Private Equity Spotlight: The Growth Stage Playbook with Erica Blob of Brighton Park Capital

[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. In this episode, we have a great conversation with Erica Blob, Managing Director with Brighton Park Capital. This episode is brought to you today by BluWave. I'm Sean Mooney, BluWave's founder and CEO.

[00:00:29] BluWave is the go to expert of those with expertise. BluWave connects proactive business builders, including more than 500 of the world's leading private equity firms and thousands of leading companies to the very best professional service providers, independent consultants, and interim executives for their critical, variable, on point, and on time business needs.

[00:00:48] Enjoy.

[00:00:59] So we are very fortunate. Today to have a wonderful guest on with us today. So we're joined by Erica Blob, who is a partner with Brighton Park Capital. Erica, thanks so much for joining us. Thank you for having me here. I've been really excited about this conversation. We've been looking forward to it. Eric has got a very interesting kind of background and career and a perspective here.

[00:01:22] And as we're, as we're jumping into this, maybe to kick things off, Eric, I'd, I'd love to hear really about your, your background. How did you kind of come up? How did you end up into the private equity? What, what kind of, kind of, what was the siren call that drew you to it ultimately over time?

[00:01:38] Erica Blob: Yeah, well, , it was really through the fact that I couldn't be the shortstop for the Boston Red Sox because that was my preferred career, but , a few things were working against me and, and, , Nomar Garciaparra was, uh, doing a great job.

[00:01:54] So I had to find an alternative career. And when I graduated from college. Much like a lot of people who knew broadly that finance sounds interesting, but don't really know much more than that. I took a job in investment banking and found my way to business school. After business school, I took a role at walmart. com. I'd always been really interested. In consumers and being at an operating company and the job that I could convince them to give me coming from investment banking was, uh, managing their online credit card business. They wouldn't let me touch, , the baby gear, the women's fashion or anything like that, but they said, okay, credit cards, you can, you can do that.

[00:02:37] And , my thinking was really that I wanted to be an operator at a company that made products. For 10 to 15 years. And then I would take that knowledge to become an operating partner at a venture capital firm someday. In reality, I lasted 13 months. Walmart is an incredible organization.

[00:02:58] But, and, and the people that I worked with there have become CEOs of retailers in their own, right. And it was an unbelievable life experience. I always joke. I say, I got, , 13 months masters in retail. But Walmart moves very slowly by design and I was very much used to the pace of capital markets and deals, , launching at 4 p. m. and pricing at 6 p. m. and trading the next morning. So it wasn't a great fit for me from that perspective. So I went back and worked at and joined Morgan Stanley in the fall of 2007, which again, in hindsight, probably not the best time to join an investment bank, but that was really the springboard to where I am today.

[00:03:41] I spent the next 10 years working for two of the legendary Steve's in the alternatives business, Steve Cohen, and then Steve Klinsky before ultimately joining Mark Dalga to start Brighton Park Capital. And, , it was an incredible 10 year period working both in the hedge fund public equity space and then in the buyout space and I learned a lot , both in, , from, from my days working with Steve Cohen, , I think he, he had a really interesting philosophy we had in, in 2008.

[00:04:13] Had outperformed the market, but had not had a positive performance year. And, , he said, , whenever anyone on our team would say, , we, we did great, we beat the benchmarks, he would say, you can't eat relative returns. And that's really been something that's stuck with me whenever there's an opportunity to do something that's just good enough is to really think about that and say, , just because it's good enough doesn't mean it's great and not an excuse for not, , trying again, or thinking about a problem in a different way.

[00:04:50] And then working at new mountain, which I did for 7 years, , that the mantra of new mountain is all about building great businesses very much in the Jim Collins school of thought and and, , to live and breathe that and interact with everybody. Was really formative when it comes to looking for, , really high quality businesses that are transformative in their industries.

[00:05:13] So, I, I learned an incredible amount about, . Private equity, the alternatives business at those 2 organizations, but when I arrived at both of them, they were already fully formed and very successful. And in the back of my head, since I was a kid, I had always wanted to try my hand at, at, , starting something.

[00:05:35] , I unfortunately have terrible ideas. My sister and I have thrown around a lot of ideas over the years and, and, uh, fortunately, I, I didn't quit my day job to do any of them. But I, when I was connected by a, a mutual industry contact with Mark Alga in the fall of 2018. He told me about what his vision was for Brighton Park, and it seemed like this would be the perfect sort of, quote unquote, startup experience for me.

