Graham Weaver – People-Driven Private Equity at Alpine (EP.391)

24:38So we looked at all the data of all private equity firms and all the public data we could get. and we actually set a goal of delivering 5X on every fund. Median return in private equities, 1.6, 1.7X, depending on the vintage. I don't know, one-tenth of 1 % of funds have ever put up a 5X fund. And usually that's because they did Uber in that fund or something. So we set a really audacious goal. And then that forced us to say, okay, if you're going to be really several standard deviations better than everyone else, you're going to need to do things completely differently. And so we started looking for bright spots that we had.

25:14Another thing I learned in coaching is everyone focuses on their problems and things going wrong. You actually make all your money by focusing on the bright spots and scaling the things that are going right. We've made 95 % of our money by focusing on the things that are going well and scaling those until those crowd out the rest of the activities, give more resources to your best people, your best companies, your best ideas, your best strategies. So we started looking at all our bright spots and it was really interesting. We cut our data every way you could imagine. We had purchase multiple, industry, growth rate, capital structure, everything you would think of.

25:50Everything you'd always cut your data on, return on tangible capital, all that stuff. And we had these three deals that kept showing up on every list and they had nothing in common. And then we kept digging in and then we're like, well, they do have one thing in common, which is they all started off really, really badly. So badly, in fact, that we took one of our own people and put them in to run the company. And then those three were our best companies. And so then we combined that with that realization we're in the talent business. And we came up with this idea, we're just going to put our own people in every time, a hundred percent of the time.

26:24If we want to really transform a company, we got to put our own person in place. And so that was one of the core tenants that we thought was going to really differentiate us because then we could also buy companies that don't come with a management team. If you go and look at private equity, go on the website, 95 % of them have on the very first page, we're great partners for continuing management teams. I've heard people on your podcast say that as well. And that's great. But we're like, well, what if we're the buyer for the other stuff? And by the way, in the public markets, Ted, you pay a premium to put your own management teams in.

26:57In the private markets, you get a discount. and so we would pay a premium to put our own teams in and instead we get a discount but it's very very hard because our deal flow when we made that change went down to zero because every deal that bankers send you so we had a year where we had to rebuild our entire deal flow our brand it was very very hard but that was one example of something that we decided we were going to do that was going to try to make us several standard deviations better than the other what were some of the other tenets of the approach? The other thing that did show up when we cut our data is when we did add-on acquisitions, it made a massive difference.

27:31And then the third would be buying companies with really high quality revenue, which sounds really obvious, but we hadn't done that consistently. So those were the three. Change management, have a strategy where we can do a lot of add-on acquisitions, and then high revenue retention. The add-on acquisitions is also just almost another form of talent. Because if you think the talent arbitrage, that's the term I use, The talent arbitrage is big at a platform company. Imagine what it is at Adon. We have a$10 million revenue business in Ball, Louisiana, and we put in this world-class leader. That's just another form of that.

28:04So Adon acquisitions has also been a huge tenant for us. Can you start breaking this down? And let's start with the people. To put your own people into the companies, you have to have them. You have to know what they're doing. How do you go about the process? We could just start with bringing those people into Alpine. We have this process that we actually took from Toyota Lean production system, which is like the Kaizen process, which to keep it really simple, it's like you have a problem, you don't know the answer. You have a team that you assign to it and you do a 90-day sprint on that problem.

28:35And we've done probably 150 of those projects over the last 10 years. One of them was exactly what you just asked me. How do you put people in the companies? We don't know how to do that. So we built a Kaizen team. I actually led this particular team and said, we're going to figure out how to put people into these companies. And so around this time, I had started teaching at Stanford Business School and I was teaching a class on entrepreneurship and I would go on walks with students. And the number one thing they said is, Graham, can you help me get a job? I want to become a CEO. And then we're staring at this other problem, which is how do we get CEOs in our companies?

