Private Equity Growth Levers for Founder-Led Businesses with Tim Billings

Sean Mooney: [00:00:00] 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 a fantastic conversation with Tim Billings, senior partner with Quad-C. Enjoy.

Before we get started, here's a quick disclaimer. Tim works for Quad-C Management Inc., a registered investment advisor with the US Securities and Exchange Commission based in Charlottesville, Virginia, with approximately $5.2 billion in AUM. He is speaking today in his personal capacity and not on behalf of Quad-C.

Please note that anything discussed today should not be considered investment advice or recommendations to buy/sell securities. Quad-C and its investments may have business relationships or [00:01:00] financial interests related to topics discussed today. Please see Quad-C's Form ADV for more information on conflicts of interest.

Let's get to the show.

I am super excited to be here today with Tim Billings. Tim, thanks for joining us.

Tim Billings: Thank you, Sean. Really appreciate you having me.

Sean Mooney: This is a really good one. I've been looking forward to this for a long time. So Tim and Quad-C have been, like, some of the more OG-er of people who trusted us amazingly, like, many years ago.

And so, not only am I forever grateful for them in trusting us, but also just knowing everything about Tim and his firm, this is going to be a really excellent discussion here. So Tim, I appreciate it, and looking forward to jumping in here.

Tim Billings: Thank you, Sean. Sean didn't ask me to do this, but a quick plug for BluWave.

We've used the firm dozens of times to find service providers, and they do a really great job. So if you are looking for any service providers, they're absolutely excellent at matching you up.

Sean Mooney: Thank you, and I do appreciate that.

Let's jump [00:02:00] into you because I think that's going to be the most interesting part of our conversation here.

Let's start off. Can you tell us a little bit about yourself, where you grew up, where you went to college, how you ultimately got into private equity?

Tim Billings: Yeah. So I grew up in northern Virginia, the oldest of three, younger brother, younger sister. My dad was a college professor, and my mom was a nurse, so had a comfortable middle-class upbringing.

But if I wanted a new pair of Nikes, I had to buy them myself, so I worked a lot in high school. Had a lawn mowing business. It was a great business back then because all the yards in my neighborhood were small, so you could mow them in fifteen minutes and make $20 a yard. It was a great business. And worked at a pizza place and a restaurant, all really good experiences.

But I was always fascinated by the stock market growing up. And so I went to Georgetown and studied finance, met my wife, Tricia, there. I was not the best student starting out. I got very mediocre grades my freshman and sophomore year, [00:03:00] and then I realized I needed to get serious. And so I did well my junior and senior year as a bit of a late academic bloomer.

From college I moved to New York, got into investment banking. It was an interesting time in the 90s. I went through, I think, three mergers of banks in my first two years. I started out at Chase. They merged with Chemical Bank. Then I joined a firm called Dillon Read, which was an old-school investment bank that got bought by Swiss Bank Corp.

And then Swiss Bank Corp merged with UBS, so went through a lot of mergers. But was fortunate. I had a lot of great mentors and I sat in on a lot of the internal underwriting committees, which is how I really learned to think like an investor. And when I was doing investment banking in the late 90s, telecom was booming.

So I did a lot of telecom M&A and had a really great experience, but wanted to do more than advise on M&A, and was really fascinated by private equity and taking an ownership stake in a business and then working with the company over [00:04:00] many years to grow, versus just advising on a deal and moving on to the next transaction.

PE was still very new at the time, and so there wasn't, like, a set career path like there is today. But I joined DB Capital, which was Deutsche Bank's private equity arm. They had bought Bankers Trust and merged the businesses, and then I was part of a group that spun out of DB Capital to form a group called MidOcean Partners.

And I was in New York this whole time, so I spent about 19 years in New York City. And then in 2008, I joined Quad-C, was in New York for about five years with Quad-C, and then moved to Charlottesville in 2013, which is where Quad-C is based today.

Sean Mooney: I love the background and it's interesting. So being able to have and be fortunate enough to have conversations like this, there's a number of common backgrounds with parents, and one of the most common one is having a parent who's an educator.

And thinking through why that is, it's just probably there's an installation of curiosity and constant learning and constant growth [00:05:00] mindset. Does that kind of resonate?

Tim Billings: It does. It's very interesting. And the crazy thing is my brother is now a college professor. My dad taught economics, and my brother is now an economics professor at the University of Colorado Boulder. So yes, it totally resonates.

