Adapting to Change: Philip Lewis’ Strategy in Private Equity

[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's founder and CEO. In this episode, we have an amazing conversation with Philip Lewis, partner with Fulcrum Equity Partners. Enjoy.
I am super excited to be here with Philip Lewis. Philip, thanks for joining us today.

[00:00:40] Phillip Lewis: Yeah, thank you for having me. Looking forward to our conversation.

[00:00:42] Sean Mooney: I've been looking forward to this conversation for a long time and so maybe we'll jump right in. The way I love to start these things, Philip, is just to get more of the personal story, the story of you.
So could you kick off and just share a bit about yourself? What's the kind of the abridged story of you and how you came in and ultimately got into this industry that we're going to talk about more today, the private equity world?

[00:01:06] Phillip Lewis: Yeah, it's definitely not the typical way of getting into the business.
There's a lot of different ways to end up at the outcome you're looking to achieve, but from Memphis originally went to school up at Wash U in St. Louis. Wasn't really sure what I wanted to do in college, but got the advice to go into investment banking. So I did that and joined a firm called A. G.
Edwards. This was back in 2007. Thinking great, good Midwestern bank solid been around a hundred years. And then two months in Wachovia bought them. And it became very clear that Wachovia was looking to acquire them for the retail brokerage, not the investment bank. So about three months out of undergrad, I was looking for my next job.
And for those who remember the fall winter of 07 was right before everything took a pretty hard turn and investment banks weren't looking to hire at that time necessarily, but I interviewed at a number of places, took a lot of conversations and ultimately talked to one guy who just said, Hey, we're not hiring shocking, but I just had lunch with somebody who's raising a venture fund.
Would you be interested in getting into venture capital? Sure. Why not? I'll take a meeting with just about anyone. Didn't want to move back home to my parents basement. So. Took an interview and my background had been doing investment banking and real estate private equity. And these guys were raising a Venture slash growth fund focused on health care and technology two industries.
I didn't know anything about but I had one really good thing going for me and That was I was willing to work for not a lot of money and that ended up being a key differentiator to join a startup Fun. So it was the three founders And me and they were raising fund one. They probably raised about three quarters of a 40 million target when I joined them and off we went and went from that time being an analyst and fund one and really having some very rudimentary processes and memos and models to.
Where we are today with nearly a billion under management, uh, two really distinct strategies and the kind of growth equity and private equity world. It's been really fun to be on that journey and make partner in the last fund. It's been kind of an interesting ride.

[00:03:27] Sean Mooney: It's an amazing journey because it like not often aid you get to a jump into a firm so early in your career, but also early in the fund formation and see it from literally the first floor.
And was this in Atlanta where this firm was forming at the time?

[00:03:44] Phillip Lewis: Yeah. So my brother, I have an older brother, he went to Emory and he was working at JP Morgan at the time. So I said, I'm from Memphis and being a Southerner, some of us like to go up north for a little bit. I did not necessarily want to do the New York or Boston or Chicago thing.
So I was really focused on staying in the Southeast. So a lot of where I was looking was in Atlanta and kind of through his network.

[00:04:09] Sean Mooney: That makes a ton of sense. BluWave is headquartered in Nashville, so kind of the sister city to Memphis. So I appreciate that. I think, candidly, I'm going to get flack for this, but Memphis has better barbecue.
You guys have an NFL team. Exactly. Exactly. There are Ps and Pos and different pros and cons to each one. And then the Atlanta thing registers a lot. I grew up in Texas, and then I went to college in Washington, D. C., and the question is, do I go back to Texas or do I go on Northeast? I went with the idea of going up to New York for two years, and then I was going to come back to Texas.
And then I met a nice girl from Connecticut. And then 20 something years later, I was still up there. I was like, this winter thing comes back every year. So I'm glad to be in the Goldilocks of Nashville, and now I think we're just turning into a distant suburb of Atlanta, which is the big shake in the region.
So I love that background, Philip. You know, one of the other questions I love to ask is, what would be one of the things we would do? I'd love to know and get to know you better if we knew this about you.