29:08One of my students, I said, okay, I'll tell you what, we'll put you through a whole training program and we'll put you into not a CEO role, but a really senior leadership role. And then in a short time, you'll become a CEO. So we hired the person, we put them on our payroll and I literally couldn't get any of our CEOs to hire this person because they said to me, okay, Graham, let me get this straight. I've got this really expensive person who has no experience and is super entitled. Where do I sign up? So for an entire year, I couldn't get one CEO to hired this person and the person ended up leaving.

29:39So that was a year. The next year I have another student and I told one of our CEOs, I said, listen, you hire this woman. And if after a year, she doesn't work out, I will reimburse her salary from the management company, basically my own money. And he hired her and she just knocked it out of the park in the biggest way. I mean, she was frankly, as good as him probably. And she was so good. And the next year he said, okay, can I have three more? So then that was the birth of our program, which we call our CEO and training program. And then year after year, we've scaled it and built it. Now we have training that goes with it.

30:10And now, by the way, we're putting people directly into CEO roles. I think to have returns that are different, you have to have a belief that's different at the core. And our belief is that we can put a low experience, but high attribute person who's very young into an incredibly high senior leadership role. And in a short period of time, they will eclipse the a more experienced person and then have a higher trajectory for the remainder of that time. What's the scale of that program today? We have a number of different programs. We have the CEO in training program, the original program. We have a CFO in training program where we're hiring CFOs directly into companies.

30:48And then even bigger than any of that, our most acquisitive portfolio companies have their own versions of that where they're recruiting directly. If I add up all those, I mean, we're putting probably somewhere between 100 and 150 MBAs into these companies per year. The concept sounds great. Just hire a young person, train them, send them into a portfolio company. They do great. How do you train them? So basically they go on the same almost arc that I went on. And so there was one coach, it was a husband and wife team, Tom Vakola and Francis Fuji. and they coached basically me slash our firm for a year.

31:26And we had a whole program we went through, which was really basic stuff. Here's how you're going to do meetings. Here's how you're going to do offsites, that Kaizen program. And here's how you're going to do process mapping and process design. Here's how you're going to come up with your priorities and roll those out. I mean, basic, basic stuff like that. But it was all stuff we weren't doing. So these basic fundamental paint by numbers. This is how you become a great CEO. So then we basically bought the intellectual property from them for that program. And we designed what's called the People First Leadership Program.

31:58So a young CEO from our program comes out and they get paired with a coach slash consultant who specializes in that People First Leadership Program, who stands side by side with them for the first six months and offers that program to them. And then they also have a mentor, usually the CEO of the platform company as their mentor and then tour at Alpine as well. So they get a lot of support and coaching. They still are really in over their heads for the first year or so, and they have to be a little patient. So it's not perfect, but it definitely gets them up to speed pretty quickly. We're going to take a quick break in the action to tell you about SRS Aquium.

32:40Want to make sure your M &A processes aren't stuck in the past? partner with a company that's been defining the future of dealmaking for nearly two decades instead. When it comes to M &A innovation, SRS Aquium has reshaped the way that deals get done, streamlining processes for maximum efficiency and minimum headaches. Professional shareholder representation, online M &A payments, digital stockholder solicitation, SRS Aquium pioneered each and continues to set the bar for game-changing innovation. So leave the days of disjointed deal management behind and define your future with SRS Aquium, the smartest way to run a deal.

33:25Learn more at srsaquium.com. That's S-R-S-A-C-Q-U-I-O-M.com. And now, back to the show. What are some of those blocking and tackling practices that maybe when you're talking to your clients or other GPs, you just know that other people aren't doing? Well, I'll give you a few. So one I mentioned, which is that Kaizen program, that's life-changing. If you can have a program of continuous improvement, you can tackle almost anything. And it forces us to innovate. I mean, we've innovated on the CEO and training program. We've innovated on the CEO and residents. We've got a whole sourcing engine that we've run.

