Private Equity's People-and-Growth Playbook with Carr Preston

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 an awesome conversation with Carr Preston, managing director with Akoya Capital. Enjoy.

I am super excited to be here with Carr Preston. Carr, thank you for joining.

Carr Preston: No, happy to do it. Really looking forward to it, Sean.

Sean Mooney: I've been looking forward to this one for a long time. I think we're going to have some great insights here, topics, all the good stuff that brings people back here time and time again.

As we jump in, as we always do, Carr, I'd love to get a bit about the story of you. So can you tell us about [00:01:00] yourself, where you grew up, formative experiences, college, out of college, and then ultimately how you got into this industry we call private equity?

Carr Preston: Yeah, sure. No, happy to, and it's a great place to start, and it's great to be here.

So I grew up in San Francisco, California, a place that always will be near and dear to my heart. Still an avid 49ers and Giants and Warrior sports fan. And then stayed there until after high school, and after high school, I went to college at Morehouse in Atlanta. HBCU, and really fortunate, a little 'right place, right time', because in the previous years, they really did a lot of establishing and investing in the business program.

Got a lot of benefit from that, so I was a business major there. And I think if you look back at Morehouse, there's just been an impressive number of business, financial, and kind of private equity leaders through the years, so it was a real formative experience, and learned a lot in the classroom, learned a lot out of the classroom.

It's still a very effective [00:02:00] network.

Sean Mooney: So you grew up in San Francisco, you ultimately went to school in Atlanta, and then where did you go from there? What was your first step out of college?

Carr Preston: Yeah. So right after college, I went to law school at George Washington, in Washington, D.C., and then I went straight to business school after that at Wharton at the University of Pennsylvania.

Then I went to New York and started out working at Chase for a couple of years, and then really ended up moving into private equity when I joined Allied Capital back down in Washington, DC.

Sean Mooney: So that's, A), a great set of experiences. So growing up in San Francisco you've triangulated here, right?

You've got, or almost like a square, I guess, because right now you're in Chicago?

Carr Preston: That is correct. That is correct. But San Francisco will always be home, and really enjoyed the time in New York and DC and, now I've been in Chicago for a number of years, and it's really treated me well.

Sean Mooney: As you think [00:03:00] about those kind of stops, so an iconic, highly heralded college. You went to business school. What made you think about going to law school?

Carr Preston: Yeah. So I went to law school first and always was interested in business, thought about business law, and then I was fortunate to get into business school right after law school, and went straight, and then thought I would start my career after business school.

Sean Mooney: It's an interesting path. I remember when I was coming up and I grew up in Texas, and then I went to undergrad in Washington, DC, and then I ended up in New York after that. But it was like, the degree was always the JD/MBA, and everyone's like, "You should do that." Now, I couldn't get into any schools that would allow me either

to do the JD or the JD/MBA.

Carr Preston: Yeah. Well, at least I wasn't smart enough to do a combined program, so I did it sequentially, but it all worked out. So it was a good all-around experience.

Sean Mooney: It was such a powerful combo, though, like when you could couple, particularly in private equity, as I grew up in my career, [00:04:00] so much of it becomes contracts and negotiations and understanding kind of the papering of the deal.

And so how helpful was that, before we get too far into maybe your business side of things? How much did that ultimately help you being able to pull it all together?

Carr Preston: Yeah, it really helps having a kind of broader perspective and seeing multiple sides or multiple components of the transaction.

The predominant part is still business analysis, the investing, the diligence. But as you work with lawyers, you may understand what they're saying a little faster, ask some more kind of insightful questions, and just get a good feel for their role and just making sure that side of the transaction's understood and buttoned up.

So it's really served me well.

Sean Mooney: For those listening, I think it's a powerful combination. As I reflect back to my career, as you're an associate, you're learning the art of understanding how to value the business in the private equity way, not necessarily the DCF investment banker way. Then you're learning [00:05:00] like the elements of value as you get into kind of maybe your later associate to VP, like what makes a good company really well.