[00:05:17] Phillip Lewis: Yes, I interned with the Memphis Grizzlies for two summers. So, very big basketball fan, play rec regularly, but the really best part about that internship, and it still is in existence today, was I was tasked with finding a non profit fundraiser they were looking to do.
This was, Back in oh one, so the Grizzlies had really just moved there and did a lot of research what other teams were doing and came up with this idea of a bowling event. So the Lionel Hollins bowling for backpacks event was the idea of a high school senior and I see what it's become and the amount of money they've raised and what they've done for youth in Memphis is beyond what I could ever dream, but the Lionel Hollins bowling for backpack came from my summer internship.

[00:06:06] Sean Mooney: And is that something that's just generating huge sums? What's the kind of the current state of that?

[00:06:12] Phillip Lewis: Yeah, I mean, they do it every year. I can't say I can keep up with exactly what they do, but they sell out the bowling rink in Memphis every year and the players come and they bowl with fans and raise money for school supplies for the youth in Memphis.
Really, it's a great impact. By this point, it's got to be. Thousands of students have had a positive benefit from it. So something I'm pretty proud of.

[00:06:35] Sean Mooney: That's amazing. And the Memphis Grizzlies are something that also is a, going back to Nashville and Memphis is these kind of sister cities. Everyone in Nashville is jealous about not having a basketball team.
So it's, uh, they bring in the NBA and what an amazing experience is a younger person to be able to like have that as your internship too.

[00:06:55] Phillip Lewis: Yeah, it was really cool.

[00:06:56] Sean Mooney: Maybe as we move on to the next chapter of our conversation here, Philip, One of the things that I really like talking with people like you is kind of this innate sense of an ability to Take challenges head on, address them, find ways above them, around them, below them, across them, to kind of Move past it.
What would be one of the maybe harder things that you've encountered Over time and how did you think about kind of addressing it?

[00:07:26] Phillip Lewis: Yeah. So let's say this was probably about three and a half, four years ago, had to step in as sort of executive chair of one of the portfolio companies that I had led CEO had some personal health issues and needed to take a step back from the company, so really started working closely with the team, three main executives that were still there.
And as we were kind of going through, looking at the business, looking at what we need to do, executing a plan. One of the things we. Decided to do is actually sell one of the business units. We thought that'd be a great idea to raise some additional capital for the core business and run an internal process.
Find a buyer, go through diligence and go with, this is very relevant based on what just happened with CrowdStrike is we're about a week from closing. And always remember this. It was a Saturday afternoon. We were just about to leave for a good friend's son's birthday party. We got the kids packed up and the CFO of the company calls.
And I'm just like, this can not be good. So go upstairs, say, Hey Steven, what's going on? He's like, need you to know we are having issues with our servers. We're having issues accessing data and we are seeing large amounts of encryption. And I'm like, okay, like, so what are you guys doing? What's going on here?
He's like, well, we're pulling servers offline. We're figuring out trying to get the extent of the damage. So I'm like, okay, well, my Saturday just changed. The first thing you do when this happens is you call your lawyer. So you say, Hey, Justin, your Saturday is about to get blown up. Also ended up on the phone with Dell cybersecurity, strike force, getting them involved, getting them access to our servers, setting up everything in a remote way, but what was interesting going through this was really just making sure you had the team all calm.
You had everybody talking and you didn't make things worse. And that was one of the key things there was just seeing what the situation was, analyzing the situation and not taking any rash decisions. A lot of times it's easy to panic and do this and that in a crisis situation. And instead we really got to the heart of the issue, isolated it.
Fortunately, no data was extracted, so that was good. It was just a true ransomware attack. And it was a difficult week, I would say, working with the team. Making sure we got everything figured out, everything back online, everything rebuilt, but looking back on it now that everything was okay. And fortunately the buyer, because we had actually a lot of good security protocols in place, it ended up being a devastating attack and nothing was exfiltrated.
The buyer still closed on it. Just took a couple of extra weeks to get through that. But I think just dealing with a kind of crisis in progress and having that experience. It lets you relate really well when you're talking to portfolio companies about problems and challenges and not necessarily don't make a situation worse when something goes bad.
Try to figure out, solve the problem and execute really.