34:04We have how we integrate add-on acquisitions, all that intellectual property. We just add to it every time we do one of those Kaizen projects. So that's a huge one. What's the structure of one of those projects? So the structure would be you start off with a clear statement. So we'll use the one we were just talking about. How do we get leaders into our portfolio companies at scale? That would be a question. And then you set a team. So you have a leader, you draft the cross-functional team, and then they have a 90-day sprint that they go through to work on that. And they could do benchmarking.

34:36They could find other companies that have done it. It could be that at the end of 90 days, all they're offering up are a series of tests you're going to run to try things out. Or maybe they've solved it and you're going to actually launch a pilot of something. And then Jim Collins has this line, fire bullets first, then cannonballs. So we're always trying to have a way where we can fire inexpensive bullets at these things. So that's one. Another one would be process mapping. Take a very basic process. It could be, how do you recruit a CEO into a company? Sounds like it's really simple. If you actually map that out, it might have 37 steps, starting with building a scorecard that's really clear about exactly what characteristics that person needs and attributes going through.

35:17Where would you source them? And then how would you sell them? And it's actually a pretty complicated process. And everyone would say, oh, we know how to hire CEOs in our process. But then if I actually watched five people from your organization, they're all doing it differently. And probably none of them is doing it perfectly because this person does this part really well. So again, it sounds really basic, but if you can take that process and standardize it at the best optimal practice for every single one of those steps, and then roll that out, most people are like, if they're doing 20%, they're going to have an 80 % improvement in that process.

35:48Edward Deming was the one who mapped this out. And this is not our view at all, but his view was if the process is good enough, then any person can complete it. And our view is we'll make the process good enough, but we'll still have A++ people completing it. If you put both those together, it's even more powerful. So those are two examples. To get those A++ people, if someone who's young learning the leadership component, so there's an element of this is what you do, then there's an element of how you do it. How did you train people to be good leaders? Yeah. So I think that there's things we can train and things we can't train.

36:24And I think it took us a while to learn how to hire for the things we can't train. The things we can train are the things I was just talking about. How do you set up meetings? How do you hold people accountable? What's your rhythm? How often are you meeting with your VP of sales? Those kinds of things are easily trainable. There's a ton of intellectual property in them, but they're not complicated. What we can't teach is attributes. And so we centered on the attributes of the person, people that we think are most successful as CEOs. And number one is will to win. And that's the kind of thing where if you interview someone, we use the top grading process that GH Smart popularized.

37:02And so you do this three hour plus interview with someone. And if the will to win doesn't pop out of that interview, they don't have it. So people are like, how do you interview for that? It's either obvious or it's not. And then they need to be coachable. Some people just aren't. They need to have self-awareness so they understand how they're showing up and how they're affecting people. They need to be able to have some kind of followership where people want to get in their boat. And that doesn't mean they're charismatic. They could just be very true to themselves. They could be great listeners.

37:31There's lots of ways, but they have to inspire some kind of followership. So those are things that we've gotten good at hiring for. And then we combine that with the X's and O's of the tactical stuff. Once you have them in the seat, maybe they're being successful. They're still a year or two out of college. How do you help them continue to develop as leaders? We have a whole bunch of different things. So we have these modules that we'll do. So for example, we'll have an offsite where we're just doing go-to-market customer acquisition, or we have a module we're doing, how do you do pricing and packaging or things like that.

38:00So we have training things that we do like that. We also are not surprisingly really big in executive coaching. So we have 23 coaches that are in the Alpine ecosystem, and I think we've done over 500 coaching engagements over the last five or six years. So they have a continuing process of that. With a combination of those, just the peers that they have in the Alpine ecosystem, they get better every year. So this whole program you've developed is clearly different from other people. What have you seen as the strategic benefits? To keep it really simple, I think we need to get the industry right and we need to get the leadership right.