Sean Mooney: Oh, wow. Those are good places to visit, too.

Tim Billings: Yeah.

Sean Mooney: And I also appreciate that you're a fellow Hoya. And like you, I was also a late bloomer fellow Hoya. So I think I enjoyed M Street a little bit too much my, ... my freshman year.

Tim Billings: It's dangerous.

Sean Mooney: I always tell this story, and it's like we had a friend of ours who had really good handwriting, I'll just share her first name, it was Erin. And we all thought that we were golden because Erin had excellent handwriting and we can get all the notes, and you would take it back then to the library and you would find her in the library, because she actually was a good student, and then we'd get photocopies of them.

And then what I found out, though, was if you show up to class, they tell you everything that's on the test. And then I found out that Erin wasn't a very good note-taker. So then I went from pretty mediocre grades to, like, a [00:06:00] 4.0. It was like, "This is easy. They tell you everything that's on the test in class."

Tim Billings: That's awesome.

Sean Mooney: I think one of the common attributes of PE people is you learn how to land on your feet. So I was able to pull up out of that nosedive and get it up high enough to have some poor investment bank believe in me.

Tim Billings: Well done.

Sean Mooney: So the way-back machine is great. You eventually ended up in Charlottesville.

How did Quad-C end up in Charlottesville?

Tim Billings: Yeah. So our founder, Terry Daniels had gone to the University of Virginia, played football, and he had bought a farm down here. And when he decided to start Quad-C in 1989, he thought he could do it anywhere, and the idea was to recruit some smart kids from the University of Virginia.

That's why we're here, and it's been great. Great college town. About half the firm has some tie to the University of Virginia. And then post-COVID, everyone's wanting to move down. So it's been really a good thing.

Sean Mooney: As a parent of a college-age student and now another [00:07:00] high schooler, I know there are legions of high school kids, probably including my own, who aspire to, more than most things other than else, to have the opportunity to go to UVA.

So what an amazing college town to live in.

Tim Billings: It's a special place.

Sean Mooney: So one of the things I love to do is to dig a little bit deeper into stuff that even goes beyond your timeline. And one of the questions I like to ask is, what is one thing that we would know you better if we knew this about you?

So Tim, what would be one of those things that kind of jumps out?

Tim Billings: Well, if you asked my eleven-year-old daughter, you'd get a very different perspective of me versus my work persona. My daughter, Francis, really brings out my laid-back and silly side. I'm a horrible singer, but we sing in the car together on the way to school every day.

It's super fun. The only downside is that Spotify gives me really strange recommendations since I listen to a lot of Olivia Rodrigo and Alex Warren and all sorts of other songs [00:08:00] that eleven-year-old girls like.

Sean Mooney: So your algorithm is probably very uniquely tuned.

Tim Billings: Oh, it's bad. My Spotify and Netflix, it's scary.

Sean Mooney: So what are your favorite anthems that you all sing together?

Tim Billings: Lately, it's been Olivia Rodrigo and Alex Warren, but it changes. It's whatever my daughter Francis and her friends are listening to, that's what we sing.

Sean Mooney: Oh, that's great. Yeah, that's what cars are built for, right? Only second to the shower for the acoustics, I guess.

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. They 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 everyday top proactive business leaders at public companies, independent companies, family companies. So absolutely, [00:09:00] you can use us 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.

So why don't we jump in to maybe the next phase of our conversation here. And one of the things, Tim, when I get an opportunity to speak with people like you who have built these really successful investment firms, is to get a chance to see what is your view on what makes a good company.

And so one of the things I'd be curious about, like when you get a new CIM in, you're looking at a company for the first time, what are some things that you're looking at saying, "Is this already a really good company? Does it have the attributes, the levers?" Or probably as importantly, if not more important these days, "Can it have these things?"

Tim Billings: So the majority of our investments are founder-led businesses, and so we're often the first institutional capital. Half our firm does [00:10:00] industrials and half does services. I spend most of my time in business services, so we focus a lot on the people side of things, and we're really looking for businesses that are providing a superior service to their customers and have found a way to do that in a sustained and differentiated way.

There's no patents or secret formulas, so it comes down to people and execution, and we spend a lot of time with the management team understanding how they do what they do, how sticky are those customers and why, how are they growing with those customers? How are they adding new customers, and how much of the growth is price versus volume?

