[REPLAY] Private Equity Masters 3: Robert F. Smith – Vista Equity Partners (Capital Allocators, EP.202)

24:59But we bring the C-suites together. We bring the middle managers together in certain best practice solution summits and those sort of things. And they share those best practices. And I'll tell you, that is probably the greatest tool that we have that decreases any resistance to change or to improve. And now what's happened in the marketplace is we get inbound calls from companies and executives who say, I want to be part of your ecosystem because I saw what you did with these five companies. And we're similar. I want that. How do I get into that? And so that leads to a really interesting deal dynamic for us, which is we get a number of deals that no one ever sees because executives will come to us and say, hey, I saw what you did with Jamf and Ping and et cetera, and just spectacular performance.

25:46So help me learn how to do that. And then we bring them into the ecosystem. We'll say, okay, call these five senior executives and have your chief marketing officer call these 15. And then we bring them together. And pandemic has actually been interesting. Used to do a lot of it in person, physically. Now we can actually do a lot more of it virtually. Right? It's kind of interesting. So there's a higher frequency of engagement that can now occur in that context. But the content and the quality, because we've built out all this content for so many years, has been quite effective in that regard.

26:18How do you internally organize the delivery of that sources of information? The way to think about it, we've got, this is the unique piece, investment team and then our value creation team. Our value creation team has operating MDs and Vista Consulting Group working in concert. And every portfolio company has some operating MD assigned to it and some set or collection of VCG Vista Consulting Group resources that are assigned to whatever value creation dynamic that we've agreed upon with the management is going to be accomplished over some period of time. And so then there's an engagement plan, an engagement model.

26:57And again, we're not there to do it for the management team. We're there to educate, inform, and bring forward what I call the resources to enhance their ability to accomplish the goals that we've underwritten to. And it's literally, in some cases, our value creation team is talking to senior management team people every day for periods of time until we've broken the back of whatever challenge it is that we might have. And then the frequency goes down and it'll go to once a week, once a month, once a quarter, whatever it might be, depending upon where they are in implementing some of these best practices.

27:29So depending upon how heavy the lift is. So every engagement model is different. It's bespoke based on not only what we're underwriting to and agreed to with management. What are we going to do? How are we going to do it? And then over what period of time? And then who's responsible at the company? Who's responsible at VCG? Who's responsible within the operating MDs to make sure this all occurs? There's some things you have to put in place like everything else before something else that you can do, the building blocks. And so that's why we put that whole flighting together and work with the management team to make all that happen.

28:01I want to turn a little bit over to the right side of the balance sheet, which is in these businesses with that type of gross margin, how do you think about the appropriate amount of leverage? It's been interesting. We've been able to do some real interesting pioneering work in the capital markets, which we can get to in a little bit, for people to recognize what these businesses actually can do. If you think about creating true operating leverage, not financial leverage, operating leverage, you then have the ability to dial up and dial down what we'll call your go-to-market resources and manage that relative to what sort of profitability you think you want or can capture in the company.

28:38For instance, we just sold one of our businesses. It was quite interesting going into the pandemic, that company was growing 30 plus percent. And quite frankly, it had some interesting profit margin there. We were kind of at zero, etc. because we're really growing this business. Well, the pandemic hit and we said, okay, let's do this. Let's throttle back just to make sure that if you have any losses, you don't end up with capital losses or lose any money in that business. And we did that for a quarter. Then all of a sudden, we saw a massive demand for that product again, which gave us the ability to put more resources and go to market, not drive the company at 30 plus percent growth and maintain the operating margins.

29:17But if we hadn't put the infrastructure in place before, we wouldn't have had the ability to throttle our business in that way. And I'm proud to sit here and during the pandemic, we had 68 portfolio companies. We didn't have to provide$1 of rescue financing. And that's because our investment teams, our operating MDs got engaged with every management company and said, okay, how bad can this be? Well, we don't know. So let's make adjustments and plans now to ensure that every company not only survives, it has the ability to thrive coming out of it. So that's one advantage of having these high free cash flow businesses that don't have a lot of capex burn on them.

29:56And if you build a solid operating infrastructure, you have the ability to throttle up and throttle down various elements of the business, but you have to know how to do it and do it responsibly. So this is an example of during the early stages of the pandemic, our teams were engaged with the management teams every single day, every single day, first two, three, four weeks of this, then they went to every other day. And then once we figure out, okay, here's the model that we're going to operate until something changes. In some cases, all the customers stop transacting. They still pay their software bills, but they stop transacting in their core business.