38:36That's it. Those are the two decisions we make. And the industry part, I won't say it's easy, but it's a lot more like the things you would think that you probably talk about on the show, about the structure of the industry and things that they probably teach you at business school and you would work on if you were at McKinsey. I don't think that we're super differentiated on that. I think we're good at it. We're quite good at it, but I don't know is really where we can thrive. So those are really the two things we need to get right. And the leadership is where we're creating the alpha because we have companies in our portfolio that have done 200 add-on acquisitions and we're putting new leadership in nearly every one of those add-on acquisitions.

39:16And so that's just the huge source of alpha for us. On the business side, what have you found, even if it's similar to other people or the types of businesses you like to buy? First off, your first part you said is it's similar to other people. Almost the similar to other people's almost exactly what we try not to be. Because if every single person is doing X, X is probably overpriced and picked over. So at Alpine, we do software and services, but we probably have been migrating to do way more services. So we're in very prosaic industries. Some of our best deals are residential plumbing and HVAC, roofing, landscaping, home healthcare, IT services, revenue cycle management, basic, pretty prosaic things.

40:04But what they have in common is that they're big industries. They're fragmented. There's a lot of targets. They have pretty predictable revenue. They're mission critical, but they're labor intensive. The moniker I tell our team all the time is we're going to do the hard work operationally. So the investing decision is easy. If we have a clear playbook about what we could do with an add-on, we think we can increase the EBITDA of this add-on by 50 to 100 % in the first 12 to 18 months because we've done the heavy lifting on all the elements of that playbook for that industry. The investment decision is really easy.

40:35But doing that at scale, ripping out the IT systems of a$10 million revenue business and putting in place your common financial systems and ERP systems and then putting a new leadership team in place, training that leader. It's a ton of work. The investing decision is very easy. The operating part's very hard. So when you started thinking about putting your own executives in, you mentioned you had no pipeline because companies want to keep their leadership. How did you develop your sourcing capabilities? Our sourcing almost by definition has to be a lot more direct sourcing because if you think about it, let's say you're a bank, you're Goldman Sachs, and you're going to sell a company.

41:18You're going to take a company market that has a management team. Because if you don't, you're going to severely limit your buyer universe. So we figured that out. All of a sudden, we're looking at all the deals that are coming into us through our intermediaries, and basically zero of them are pitched to us with no management team. So we had to manufacture our deal flow by calling owners directly. And then sometimes people say, well, how's the pitch go with an owner when you're telling them you're going to replace them? And I said, it actually goes great because our pitch is, okay, Mr. Owner, here are your options.

41:52You can take this company to market and you can market it, but you're going to have to stay for three years. You're going to have to roll 35%. Or in our case, you can cash out 100 % tomorrow and go off on your boat. And you can even roll stuff if you want. And here's our track record of what the rolled equity is going to be worth. And then by the way, here's a list of 37 founders in your industry and their cell phone numbers. And if we can get them to call any of those references, they will sell their company because the founders will say, this is the greatest thing I've ever done. I'm so happy right now.

42:24So our pitch is actually pretty good and it's a unique pitch. How do you find the businesses? We actually end up focusing on specific industries. And so every industry is a little different, but it's not that complicated. There'll be industry associations. There's Google searches. We're getting better at using AI to help us generate the lists. And actually with AI can get a lot more granular. We can actually now get down to finding the revenue and employee counts and the key owner's information and things like that. So it's a process. It's basically an enterprise sales process that we do, but for sourcing companies.

42:58Are there anything decidedly different about how you look at and assess companies from how other people do? Our process goes like this. First, it's the industry overall, the structure of the industry, and it's whether we want to play in that or not. I would say our criteria might be a little different. We're looking for big, fragmented things where we think we can develop a playbook that's going to be unique, but that's not maybe super unique. The second decision we're making is who's the leadership of that, which I think is pretty unique. And then where the magic really happens is when we start aggregating companies in the industry, because the way that we eventually figure out a playbook where the business we're buying from founders worth twice as much to us, because we can do purchasing better, we can do marketing better, we can hire better, we can recruit better, we can train better, we can develop better.