Do they have the ability to raise prices? Is there operating leverage in the business? Is AI a tailwind or a headwind? What is the company culture and what drives employee retention? But when we look back at our past successes, boiling it down to two things. One is a founder or a CEO who is open-minded and a mountain climber.

It's [00:11:00] critical to our ability to create value, and the founder has to want a partner and not just capital. So that's number one. Number two is, it's really having multiple growth levers because they won't all work, and we need to find a way to play to the company's strengths, and oftentimes in a founder-owned business, the founder has identified them, but he or she doesn't know how to attack them or has been reluctant to invest dollars to execute on them.

Sometimes it's as simple as investing in sales and marketing or expanding geographically or adding new services or pursuing M&A. And so it's really looking for those opportunities when you have a good core business.

Sean Mooney: I think you just summed up my Columbia MBA in about two minutes there. So I appreciate that. Probably would have saved the PE firm that sponsored my MBA a lot of money. Where were you back then?

So one of the things I'd love to dig in and, in all those nuggets is you mentioned a CEO who's a mountain climber. Can you [00:12:00] say more about that, and what does that mean?

Tim Billings: Yeah. So when we think of a mountain climber CEO, this is someone who wants to scale new heights. They want to grow. They aren't dialing it in. They aren't satisfied with the status quo. They want to inspire the people around them. They're hungry. They're motivated. You always have this concern when you invest in a company if the founder takes a bunch of money and puts it in their bank account are they going to show up for work the next day?

And you don't have that concern with a mountain climber. It's in their DNA. They love what they're doing, and they love trying to achieve the next thing.

Sean Mooney: I'm a collector of metaphors and analogies, but I love that metaphor because if you think about building a business, it's constant desire to go upward, right?

But in the meantime, there's ups and downs, and there's slips and falls, and you're pulling yourself back up. But true business builders, like, they need to get to that peak And when they get there, they need to get to the next one and the next one.

Tim Billings: Exactly. Like you said, it's always [00:13:00] changing. You hit roadblocks, you've got to go left or go right, and it's that ability to adapt and that desire to get to that next peak.

Sean Mooney: As I've seen timeless, when I was in PE, you just see these people like they can't help it. It's in their DNA. It's dyed in their wool. Like they have to keep on doing it. If you give them some money, it doesn't really matter. One of the great things I get to do here is, a lot of times when people will sell their businesses who have been tremendously successful, they want to do something, but they just maybe aren't looking to do an 80 to 100 hour a week job of being a CEO when you just have that.

And I always ask them, probably knowing that someday a PE firm will founder-ectomy me. So... but I'll have it coming. It's like, "How long was it after you quasi-retired and quote unquote 'went to the beach' before you just became insatiably neurotic about getting back to doing something?" And I'd say 90% of the people, these mountain climbers have the exact same answer: three months. [00:14:00] It's like 90%. It's like three months. And it's just because your point: it's dyed in their wool, and I never really thought about that as you're assessing a company. It's like, look for those people. They're going to have no choice but to overcome and get altitude.

Tim Billings: And look, great things happen when you partner with people like that because we've had businesses where the industry changed, and if we didn't have that mountain climber, we would've lost money on the investment.

Instead, we had a great return because the mountain climber found a way to create value in a very different environment than we thought we were investing in.

Sean Mooney: I think more and more about this metaphor. It's such a good one in that I think most people from the outside and they see what happens with the businesses after you build and they think it's a straight line up and to the right.

Tim Billings: Never.

Sean Mooney: And I always describe it, it's like building a company, it's more like a sine curve at an angle where you, where it's just up and down and up and down and up and down. But from the outside they're like, "Whoa, that must have been easy."

Tim Billings: It's hard. Every day is a knife fight.

Sean Mooney: It is not for the faint of heart, just like mountain climbing.

Have you climbed any mountains in real life?

Tim Billings: I [00:15:00] have. I was fortunate enough for my 50th birthday to climb Mount Kilimanjaro with my kids, which was an amazing experience. Really enjoyed it. It also gave me a chance to unplug, which I haven't done really ever. So I had five days of no cell service with just my kids. It was wonderful.

Sean Mooney: I did something like that right out of college, and I haven't done it since. And so did you go through like withdrawal when you were first doing it?

Tim Billings: Definitely. In fact, one of the guides had cell service, and I was literally offering him money to hotspot to his phone. I couldn't help it.