[00:06:02] It was really a no brainer. His idea was really to bring operating and company building capabilities, which, again, something that had been historically more of a buyout value add capability to these growth stage companies was really exciting to me. And so was the opportunity to build. , a next generation firm , a firm where, all the people who joined could, , take from the incredible organizations that had come before us, , and take off, , take all the good things that we learned at those organizations, but also, , as the private equity industry has matured give us the opportunity to question some of the just assumptions of the industry. , in particular, I'd say something like transparency and to just do things totally in a different manner. And that was really excited to me exciting to me.

[00:06:54] Sean Mooney: I love your your story there it's there's there's so many interesting threads and as I as I listen to this one is that your your perspective on the on the Boston Red Sox and being the shortstop and I've a similar but different perspective in that I grew up in Austin, Texas, but our baseball coach was maybe an infamous relief pitcher named Calvin Schiraldi, who is kind of like during the Bill Buckner years. And so, and so, so we have all sorts of Calvin Schiraldi starts. I was never good enough to make the team. So, but I was at a whiz and the JV team, I was an expert at getting walked because I never played baseball.

[00:07:30] But it got me out of cross country. And then one of the things we talked about Steve Cohen in just a personal interest, I use around those times I was working for A private equity firm in Greenwich, and then a private equity firm in Rye, and we would occasionally meander down towards your campus and Stanford there and go to that.

[00:07:46] What was that? There's that crab restaurant or like a lobster shack, the Crab Shell the Crab Shell. So we would go there all the time.

[00:07:55] Erica Blob: Legendary spot. Absolutely. Absolutely.

[00:07:59] Sean Mooney: And the other thing I love about your perspective, we shared is this whole idea of. something that we held it at the most recent PE firm I was at where it's like, , this whole idea of good, not being good enough when you compare it to what the full potential is.

[00:08:11] And that was always why we're, we're, we're measuring things is like, well, it was good, but it could have been so much better. And we could go, we could talk about five hours for that. And, and then you mentioned Jim Collins, which is my, my favorite business book of all time is good to great.

[00:08:25] Everyone in our team gets it when we start. So

[00:08:28] Erica Blob: Oh, that's awesome. Yeah. One of the questions you'd asked me to think about is potentially sharing a favorite business book. And I think that one by far in a way is the one to, to, to recall. And I think it was.

[00:08:40] I think it had just, or had come out a couple years before I went to business school and, and yeah, it was the, I think it was the first book that they gave us in one of our, our classes at HBS. And, and, , it stayed with me ever since, and I'm probably due for a reread of it. Again these days

[00:08:57] Sean Mooney: For sure.

[00:08:57] No, it's, it's fun. I'm this, in the, the following Monday I'm doing a Teach-in for our team on it. So . Oh, that's, oh my

[00:09:04] Erica Blob: gosh. I'm gonna have to, uh, send around the Zoom link. Oh, yeah. I, I wanna join. I wanna join. I wanna hear what you have to say.

[00:09:11] Sean Mooney: You'll appreciate that. Our company's logo is a flywheel .

[00:09:15] Erica Blob: Oh, there we go.

[00:09:15] There we go. I know. Every time I hear that in a, you know, 'cause that's one of those industry buzzwords that. people use it, it always brings me right back to, to really learning about that for the first time. So that's very cool. Yeah, it's funny too, with, I mean, with, Steve, now that he owns the Mets, my friends like to tease me, they're like, , if you'd stayed there, maybe you could have been the shortstop.

[00:09:36] Sean Mooney: They still might be calling you up.

[00:09:40] Erica Blob: I know, I know. I was like, what's the market for, uh, , 40 year old slow, can't throw short stops. Never say never. I know. I've been a, I've been a diehard Boston sports fan my whole life. So, much like the, the last, , 13 years of the bull market, it's been a pretty good

[00:09:59] millennium to be a Boston sports fan, although now, , I think we're starting to come full circle and the years ahead are not not great looking.

[00:10:08] Sean Mooney: I have no tears for Boston sports fans. You've had an embarrassment of riches.

[00:10:13] Erica Blob: I know. I know. I've been I've been trying to distract myself. I now I've gotten very much like, , half of America.

[00:10:20] I've gotten very into Formula One. And so I, I, this fall, I've been spending my time watching that and not watching the patriots. That's,

[00:10:27] Sean Mooney: that's a good distraction. So we've, we've learned a bunch of new things about you in terms of your formula one, your Boston sports fans. Is there anything other, is there, are there other features about you, Erica, that we'd know you better if we knew this about you?