[00:10:39] Sean Mooney: I really like that example because in some ways it's reflective of what happens in business and one you're already in kind of improvement mode, right? Because you're there to help the business come and that in itself can be incredibly challenging.
Just to deal with and have that calm in that like we're gonna get through it and let's find ways And then right when you think you're like at this one big waypoint of making it through Another kind of shoe drops and that is like totally I think consistent with when I've been in those experiences You're like we can't win.
Yeah Another thing and another thing and another thing and those that make it through or those that just kind of continue to hunker down and just work through it and work through it, but particularly to have that, which is such an acute experience where it just springs on you, your ability to find that calm is like, A, incredible, but B, what a lesson that probably empowers you.
The tough things certainly aren't as tough as they have been because you've been through that kind of experience.

[00:11:46] Phillip Lewis: I think if you were to ask my wife, she might not say it was the most calm I've ever been in a week, but I try to project calm to the team and really. It is. We have a saying here is when everything is going right, something's going wrong.
You just don't know about it yet. It's not to try to be negative. It's not to try to be a wet blanket with any of our companies. We always want to celebrate wins. We're always about pushing the teams forward and having that positive momentum in the business and the positive culture. But if you have that thought in the back of your head, when something does go wrong, it gives you that extra calm to be able to execute in that say, okay, well, here's the problem.
Transcribed Let's diagnose it, let's go through it, and let's not make things worse, let's make things better. And the other important thing is just motivating the team through it, making sure at the end of the day you've got to have the teams executing and aligned on where you're going. And I think just having a level of communication and honesty and transparency built up with the teams, they don't look at it and say, Wait a second, our company stinks, we had this happen.
It's like, no, no, no, we're doing a good thing, something bad happened. But. We're still doing really good work here. It's nobody's fault. Let's diagnose the problem and then let's make sure we put in safeguards in place so this problem doesn't happen again.

[00:13:01] Sean Mooney: Absolutely. And most of my career I was in private equity before founding BluWave and one of the sayings we would have is like, you got to be like a duck, be calm on the surface, but paddling like hell underneath.
And as I've been in a seat now as a CEO, you really also, and you and that seat as executive chairman. It really is something that I've noticed and I still work on is like, particularly in, in any business, there's always things going right and going wrong. And you're always kind of going up and below the ledger.
And maybe that ledger line is at like a 20 to 45 degree angle of growth, but you're never, anything's always going right. And so. The thing that you pointed out that's so important for every business builder to think about no matter what seat you're in is that how you react to a situation as a leader is going to be witnessed and observed by everyone else.
And if you freak out, they're going to start freaking out. If you're positive, they're going to be positive. And it takes a lot of grace and pause to find that in the moment that I found, at least, where you're like, Oh my gosh, I just want to freak out. And I might go home and have maybe a little larger glass of wine that night.
But, but, you know, you just kind of have to keep calm and carry on.

[00:14:16] Phillip Lewis: Exactly.

[00:14:17] Sean Mooney: I really like that. That's a great story. And I think particularly now, as we look at things, you can hopefully see some light at the end of tunnels, et cetera, coming through this phase of the economy, et cetera, we've been in. It's another great example.
The other thing I've been saying for three years is this too shall pass. You know, I think history has a way of repeating itself. Yeah. So fingers crossed.

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[00:15:00] Sean Mooney: Maybe with that in mind, I'm curious. Philip, about how you all, from a firm kind of approach, not just these kind of acute situations, but value creation in general. And maybe what are some of the things that you are bringing to bear to kind of keep that growth and development curve, acknowledging that it can be kind of ups and downs, but going up and to the right as much as it can.