43:47And that's really the magic. There's a lot of private equity firms who go around and they basically do this math. They say, okay, a platform company trades at 15 times EBITDA and I can buy the add-ons at nine. So I'm going to make money. It's fine. Lots of people do that. That exists in our world too, but our world goes another layer where we say, okay, let's say we are paying nine. We want to have a playbook where we can blend that nine down to five times EBITDA within 12 months. That part for doubling the EBITDA in a short period of time. That's super intensive. That takes a ton of work. That's where we have to put the companies on common ERP systems.

44:27We actually really have to integrate the businesses. They're not standalone. They end up coming into our system where we're centralizing a number of functions. That last piece of actually improving the company you're buying is a tremendous amount of work, but it's also where all the alpha comes from. When you have this team that you've hired in to be future CEOs. How do you figure out which future CEO to put into which company? That's a great question. So the way that it works in the standard Alpine CEO and training program, we go to business schools, we hire people from all the top business schools, and they join Alpine.

45:03They don't know what company they're going to. They don't know what geography they're going to. So they're having a big leap of faith. And then we do a process like the medical school matching process where they interview a bunch of companies and they rank their companies by the top ones they want to go to. And then the leaders of the companies rank them and we have this matching process. You would think it would be really complex. I guess it is, but I would say most of the time they're getting their first choice and sometimes their second choice, but it somehow just works. And then by the time they join us, they have already been matched to the company.

45:37What's the success rate been like of that process? So we probably lose about 10 % really quickly because they worked in consulting. They thought they wanted to be a CEO. It turns out it's really hard to be a CEO, maybe not for them. And then probably another 10 % who either along the way decide it's not for them or they're not performing. That'll take a little bit of time. But then if you look at who actually stays in the program in a long period of time, it's probably pretty close to 80%. The GH smart hiring process says, if you do everything right, you can get to a 80, 90 % success rate in hiring.

46:18And that's probably close to what we've achieved. So over this last decade, decade and a half, you've been doing this model. As you look at your biggest successes of it, what do you attribute it to? There's a non-linearity to this. So for example, if you get the industry right, let's say that there's five things you need to get right. And you get the industry right. Okay. That's huge. You get the CEO right. That's huge. Then what if you get the first part of the playbook right, where you can do say some basic stuff, purchasing and backend systems. Okay. And then what if you get the marketing right?

46:54And then on top of that, you could really nail training and recruiting in the industry. and then you could nail pricing and packaging. And if you can run the table on five, six, seven of those, you can get to this logarithmic outcome because the logarithmic outcome is you can go buy any company in the industry at the market clearing price and that purchase price ends up being below your debt multiple. And that's where it just gets to be logarithmic. That's not always possible, but when we have achieved that, that's where we've had these really crazy outlier successes. What have been the biggest challenges along the way?

47:33Definitely talent. If you think about what we're demanding of that CEO, it's a lot. Because that example I just gave of running the table on that, that CEO has grown and had a new job every year and a half, basically. Not everyone in the world can have that kind of growth trajectory themselves. So we're putting a lot of demands on the talent. And sometimes people are amazing for certain, the beginning part of that, and then they tap out. And that can be really hard. Or just designing a culture where the best people really want to go into that organization. So certainly the hardest thing is the talent, is getting that right.

48:07How do you think about the multi-period game aspect of this? So there's an example, someone's doing great, they're tapping out, but you've got this large community of executives of maybe 80 % of demonstrated skill. How do you bring that all together and allow it to sustain itself and compound organically. It's a tremendous amount of work. I mean, we have a team that that's literally all they do is manage our internal talent and they're looking at who's performing, how they're doing, do they need a new role that's bigger? And conversely, are there people that aren't performing that we need to maybe move into a different role?

