a hundred percent right.

[00:22:39] Sean Mooney: Now, we have Erica Blob, founding partner of Brighton Park Capital Partners, who talks about some of the things that she looks for in a company.

[00:22:49] Erica Blob: So our focus at Brighton Park Capital is in growth stage companies. So that's companies that have anywhere from 20 million to as much as 100 million. Of recurring revenue that are growing 40, 50, 60, a hundred percent. And so we look for companies that are operating in large end markets. Those could either be end markets that are mature and ready for disruption.
We're completely new markets that we think have enough potential. We are technology investors. So we're looking for companies that have truly innovative technology, not copies of other technologies. We also are looking for companies that have referenceable customers. And this is probably our most important diligence point.
We want to find companies. Who have customers that are complete apostles for their products, very high net promoter scores, customers who can clearly articulate to us the ROI they've gotten from the company's product, either through how much money that product has saved the organization, which right now is an especially important quality.
Or how much incremental revenue the product has allowed them to generate. So we spend a lot of time doing customer work, calling customers, analyzing the quality of the customers of a company, low stroke of the pen risk, or being software investors, tech investors, something that the big tech firms can't easily do and run you out of business.
We're also looking for companies and opportunities where there are many ways to win So new products, companies that have platforms where we can build new products or new markets to enter new geographies or M& A opportunities. That's important to us. And then finally, I'd say, and this is incredibly important for our strategy.
We're looking for very experienced, low ego entrepreneurs. We only work with a small handful of portfolio companies at a time by design. Our strategy is really about bringing operational capabilities to these growth stage companies. So that requires a very good relationship with the founders of our companies and trust.
It's not really about how much of the company we own. It's more about what is that working relationship like with the founder of the business? Cause these aren't the types of founders who. Want to take a bunch of capital and just be left alone. They've chosen Brighton park as their partner for that next phase of growth because of our experience in building and scaling companies and tackling the issues that companies are facing when they're scaling from 20 million of revenue to a hundred million of revenue.
Cause it's a completely different type of company by that point.

[00:25:53] Sean Mooney: I love that the series of perspectives you shared there. And the only thing I would add is. Watch out HBS because you just gave a mini MBA right there. And so don't want to put your alma mater out of business too soon. But, uh, I think it was, it was so important for

[00:26:09] Erica Blob: people far smarter than I,

[00:26:12] Sean Mooney: I'm not falling for that one, but a lot of the points you made that really resonated.
And I love this perspective on customers, centricity, if that's a word. And if your customers love you, And you have the audacity ask them to tell them how they'd love even more, they'll tell you. And having that focus first, as they pointed out, I think says it all, right? You're building a mousetrap that people want, then what else can you do?
And then this whole idea of the other point that you brought up that I really liked was this kind of humble, open to input CEO, who's going to kind of probably have this tenacity and grit to get through a really substantial growth phase ahead is so important.

[00:26:51] Erica Blob: Yeah, that's absolutely right. I mean, one of the most successful companies we've invested in was with a founder who had built a successful business, but also in many respects had failed in his second venture and the business we're working on with him, that perspective is actually can be even more valuable than having a successful company that you've built.
So I think Again, tying it all back to the sports analogies, having a bit of a Tom Brady chip on your shoulder, but you have to have that grit and desire to win, but you also have to take sort of, it's not all up into the right from a growth perspective. So really learning from. The experiences that have been more challenging can make a founder even better.

[00:27:38] Sean Mooney: I think that's another great perspective. And as I reflect back and when I was in PE, I think in nearly 20 years in PE, not a single investment turned out for the reasons that I thought it would kind of going back to your point around optionality, like you need to have multiple ways to win. And usually we were finding those multiple other ways than we thought, but being able to root out, it weighs around blockades and as you're growing.
Because it isn't that linear up into the right thing and. And I also deeply appreciate your point about that, because when I started BluWave, I probably, I thought I knew everything because I was building a company to serve private equity in their portfolio. I know everything. And I learned very quickly for six months that I knew nothing.
And so you had to completely reinvent things. And so I think those are. Fantastic perspectives that I've written down while I listening to you, uh, speak here. Hey, as a quick interlude, this is Sean here. Wanted to address one quick question that we regularly get. We often get people who show up at our website, call our account executives that 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.
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.
And last, but certainly not least, Eric Hansen, partner with Blue Sea Capital talks about the elements of value that he looks for in a business.