[00:15:26] Phillip Lewis: Yeah. It's interesting how value creation has become such a thing in private equity over the last decade or so. And we've been fortunate enough to sell some companies to really good funds and roll some equity with those funds. So we do try to steal from the best and we steal from other funds. And I think insights on site models are really good one.
We've seen the LLR's value creation team and how they do it. We see how lead edge capital we've tried to as a smaller fund. I mean, we've gone from that 40 million first fund, this fund's 372 million. We don't quite have the full resources that a lot of these bigger private equity funds have, but at the lower end of the market or the middle market, I do think there's a lot of ways where we try to add value and we've tried to take kind of best practices from these other funds.
One in particular is we've got over 150 current and former CXOs of businesses as LPs in our fund. So we try to make very relevant connections for them. If somebody's looking to get introduced to Company X or trying to get a, with this company or get through procurement or get an introduction. We'll tap into that network to try to help that out.
Same with recruiting executives, but I think one just big key to value creation is also seeing where each company is at, what help they need at that stage and where you can be most helpful and part of that is. A lot of times when you invest in a company, there's a list of 20 things that need to get done.
It's sitting down with a team and prioritizing. So if you try to go and fix all these things at once, or hire all these people at once, or do all these initiatives at once, they're not going to get done right. And we've got a saying here at Fulcrum of let's do this right. And it's not necessarily about, you know, there's a wrong way of doing it.
It's like, let's focus on doing this the right way. Let's take our time. Let's execute properly. Let's put together plans. And I think when you do that, when you sort of take your time and take that 20 list item that you need to do and break it down, what can we actually do this court? And then what can we sort of have the vision to do in the next 12 months and reevaluating that on a quarterly basis and tracking it on a weekly and biweekly basis?
Allows you to make impact and allows you to really judge the impact and not just for the investor to hold them accountable for them to hold themselves accountable of saying, Hey, this is what I think is going to have the most impact is to change my sales strategy or set up a partner strategy. And here are some things we're going to do to make this happen.
Fulcrum. Here are some things you can help do to make this happen. Here's some connections you can make. Here's a playbook we can help give you that another company's use that can maybe shave a month off of your effort. And then holding each other accountable for actually making those changes.

[00:18:14] Sean Mooney: I really appreciate your perspective there.
It hits on kind of a number of things that I think are so important as business builders. In one, it's this idea of to innovate and to create. You don't have to recreate the wheel. And so when I was coming up in my career, I was just like, Oh yeah, I use the Walmart form of innovation. Walmart created this behemoth, but they really didn't come up with much that was totally new.
They would just see what was happening in the world and then grab pieces of that and custom configure it into its operation. And it became, you know, the world's largest retailer. And so that's what I would try to do in my life, even as a person or miserable. I was like, I'm just going to take that. And I'm going to grab this other thing, grab this other thing and put together.
And that's really how we created BluWave. It was like, Oh. I wish I had this meets that meets this, and then we decided to do it in like a fit of entrepreneurial craze and insanity. But it's also this idea of bringing other people together to not have to create something anew each time, and you've got this ecosystem of CXOs who can help with that, you have playbooks that you can help with that, but a lot of times people will try to do kind of that first level we talked about.
Like, oh yeah, just borrow everything, but not prioritize. And so, and you try to do everything, and so what I really like the way that you've coupled that concept and advice here is like, yeah, see what's happening in the world and then configure it in a way that's going to work for you, but also spend more time on fewer things and prioritize them.