Sean Mooney: But then you get this, I'm sure this feeling of serenity about two or three days later. So...

Tim Billings: I slept great.

Sean Mooney: Yeah. All right. Well, we don't want to get-- we don't want to trigger anyone, so maybe we'll move our conversation on here.

Hey, Karma School listeners, this is Sean with a quick aside. Virtually every day, I'm having conversations with private equity firm professionals and business operators, and we're talking about the same exact thing.

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One of the things that I'm also interested in from your lens, how does Quad-C think about approaching value creation? How do you support the companies once you're starting this mountain climb with them?

Tim Billings: We've evolved a little bit. I mean, we've stuck to our same core formula, but we've continued to evolve our value creation model.[00:17:00]

I think what's a little unique about Quad-C is that from our beginning, over thirty-five years ago, we've always tried to think about the businesses that we invest in like an owner, and we do that twenty-four hours a day. So we're not just deal guys thinking about how do you buy something for ten times and sell it for fifteen times.

Instead, we spend a lot of time with the CEO, who's often the founder, before we invest and align with them on a plan. And that plan will change, but it's important to us that we have a shared vision and alignment up front on how we're going to create value, because that's really the blueprint we're all going to follow, and we need to make sure we're aligned.

And then our investment team sticks with the investment post-acquisition, because we're investing a lot of time and effort understanding, learning the business. We stay involved as very active board members, strategic advisors to our management teams. In many of our founder-led businesses, they've never had a partner, [00:18:00] and so we're very careful to provide support and advice without getting in the way of the team that's running the business. And so it's really providing that strategic support so that founder and CEO can really achieve those objectives.

Now, what we've done recently over the last few years though, is we have started to build out a portfolio optimization team, but that's really functional experts that can help as needed. So a lot of our companies really need additional help with finance and accounting, so we have a dedicated resource who can really help the companies with finance and accounting, whether it's how do you develop better KPIs, maybe it's around closing the books sooner, it's whatever the case may be.

Same thing with IT. So those are two areas where a lot of our companies really need the help, and we found that they were asking us for the help. The deal teams weren't necessarily the best ones equipped, so now we have dedicated specialists to help them there. [00:19:00]

Sean Mooney: I really like your approach, and one of the things that I think a lot of people outside of PE might not fully get is, like, how much of a team sport it is and how aligned things are.

Because, like, in your business, no one does well unless everyone does well. And not only for you, like one investment. You have to do well across 10 investments in a portfolio. And if you're not consistently doing that, everyone wins together or everyone fails together. And so the way that you've set it up, I really like, because the people who are tasked with making the investment, sometimes it's easy to hand it off to someone else and say, as you're going through this mountain pass, it's easy, like, "Hey, this is the other team's...

this is their job now. I'll just give them my deck." And the way you're setting it up is like, "No, we're going to be with you through the ups and downs, the hills and valleys, all the way until the peak when we exit, and we're going to do it together." And so I really like that.

Tim Billings: It's a really important point because you never want the finger-pointing, and we've always viewed it as , it's a firm deal, not an individual's deal.

And so when we make an [00:20:00] investment, we do think about it because we've all signed off on it. And so it really has to be a collective effort, and no finger-pointing if things don't go well. You put a lot of effort and it takes a lot of time, and like you said, you have to be rowing in the same direction, otherwise it's really difficult.

Sean Mooney: I like how you're also then coupling it with real subject matter expertise in the areas that go beyond your wide range of expertise, but you're like, "Hey, we're going to bring in finance, IT experts, et cetera, who are going to be able to help you in the real specific specialized areas."

Tim Billings: Exactly. All of us here are reasonably good at finance, but we haven't closed the books for a mid-market company.

We haven't had to do a lot of the day-to-day activities that our CFOs have to do. And so when I was working on it, I'd give myself a B-minus in terms of helping the companies, but Joe, who's our expert in finance and accounting, he does an A-plus job, right? because he does it every day and he has that experience.

Sean Mooney: I remember when I started BluWave and I spun out the PE firm I was with, and I was like, "Oh my God, [00:21:00] I don't really know how to close the books." I was like the first thing I did was get an outsourced accounting firm when we were, like, real little, bitty. I was like, "I need someone to do this," because, like, I know how to read the books.

Tim Billings: Exactly.