But then suddenly, like you're starting to negotiate term sheets and talking to lenders, and then you get into like purchase agreements. And that was probably one of the biggest jumps for me, was trying to figure that out. And they don't teach that to you in undergrad.

Carr Preston: No, and just being able to understand how the different legal documents fit together, and the focus from the banks or the mezzanine investors, the equity, the seller reps and warranties, and all those different parts as well as, legal due diligence.

So yeah, it does really give you a broader perspective and just make sure you're focusing on the right things, and frankly, that you have the right type of coverage and the right advisors.

Sean Mooney: So, after you've had these experiences, you start off in Chase, which is also another one of these incubators for really a lot of the private equity industry in terms of like they had this [00:06:00] really famous training program.

So, so many of the people that I knew started off at, what was it? Like Chemical and then Chase, and then like there's this series of logos that all ultimately became Chase, which ultimately became JP Morgan. And so you're going to business school, and then you can kind of go one of two ways when you come back.

How did you think about like, "Okay, I can go ultimately get into investing, I can go and do investment banking." What was your kind of decision process when you left your business school?

Carr Preston: Yeah. After networking and talking to people, really wanted to try to make the move into private equity.

I was really fortunate that I ended up joining Allied Capital in Washington, D.C., A publicly traded private equity firm. It just really started at the right time. This is the early 90s, left in the early 2000s. So I was there a little over 11 years. It was just a great place to learn the fundamentals of investing, company and business model analysis, and what [00:07:00] makes a successful company, due diligence.

The founder of Allied kind of started out in the FBI, so due diligence was born and deeply embedded in the DNA. So it was just a great overall experience of working with a lot of really smart, really talented people, and it was a great kind of overall experience.

Sean Mooney: As I recall from those firms, and there's really two huge innovators that came out of that area, there was Allied and there was American Capital, if I'm correct, and they essentially created this public company structure for doing private equity. You're at the kind of like the birthplace. A lot of the structures now in some ways are, started all back in Washington, D.C. I thought the other thing that was great about those firms, having friends that went to both of those, who said like you also had a variety of structures that you could use to invest with.

Is that an accurate representation?

Carr Preston: Yeah. No it really is. You had mezzanine, you had growth equity, you had more kind of buyouts, and just the number of deals and the [00:08:00] velocity, so you just kind of learned a lot and saw a lot. So it was just a really great environment to be in at that part of my career.

Sean Mooney: I always thought it was such a great training ground. At a place like that, you get to learn the risk-adjusted perspectives of where you can play in a capital structure and how it differences and matters, in terms of how you're making investment and how you're playing with the capital structure.

Very few places anywhere could give you that kind of understanding, particularly earlier in your career.

Carr Preston: No, it's a great point, Sean, because one of the benefits there, there was just a number of different investment products where you could work your way up and down the balance sheet on the right side just based on whether you had more of a debt viewpoint, equity, whether you want a blended, what risk you wanted to protect and find the right structure really that kind of tied into the deal and really kind of what supported your investment thesis.

So it was great having that flexibility where you're not always a hammer kind of looking [00:09:00] for a nail. There are a lot of variables, a lot of variations on different structures and different approaches, and you're talking and working with a lot of really smart people. So it's just a great all-around experience finding the right solution for the right deal.

Sean Mooney: A similar type of mentality, different structure firm was a firm called Key Principal Partners, where I started out. And similar, what we would do is we could pick our security. We would do mezzanine debt with warrants, we would do preferred stock, or we would do buyouts. And it really depended.

We would look at the company and say, "Where do we think that best risk-adjusted return exists?" And very often what we would do with a founder-owner is give them two term sheets. We're going to price the debt in preferred structure one way or the buyout the other. Which way do you want to go? It was a tremendous learning opportunity, and then we would go all the way to doing, like, buyouts in China, which I think all of us wished we didn't do.

Carr Preston: Yeah, exactly.

Sean Mooney: That's like one of the reasons why I went gray very early, but that's-

Carr Preston: Yeah. Probably still learned a lot though, so that's good ...