30:28And in those cases, okay, how bad can this be and for how long? None of us knew in April and May and June. But by September and October, we started to see what the patterns look like. And now we're seeing one of our businesses, 98 % snap back within 48 hours after their customers open their doors, right? So that's part of the ability. now we can throttle that business differently. But you've got to have the tools and the levers and the systems that work together in concert. So once you know and have a good sense, now a very good sense of what that sort of downside operations could be and therefore the appropriate amount of flex and operating leverage, how do you think about financing it?

31:04If you don't have operational controls, then you're kind of playing with fire. What we look at is we kind of say, okay, what are the systems that we have control over? How quickly can we throttle them up and throttle them back? What level of recurring revenues do you have with your customer base? What's the retention rates of those customers? What's the length of the contracts with those customers? What's the ability of that in-market? Are these companies, your end customers going to go have problems where they can't pay you? And so you have to take that all into account and say, okay, should we leverage this company at four times, five times, six times, or seven times?

31:37And then if there is a downturn, what are we going to do so that we don't have any problems with any of the covenants in that leverage. And we'd like to be very responsible about it. 20 plus years, we haven't missed an interest payment or had any problems managing the capital structure of our businesses. But that's because we take a lot of time in the front end. Look, things happen, but we've had enough experiences with enough cycles and downturns and great financial crisis, now the pandemic, that we have a really good sense on how to manage these businesses. And frankly, I think a lot of that comes out of our deep focus on the single industry, enterprise software.

32:10And so we don't have to figure out new and different dynamics in other industries. We have a really good sense for what the dynamics are and how those companies operate. What are the systems that we need to have? And in some cases, if it's a new company, we may not have the visibility. And so we can't be as, call it forward-leaning and leverage. But in other cases, the companies that we've had, we have a really good sense for the management team and what they're capable of and the recurring revenue nature of that business, retention rates of that business, the ability to manage the free cash flows, then you can probably lean a little more forward to try to enhance the returns for your investors.

32:45How do you think about exit strategy on businesses, particularly in light of how much you're trying to do to improve them upfront? I always tell our senior executives and our teams at Vista, we have to think about the absolute best that that company can be. And look, you may not ever get it right. If you hold them long enough, you'll probably get more right over time. That's really what the plan and the point is. But in some cases, things change in an industry. You might have a new competitive entrance. You might have a dislocation of some technology or industry construct that says, ah, you know what?

33:18The original investment thesis of this has changed or the environment has changed. So we have to change investment thesis. And so we're not going to be able to hold it as long and do as much work. And in some cases, you get inbound interest, which we get quite often of our companies and people kind of making you offers on the businesses. And we'll run a process in most cases that we think kind of pulls forward what we could realize in two or three or four years to today. Look, investors, one of the things they want is they want their capital back, right? And I think we do a good job of ensuring that we deliver those returns to our investors.

33:51All that said, certain businesses, I would have loved to have held a little bit longer, but because of the time in which we hold them, the construct of our industry is one of invest over five years, return over that next five. And so that's kind of, it was built 30 years ago. I don't think that model really applies specifically to enterprise software, but that's how the private equity businesses are thought about. That's how investors think about it. And so there's a duration. So there's a sense of urgency to get the work done, improve the operations. And then the question is, does it make sense to sell all of that business?

34:23Does it make sense to recapitalize that business, sell part of it, sell none of it, and then try to deliver more and more value to our stakeholder base. So those are the things that we take into consideration. Every investment has to be taken on its own in making those decisions. In some cases, we're like, okay, this is one we probably need to sell now, given what's happening in the industry. In other cases, you know what? We'd love to have two or three more turns on this company because of its place in its market, its ability to actually capture more and more economic rent, the ability to innovate based on where they are in the marketplace to capture that increasing economic rent.

34:54Those are all things we take into consideration at our investment committee process before we make a determination as to whether we're going to sell a company or recap it or hold on to it longer. So the other side of that, you talked about the structure of called the private equity industry. And I know you've had a couple of different products, including the most recent, a long duration fund. How do you think about going in what the appropriate, let's call it sleeve or product is for a company that you're buying when ultimately they're all enterprise software businesses? First, there's this kind of size criteria.