[00:10:44] Erica Blob: Sure. I think, look, I was very influenced early on. My mom had gotten her MBA from Babson and she was an accountant. And, , that was, Very, , instrumental and sort of my perspective when I, , was applying to college, I was thinking about the colleges or I was thinking more about sort of my business school, , which college will I get into that will get me the best job so I can go to business school.

[00:11:12] And, , I was really lucky to have a mother who, was, accomplished in her own right and always encouraged me to. play with the boys and, , not be afraid of taking on new challenges. She actually, tying it back to the sports she was my coach of my all boys except for me and two, two of my elementary school friends, girlfriends t ball team when we were six years old.

[00:11:37] And, she took her time out from, from her job to do that and she'd leave work, and, and teach us. And so it was, very, very sort of instrumental in how I view the world and, the opportunity set and the things that I thought that I could accomplish. So I was very lucky in that regard to have somebody like that from being very young.

[00:11:58] Sean Mooney: What a great role model to have growing up who also sounds multifaceted if she can coach T ball and, and, and have the, you know, it sounds like a really kind of a lot of, of responsibilities in a corporate world, but also being able to find that time. , which is something, , with probably with regret, my kids never benefited from me doing so, sorry, Casey and Liam,

[00:12:21] Erica Blob: it's absolutely, it's true.

[00:12:23] And it definitely, , I'm lucky to, to work up in Greenwich, Connecticut, , five minutes away from where my kids go to school and, and, , look working in an industry like private equity. as a mom is incredibly challenging. You know, this is a business where it isn't, it is not a nine to five business.

[00:12:42] It's a 24, seven, three 65 business. So , having, my mom being there for so much when I was a kid really has made me prioritize and make sure, , those little things like. Coming to school to, to be part of the school lunch, you know, to have, a first grader throw spaghetti in your face while you're in the middle of your work day or even if it's, , 15, 20 minutes, , once or twice a year, it's just really important in terms of shaping kids.

[00:13:09] So. I feel very lucky that I, I'm able to do that because of where we're located.

[00:13:13] Sean Mooney: That's amazing. We have, that's just amazing. You probably should have to keep one of those tied pens, , with you.

[00:13:19] Erica Blob: It's true. I mean, uh, the first grade boys are just, uh, a different breed.

[00:13:24] Sean Mooney: Like I keep one of my briefcase very true, very true.

[00:13:29] So Erica, one of the things that I've always appreciated by people who are drawn to private equity is this kind of sense of tenacity and grid and overcoming and realizing that, , we're not into this up into the right world always. And there's going to be, it's really a, it's a journey of ups and downs.

[00:13:48] So I'd be curious if there's been, , an instance in, in your life where you had kind of a difficult circumstance that you had overcoming. And maybe how you thought about it and approached it.

[00:13:59] Erica Blob: Yeah, I think, one of the things when you get to work with these entrepreneurs who've built these incredible businesses, you don't always get to appreciate how difficult it is to build a business.

[00:14:14] And I think That was one of the things we definitely got to learn when we were building Brighton Park, , actually building a business yourself. And right as we were getting some momentum for the business and we were raising our first fund, COVID happened. And overnight we went from moving into our newly, , we were finally at the point where we were taking over, real office space.

[00:14:47] And we were so excited to, to have everyone, , have their own offices to, in the span of 24 hours, figuring out how to operate a new business and hire people over zoom and having to make decisions, not just about our business principles or investments, but about people's lives. And that was an incredible pivot and one, nobody has experienced but we did all of that while raising our first fund.

[00:15:21] And also, during that period, we actually had our first regulatory exam. So, well, actually, while our CFO was on her way to the hospital to have a baby. So the second quarter of 2020 definitely aged us a few years, but, fast forwarding to the present day, every Monday now when we have our investment committee meeting and I walk into our conference room, I'm reminded of what we've built so far because our conference room.

[00:15:51] It was very high tech and has this big table where our 50 employees now get together to discuss our new investments. But that used to be an open room that had two long tables in it. And we all sat there on day one of starting the firm and not everybody, even in the, like, the first week, not everybody had a laptop.

[00:16:12] And today, we have this incredible, space to sit and discuss our investment ideas. So it really reminds me. Of, how proud I am of what we've built, the people we who have joined our team are incredible. And most importantly, the, the organizations, the foundations, the endowments, all of the pensioners.