Sean Mooney: Just don't know how to close them, so... But there's so much expertise and knowledge that's required to do that well in a professional way that's required by a firm of your stature and standards.

If we go to the next chapter here, you've made the investment, they align with the key kind of things you're looking for in a business. You're ready to climb the mountain hand on hand here. What are some of the top value creation opportunities that you are now thematically thinking about and engaging with your portfolio companies these days?

Tim Billings: Every company's different, and so we do try to take a bespoke approach to each opportunity.

But if I were to come up with three common themes or value creation levers that we typically use, I would say that number one would be sales and marketing. What we [00:22:00] find in a lot of the businesses that we invest in, that sales and marketing is often underinvested, and it can be the best growth lever, right?

Because we're picking good companies, they have good products and services. And so by expanding the sales force, by making sure you have the right sales commission plans, by investing in marketing, by looking at your pricing, we find that can be a very effective lever for a lot of mid-market businesses.

That's a big one we look for. I think number two is around talent. One of the things with founder-owned businesses is a lot of times they've underinvested in executive talent. They haven't wanted to hire a world-class CFO, and instead they might have a controller. And so making sure you have the right people.

They may not have a chief revenue officer or a chief people officer. And so one of the ways we help that founder scale their business is by working with them to surround [00:23:00] themselves with the talent that they need to really grow the business and take it from, say, a hundred million in sales to a billion dollars in sales.

They took it from zero to a hundred, but how do you take it to the next level? And then today with AI, we can't have a conversation without the impact of AI, and so talent needs are different, and a lot of companies are trying to figure it out, and a lot of them haven't adapted. It's a constantly changing situation, and so really looking closely at the talent, what's missing, what skills does the team need in today's environment?

If AI can do some tasks, then how do you repurpose those resources, and what skills do those people need? And then, how engaged are the employees? I spend a lot of time in service-type businesses, and so employee engagement, employee retention, making sure that they're aligned. So we have a profits interest program with all of our companies and pushing that down into the organization so that they feel like owners, it can be a very powerful thing.[00:24:00]

And then the third category would be M&A. We don't do acquisitions in all of our companies, but a lot of them we do. I think one thing that I learned very early on is don't just do acquisitions just to get big. I've seen many of my peers pursue buildups. They got too big too quickly and focused on scale, and that can lead to some problems.

And so really looking at every acquisition, does it fit strategically? Does it give us access to a new geography, a new customer base, key talent? Like what's the strategic rationale? And if you do that, then you can have a successful M&A strategy versus just trying to get big.

Sean Mooney: For our listeners who are new PE-backed CEOs or aspiring PE-backed CEOs, listen to what Tim said.

He just showed you the way. So I mean, what you said there I think was so spot on. It's like at the end of the day, value creation and returns are correlated with growth. You're not going to cut your costs to salvation here. I mean, that doesn't mean you're going to carry a bunch of [00:25:00] extra weight, but ultimately it's about growth.

And part of the job I enjoyed when I was in your seat, or in a smaller seat, but when I was in that seat, was that so many of these companies were so successful, and yet there were so many levers they could still pull. And so one of the things I would call them and not in a negative way, is like, "These companies are successful in spite of themselves," which means they've built something so good that their customers found them.

And I thought that was a really clever line until my colleagues started calling me successful in spite of myself. So, which, which is like, I guess if the shoe fits. And so...

Tim Billings: Sean, you're spot on. That's what I love about, especially in the middle market, because you can really find those companies that they're very successful despite some real obvious opportunities, and that's why I think it's a great area to invest in.

Sean Mooney: And then you give them fuel. Like, right, "What if we did this in sales?" Then that engine where customers are just naturally finding them, and then you just give a little bit and then it's like, whew, it takes off. And it's not that easy, but it certainly helps, in real life. And then what I also love that you tied in is like, [00:26:00] but you need the people.

And so often entrepreneurs and new executives, they're thinking about, well, we can't invest. Every dollar of cash flow needs to become cash flow. But there's a wisdom in what you share there for any aspiring CEO or new CEO to this kind of business in PE. In many cases you're going to have great people.

There's a lot that you're going to need to upskill, and then you're going to add some new people, and that's going to create profound returns in this J-curve kind of life of PE, where you're going to maybe make some investments, but it's going to three, four, five years, even two years out, you're going to see these ROIs that a lot of people I think are just wowed by once they go through it.