Sean Mooney: That's for a different conversation. [00:10:00]

Carr Preston: Yeah.

Sean Mooney: 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, 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.

One of the questions I love to ask, Carr, is we would know you better if we knew this about you. So what might be one of these things that [00:11:00] doesn't maybe make it to your LinkedIn or your bio, that we would know you better if we knew?

Carr Preston: Yeah. I think one of the things that was a lot of fun was probably in a kind of relatively short period of time, I went to 11 Prince concerts.

So it was really the kind of soundtrack of my undergrad, grad, and actually even some high school years as well. So that was a real fun period. So about seven or eight years was just a real kind of fanatic and really enjoyed that. So that's one of the things that really doesn't make it into LinkedIn or into the bio.

Sean Mooney: Prince is one of the all-time best.

Carr Preston: Yeah.

Sean Mooney: For younger listeners, they broke the mold with him. He was THE musician for probably a decade straight. I don't know. I don't think anyone could outdo them.

Carr Preston: No. And just so prolific with the music, the energy, and the performance. So if you look at that high school, college, as I said, grad school, so it was always [00:12:00] a backdrop, and with a different kind of sets of friends at different points in your time. So it was just really just a lot of fun. It was a blast.

Sean Mooney: Now, back in the day, you used to have to listen to music on these things called cassette tapes, for some of our listeners here, and I'm pretty sure one of Prince's early albums was, like, my very first cassette I was ever given...

Carr Preston: yeah.

Sean Mooney: by my parents. It was just... And that thing was just like, play it, rewind it, play it, rewind it, play it, rewind it.

Carr Preston: Yeah. But that's a great point, because one of the things is, you hit it, is just playing the albums, putting the album on the turntable kind of with the needle, and you remember the cassette tapes and then Walkman, where you were fully mobile, the forerunner to the iPod.

So yeah, a lot of good memories. So that was a pretty special time.

Sean Mooney: So what was one of your favorite songs of his in one of your favorite locations that you saw the concert?

Carr Preston: Favorite song was probably, "Purple Rain" has to rank high up there, one of the [00:13:00] iconic songs. "Red Beret" was another great one we always liked, so.

And then had a chance to see kind of New York, Atlanta, saw him in Paris, so really just a great overall kind of experience.

Sean Mooney: But yeah, as good as they get, he still makes it on all my favorite song lists. If you're not familiar with him, that's something you definitely need to fire up on Spotify and then I think you'll get hooked.

Carr Preston: Well, everybody has those touchpoints with certain audiences: hear a song, takes you back to a time, a place, people, and Prince has really done that, as I said, for about, 10 years. So it was just a great reference point.

Sean Mooney: If my kids are any judgment, the 80s and 90s have been coming back in a big way, so it's...

Carr Preston: Yeah, everything comes full circle. So all you have to do is just wait long enough.

Sean Mooney: That's exactly right.

So let's maybe turn the page here on our conversation, and get into some of your business insights. And one of the things I always like to do when I get the good fortune of being able to speak with people like you, [00:14:00] Carr, who have had these types of careers, is to get a sense for how you look at the drivers and elements of value in a business.

And so you're looking at tons of businesses every year. You've invested in tons of businesses over time. When you see a company, and they're coming up to you and you're trying to say, "Is this going to be a good Akoya Capital partner for us to invest in and help create value and build a better business over time?"

What are some of the elements of value that you look at to say, "Is this a good company?" Or probably as importantly, "Will this be a good company in the days ahead?"

Carr Preston: Yeah. I think those are two really good questions and slightly different. And it really all starts with the leadership team and the CEO of the company, and really having a vision, a perspective, being able to develop a strategy, and then as importantly, being able to execute that strategy, because that's where the rubber meets the road, and you really look at roles, who's [00:15:00] doing what, making sure that there's accountability.