[00:16:33] For whom, we're doing this, our returns are the ones that are helping them with. their end goals and providing them with health care and retirement funds and funding new innovative research and giving students. scholarship money. So it's a really incredible reminder of how far we've come.

[00:16:54] Sean Mooney: It's I think that's a great story. And one of the things I think a lot of people lose perspective, maybe don't appreciate is that when you're when you're starting a new private equity from a it's incredibly difficult to to get investors to trust you in the way that you all have. But B, you're starting a whole new company.

[00:17:13] That's, it has all sorts of facets to it. And so I can, I can only imagine you're starting an incredibly complex, multifaceted. Business that has complexity up and down and left and right when that moment came and everyone, it seems like a blur to me and they said, all right, we're, we're heading home and you're right in the, in the thick of getting your business going.

[00:17:38] How did you, how did you even find the moment of pause to kind of make things slow down and figure it out?

[00:17:46] Erica Blob: I don't, I don't know if we pause much. We just, you know, charged ahead. No, I mean, there were some benefits to being a new organization. Our, our entire business was in the cloud out of the gates and we already were using, we started using collaboration software from day one.

[00:18:02] So I think, that was really helpful because we didn't really have to unlearn anything. But no, it was definitely a plot twist moment where. like I said, we were mid fundraise and we didn't know if that was going to be the, the. Ultimate size of the firm which would have required a different strategy and different hiring needs.

[00:18:24] Or, we were going to be able to be successful in what we originally set out to do. So there was definitely a moment or 2 of. Oh, Lord, what, what, what have we gotten into? But fortunately, I think, we put our heads down and really focused on finding really interesting companies during that period who wanted to find partners to help them navigate through that moment in time and the future.

[00:18:48] And, and so, that's what we spent our time doing. And, and as the world emerged and the new sort of normal of being on Zoom started to to really settle down. I think that's 1 of the things that really made us. able to ultimately achieve what the goals were that we set out to is because we had just really focused on building the business and finding great companies.

[00:19:13] Sean Mooney: Well, the good news is hopefully the timing helped you guys avoid having to buy desktop phones and polycoms for all your conference rooms.

[00:19:22] Erica Blob: Definitely a cell phone oriented culture. That's for sure. That's for

[00:19:26] Sean Mooney: sure. So I think that's a that's a great segue into your kind of your business world here now.

[00:19:34] And I'd be curious, Erica, after all these kind of multifaceted, pretty amazing experiences, how has that led you to kind of think about businesses, from the perspective of an investor? What are two or three or maybe just some of the important traits in a company that you and your firm look for when thinking about the operational excellence of a business, or if it can be, operationally excellent?

[00:20:01] Erica Blob: Yeah. 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, 100 percent. And so we look for companies that are operating in, large end markets.

[00:20:27] Those could either be end markets that are mature and ready for disruption or 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 sort of. Bootstraps of a bunch of different things.

[00:20:48] 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.

[00:21:06] 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.

[00:21:30] So we spend a lot of time doing customer work, calling customers, analyzing the quality of the customers of a company. And then some other things that we look for, low, low stroke of the pen risk or, being software investors, tech investors, something that the big tech firms can't easily do.

[00:21:48] 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 and a opportunities. That's important to us.

[00:22:08] 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.

[00:22:32] 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, because these aren't the types of founders who. Want to take a bunch of capital and just be left of low left alone.

[00:22:55] 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 the companies are facing when they're scaling from 20 million of revenue to 100 million of revenue. It's a completely different. Type of company by that point.

[00:23:13] Sean Mooney: Yeah, I, I love that. Uh, the series of perspectives you shared there. And the only thing I would add is, watch out HBS. Cause you just gave a mini MBA right there. And so you don't want to put your alma mater out of business too soon. But, uh, I think it was. It is so important for

[00:23:31] Erica Blob: people far smarter than
[00:23:33] 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 customer centrist, centricity, if that's a word.

[00:23:42] 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 there's the whole idea of, the, the other point that you brought up that I really liked was this kind of humble.

[00:24:04] Open to kind of input, CEO, who's going to, who's going to kind of, probably have this tenacity and grit to get through a really substantial growth phase ahead is so important.

[00:24:16] 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, had failed in, in his second venture and, the, 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.

[00:24:41] So, I think. Having a little bit again, tying it all back to the, the, the sports analogies, having a bit of a Tom Brady chip on your shoulder, you have to have that grit and desire to win, but you also have to take sort of the good, it's not all up into the right from a growth perspective.