[00:19:47] Phillip Lewis: Yeah, and I think something that's sometimes lost when. P funds come in with their value creation initiative is really understand what's going to work within the culture of the business you're working with. That a certain regiment with maybe a product led company or a product led CEO might not be right if you have a really hard driving sales background CEO.
So I think it's really important that as you think about playbooks, as you think about initiatives, the 80 20 rule, it's like, yeah, most of this is good, but These guys are have a very emotional culture. This is a very different type of business versus this Extremely metric driven culture. And you as an investor can't think you can come in and change the culture of the business.
You need to adapt your style of working with what that business needs, with what that CEO is looking for. If you don't do that, you take a business that's maybe highly emotive. And day one, you say, I need these a hundred metrics and you got to report them to me all the time. That's going to ruin that relationship.
And they're not going to do that. You got to also say, Hey, you've got this great culture here. Let's start adapting. What metrics can we start holding ourselves to, holding ourselves accountable to? And you start layering that in place and you work with them and show them that, Hey, this is really working.
These are some best practices and you get them there. On the other side, if you have the super metric sales driven culture that might have some higher employee churn, you're like, Hey, are there some, you know, culture building activities that you could be doing? Are there some team building activities?
Because if you have just one or the other, yes, it can work. But. There might be some better ways of looking at it and trying to lead the horse to water slowly, not just saying, Hey, go and duck their head into the water day one.

[00:21:28] Sean Mooney: I love the concept that you're talking about as well, and as it relates to business building is also embracing culture and values.
And when I was coming up, I came up as we were talking about East Coast private equity. And it was all like, strategy and like, take the hill at all costs, you know, like, and then West Coast were like, culture eats strategy any day. And then eventually when I grew up, I was like, well, why are we using the word or, we can use the word and.
We can couple, you can do culture and strategy and execution. The point that you said was also resonated so clearly with me, particularly when I was a younger pup where, particularly coming up in private equity, where IQ is valued and like execution. And it's like, just go do it, be smart and get it done.
And I think where the industry is evolving quickly is you need to have EQ as well. That particularly as we look at the data and the project requests that we get from PE firms, it's people, people, people, people. And then 50 other things, but people are really valued and because you're transforming these companies, you're creating jobs.
And so there's been this Genesis and revolution in some ways that maybe sounds atypical, but towards like understanding culture and using it. But it was totally lost on me probably as a younger professional ways. I wish it wasn't.

[00:22:46] Phillip Lewis: I got this one from working with SAS Optics. He was the founder over there.
We were talking about some different initiatives they could change on some go to market strategies. And he looks at me and says, well, that sounds great at a high level, but think about how now you have to take that strategy down to the BDR, changing their messaging to the AE, how they're going to manage that account.
Now you have a different account that's got to be onboarded. That's changing that. So think about the second, third, and fourth order effects of that change that's going to come from the board. You say, this is a great idea, which it may or may not be, But think about the levels of execution that need to go into place and getting the team bought in to that strategy and changing all of their playbooks, all of their go to market strategies, those effects, and how do you get the people that were recruited to do this, to do that?
I just think it's really important. You're sitting at the board level to think through those next order of facts of the changes you're asking to be made.

[00:23:44] Sean Mooney: I think that is great, great advice for not only any investor, ops team person, but also for maybe the newer CEOs that are listening to this episode in terms of like thinking through holistically how this thing impacts not only strategy, but execution and culture.
What Philip has shared here, do that. It's really good. Philip is we. Think about kind of the next change. We've lived in what I call a washing machine economy for the last three years, maybe even four, where it's like good news, bad news, good news, bad news. How are you kind of thinking about, how are you talking with your business leaders within your portfolio company?
What advice are you maybe giving them to manage through this part of the world we're living in right now?

[00:24:33] Phillip Lewis: Yeah. First turn off the news would be advice one, but second, just Really have a good understanding of what's going on with your specific buyer. If you were selling to a hospital or health system end buyer right now, you need to understand that a lot of their focus is going to be around labor shortage.
A lot of their focus is going to be about changing reimbursement rates. A lot of those buyers have been unprofitable recently. If you're selling to CPG companies that have been having record earnings, it might be looking very differently. Have I think it's really important that you understand the current state of your end buyer.
And that is how you're going to try to plan your growth, plan your retention, plan your value prop. And it's going to be growing in your own sub market. It's easy to say at a broad level, the market's doing X, but think about your micro market. Think about your buyer set. And frankly, think about how much you can sell in this current universe that we're in.
And maybe back in 2021, you could grow at a hundred or 200 percent and you should staff for that. Now, given solely the macro effects or the micro effects of your market, you can only grow at 40 percent and that's not bad. Just staff to that level of the advice. We really give a staff to the level that you can actually grow at, stay ahead of the curve.
And. Businesses are still growing. It's easy to get all the bad news, but businesses are still growing. And I think when you keep that attitude, you're really able to build that positive culture and get these companies to continue to focus on growth.