But that kind of framework is in place, and then I think the second piece is really just looking for a tangible, kind of verifiable business and economic model. How do they win? Where do they win? How do they differentiate themselves? What's sustainable? What's recurring? What's the value prop to the customer?

And really being able to articulate that in a short, kind of concise way of, what gets you excited, what separates them, and just making sure you have that part of the thesis. And then the third area we pay particular attention to is really the sales function or business development, because a lot of these businesses, lower-middle market, it really is about driving revenue.

How do they go to market? What's the sales strategy? How do they convince customers? How do they identify customers? How large is the market? [00:16:00] How do they onboard customers? What's the follow-up? And is that really scalable or is it more of a one-trick pony? A lot of times, as I'm sure you are aware, is that you run into customer concentration.

You just really want to make sure that there's a scalable model you could build to drive the pipeline to ultimately drive the new business side of the equation.

Sean Mooney: I like how you very succinctly summed up about 20 years of my private equity career in about two minutes there.

Carr Preston: Well, yeah, it takes a lot longer to learn, and then you've got to re-learn it, and it's all about, they like to say 'the tuition you pay along the way' about trying to identify things that go right and some of the lessons learned.

Sean Mooney: All the scars.

Carr Preston: That's part of our business, as they say. You learn it by doing.

Sean Mooney: But you did a great job of, ultimately it's the people that matter. As much as everyone talks about AI, it's the people, right? And then do they have a product that people want to come to? Is that product differentiated, and does the company have a strong competitive position?

And then ultimately, what I thought you did a really nice job then was, [00:17:00] does that create growth that not only grows in time, but sustainably over time? Like I said, you kind of summed up what matters, and it took me probably 15 of those 20 years to figure that out. And then everything changed, and I didn't know it yet.

Carr Preston: No, you kind of learn. And then the other part is, a lot of businesses at Akoya, they're family-held, owner/operator businesses, and we also make sure there's a really strong partnership dynamic. Obviously, you have an economic component to the transaction, but you really want people that are looking for a kind of knowledgeable, credible buyer that help the business kind of get to the next level, that is concerned about all the different stakeholders, customers, suppliers, community, and that kind of factors in.

And then in our deals, they usually stay involved in some role. They have the conventional rollovers. That's really important for us as well, that there's the right leadership team in place, the right business model, valuation, and structure, but there's always that [00:18:00] partnership dynamic, and we spend a lot of time there.

We're big believers in still face-to-face, breaking bread, getting to know each other and just making sure that we're the right partners for each other, or we're not the right partners for each other.

Sean Mooney: This is something that also gets to the, like, complexity and challenge of being a good private equity investor, is you need to understand what makes a good business, the elements of value that you shared.

You have to be able to assess people and teams, and not only individually, but how they work together. And then you have to be able to figure out how much that's valued, and then figure out how much you think you can actually make by seeing the future, and bending space and time. And all of that is super, super hard.

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. Where and how do we actually start with AI? The answer is you start with people who have already done it successfully for others.

[00:19:00] This is exactly what BluWave does. We have built a one-of-one, invitation-only network of trusted AI enablement providers that top private equity firms are using right now to create real value. Private equity-grade quality, pre-vetted by BluWave, ready to go at a moment's notice. And they're not just for PE.

Whether you're a PE professional or an operating company CEO, go to BluWave.net. That's B-L-U-W-A-V-E. We'll get you to the right resources so you can start on your AI journey right now.

One of the most complicated things that I always had is, particularly coming up in my younger age, and I think today still is a challenge, is like when you're looking at a team, what are some of the things that you're looking for to say, "Oh, I think they've got the stuff, and they're going to be aligned with us. Not only are they good, but we're also going to be good together," as you pointed out?

Carr Preston: Yeah. I think it [00:20:00] starts with here at Akoya just realizing that it is a team sport, so really working with people on your team that everybody's assessing, everybody's evaluating, and everybody's a sounding board and able to get different perspectives.