35:26For the most part, There's a size differentiation as to where they belong. We are constantly evaluating, is this a good platform company? Is this an add-on to another company? Is this the sort of company we want to own forever? And we've got our rules of engagement as to which fund it belongs to. And the good news is the way we work, we have our private equity management committee and executive committee, et cetera. We get in and talk about those sort of potential conflicts and all this belongs in this fund versus that one. And in some cases, we'll bring our limited partner advisory committee into that sort of engagement.

35:59But yeah, it's all software at the end of the day, but at what stages? It's a company that we look at and say, this is what we do want to own for the next 10, 12, 15 years, or it's just a company that we think that the taxonomy of the industry will lead to this being a consolidator. It should be public, right? Or the taxonomy of the industry says that this is a company that likely needs to be an add-on investment or be consolidated over time. And the good news is the men and women at Vista have been doing this, many of them for 15 plus years and have a good sense for how we should evaluate it.

36:31And then we make some decisions on that basis. What have you seen in the external marketplace or selling businesses in particular about the potential signaling effect of your own actions as it relates to the underlying business that you might be bringing to market? We will see that from time to time. And it's interesting. Well, if Vista is selling it, is there no more economic rent that can be taken out of that market, because people think we do a really good job of managing the businesses with our management teams. And in some cases, it's just because it's where it lives in its fund life. We have these funds with certain durations.

37:05And at some point in time, investors do want their capital back. Now, the good news is, and with a number of our large investors now, they're saying, hey, let's think about ways to recycle capital more efficiently. And so we've had some very innovative agreements on that side, which I'm very excited about, because people have started to really understand the durability, the resiliency, the long-term nature of enterprise software and saying, yeah, this 10-year construct doesn't really fit certain parts of our market. Early and years ago, when we do recapitalizations with other general partners, they were wondering, oh, gee, are you guys really committed to this because you're making money on this trade here and do you care about the company going forward?

37:45But I think we've done enough of these partnerships with some very large GPs that they realize that in many cases, we're making more money on the recapitalization after we've sold them half of it than we made on the first part. So they're realizing that we understand and we buy into the vision of value creation in our marketplace, and they're often willing to put our money where our mouth is. With all these experiences you've had with these different software companies, I'm really curious, what have you learned that you're able to apply internally as an asset management business of all of these different software tools?

38:15Sure. I mean, not surprisingly, we leverage a number of software tools internally in running our business to be efficient. And I think one of the most important things is getting the right people in the right seats, doing the assessments of folks to make sure that our talent management is done properly. There's some folks who do really, really well in large companies and some folks who do a lot better with smaller companies. And And we start off with our investment teams, for instance, they're in a pool AXO structure. And we get wonderful incentives for them, which include ability to participate in the sale, carried interest with our associates and analysts, which I think is somewhat unique in the industry.

38:55But by then trying to figure out, well, where do they fit? And so a lot of that is that talent management. Like I said, some people are better at certain types of businesses than others. And to communicate that, then training. One of the things we do in our portfolio companies, we spend massive amounts of resources ensuring they have the ability to train from interns to entry-level hires to mid-level professionals to C-suite professionals to the CEO. Well, we do the exact same thing within Vista. And we spend, I think, a disproportionate amount of time relative to what I hear other competitors do in the marketplace or other private equity firms do to train our people.

39:28Because I know a well-trained executive will give you exponentially more capacity and insights and efficacy than just having kind of more people that you don't formally train. So those are a couple of examples. Training, we think, is critically important. Talent management, we think, is critically important, not only in the portfolio companies, but within VISTA. And then, of course, there's leveraging tools. How do we leverage distance learning for our executives? One of the few organizations that anyone in the company is going to actually take in nanodegrees and artificial intelligence through our Vista University construct.

40:01We believe in educating our workforce and ensuring that they have a path for progression as part of their psyche as to why I want to be at Vista. It's not just compensation. It's who am I and what am I going to be able to build in my own skill set going forward. When you've extended, as you have through private equity to credit and public equity, what was the thought process in introducing that with a model that's already working so well? I mean, our industry has evolved over the last 20 years. You remember 15, 18 years ago, there were only a few institutions that would offer any form of credit to software companies.