[00:26:20] Sean Mooney: Yeah. I love your customer centric thinking there. It's one of those things that it even took me time to learn here.
When I did this kind of crazy startup eight years ago, at this point, I thought I knew everything. I was like, Oh, I'm just selling to myself. They're going to love it. And then everyone spit it out. I was like, Oh my God. And then I had the audacity to ask my customers what they wanted and they shared and they told me, and I was like, Oh, it's a little different, but not totally different.
Yeah, we can do that. But like getting into the mind of your customer, but also appreciating that that's not a static mindset. It changes over time. It ebbs and flows with the economy, with their segments. And so think about what your customers wants, where you can serve them, how you can help them improve.
I really like your point also is like. And that's not just a constant. Some years it's going to be one way, some years it's going to be another way, so constantly have that perspective of what are your customers challenges and opportunities and how you can best address them, not only at a point in time, but over time.

[00:27:18] Phillip Lewis: Yeah. And through that, how do your customers view the ROI of your product? It's easy for you to say, Oh, well, you're going to save X by using our product. You're going to generate Y more revenue by using our product. Right. Yeah. But they might be using it for a totally different use case than you thought.
They might be driving value from an analytics piece, from an insights piece. There might be a software ROI, but if you understand that value, that true perceived value that they're getting, that'll help you then go and speak to new prospects about the value they could be receiving based on the value your current customers are receiving.

[00:27:54] Sean Mooney: I love it. And then it helps you do value based selling. There's so much that that opens up that. As business builders listening to this that you can kind of Walmart form of innovation into your companies. So I think that's a great perspective there. Hey, as a quick interlude, this is Sean here. I wanted to address one quick question that we regularly get.
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.
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.
As we kind of turn the page here, one of the things that I love asking folks like you who have been really successful is about like some of the things that you've been reading. There's definitely some kind of similar themes on this call. It's like, don't create it all yourself. You can find some things that other people have figured out the harder way and do that.
And that's absolutely something that I have to do because I wouldn't say I'm creative. So Philip, what are maybe one of the. Books that you've been reading or have read that had an impact on you and what are some of the takeaways?

[00:29:33] Phillip Lewis: Yeah, so i'm a big fan of history and a book i'm about two thirds of the way through it now It's really interesting.
It's called the big rich. It's about the original texas oil men and then the rise and the falls of their families it's a pretty long book, but it's pretty interesting and What I found the most kind of applicable to business is it's kind of four families that it's tracking You It's H. L. Hunt, Roy Cullen.
Clint Murchison and Sid Richardson and their families and when you follow kind of their founding stories Each one is very different. You have ones that were out in the fields actually sleeping there doing the drilling themselves. You have others that came through, they were gambling and legal background and they kind of got into it.
Others that failed multiple times before solving. And I think one of the things that comes across is there's a lot of different ways to end up being successful. There's a lot of different backgrounds. Too many times I see people, here's my five year plan and how I'm going to get to this. I need to go do consulting and then I'm going to go do strategy and then I'm going to go to corporate and I'm going to go run this company.
And I think what you find by these four gentlemen is there's an element of just go and do it. This is what you want to do. Just go and do it. And the other is, is an interesting story where I forget which one it was, but he was out drilling a pipe one night and They have all these fires around the oil wells and they strike the oil, but a pipe comes undone and splattering oil everywhere, and if it ignites with one of these flames, it's literally going to go up and all those oilmen that are working there are probably going to blow up.
Well, you would think that this guy is now at this point made pretty decent money, but he's still early in his career, is going to run away and let them handle it. Instead, he runs right into the oil well. He goes right there and is jumping on pipes, holding things down, getting his men to close this, turn off this, put this fire out, and one of the people in the book said, this is why he is able to recruit the best oil men to work with him, the best drillers, the best hands, because they know he will run into the fire with him.
And I think there's something to be said as a leader. It goes back to what we talked about at the start, they want to see how you're executing when everything's on fire, when things are going really bad, and they want to have the person that's going to lead them in and be at the front of the line. Not the person that's saying, now you guys go figure this out, this is your problem.
And I think there's a lot of leadership lessons within that one story right there.