48:41Our guiding principle is that if someone is willing to put in the work and be coachable and show up and really, really throw their soul into it. We probably have a role for them somewhere at Alpine and that we want to have Alpine be a place where they could spend their entire career. That's our guiding North Star. And then the mechanics of making that work are, it is hand-to-hand combat. It is bespoke to every single individual person. It's not cookie cutter because people are different and they're in different roles and how do you compare across? So it's just a tremendous amount of work. And we have a whole team that is doing one-on-ones with people and they're doing reviews and they're looking across the portfolio for different opportunities.

49:21And so it's a tremendous undertaking. How have you scaled all of this? It's been a process of learning. And so, for example, in the early days, I knew every single CEO and CEO in training, and I could literally point them in the right direction and put them in the right companies. And then I tapped out, and then my partner, Matt Moore, did that for a while, and then it got too big for him. And so now we've just had to have an entire organization. Every time you hit a certain level of people, you have to reevaluate all your processes. And we've just continued to do that every 18 months. How have you leaned into the goal of social good?

49:58So a few different ways. Probably the one that is the most obvious, but I'm still going to talk about is just delivering really high MOICs for our investors. We have investors who've been with us for a long time, certain colleges and universities. And if we add up the gains that we've been able to deliver them and we subtract out the gains they would have received had they invested in the median private equity firm. So the delta between our performance and median at some of our investors is paying for all the financial aid that they're going to do every year, paying for buildings, paying for scholarships.

50:37And a lot of our investors are nonprofits that are trying to literally cure cancer. And so again, we think about how much money have we quote unquote gifted them by having the outperformance versus the median. And those are big, big numbers that we're contributing just by being good at our job. So I would start with that. And then the other biggest thing I think is, if you look across the United States, which is primarily where we focus, 70 % of people that work in companies dislike or actively dislike their job. And so you just think about, imagine that there's a single mother and she's just putting food on the table and she just hates her job.

51:17And she's there because she has to be. And then think about how does she show up in her community and with her kids. And then imagine the opposite of that, which is our goal is she's inspired. She's excited to work at that company. She knows how, what she's doing affects the business. She knows why the business is there. She knows what the mission of that company is, which by the way, all the stuff I just said is part of that people first leadership program I mentioned, which is we're trying to get employees enrolled into the vision of the company. So we're flipping that number and 70 % of the people at the companies are really engaged and really excited, then we think that has an enormous impact on communities and families and people's self-esteem.

51:58So I'm really proud of that. And then on DE &I, we have a huge impact because if you're a typical firm that's, let's say we own a healthcare software business and we say, we want to hire a CEO for a healthcare software business and we're a standard company and we say, okay, we hire Hydric and Struggles to go find that person. And guess what they do? They go look at people that have run healthcare software companies for 20 years. And so the DE &I battle was won or lost 20 years ago. Now, you could tell them, okay, we want that to be a minority or a woman, but they're not increasing the pool. They're just moving the pool around.

52:32In our world, we're hiring people that have zero experience, literally. So we are creating a path for people of all backgrounds, races, genders from today going forward. They don't have to have already been a CEO. We're just hiring for their attributes. So we've had just massive, massive impact on DE &I across the leadership in our portfolio. What goals are you laying out from here for Alpine and yourself? Our goals are exactly the same as they were 15 years ago. I mean, we want to be the number one performing private equity firm of our generation as measured by net MOIC and almost every investment and people decision that we have is geared toward that.

53:16We want to be the best place to work for the top people. That can be expensive. We have to be very long-term oriented to do that. We want to be a force for social good, which we're investing a lot of energy into. So those are still our same goals. Our goal really is not AUM. We're not really focused on that. If we have the opportunity to put up the numbers I was talking about before, and we can do 5X on a fund, you don't need to have crazy numbers of assets. I mean, I think we're doing fine financially. So I want to end my career and have the legacy be MOIC across every single one of the firms.