[00:24:59] So really learning from the experiences that have been more challenging. Can can make a founder even better.

[00:25:07] Sean Mooney: Yeah, I think that's another great perspective. And and I, as I reflect back and when I was in P. E. I think in nearly 20 years in P. E. Not a single investment turned out for the reasons that I thought it would kind of going back to your point around optionality.

[00:25:23] 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 ways 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, Okay.

[00:25:40] When I started BluWave I, I probably, I thought I knew everything cause 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, those are fantastic perspectives that I've, I've written down while I was listening to you speak here.

[00:26:02] And so maybe turn the page. So you've made this investment in a great company that kind of fits your. Kind of your, your, your form that you're looking for, not that there is a form per se, but kind of as in the strike zone to continue with the baseball analogy, how does your firm then approach value creation and what resources do you bring to support their success?

[00:26:26] Erica Blob: Yeah. So we are extraordinarily lucky to have a group of over 30 operating executives who work with Brighton Park, who have. Built and scaled, unbelievably successful organizations, taking them from 10 million of revenue to, over a billion of value. And, and in functions like CEO and CTO and heads of sales.

[00:26:54] And, for the size of the companies that we work with at the stage in which we make our investments, those companies wouldn't typically have access to people like this to be on their boards, to call them up to discuss a strategy or a problem they're trying to solve. And so that's 1 of the biggest things we bring to them is, is that network of folks who can help them because.

[00:27:20] There, there's a lot of pattern recognition that obviously comes from building and scaling businesses that these folks have all seen. And, we find that this group of operating executives is really one of the biggest reasons companies do choose to work with us because we bring those operating executives in to meet with the founders, the very first meeting.

[00:27:41] Um, they, they can share their perspectives often they identify things that the founders are thinking about and are able to articulate to that to them and there's a real light bulb that goes off. But also, the people as, as these founders are building, these companies are thinking about things, go to market is a great example.

[00:28:00] This is one of the areas. We spend time on with almost every single one of our companies, when you have somebody like an Allison Gleason, who has an incredible track record in that space, really helping you think about your strategy. That's incredibly meaningful to the founders. So there's a number of different areas that we, we focus on with our companies.

[00:28:23] And, in the current opportunity and market environment, there's some things that are definitely front of mind right now to us, but I think it's that having that group of operators and, and also our deal. People also think with that operating mentality that really makes the difference again, Most of the companies at some point or another have been pitched by someone who has offered to just hand them, the cash they're looking for and leave them alone.

[00:28:49] But that's not what these these founders are seeking out. They're seeking out, the thought or the person to be in the proverbial trenches with them. As they scale the

[00:28:58] Sean Mooney: business, I really like that that approach, because I think you're right. There's there. There's a lot of capital out in the market, even today.

[00:29:06] And, with firms like yours, and really taking this differentiation, we're bringing in you something more than a check. And, and in your case, with this kind of, like, blue chip, people like Allison Gleason coming in and saying, let me help you out. That's a huge differentiator because we all know.

[00:29:23] Particularly in a growth based company. And I get it here as well. We get knocks on our door every day and they're like, well, and, and, but you get it, it's, it's lonely at the top of these businesses. So that kind of access and resource that you bring, not only from deal teams that think like that, but also from operating executives.

[00:29:41] Is hugely valuable.

[00:29:43] Erica Blob: Absolutely. Absolutely. We really think at this point, especially in the last 4 or 5 years, capital is a commodity. It's it's probably the least valuable thing we bring to the table to these companies because they're actually, mostly, very a fit capital efficient businesses to begin with.

[00:30:01] So it's more about, the time and the strategy work and the introductions to other customers. Or, potential acquisitions, that's what we bring to the table.

[00:30:14] Sean Mooney: I think that's that's incredibly important. I think that observation is spot on. It's like, I think when you said that, I've never really said you heard that before.

[00:30:22] It's like, the capital is the least important thing you bring. And it's, it's totally true. It's like, how do you transform these companies? And in thinking about this and actually thinking about how you all treat the business of private equity as a business, one thing that struck me is how you talked about with your, with your portfolio companies.

[00:30:40] You're so customer centric, but one of the things that you are also known for is how you work with your LPs who are really your customers. And I think you have a really kind of a unique approach to that. So I'd love to hear your perspectives and approach there.