But it's really just looking at the effectiveness of the team, how they make decisions, removing any ambiguity, how they've worked through challenges. Are they all speaking the same language? What's the tone? What's the tenor? We've been in situations where it's been things that where we didn't get comfortable, it's clearly more of a command and control type of environment where people more took instructions, than in others where there is more collaborative, more consensus. And, in our business as well, where we play, a lot of times they may be strong in a certain functional area. It could be technology or operationally.

And then how do you shore up the other kind of sides of the business as well? But, [00:21:00] Sean, there's really no substitute for that evaluation, other than kind of time through the initial management meetings and then spending more time during diligence. But that's really the heart of it.

And the other nice thing about Akoya is the origins of the firm really starts with human capital. The founder built and sold a successful executive search firm. So that evaluation, partnership, dynamic, strengthening, augmenting teams is in our DNA.

Sean Mooney: All the things you share there I think were so on par.

And one of the things that I think you mentioned amongst many really good points that is lost on a lot of, I'd say, businesses as they're growing, is do you have a CEO who's like a command and control person, or is there a collaboration going? And that was something that I think I eventually figured out, is like if you're in a management meeting and the CEO is the only one talking, it creates so much risk to not only, like, key person risk, ' hit by the bus risk', as they say, but it's also, like, scalability risk.

It's just [00:22:00] like, if it's just one person, there's only 25 hours in a day. There's only so far you can go. But very few people mention that.

Carr Preston: Yeah. Well, there's little tricks you learn along the way. One that we always look at is we do a lot of management meetings, and if the CEO is leading the plant tour versus the VP of ops or the COO, because you like someone else being able to do that, and they have trust and confidence because you're bringing through a prospective investor.

Are you making eye contact? Are you speaking to the employees and people that are working in the facility? And what's that dynamic or what's that kind of vibe like? So you could really get a lot. As you said, if you have a CEO who's really leading the management presentation, doing all the talking, dominating the dinner.

If you go to dinner, it's just the CEO, and then he's also doing the plant tour versus incorporating other kind of members of the team, that tells you a lot right there. That's why it's good to have just a team approach, because you're just able to sanity [00:23:00] check things and bounce things off each other, our team.

Did we all see the same thing? Did we read it the same way? What do we need to address? Just doing that feedback after the meetings. That's really so important.

Sean Mooney: Once again, those are all little pearls of wisdom there. And I also love your plant tour comment. It's like when you walk around and do they know the employees by name, and is there a relationship?

And it's really almost like more looking at the employees and see how they're responding.

Carr Preston: Yeah. No. Do they make eye contact, and are they engaged? Because one of the hardest things to do in this business is a cultural kind of transformation, and that's got to be part of it, because one of the things that we need to do, and have to do, is take that family-held business and start to professionalize it. But when and how you do that, who's at the helm thinking through the implications, just has to be very intentional and very thoughtful.

Sean Mooney: I think that's, once again, on point.

I'd say we had one other test I'll add that I thought was, if nothing else, unique. We would call it the golf club test. And so one of [00:24:00] us would make it so that we would go to the dinner with the CEO of the company, and then we would ask to put our briefcase in the back trunk, and we were looking to see if there were golf clubs in the trunk.

We wanted to see if they were ready for how quickly the world was going to change.

Carr Preston: Yeah. That's great. That's a good one.

Sean Mooney: I don't know if I'd recommend that for anyone.

Carr Preston: Yeah.

Sean Mooney: But, maybe a little old school. I don't know if that's necessary today. So I'd probably sunset that test, but 20 years ago it was a good one.

So one of the things that I'd also love to understand, so you've made your investment now. You have that alignment. You have the people, the product, the engine that can grow. There's a fit between you and the team that you're investing with. How then does Akoya work with that company? What kind of support do you offer them as you're creating value together?

Carr Preston: Yeah. I think it really kind of goes back to our investment strategy, and we really have an operating centric approach, and it's really thesis driven, where we're not generalists. [00:25:00] There's certain verticals that we really focus on, and we have a team of investment professionals, but we also have a team of operating partners that spent 30 or 40 years in their given industry.