53:48And that's the thing that gets us out of bed. And it's a really, really fun problem to solve. And it's, I think just going back to what I had said in the beginning, working on your genie goal and waking up every day and working on it, I think it's a journey everyone should go on and we're doing it at Alpine. If you'd like everyone to be able to go on the journey you have, you certainly put some of this messaging out and you've seen it on social media and things like that. Curious how you thought about that as part of your own brand or the brand for Alpine. It happened a little bit by accident.

54:20During COVID, I started a blog and the blog really was just my own personal musings that I put in my journal, literally. Some blog entries will be about how to optimize customer retention. That'll be a blog. And then the next blog will be about my son going to college and how it felt like someone ripped my heart out. And the blog after that might be about why protein should be the core of your macronutrients that you're eating. So I just wrote whatever I was excited about, whatever journey I was on at the time. And people really had a great response to the blog. But then I watched my kids, I have three teenagers and they never read.

54:57It would even be about them and I would forward it to them and they'd be like, oh yeah, I didn't quite get to that. But then they were scrolling for hours on TikTok or Instagram reels or whatever. So I started making the messages consumable by them and making these little 60 second videos that I put out and they did well. And I think the reason they did well is the same reason that I loved listening to content when I was 15 years old and mowing lawns. It was content that was geared at helping young people really find their way. And when I looked at what else was on social media, it was really, really disheartening because it was the opposite of that.

55:33It was people on there selling a message of you're worthless unless you get rich quick and look at me and look at my Ferraris. And if you buy my option trading program for 9.99, you too can have a car like this. And that was what was on social media. If you're 15 years old, I'm sorry, but you don't know any better. You don't know that that's not the path. And so I wanted to be a countervailing voice and go back to the stuff that I learned when I was 15, which was you got to set some clear goals. You have to work backwards from that. You have to create a plan. It's going to take time. You're going to have struggles.

56:08You're not going to get rich quick, but you can manifest anything into your life, but you have to take the time and it's going to be a struggle and it's going to be a process. I wanted to offer that countervailing voice on social media, particularly the young people who may not have mentors that are delivering that message. What have you found similar and different when you're teaching at Stanford? It's a super impressive group of people that I'm teaching at Stanford GSB. I mean, the acceptance rate there and the things that they had to do to get there is incredible, but it's the same thing. The class I teach is on entrepreneurship and how to become a CEO and how to build companies.

56:42That's the headline. That's why the university allows me to have a job. The thing that I really want to teach and what I do also teach in my class is let's really decide what you want to do with your life. And let's decide from your heart and your soul, not from your head. Let's get in touch with that. Let's really figure out what that is that stirs your blood. What is your genie goal? And then let's work on your limiting beliefs and all the reasons you're telling yourself you can't do that. We actually go through and do exercises on overcoming limiting beliefs. And then let's make a plan to go do that because you got one life.

57:16I want you to leave Stanford Business School and go do the thing that you wrote your essay on and do it because it's the thing that tugs at your heart, not because it's something that your peers or social media or whatever says you should do. So that's the message that I am really excited about at teaching. So you distilled all of that relatively recently into a graduation speech at Stanford. Love to hear that message when you say, hey, this is how you want to try to teach people to do this. The students invited me to give their last lectures the last several years. And each year when I've been invited, I start with a blank piece of paper and I say, what's the message now, this year, right now?

57:56I don't use the same material from before. So the one I gave last year was really around this. It was first off, do hard things. If you want to have a goal, the first step a lot of times is going to be, it's going to get worse first. And so So that was step one. Step two is do your thing. Find that thing that really tugs at your heart. The thing that you would do if you knew you wouldn't fail. And then the third one was do it for decades. It's going to take long. It's going to be a journey. That's not a bad thing. It's a good thing because your whole life is really the journey of doing the thing that your soul wants to do.