Tim Billings: That's exactly right. Most of our businesses, we tend to depress EBITDA margins in year one and two because we're making those foundational investments. And so because we're looking at a five-year horizon, doesn't really matter to us if years one and two the margins aren't optimized, because we're investing that money in people, in new products and services, maybe new facilities to drive that growth [00:27:00] in years three, four, and five.

You can't grow without making investments, and so making them early on and then really harvesting and seeing the benefit can be very powerful.

Sean Mooney: 100%. The last piece of wisdom, and once again, bookmark this part of our conversation, if not all of it, but particularly this if you're new to this role. I've seen a lot of CEOs want to do M&A to get bigger, and I think you pointed out really right at the beginning, like, we don't do it to get bigger.

You do it to be strategically more valuable. And that has been a value destructor in so many companies where they just think one plus one equals two. And particularly earlier in my career, I think I had that mindset, and I was like, one plus one, if we got to two, I was like, "Dear God, our model said one plus one equals four."

And then, if we got to two, I was like, "Hallelujah." But...

Tim Billings: And look, everyone does bad acquisitions, and a bad acquisition can be a real drain on a company, both financially, and [00:28:00] from a time and effort and morale, and especially in people businesses, if you have the wrong culture in the acquired business, it can really destroy a lot of value.

Sean Mooney: Yeah, and I think that's another point you made that's so good is that a lot of people don't take the time to look at the culture fit. It's like, if you have oil and water, it doesn't matter what you're going to do, they're going to have a really hard time kind of mixing and blending.

Tim Billings: We've tried, and we don't always do this, but we do try to do employee engagement surveys to kind of get at some of those questions.

A lot of times it's hard as the buyer. You don't have the access to the team to really understand the culture. So we do our best, but sometimes an employee engagement survey can help figure that out.

Sean Mooney: I mean, it's never easy doing these things. I'd like and really appreciate the thoughtfulness that you're advising here and that you do at Quad-C, because it can be, on the flip side, like I don't want to say about all the downsides of M&A, it can also, done right, create tremendous value.

You have [00:29:00] to kind of measure twice, cut once, be thoughtful about it, and not just buy, and then there's so many acquisitions that the weight of those things ultimately, like, cause damage on the infrastructure of the building you're building.

Tim Billings: It's so true, and a good acquisition program, like you said, can create a ton of value if done right.

And so we do encourage acquisitions. It just, again, you have to be thoughtful in how you do them.

Sean Mooney: Yeah. Like everything, it's like it's just don't be blunt about it kind of a thing.

Tim Billings: Right.

Sean Mooney: Tim, you shared a ton of advice here. I actually have tons of notes here and people get nervous at our company here when I have good conversations like this, because then I come back with ideas.

So then I start turning over proverbial apple carts, but that's- ... it's a journey in my own career here, too, as well. But I am a collector of other people's lessons learned, because if life and business were up to me alone, I would've been in a lot of trouble a long time ago, starting off probably earlier in college when I learned if you go to class, they tell you what's on the test.

So I am [00:30:00] curious, if you were to go back to your 22-year-old self, you're sitting next to yourself at The Tombs, and you're going to give yourself a piece of advice that you wish you knew then, what might one of those be?

Tim Billings: It's a great question. When I look back and think of what I wish I'd known as a 22-year-old, I think number one is: really surround yourself with good people.

And what I mean by that is that at The Tombs there'd be lots of friends that were fun to drink and fun to hang out with, and that's great and important to have fun, but it's also, whether it's professionally or just personally: surround yourself with people who are going to bring out the best in you, because you are a result of your environment.

And I think we've all seen successful people, good people, have oftentimes surrounded themselves with other successful people and talented people, and that's critical. And so I wish I'd seeked out more of that when I was 22. And I think the other thing, too, is just take off the blinders. You get tunnel vision when you're young [00:31:00] and focused.

You're doing your day-to-day job, and just look around and talk to different people and be open to different career paths and different opportunities, and don't just feel like you have to go down this one set path. I talk to tons of kids out of school and they're like, "You know, I had to get the right internship to get the right entry-level position to go to the right firm."

And there's lots of different paths, and there's windy roads, and just take off the blinders and enjoy yourself.

Sean Mooney: It's such really good advice, and I'm looking through it now through the lens of a parent who's on the verge of empty nest-dom, which is, like, really scary. What am I going to do with my time?