[00:30:54] Erica Blob: Yeah yeah, that's one of the areas that we, when I mentioned earlier, some of the underlying assumptions of the industry, or rather just sort of the habits of the industry that we really wanted to question when we started Brighton Park.

[00:31:10] We firmly believe that the investors, the partners who give us money to manage on their behalf of their pensioneers or, their students, whoever it may be, or the families when they give us money and we invest it, they are the shareholders of those companies, and they should have access to information about how those companies are performing.

[00:31:34] They shouldn't just get a statement once a quarter with, a line item that says how much, the, the fund has gone up or down. And we take it really seriously. So we have an investor portal that we provide our, our partners. That shows them, the forecast we have for the underlying businesses that show our liquidity projections that shows, who, who runs the companies, what are the companies do, who from our firm is leading the efforts, who sits on the board, all of those dynamics and.

[00:32:10] We, we produce all that information straight from our own internal portfolio management system. So essentially we're allowing you to log into our portfolio management system. And what that means is that when something changes at a company, if they are ahead of plan or if suddenly they're behind plan, that information gets updated instantly and pushed out to the investors and there's really no hiding.

[00:32:35] And so I think. We've just really been really transparent with our LPs and they're constantly saying to us, it's really refreshing that you're telling us the good and the bad about what's going on at your organization or your companies and treating us like a real partner, which again, I think is something that just hasn't always been the case in the industry, but seems like something that, is very appropriate when you're entrusted With hundreds of millions and billions of dollars from people, they have a right to know what's going well and what's not going well.

[00:33:13] Sean Mooney: I think that's it's it's such a, a, kind of refreshing perspective, but it just shows how the industry is evolving. And there's certain firms like yours that are taking leadership positions and like, we're going to trust them. They've trusted us with our capital. We're going to trust them with the information.

[00:33:29] And I imagine that when you start talking about the next fund, it's, it's an easier street because like you, you have that unique relationship that and a unique level of trust that just, they probably don't see in a lot of places.

[00:33:41] Erica Blob: Yeah, there's no, there's no surprises with us. We will, we will call you and let what's going on.

[00:33:47] Like I said, good or bad. And, and if you are surprised by something that happens here, then, then we failed because we haven't. been open or communicative enough or, educated you enough in what we do and how we do it. So there really shouldn't be any surprises.

[00:34:06] Sean Mooney: That's, that makes a ton of sense.

[00:34:08] So Erica, I'd be curious to hear some of your perspectives on like, what are some of the top kind of value creations that you are thematically engaging with in your portfolio companies right now that you think maybe other. Business leaders would benefit from.

[00:34:24] Erica Blob: Yeah, I would say, there's, there's a couple of different areas or a few areas rather that we're very focused on at the moment.

[00:34:33] That's both sort of part of our strategy, but also in this moment in time particularly relevant. I'd say that one of them is M and a. And there's a couple of reasons for this. Um, one, we just did some research in, in 2021 and 2022 according to PitchBook, a PitchBook screen that we ran, there were over 30, 000 companies funded by venture capital in those two years alone.

[00:34:58] In a more normalized time, that's probably anywhere between 4, 000 and 6, 000 companies a year, so many multiples, and it's very clear that during this period of time, there were companies that were funded that weren't really companies. They may have been products or even features of products that got funded as companies, and so we've really encouraged our founders.

[00:35:23] To keep an eye out for competitors. They'd like to acquire and that's a responsibility of our team as well to inform our founders of opportunities. Because, given the software business model, 1 plus 1 can equal 3, you can take. A company that's profitable and 1, an add on to it, a company that isn't profitable, but because the amount of leverage that you get from sales and marketing and R.

[00:35:52] and D. and G. and a, all those costs across a multiproduct product platform you can really build some profitable scale. So that's been a big area of focus for us and our portfolio companies. Secondly, I'd say, we, part of this exercise we recently did there was a really interesting chart from Stack Overflow that shows software developer compensation country by country and, the unemployment rate in the U. S. is a little bit over 3%. The unemployment rate for software developers is even lower than that. And the compensation is, is much, much higher than it is in the rest of the world. So. Being opportunistic about areas where you can offshore and find really high quality engineering talent.

[00:36:36] That's definitely been a priority for us as well. And then, front of everyone's mind these days around all things. A. I

[00:36:43] finally front of mind, I think for everybody these days, all things. A. I. We're really big believers that, we'll be able to leverage AI to improve the productivity of software development. We think there's 4 areas where there's real opportunity for that, increasing productivity.