40:35And they did very well because they had very little competition. Most of the big lenders were out there saying, well, gee, your assets leave every night out of the elevator. And then they started to understand over time, and I think we had a role in this, that the recurring revenue nature of the relationship with customers is something that actually, frankly, is more resilient than some other tangible kinds of engagements with those customers. Then you look at in the age of the pandemic, people paid their software bills before they paid their rent. And so that realization of, wow, I look at my portfolio today, 71 companies, I think we're 92 % recurring revenue, over 90 plus percent in retention rates with our customer base.

41:19and the average customer you have for a decade or more, well, it creates a massive amount of certainty, especially if it's very little CapEx on those businesses around free cash flows. And so what that leads to is, wow, this seems like an industry that should have a bigger and broader credit, call it expression in the capital markets. And so I think it was nine years ago or so, almost 10 years ago, we said we need to form a credit business to not just support Vista, But the industry, people are, they'll come to it and you see it now today. Now you see recurring revenue loans as opposed to loans that are based on free cash flows versus EBITDA.

41:59So it took a while for us to educate part of the industry. But what that has done is drawn a lot of capital into the industry and actually created new expressions and expansions of opportunity and putting credit into software companies, which by the way, now enables them to grow much more efficiently because they can use a cheaper form of financing to drive those businesses forward. And how about public markets? Look, I mean, we've seen this. The public markets have re-rated software. I think coming out of the pandemic, there's a few investors who really understood it. The retention rates, the resiliency, the durability of enterprise software.

42:33More have come to realize that because they realized companies were blind without software during the pandemic. And many folks around the world, frankly, companies that I have to now pivot and build more technical infrastructure. So I have more visibility. I have more flexibility in the way I manage my supply chains or engage with my customers, et cetera. So it went from being a nice to have to reduce costs to a necessity to be in business. So that has re-rated software generally. But the short answer here still, Ted, is 98 % of software companies are private. So you don't actually have access to most of the software companies out there unless you're coming through private equity investors like us, okay, who are actually expressing opportunity in the form of private equity investments in these private markets.

43:18Now, what has happened is not just going to be the growth equity and the buyout. It is a full range. Our founder direct product. We just funded a deal run by a guy, Charlie Moore, called Rocket Lawyer, a fantastic guy,$230 million in a first lien senior securities to enable him to grow his business. And so it's not just going to be inequity. There'll be some debt that can support the growth of these businesses. And what we want to do as Vista is really be able to supply the entire capital structure of need and opportunity for the enterprise software industry globally. And that's what our ambition is.

43:52And part of it is we just have to continue to build the infrastructure, maintain what I'll call the sorts of returns and accelerate, which we've been doing our returns and have kind of lowest loss ratios out there. And that's an important part of building responsibly the infrastructure to service the needs and the requirements of a rapidly growing industry, which is enterprise software. In a business like this that's proven so attractive over time, the underlying business, how is it that you're not just deluged with competition? There's very few competitors who do the sort of deals that we do at the high end of the market, which are kind of fast growing, profitable businesses at scale.

44:28The middle market, I mean, it is. There's a lot of capital. Interesting thing is when we do our analysis, it's only probably 10 % of the private equity firms out there in that space that have done half a dozen deals. We've done over 500 or so. The vast majority are looking to get an investment in software or maybe one or two investments. This is all that we do. And so we typically, and through the work that we've done with VCG and value creation, what we can demonstrate, typically if it's a business that we like. Like I like to say, there's A assets out there and people are paying A squared prices for them because they want to have an expression in software.

45:06We still have a very disciplined approach. Our returns show it in terms of what we underwrite to. Some folks will take lower returns because they may have fewer investment opportunities than other things that they've done. And we've seen it. We've been here 20 years, 21 years. We have built, I think, a phenomenal infrastructure that scales. We are constantly tuning that infrastructure, constantly tuning our approach, and frankly, expanding our investor base as well. You mentioned re-rating in the pricing environment a couple of different times. How do you think about the marketplace understanding now far more than they did certainly 20 years ago that these are great businesses and therefore they have to pay higher prices going in?