They have domain expertise. They have operating experience. They created value. So when we sit down with an owner/operator, there's usually a strong kind of affinity. They speak the same language, may have similar war stories, things they had to manage through, and really understanding that business, looking at what it is today and what it could become.

And then as we get closer to close, and you get through the balance of the kind of confirmatory diligence, it's really spending time between the Akoya team, our operating partner, the CEO, and then the seller of the business that usually is a rollover, and creating what we call, like a lot of people, a value creation plan.

But one of the differentiators for us is really working with people that kind of grew up on [00:26:00] the Akoya side in that industry, and things that we're looking for, and then what levers are we really going to turn post-close, to add value and create value, new products, new markets, moving into different geographies, margin expansion, add-on app, whatever it is, resources, capital, time, ownership, responsibility.

And I think the owners really take a lot of comfort with the thought and the rigor that goes into that, that they have somebody that really kind of understands their industry, their company. And was saying earlier, that's really done on a collaborative consensus basis, and then bringing that to bear post-close.

So once again, and then you kind of refine it right after close and as you kind of get into the business and work through that transition. But that's a really important part for us and the resources and the skills and the experience we bring to bear is [00:27:00] not being a generalist, not being one size fits all, really looking at that particular business within that industry of where we need to focus.

Sean Mooney: What I really appreciated in your approach as you described it to me, is one, you're bringing specialized expertise that is tuned for the businesses that you're investing in. It's like you said, it's not kind of one-size-fits-all. Two, you're doing it before you've even closed. I think so often where things go wrong is, we're going to have a strong perspective, we're going to form our hypothesis, we're going to close the deal, and then we're going to meet with the company one week later and say, "Here's your plan."

And what you're sharing with us here is like before even closing your meeting, you're saying maybe sharing your hypotheses, but then getting with your specialized operating executives who know those industries and the team, and creating a greater whole, so there's not this whole kind of zigzag afterwards where you're trying to take time and calibrate things.

It's, particularly in this age in private [00:28:00] equity, it's so much about not just certainty and value creation, it's about speed. And so you're able to get alignment before anything starts. If I were to personalize this in the older age of private equity, we would form our hypotheses, you'd kind of ask them, and then the week after we closed, we would go, "So that plan, it was in the SIM. That was your plan, right? That the investment bankers told about it." And we all knew it wasn't their plan.

Carr Preston: Yeah. You discover that pretty quickly, the easy way and the hard way.

Sean Mooney: Yeah. We'd almost make them squirm for a couple months just to watch them miss their numbers.

And it's like... And at least, it's like, no, it's like, there was just like, why do that? You're both kind of flipping your cards up and saying, "Let's-- we're going to be in this together. Let's position us to win like right out of the gate." You're getting everyone running before they say start. So I think it's a great way to do it.

Carr Preston: Creating that alignment and really kind of creating that common purpose.

Sean Mooney: Now you've got the companies that you've invested in. You now have a portfolio of companies. What are some of the [00:29:00] top value creation opportunities that you and your team members at Akoya are thematically thinking about with your portfolio companies that really other business leaders should also be thinking about?

Carr Preston: Yeah. Really working across the board, but if I had to put a spotlight and highlight kind of one area, it's really looking to optimize, enhance, and improve sales and business development. And really, as I was saying earlier, how do you drive revenue? And there are just a lot of difficulties and challenges and tribal experience, the art of hiring salespeople, understanding the go-to-market, what's effective, things that work, things that don't, training, onboarding, compensation, retention.

A lot goes into that, and it's very bespoke by business. So that's one thing that we really try to say. Are there a series of best practices that we could take across the portfolio? But then there's a lot of differences based on [00:30:00] product, based on market, how to utilize the CRM, how do you... just all those things that goes into driving kind of the top line.

And it's a day-to-day effort to really focus on getting efficient, getting strong, effective, salespeople. That's one thing that we do spend quite a bit of time on to understand pre-close, and then how can we optimize and improve post-close.

Sean Mooney: I think you're bringing on a very important point.