[00:29:30] Eric Hansen: Easy answer for me. And it's always been me throughout my career. And it's probably frankly, from my lending background, because I know some of my colleagues here don't have the same be in their bonnet about concentrations.
Customer vendor, product, geographic, all that stuff. So for me, when I'm just looking at this and that's a number one, number two, I've got a database of kind of the sub sectors that I cover and in talking with the investment banks have gotten a nice. Scorecard where we can compare different metrics that are important that can also pretty easily screen things out and here's a company on focus on.
So then you go to that part that you're saying is that it's such an easy answer, but it's management and it's not just manage. It's not how good the CEO is. It's how many holes are there? A big thing for me is also have they been together for a long time? I don't not a fan of that because I want people to bring different perspectives from different companies, different thoughts, not be an echo chamber.
So that's the other thing that I really focused on and look at the resumes. I'll be candid when I was in lending, I used to really skip through that, but I found it's really important because that also then can tells me at least, is there the capability to inflect growth from a knowledge perspective, strategic perspective, and that is through organic or inorganic, right?
You always want to look for an acquisition story. That's the easy answer to see if you can do growth, but do you have the team that can source it and do it? And how much time will it take? Of our team. And that's okay. It's just, you need to kind of balance that out from an efficiency perspective. And so the other thing that's really tough to do, and those of us who are older, you just, it's a muscle you learn to exercise the integrity of the CEO.
And can you have a candid conversation and do you feel like you're being. Given the straight scoop into if you can have hard conversations without defensiveness, obfuscation, because again, in life, you have bad days and good days. So it's never going to be as great as it is the day you close. And it's really tough to judge.
I've been wrong more times. I've been right, but I try and really take a very fine point of being able to make that judgment call in my mind, whether I can have those conversations. I think the other thing I look at that kind of comes further on a diligence is the timeliness. And accuracy of the data requests.
It's so telling to me sometimes it's a, Hey, can I get gross margin by skew? Sure. A week later, you got that yet? Not we're working on it. And all of us in this business and in general investing, the bottom line is, can you make, what are the financial results? Which is great, but underneath that is the operational excellence that you need to have.
Is it a nice swan swimming, just paddling furiously underwater? And I say that because if you don't have systems, that means to me, you don't have the ability to put in the right KPIs. If you can't have the right KPIs, you can't measure it. And you can't inflect performance on your individual contributors.
You can look at salespeople, right? That's easy. But how's HR doing? How's IT doing? How are these other functions that are very critical to a portfolio company? How do you judge them? And are you using the right metrics? We don't have the systems in place to be able to accurately judge that. Again, we pride ourselves on when we exit companies, we've got them where they're, you Not only financially performing, but operationally, you don't have to go in and tinker with any part of the organization.
And so I just think systems, the timeliness accuracy tells you so much about the quality, not just of the systems, but obviously the team and if they place importance on it or not. Those are the things that I've looked at more so now that I'm in private equity than in debt, but I have carried on that kind of diversity angle that for me, there's bright lines that I have mentally about.
Diversification across all those spectrums that I mentioned before.

[00:32:48] Sean Mooney: For our listeners here, Eric just gave a bit of a masterclass. So if you're one of our listeners is an executive on a C suite, either backed by PE or aspiring to be backed by E, listen to these things because he's right. You're too kind, but please go on.
No, but I think a lot of that resonated with me. And I think one of the things that you've kept on going back is the team and the human capital of these teams, but it's by far the number one thing that, We get called for our recruiters for executives, interim executives, organizational effectiveness people, because no matter how much people say chat GPT is going to take over the world, it's still the people that matter.
And one of the things that I haven't heard really is the freshness of the team that you brought up. And I think that's a really interesting perspective because I think many people in our industry have read the book. Good to great. And it's this classic, I think it's the best business book out there. And one of their tenets is you gotta get the right people on the bus.
And so often companies that I think just get stalled and good just keep the same team in and they don't evolve because it's comfortable and like you said, you develop this echo chamber and everyone can say, yeah, we agree, we agree, we agree. And this bringing in this freshness as companies evolve is so important, because if you're figuring it all out, half the reason why I think every P.
E. person reads so many books is because they don't want to figure it out themselves. Bring in someone else who's really good, who's already figured out what you're trying to do. You And so I love that. And the metrics thing is also so important. And the other thing I think that really resonated with me is do you have a CEO who can have a hard conversation?
Cause ultimately when we get the calls, because they're making a change, they've lost trust in that two way communication because they feel like they're getting managed and the results aren't happening. If your results aren't happening and you're getting managed. In a way that's not truthful and open, that's not a basis for trust.
It's you got to have that foundation. So I really like that as well. And I think it speaks so much to get someone who can listen. And one of the things we used to do was intentionally during our management meetings, challenged the CEO just to see how they'd react. And we were not trying to be provocative, but we were just like, let's see how they react.
You know, and if they would respond, that's a good question. If they didn't know the data, they wouldn't make it up. They'd say, let me get that information for you. Those are all really good measures. And so I'd love those points that you brought. And I think they're ones that everyone listening to this should write down.
I know I will. So when I have someone like Eric staring me down in the future periods, and I'm like, uh oh. I'm very scary.
That's all we have for today. I want to give special thanks to Carl and Suzanne and John And Erica and Eric for sharing their really profound insights on how business builders should look at creating value in their own companies. If you'd like to learn more about any of our previous guests, please see the episode notes for links, including links to their prior podcasts, which I highly recommend you listen to.
In the meantime, please continue to look for the Karma School of Business podcast anywhere you find your favorite podcasts. We truly appreciate your support. If you like what you hear, please follow, five star rate, review and share. This is a free way to support the show and it really helps us when you do this.
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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.