45:45Yeah, it's interesting. Institutional investors, our investors, for instance, are understanding that more and more. I have, I don't know, X number of investor calls a day or week, whatever it might be. And there's still a percentage who are saying, wow, this seems like an overinflated market and the prices are high. And if they haven't been in it like we have for 20 years, I mean, three years ago, people said that five years ago, people said it. But as more and more investors become educated as to the value of recurring revenue, high retention rates, mission critical, business critical enterprise software, you're going to see more and more capital coming into the area because they'll see the returns and the loss ratios and say, wow, on a risk adjusted basis, this is a good place to be.

46:29Now, how do I get in it? Well, if you go into public markets, there's very few expressions, right, of how to actually participate in certain parts of enterprise software. If you're in the private market, we've got a very wide landscape of opportunity. And so there's an education process that has to take place. And we do a lot of that primary education with our investor base. But then as they start to realize it, then they move in that direction. It's been interesting to see some of the public market investors really start to come to more of the realization of it. And I think a lot of that is coming out of the pandemic.

47:00They saw what industries were durable, which industries were resilient. And then what industries also were called upon to solve problems remotely. and that no one else could solve. Well, that fits right up our alley of enterprise software. So again, the basic fundamental demand of our products has actually increased over the last few decades, but has accelerated in its increase in demand over the recent times because people have realized that without it, they're lost in either understanding their current business or reaching their customers or being able to actually manage their supply chain. You're seeing some effects of that right now globally where supply chains are still disrupted for various reasons associated with the pandemic.

47:45And some of the companies are still blind to where they're going to get supplies and products because they hadn't made the proper investments in enterprise software two, three, four, five, or eight years ago. So going forward in the capital markets, somewhere in between these public markets and private markets, we have this burgeoning SPAC ecosystem, which I know you've been involved with. How are you thinking about SPACs in general and your participation in this movement potentially to some of these private companies to public markets? Sure. I'll say these have been around long enough. This is kind of the third expression of SPACs coming into the public markets in my lifetime so far.

48:20And like all things, you will see a massive expansion of this opportunity because there has been less friction in the formation of them than in the past. There's been some changes in the rules. And I think people are going to embrace them for some period of time. And then I think there's going to be some disappointments and potentially some regulatory changes, which we're starting to see the beginning of, which I think are going to change the attractiveness of them for companies to be part of them. Our world of enterprise software, like I tell folks, if I don't get three calls a day from somebody about a SPAC, that means I woke up late that day, or they're looking to buy one of our companies or have some proposal.

48:56And so from our perspective, we look at and say, look, it is an interesting capital alternative. We, of course, have teams of people evaluating, does it make sense for our companies? Is it something we should do? And we'll continue to do that. And at some point in time, you'll probably see some announcement about Vista has embarked on a deal in one form or another involving a SPAC. But we look at them, they are an interesting way to participate in the public markets in a shorter period of time than a traditional IPO. That said, there's some advantages to them and some disadvantages. And you have to weigh that relative to all the stakeholders that we constantly are managing the interest of as a firm.

49:30So as you look out for the next 20 years, how do you evolve the next generation of leaders at Vista? I look at, there's kind of pyramids of opportunity. Our AXOs, I'll talk to the investment team and I'll talk to BCG. Really, they've got to be fundamentally and technically sound and underwriting, period, in the story. The good news is we work on a lot of companies, probably do 50 deals, 50, 60 deals a year. So they have a lot of stuff completed, which means we're doing multiples of that in evaluation. And so our people have an opportunity to really become expert at underwriting. I was actually just encouraged yesterday.

50:06I got an email from one of our largest investors who has completed a deal with us, a co-invest deal. And this is a global investor, billions of dollars that they invest. And they said, you all do the best diligence of anyone we've ever engaged with by heads and shoulders. And knowing that team, and it is a MD, senior vice president, associate, and I know the quality of the work that we do. And it's just great to see that expression coming unprompted from a very large, very sophisticated investor. That tells me we're continuing to do the right things in the development. When you start to get into the vice president level, we have to teach a different set of skills, which we commit ourselves to, teaching them how to source, how to engage, how to engage with management teams.

50:48And you remember the ages of these folks. I mean, they're engaging with senior executives who are the age of their parents or grandparents in some cases. And so we thought about this over time and how do you create the training methodologies? They know how to address them in a respectful way, but also encourage what I call the adoption of the best practices that we know are effective. And then when you get to the managing director level or the co-head level, you have to think about things differently. You're not thinking about it on an asset by asset basis. You have to think about it more than a portfolio type of basis.