People from outside the industry, maybe their perspective is probably derived from like 1980s movies with Charlie Sheen and Michael Douglas, and it's like, "Cut costs." And the two things I've heard most from you here today are: work with great people, and grow the company. That's what the industry is about.

It's great to hear that's what Akoya is about, because that's the name of the game. That's how you drive value creation, is by people and turning those great teams into an engine that can drive growth. And so as you look into [00:31:00] these companies and you talk about like driving growth, are there any kind of like common themes where you say like, you know what, particularly for maybe founder-owned businesses, like here's one thing of-- and there's many things you're going to do--

here's one thing that like a lot of companies could probably benefit from ultimately, in terms of their own revenue operations.

Carr Preston: It's really having the follow-up and the focus on the kind of commercial activity, having a good organization, a good structure, understanding what the stage gates are, how you're going to manage progress through the sales process, the conversion, the onboarding, and just having a real common understanding there about, you know, who's going to do what, and it's really streamlined, and it's really clear.

And that's one area that I think you could really focus on, and just make sure you have the right attention, because at the end of the day, that's such a critical part of creating value.

Sean Mooney: I think it's a very good point. Not only as [00:32:00] I reflect back on so many of these kind of lower-middle-market businesses, the companies were, and I've used this line before, but they were successful in spite of themselves, and I've shared this before.

Like, I thought that was a really clever name for things until people started calling me successful in spite of himself. But that's a different story.

Carr Preston: Full circle, yeah.

Sean Mooney: Different story. But it's like, there's something about putting structure to things, and then driving accountability that is so important. And very often, these companies that are doing otherwise really quite well, they have a whole new gear if you just put some systems and process around things. And so I think that's a great piece of advice for anyone running their own business who hasn't maybe professionalized yet. Just, by organizing your funnel, your product or service moves through it.

Looking at the data is probably something that unleashes a tremendous amount of value to these companies that have otherwise been really good over their time.

Carr Preston: Yeah, and it's always easier said than done, but the critical thing is identifying, as I [00:33:00] said, what made the company successful. But then, how do you scale that?

How do you grow that? How do you expand that? And really getting the right priorities, then having what the KPIs are, how you're going to measure it, who's going to be responsible, removing ambiguity, and just once again, just having alignment around, what is a strike? What are we looking for? And then having a mentality of where, that is going to be the primary focus of how we're going to measure and how we're going to set up our business development efforts.

Sean Mooney: That's another, I think, spot on, great point. It's just like you mentioned also, it's like choose the things to focus on. One of the things I'll, and I'll even profess in running a company, is trying to focus on fewer things. Like, it's so easy to just start chasing things.

Carr Preston: That's great, because I think really across the board of really understanding what are the key priorities, making [00:34:00] sure it's not too many, where are we going to get the bang for the buck, get the return, and then really making sure that's appropriately communicated through the leadership team to the organization, that there's buy-in, that there's feedback, that basically people have a chance to feel that they've heard, they have an opportunity to air any differences of perspective.

As I said, that's always easier said than done, but we've seen that really makes a difference where you're not trying to do 12 things, it's three or four, and no matter who you talk to, you get a different variation of what they are. People understand their role. What constraints are you working through?

What bottlenecks? Yeah, I just think that's table stakes at the lower end of the middle market, and a lot of that's driven by leadership.

Sean Mooney: You said it so well. It's easier said than done, and it's really hard to do the fewer things. But the focus that you're bringing to the companies you partner with, my sense is, and certainly my experience back in the day and certainly experience here whenever I find the ability to [00:35:00] narrow the aperture of the lens, is it has a profound impact.

Carr Preston: The devil's always in the details.

Sean Mooney: So, Carr, one of the things that I always love to do, because if the world were up to me, I'd be in a lot of trouble. I'm like a Frankenstein of other people's good ideas. I just kind of grab them and throw them onto me kind of a thing. And one of the things that top business builders do is try to read as much as we can and pass books amongst each other, et cetera.