[00:32:13] Sean Mooney: I love that. It jives very nicely with our earlier conversation, the cyber strike calls. You didn't say hey honey. Let's go. We're going to go to the birthday party. You're like, you ran towards it. That's how you address is run towards the problems.
Take that first step and that second step. And then that has these amazing ripple effects through the organization. And I'm curious also, I've had that book recommended to me multiple times. It's on my shelf. Part of the wonderful thing about this podcast is I get a lot of great book recommendations. The other side of the coin is I get a lot of great book recommendations, and I'm not a fast reader.
So, so, or at least most of my reading is business reading for work. But that's on the shelf, and I'm going to move that straight up. And one of the things I'm curious about, are there any kind of overlays here to think about the big rushes? You know, that's about the oil rush. We have the AI rush coming in right now where undoubtedly a lot of those holes being punched in the AI ground are going to come up empty and are, but there's tons of oil in certain places there.
So are there any kind of metaphors or analogies that you've gotten from that book that kind of inform maybe what's happening now or will happen in AI?

[00:33:30] Phillip Lewis: It's interesting applying to AI. The one that I thought was probably most recently close to it would have been Bitcoin, frankly, if you're mining Bitcoin and the original Bitcoin miners that Everyone said they were crazy and what are they doing spending all this money and where that's ended up on the AI front I wish I had a really good one for you of where the big winners and losers right now.
It would appear that The large incumbents, given how much money it takes to train a model or have an inherent advantage, but I would say that companies that are able to be nimble, that are thinking about ways to maybe refactor these models or make very specific purpose driven ones could be very successful.
And the other would be, if you're looking at. A moonshot would be, it's probably more for like the Georgia tech engineers that are listening to this, but is there a new paradigm of compute other than the current chips that NVIDIA is making because they have like an 80 percent market share that would tell me rather than trying to.
Get a faster horse, create a car. What could that be? Is there something in the quantum world? Is there something that I can't even fathom? But I think that would be another paradigm shift that could lead to an oil boom, so to speak.

[00:34:54] Sean Mooney: I think you're spot on. And I think the other metaphor is the internet.
And as you think about late nineties Netscape comes out, suddenly the internet is open to mere mortals. And then all the telco people start building out the fiber networks and some have made a lot of money. Sound didn't. To your point, then everyone went from kind of strategy in itself, pie in the sky, to doing application specific things.
And then, even in the infrastructure, like, there were better ways to build the pipes. I think you're spot on. We're already seeing AI kind of turn into going from, we're gonna cure all of cancer, to like, we're gonna help patient satisfaction. You know, like, and distill like the feedback very quickly, very specific tactical applications of a tool.
And then the people building the rail and the pipelines, some of them are going to make a ton of money. But in the meantime, someone's figuring out how to move that oil faster around. So to your point on the book as well, there's going to be many ways to win for those who are kind of clever and agile and tenacious and run towards the problems.

[00:35:56] Phillip Lewis: A hundred

[00:35:56] Sean Mooney: percent. Philip, thank you, thank you, thank you for sharing your insights here. I've learned all sorts of things I wish I knew before. And I'm grateful for it. So thanks for spending your time and kind of pulling back the curtain here a bit.

[00:36:10] Phillip Lewis: Of course, Sean, really appreciate it.

[00:36:21] Sean Mooney: That's all we have for today. Special thanks to Philip for joining. If you'd like to learn more about Philip Lewis and Fulcrum 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, truly appreciate your support.
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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.