51:16So I say all that to say that's why we build committees and infrastructures to help along the way. Our private equity management committee is one that has all the co-heads. It has all the infrastructure of our capital markets and capital formation, OneVista initiatives. All those things are designed so that we holistically are developing the entire organization, including our value creation organization and VCG. Then we have an executive committee that now thinks about how do we drive culture? How do we drive values? How do we drive the things that we want to see in talent management and development, not just within Vista, but within the portfolio companies?

51:50How do we drive an effective DEI strategy across 70 ,000 employees and 70 plus companies? How do we do it at the board level, the C-suite, the mid-level managers and the onboarding of interns and being very comprehensive in our approach? So the organizational design, I think, is critically important. So when I look out 20 years from now, I expect not only that same sort of a senior level organization design, but also us thinking about how do we create new products with our talented individuals, new products being new funds, new fund categories, new ways to express investing in the space, leveraging the people that we have trained and put tremendous resources into developing.

52:29So that's really how I think about where we are going to be 20 plus years from now. It sounds like the way you've grown the organization and certainly the focus on the vertical, there's a lot of strengths in the depth of knowledge. I'm curious, are there any weaknesses you've seen over time in being just focused on one industry vertical? I actually had some conversations with some investors multiple times over this. And we were talking about our loss ratio, which have a kind of industry leading very, very low loss ratio. And this investor said, Robert, that tells me you're not taking enough risk.

53:00And I said, well, our returns seem to be pretty darn good. But so there's a thought from certain investors, well, maybe you ought to expand faster and go into different segments and different areas and take more risk. And I'm like, well, OK, I understand that. By nature, as an engineer, which was my fundamental background, I think about building, improving out the models and the infrastructure and then expanding and extending, not just, oh, let's go try it and see what happens. I had a good conversation with Marc Andreessen the other day, and we were just chuckling about his approach, of course.

53:32He's a fantastic investor. He's like, look at your loss ratio and look at mine. And he says, my loss ratio is designed that way. He's saying, man, we need to be losing 50%. And he takes that sort of risk. And so there's a whole industry that does that. We do something a little differently in that regard, but we also see the ability to expand into other areas. But I want to make sure we develop our teams to be effective managers with the same sort of mindset for value creation and moving forward on that regard, as opposed to let's just go raise money just because we can and go try it. I still think about my parents were teachers.

54:07They're pension funds. We manage a lot of pension fund capital, and I'm sure they don't want me just to go try it. They want me to invest and not place bets. And so that's why I think about and take very seriously this whole idea of being an investor, which means to me, minimizing your losses and your loss ratios while maximizing your returns. So that's really how I think about it. I'm sure somewhere along the way, there must have been another industry that caught your attention because it sure looked like it had dynamics that are close to enterprise software. And I was just wondering, were there any situations where you came close and then ultimately decided not to say, okay, we're going to build another vertical in another sort of parallel sector?

54:47Yeah, I wouldn't say came close. We've evaluated certain segments and spaces, and I did a, I call it a non-profit expression, where I said, let's take some of these best practices and drive them. In this case, it was into minority-run companies to teach them how to leverage best practices. One was a chemicals business in the south side of Chicago. One was a food business in San Francisco. One was a services construction business in Texas. And with efficacy, and I could see it could work in that regard, but we did it as a non-profit expression as a give back to the communities that have been supporting us as we've grown.

55:20So yeah, are there opportunities out there to do this? Absolutely. But when I look at the world of enterprise software, now that we have distributed computing power globally, and Ted, look, fact of the matter is, four of the largest economies in the world actually don't have defined enterprise software layers. That's China, it's Japan, it is India and the Asian Peninsula. They They don't have defined enterprise software. They have some enterprise software companies or enterprise software sits within companies. But there's going to be an expression ultimately where enterprise software layers as an industry is going to occur.

55:56And we as Vista want to be at the forefront of that. That's going to be far outstrip what I call any opportunity, I think, for us to move into other industries domestically at this point. Robert, I want to turn to a couple of closing questions. Before I do, I have two questions I want to ask you. One, not so positive. The other one, super positive. So let's start with the first one, which is obviously in the public, you've had this tech situation. And I'm curious, what did you learn from that experience? And then maybe what surprised you most in other people's reaction to it? Yeah, that's a good question.