[00:37:04] Of of R and D, enhancing code quality, reducing code support costs. And and, R and D accountability. So we think that's going to be a big area to keep an eye out for going forward. And, and, in as much as AI will, ultimately impact the way you and I, handle a lot of tasks in our daily lives and our work lives and make ourselves more efficient.

[00:37:30] We think AI is certainly going to be able to help us improve productivity around all things software development related.

[00:37:38] Sean Mooney: Yeah, I, I think those are, those are spot on and fantastic perspectives. And 1, to me, this feels a lot like probably more like 2001, 2002 than it does. 2008 2009 and to really date myself, that's okay.

[00:37:53] I'll own it. And so, where you've got, similar to like, oh, one or two, you had all these kind of maybe overfunded companies that were. Not going back to our part of our earlier conversation, failing to live up the full potential because they had too much capital and, and they built all sorts of things that didn't need and they have layers and layers of people and maybe to your point, a lot of those, they're still great companies, but they're just, you got to peel back the onion to find, that, that part of it, that's really kind of amazing and what a great opportunity for your companies to bring them on as a life raft.

[00:38:28] For some of those are certain capital, but also a great opportunity for those companies that are maybe facing more existential issues that can come into a well capitalized business like yours and kind of take that private equity version of venture capital forward, which I think is going to be more of the mantra as we get back into, that kind of 2002 through.

[00:38:47] maybe 2008 version of venture capital. So I think there's a lot there that you said that makes a ton of sense. The other thing that really struck me was this whole AI thing, and a lot of people are afraid of it. But this is more, and I'll really date myself. This is more like 1996, right?

[00:39:03] This is Netscape coming out. This is the Internet, the investment banking groups had Internet groups, which is silly. And you can get an MBA in the Internet. The same thing with the AI. But what's happening is I think private equity in particular is figuring out this is a tactic within your strategies.

[00:39:20] And from a productivity standpoint, it's going to unleash tremendous potential to do more with less, which is some ways what private equity is really good at. And so even even a BluWave is we're thinking about next year, everyone's getting a robot and say, before you hire that 1st person, like that next person, like, all right, you're going to have someone reporting to you and they're going to be like that person who's like, right out of college.

[00:39:43] They're going to give you a first draft and you're going to have to do a lot with it. And then you have to teach it and then it's going to come back. But you're, but you're going to get, instead of having to spend 100, 000 for that person, you're gonna spend a hundred bucks a month. And so I think there's just going to be an amazing amount of, of unleashment of productivity.

[00:39:59] So those were, I think, fantastic insights. Yeah.

[00:40:02] Erica Blob: And, and, look, admittedly, we are very much, even as long as, as AI has been around and been developing. We're still very, very much in the early stages and, and there's still a lot to, there's a lot of risks and a lot of costs and there's a lot of regulatory concerns, but exactly what you just said from, from productivity standpoint.

[00:40:31] there's a lot of opportunity and there's some industries that are incredibly human capital intensive or, very rote manner, things like life sciences or elsewhere where just the incremental benefit of having some of these tools will. Really lead to incredible outcomes

[00:40:53] Sean Mooney: 100%.

[00:40:54] And I, I really like your point there too. It's like, these are not replacing people. I mean, 1 of the biggest thing we're seeing is hiring, hiring, hiring and private equity, but just like the iPhone didn't send us, to the beach and the computer ship, didn't send us to the beach. We're just going to do more.

[00:41:09] We're able to get more done in the same 24 hours a day. I don't think hiring and the people are going away. But I also don't think we're going to the beach and having bonbons and caviar. Maybe someday.

[00:41:22] Erica Blob: It's like 25 degrees out today here.

[00:41:24] Sean Mooney: So that's a good point. Okay. So maybe to go to the next kind of section of our conversation here and to wrap it up, we'll start with one of my favorite topics here, which is life hacks. And so I think anyone who's really busy with things, at least a lot of us, we try to find just little things to make things a little easier, a little more fun, a little more cool, and I so I write this email to the private equity industry once a month and every month I put in like a life hack and, and what it's enabled me to do, it's empowered me to buy all sorts of junk from Amazon every month because now I have to come up with one life hack a month.

[00:41:59] And my wife goes insane. She's like, you got to stop this. Like, there's like Amazon boxes. Like, well, I got to write email next month about a lifetime. We had nothing. So, so I'd love it. Maybe you can help me out here, Erica. What is, what's maybe a life hack or a little gizmo or a gadget or just something you do just to make things a little easier?