As I look through that though, and I look back even on my kids, they go through, like, journeys and different friend groups, et cetera. And I even look back as you say this, on my friend groups, like, you surround yourself by really good people, you can't help but get better. You move as fast as the herd moves, and your values are as good as the values of your group.

And as I saw my kids kind of get into these [00:32:00] groups that are, like, really great folks, they just thrive. And same thing for myself. I think I had a really good group of friends in college who all went on to be really successful, and we all kind of set the standards for each other.

What I like you also coupled about that: take the blinders off. I don't think I ever did a good job at that.

Tim Billings: It's hard. I was bad at it. You get so focused on the day-to-day. I remember one time I was on a business trip, and usually I'm on the plane, I put my headphones in, I'm working, I'm not talking to the person next to me. This one time struck up a conversation with someone next to me, and it led to a really interesting deal that we did because I took the time to actually talk to the person next to me on the plane.

Sean Mooney: It's really interesting, like, those little moments in life if you dare to be part of the world. The world becomes so interesting. For me, probably the one time I took the blinders off, it led to me being accused of having the worst midlife crisis in East Coast private equity history. Which was BluWave.

People were regularly... I was living in Darien, Connecticut, and they're like, "You should just do what everyone else in Darien does. Get a Porsche and a divorce. [00:33:00] This is nuts." I went "No, no, no, this is going to be good, I tell you." Oh, in the meanwhile, I was like, "This might be crazy." But it's so good.

Like, and this was a line from my brother. If you have the audacity to listen to the universe, it speaks. And to what your point is, like, if you're part of it, it kind of comes to you. Does that kind of resonate?

Tim Billings: It does. And look, I mean, like you said, you wouldn't have started BluWave if you hadn't taken the blinders off, and look what a success it's been.

It's important. I try to get my kids to do that. It's hard day-to-day, but there's lots of opportunity out there.

Sean Mooney: And I think today it's, like, a particularly scary time for a lot of people, but it's also, I think, probably the biggest period of opportunity for a young person. It's bigger than when the internet came out, like when we were coming up.

Tim Billings: Tremendous, yes. The internet changed a lot of things, but AI is changing more quicker, and that is going to create fantastic opportunity. It is scary, or can be scary, but it creates great opportunity if you can embrace it and find ways to benefit from it, and there's [00:34:00] lots of ways to benefit from it. I'm not a believer that AI's going to take away all the white-collar jobs.

I think it's going to create a ton of jobs. They're going to be different, and it's going to certainly cause change but embrace that change.

Sean Mooney: I think 1,000% right. One of the metaphors in my mind is, like, when the printing press came out, yeah, a lot of people couldn't handwrite books anymore. But all of a sudden it created, it spread knowledge everywhere, and it created, like, opportunities that were unlike any other period in history.

Tim Billings: It'll be really interesting to look back 20 years from now on where this goes over the next decade or two. It'll be fascinating to look back and see, because it is changing, but I think it's going to be a really good thing if we manage it correctly. There's obviously a lot of risks with AI and how we as a society manage that, but I'm optimistic, and I think we'll find a way.

Sean Mooney: I think that point of optimism is a great time to put a point on our conversation. This has really been an excellent discussion here. I appreciate you investing your [00:35:00] time in me and us here. I know you're tremendously busy, Tim, so I want to extend my appreciation for you sharing your wisdom, because there's all sorts of things I wish I knew that I know now because of this, and so thank you.

Tim Billings: Well, thank you, Sean. Really appreciate you having me and really enjoyed the discussion.

Sean Mooney: That's all we have for today. Special thanks to Tim for joining. If you'd like to learn more about Tim Billings and Quad-C, please see the episode notes for links. Please continue to look for the Karma School of Business podcast anywhere you find your favorite podcasts. We truly appreciate your support.

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, so thank you in advance. In the meantime, if you want to be connected with the world's best-in-class, private equity-grade professional service providers, independent consultants, interim executives, and [00:36:00] AI advisors and tools that are deployed and trusted by the best business builders in the world, including many hundreds of top PE firms and thousands of portfolio companies, and you can do the same whether or not you're in the PE world, give us a call or visit our website at Bluwave.net, and we'll support your success.

Onward.

The views and opinions expressed in this program are those of the individuals presenting, and do not necessarily reflect the views or positions of any other persons or entities, including those referenced herein. No representations, warranties, financial, legal, tax, or other advice are made herein.

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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