56:27And I've addressed this many times. But the short answer is, I followed some really bad advice some 20 years ago. I've made amends regarding that advice and mistakes I've made and been very fortunate to have the embrace of my community of support of stakeholders to move forward and get beyond that. The thing's surprising. Like all things, you see the emergence of, I'll call it a Machiavellian nature in some people. It was a bit surprising. I've also seen, quite frankly, the complete embrace, and I call it, of the beloved community of stakeholders. And that's the thing that keeps me going and propels me in that regard.

57:02So look, like all things, we all make mistakes in life. I'm just fortunate that I've had a community of people who said, let's move forward and we know who you are and let's get on down the road. So on the other side, you made this wonderful gift a couple of years ago to Morehouse University and the students. And I'm curious what's happened with that and those students afterwards. That has been honestly one of the greatest, I don't know, expressions in my life. And I didn't realize at the time when I made the gift, it would give me the benefits that it has. The benefits that I really derive from this is I have a monthly call with our class, Boar House class of 2019, and engaging with these young men, answering questions about life, engaging on how to solve certain issues that they're facing as young 20-year-old African-American males looking to make their way and make a difference in this country.

57:54That is, I mean, those Thursday sessions that we have are just inspiring. They're heartwarming. It's just beautiful. And I always say part of what my job is, and frankly, there's no greater thing than to liberate the human spirit. And I didn't realize that by liberating the debt burden, how much of their spirit has now been liberated and what they're able to now think about and do and accomplish. And I'll send you the whole list of what these young men are doing. It is just inspiring. And I mean, I get goosebumps every time I think about it and talk to them. And it's really a really philanthropist, or frankly, everybody's out there should be a philanthropist in one way, shape, or another.

58:32Think about how you liberate the human spirit, and it is the greatest return you will ever get in your life. Fantastic. All right, Robert, I got a few more for you. Sure. What's your favorite hobby or activity outside of work and family? It is truly fly fishing. I really enjoy that. And that's one of those things that actually clears my mind and I get a chance to spend time sometimes just with myself and other times with some close friends and loved ones and really enjoy the beauty of nature. It's a wonderful hobby that I enjoy. What's your most important daily habit? In the mornings, I do my spiritual readings, my prayer, and my meditation.

59:08And that's probably the most important thing I do every day. Kind of fills my cup and gives me the strength and fortitude to kind of go and do the things that I think are the right things to do in this world. All right. So once you've cleared your head, what's your biggest personal pet peeve? I'll say people who don't really listen to others. When you're sitting here in an environment and you can tell someone's not listening to the other person and truly hearing them, that bothers me. How about on the investment side, your biggest investment pet peeve? The words, they just don't get it. I'm like, well, most of the people are reasonably smart.

59:42So they need to take a little more time and explain it in a little more depth. How about your favorite book? Well, I have a lot. It cascades. That's a hard question to answer. One of my favorite novels is called Standing at the Scratch Line. It's by Guy Johnson, who's Maya Angelou's son. Ibram Kendi has written some wonderful books recently. Michael Eric Dyson has written some wonderful books. Souls of Black Folk, W.B. Du Bois. I mean, there's a whole bunch that I read and reread. And if I'm forced to say it, maybe The Alchemist by Paulo Coelho. Yeah, that's great. Right. What teaching from your parents has most stayed with you?

1:00:22That you are a member of a community. I just saw that every day in how they lived and that you have to take that responsibility seriously. Great. All right, Robert, I got one more for you. What life lesson have you learned that you wish you knew a lot earlier in life? I learned a lot of things and there's three lessons and I'm going to give them to you that I give my kids. And I'll tell you the one that I learned late in life. The first one is you are enough. You are enough to solve the problems that you focus on and be the person you want to be. And I tell my kids that kind of every day. The second is discover the joy of figuring things out.

1:00:56And the third one is love is all that matters. And I think it's the love is all that matters. I learned much later in life, and I wish I would have understood that a lot earlier in life. Robert, this is a lot of fun. Thanks so much for taking the time. It's my pleasure. And thank you so much. And we'll look forward to seeing you on the other side of this pandemic in person. Thanks for listening to this episode. I hope you found a nugget or two to take away and apply in your investing and your life. If you'd like what you heard, please tell a friend and maybe even write a review on iTunes. You'll help others discover the show and I thank you for it.

1:01:30Have a good one and see you next time.