[00:42:16] Erica Blob: Yeah, that's another list I'd love to subscribe to.

[00:42:19] Cause I think I subscribed to all the, the wire cutters and the, all the, the life hack emails. I'm always looking for that, but, I'd say cold plunging, but at this point that's become everyone's life hack, but, but I really do believe in it. And. I've become a big proponent of it.

[00:42:35] But one of the things I do is I travel a lot. So, I'm always looking for, anything that can make travel easier, changing time zones, , sleeping in loud, noisy hotel rooms. So one of the things I've done, I actually have a small pillow that I take with me everywhere. I guess it's a little bit like a teddy bear.

[00:42:57] Yeah. Uh, but, it's, it's really comfortable because if you have a bad pillow in a hotel room, your night is shot. So. I roll it up really small and I can stick it in a carry on bag. But that's made a huge, huge difference. And there's a particular pillow. It's called sleep crown. Um, there's a, it's a small business.

[00:43:15] I'm

[00:43:15] Sean Mooney: clicking buy on Amazon. Like as we speak, I

[00:43:19] Erica Blob: don't even know if you can buy it on Amazon. She's got her own. She's got her own, uh, her own website, but it's a phenomenal pillow. It also, you can put it over your head and it, it drowns out noise. So highly recommend. And then the other thing that I recently learned about that a lot of people have told me since that they didn't know about either, but you can turn your iPhone into a white noise machine.

[00:43:41] So I used to travel with a white noise machine too. That used to be, that would have been my life hack, but in the settings accessibility part of the iPhone, you can now just have your own white noise machine, which is great.

[00:43:52] Sean Mooney: Those are great. Particularly when I'm staying in hotels in New York, which are not the quietest places.

[00:43:58] I'm going to find that feature and I love your, your, your sleep life hacks. I'm going to, I'm going to buy that pillow and then find where I can get that white noise on my phone because I am in the constant battle. Probably like a lot of people in our industry for sleep. And particularly when you travel, it was interesting, I went down this like this as I often do, like probably a lot of us do, this rabbit hole, like, why don't you sleep when you travel?

[00:44:22] And the, the, at least the white, the, the rabbit hole that I went down for me, that it's basically a genetic latency from thousands of years ago when we were tribal species, when you would, when you would leave your village. It's danger. And so your body never goes into full sleep. And this is just something that goes back.

[00:44:42] And so when you're traveling, you're not in your house, your body goes and it won't, it won't go into the deepest modes of sleep. So, my hypothesis now is if you bring your pillow with you, can you trick your body into thinking like, no, you're at home. And so I'm going to try that out. I don't know if it'll work.

[00:44:58] Erica Blob: The only problem too is now I, I was traveling recently. I ran the Chicago marathon and, and so sleep was very important that night. Before, so I brought the pillow and then I left it in the hotel. And so now I have this. Really big fear of, of leaving this pillow anywhere. It's, it's like the Holy grail.

[00:45:19] It has to come with me everywhere I go or else it's stressful. Where's the pillow? Who has the,

[00:45:26] Sean Mooney: you just have to get 3 of them. Exactly.

[00:45:30] Erica Blob: Exactly. That's

[00:45:31] Sean Mooney: true. Well, Erica, this has been a lot of fun. I've learned a lot. We got a mini MBA. I, I, I've got a new pillow and, uh, I will get a new pillow and hopefully that's going to help with a little bit of sleep as well. But, uh, Erica, thank you so much for joining.

[00:45:46] This has been a pleasure and it's been amazing.

[00:45:49] Erica Blob: Thank you so much for having me, Sean. It's been a really fun conversation. So I've learned a lot as well.

[00:45:54] Sean Mooney: Absolutely. Take care.

[00:45:56] Erica Blob: Bye. Bye.

[00:46:06] Sean Mooney: Special thanks to Erica for joining. If you'd like to learn more about Erica and Brighton Park, please see the episode notes for links. Please continue to look for the Karma School of Business podcast anywhere you find your favorite podcasts, including Apple, Google, and Spotify. We truly appreciate your support.

[00:46:22] If you like what you hear, please follow, rate, review, and share. It really helps us when you do this. So thank you in advance. In the meantime, if you need to be connected with the world's best in class, private equity grade, professional service providers, independent consultants, interim executives, or anything else that's important to your business or otherwise, give us a call or visit our website at BluWave.

[00:46:43] net. That's B L U W A V E dot net, 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.