58:27And the last one was write your story. Just take the time to figure out the story you want your life to have. And the more time you can spend being clear about that story, you'll make it come true. The hard part is figuring out what it is that you want. Well, Graham, I want to make sure before I let you go, I ask you a couple of fun closing questions. All right, let's do it. What is your favorite hobby or activity outside of work and family? You could call teaching a hobby. And if you look at where my energy goes, that's probably it. I throw a ton of stuff. And during the time I'm teaching, it's what I'm thinking about in the shower and on a run and everything.

58:59So I really enjoy that. What's one fact that most people don't know about you? Probably that right now I'm spending a tremendous amount of my energy trying to work on enlightenment, to try to become more enlightened. That's where I'm actually reading about and meditating and spending a lot of time on. What have you found of late in that study? Probably if I had to summarize it as simply as I can, it's that what we talked about where your inner self always knows the right answer. And the more I quiet my mind, the more I get in touch with that inner self and the more I can follow what it wants me to do.

59:36What's a recent example of something that led you in a direction based on that introspection that you might not have gone on otherwise? That's a great question. An example might be, say, a relationship with someone at work. And maybe there's something that just is off and doesn't feel right. And my gut is telling me that maybe this is someone I shouldn't be working with or someone that our values aren't aligned. And before I would probably talk myself out of that. And now I'm paying a lot more attention to that. How do you decide a situation like that when to make a decision to exit or have the conversation and see if your instinct was right?

1:00:11Yeah, I think it's just that. I think it's sharing that truth with the person. And that's the first step. So my instinct isn't saying fire this person. The instinct is saying there's something off here and just addressing that directly. What's your biggest pet peeve? Mine is wasting time. I have a calendar that I could fill three, four times over with different things that I'm really excited about. And so I might say sitting in a board meeting and someone is literally reading a slide bullet by bullet that I've already read. I will literally stop them and say, hey, we're good on this. We've all read this.

1:00:44or I'm in a meeting that was 30 minutes and it could have been an email. So unfortunately, I just have very limited attention span for things like that. Which two people have had the biggest impact on your professional life? I'd say first is my dad. My dad started his company. He was a veterinarian and he started a veterinary practice around the time that I was born. and he had zero customers and he got up in the middle of the night and took emergency calls for 25 years, which is how he built his practice. And it took him a long time. It took him way longer than he thought, but he also built something way bigger than he thought.

1:01:21And so just watching that, I think I've internalized that with Alpine, that it's going to take a long time and not to get discouraged in the early years. And the other person would be Irv Grossbeck, who teaches at Stanford. And he was a professor when I was there. I was a case guest for 12 years in his class. And he was the one who also ended up giving me the job. So he's been incredible. He's also been an investor in Alpine since our third fund. So he's been an incredible mentor. What's the best advice you've ever received? By far, it is answer the question, what you would do if you knew you wouldn't fail, and then go do that thing.

1:02:01That's the best advice. All right, Graham, last one. What life lesson have you learned that you wish you knew a lot earlier in life? So this goes with the enlightenment goal, which is I've learned that life really is an internal game and that it presents itself as a series of external events and circumstances and problems and situations. But at the end of that, you have a filter that you are putting those experiences through. And then the story you're telling yourself is your life. And then how you respond is your life. So I think realizing that life is an internal game and it's about how you're going to show up and control and how you're going to respond to situations.

1:02:39That's been a lesson I wish I would have learned a long time ago. Graham, thanks so much for sharing this incredible journey you've been on and driving people and talent in the business. Thank you, Ted. I loved it. Super fun. Thanks for listening to the show. To learn more, hop on our website at capitalallocators.com, where you can join our mailing list, access past shows, learn about our gatherings, and sign up for premium content, including podcast transcripts, my investment portfolio, and a lot more. Have a good one, and see you next time.

1:03:20Thank you.