And so one of the things I'd be really interested in is, are there any books, either personal or business, that have made an impact on you?

Carr Preston: Yeah, I think three come to mind. The first is a book called The Warmth of Other Suns by Isabel Wilkerson, and it's really about the migration of African Americans out of the South in the late 1800s, early 1900s, to the East, to the Midwest, and then to the West Coast, and just what that entailed, what the challenges were. Impact, well-written, great historical perspective.

And then a lot of [00:36:00] personal stories and things, frankly, that I heard growing up with my own family, starting out in Texas, ending up in California. The second is a book called Undaunted Courage, which is really the story of the Lewis and Clark Expedition. Once again, well-detailed, well-researched, what they went through going from the Midwest to the West Coast.

And then lastly, The Snowball Effect, which is really the biography on Warren Buffett. So it really talked about his life experiences, how he grew up, how he became who he is, and then obviously how he built his business and Berkshire Hathaway. And it's a good mix because you get the biography, which is so important, and then you get the business side as well.

So I think all three of those books, I think, are excellent reading.

Sean Mooney: I've got three books probably showing up in one day to two days, depending on Amazon. And Carr and I were talking about this previously, but I have a comical bedside table because it's got [00:37:00] like 20 books on it, and so I have no shortage of good books to read.

But these three, I think, go to the top of the list. What are maybe a takeaway or two from some of these books that you think really impacted the way that you view the world?

Carr Preston: I would say from the Warren Buffett book, it's just-- you just really learn about the incredible kind of discipline and focus and work ethic and detail around the investments, and building a team.

And it's great to see how he started, how he built that. So that was really a good perspective, is that there's just no substitute for the hard work and the effort that kind of goes in.

And then from The Warmth of Other Suns, just the perseverance of people looking for a better life, a different life, and what they really had to go through leaving the South, going into the West or the Midwest, and what they had to overcome, and it really just talks about that in a lot of great detail.

Undaunted [00:38:00] Courage speaks for itself. It's just the courage to take on an expedition like that, and all the things that they had to work through that you may not have a good feel for unless you have a chance really to read it and understand it. It was the great unknown.

Sean Mooney: I can see how they've translated into the way that Akoya does things.

There's a striving that you're always going to continue to improve, but there's also something that I see in your firm a lot, and others in the industry is, so much in life, to me at least, and thank goodness, right, it comes down to tenacity, grit, resilience, and work ethic. And those are things that almost anyone can control if they have the audacity to just continue to strive and dust your pants off, and try harder and harder.

Certainly, if my own career were up to my intellect alone, I would have been in a lot of trouble.

Carr Preston: No, that's why we like to think there are three legs to the Akoya stool. The first is [00:39:00] thesis-driven investing, have a really good feel for what we're looking for, having the people aspect and the leadership and the rest of the team, and then having the part as well on the partnership dynamic with the leaders, and that's one of the things that comes out of the Warren Buffett book, just having that investment thesis, having the diligence and the rigor and pressure testing, once again, talking to other industry experts, just making sure you get a wholesale, well-rounded perspective as you try to execute an investment strategy. So really, there's no substitute for that.

Sean Mooney: One thousand percent.

So Carr, I have learned all sorts of things that I wish I knew before, and I'm really pleased and proud to know them now. You've been really generous with your time here, and so I want to thank you immensely because I know you're extremely busy.

And so thanks for taking the time to come here and share [00:40:00] some wisdom that will certainly make myself better as well as others who listen to this show.

Carr Preston: No, thanks to you, Sean, and the team at BluWave. Really have appreciated, really enjoyed the discussion and really glad you reached out. And as I said, it was a really good discussion.

Sean Mooney: That's all we have for today. Special thanks to Carr for joining. If you'd like to learn more about Carr Preston and Akoya Capital, 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, AI [00:41:00] advisors and tools, that are deployed and trusted by the very 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. That's B-L-U-W-A-V-E, 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. Consult your advisors regarding any topics discussed during this episode.

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.