From Startup Spark to Global Force: 20 Years of OpenGate with Andrew Nikou

0:02Who's ready to rock today, Fire Nation. JLD here and welcome to Entrepreneurs on Fire, brought to you by High Level Level, the all-in-one sales and marketing marketing. Today, we'll be breaking down from startup spark to global force, 20 years of OpenGate. To drop these value bombs, I have brought Andrew Niku into EO Fire Studios. Andrew is the founder and managing partner of OpenGate Capital, a global private equity firm that specializes in corporate carve-outs. His firm is celebrating its 20th anniversary this year, growing from a$30 ,000 startup into a global private equity firm that turns complex corporate carve-outs into successful businesses.

0:37and today for nation we'll talk about the spark first time founder grits breakthrough deals crossing borders the open gate edge and oh so much more and a big thank you for sponsoring today's episode goes to andrew and our sponsors are you ready for the ultimate all-in-one platform for entrepreneurs marketers coaches and agencies build funnels automate follow-ups manage clients and even white label your own software say hello to our featured partner, High Level, and visit highlevelfire.com to start your free trial today. Fire Nation, it's time to stop guessing and start winning with a proven playbook.

1:18Inside the Freedom Circle, you'll have access to my step-by-step systems for creating offers, building processes, and driving traffic, all in just 90 days. Ready for freedom? Visit freedom-circle.com to learn more. Andrew say what's up to fire nation and share something that you believe about becoming successful that most people disagree with. First of all, thank you for having me on the show. I love, love your work. Um, well, in my opinion, I think true success, it's a good one. And I've thought about, you know, this past five nanoseconds, how to answer this one, but it's, it's really it's true success i don't think is it isn't something you chase so that's something i learned pretty early it's it's it's something in my mind you you manifest and you broadcast and you know my wife always tells me you know your personality creates your personal reality and you know there's there's a lot to say about that and you know i think success isn't something you know you you you know it's something you tune into it's not something you chase and and i think a lot of people think you know grinding harder is is the answer not that it's not the answer it's part of the answer but i've found when you're your inner state your your thoughts your feelings your energy your mental images right your your self-talk you know the good times or the bad times, your confidence matches really the life you want.

2:52And therefore, you know, the opportunities really start to find you. And, and so I think, you know, that's one part of it. I mean, you know, most people believe, you know, it's all luck. I think it's more, again, that inside state that allows opportunities in your life to manifest. And so it starts, it starts with the inside. Well, that's a great start to what's going to be a fantastic conversation, Fire Nation, about from startup spark to global force. We're talking 20 years of OpenGate. And I want to talk about the spark, Andrew. So take us back to the very beginning. I mean, we love talking about aha moments.

3:32So what was that aha moment that sparked OpenGate? And how did you know you were ready to take the leap into launching your own private equity firm? Yeah, no, as well as well. I think it was 20 years ago. I mean, it was, you know, I don't I don't know if it was part. It was definitely a part, you know, immigrant family, you know, middle class family. Dad threw us an hatchback across the border to America because that's what we wanted us to go to school and, you know, and live and learn. And so I think part of it was my father's, you know, seeing my father's sacrifices and the risks he took to get us to Los Angeles.

4:08And that's where I was raised. You know, and how do you get out of that that that that flywheel, that trap? Right. And I saw what my dad did for for the family, the hard work he put in, the hours of, you know, commute he took to come back to make us feel like we we had the basic necessities to really be able to get through. life. And so, you know, that fire inside of me was was lit, right. And I didn't want my father, my mother and my whole family to have to go through that. So, you know, I knew I had to take a big swing in life at a young age, you know, I was obviously, you know, you're shorter than most folks, you know, barely hitting five feet.

4:50And, you know, the mind was strong, and my father made sure that my mind was stronger than, you know, matter my, my, my being my, my physical form, my hardware, right? And so, you know, it was, you know, an interesting time really where I, you know, I worked for a very well-established businessman who, you know, his firm taught me everything I needed to know about private equity. I saw how hard I was, you know, working, but so greatly I was underappreciated and I was, you know, doing great work and generating success for a very few people at the organization without the right recognition. I was, you know, getting iPods for Christmas while he was making hundreds of millions of dollars.

5:34So, you know, something just clicked. And I said, you know, I'm going to go out and do this on my own. And, you know, I really at the age of, you know, call it, you know, 24, you know, I didn't really know what risk was. But really that was sort of like the moment in time where all those things that my father, you know, went through and it sort of embedded in me mentally and the experiences I had at that moment resulted in me just going full throttle. But that also is a question is like, what is risk at 24 years old? I mean, for some people, it's really not that much. I mean, you've graduated college, like you don't have, you know, that much to rub to your name.

6:11You know, a lot of people are just like, I'm going to wait until I'm older, till I'm in my 30s or 40s to start really taking risk. But then you wake up that day and you're like, I have three kids. I have a mortgage. I have two cars. And now taking a risk is really risky because you have a lot of responsibility. So what are your thoughts on that? Yeah, no, that's interesting. Yeah. And I tell, you know, and I, you know, it's probably not the most, you know, the appropriate thing to say, but it's like, it has to be about you at a young age, right? You got to be selfish and you got to think about, you know, you know, for me, it wasn't like, I, I, I found no satisfaction in going to parties or events and, you know, basically, exerting all this energy in areas that I didn't really feel were going to be contributing to where I wanted to be.

6:58And I didn't know where I wanted. I mean, I had a sense of what I wanted to do. Like I wanted to be in business. I studied finance in college and I wanted to be the CEO of something. They asked me what I didn't like. I don't know at a young age. Right. But it's like I just I just had like grand plans. And it was sort of like an exponential thinking at a young age. And, but it was like, you know, I was just razor focused on like what I needed to do for the family. Like, you know, that was the oldest shot. So, you know, thinking of those things, you kind of, you think twice about, you know, spending time outside of areas that are not worth your time.

7:35No, I really love that because I mean, I can tell you, I don't think that's really a bad take at all about being selfish when you're young. I mean, the reality is, and I'm experiencing this now as a first time father, I have a two year old son. The minute you have a child, you can no longer be selfish. It's done. It's done for at least 18 years, probably longer. It's over. So you have to be completely self-sacrificing, completely selfless at that point. So hey, it's not that bad of a thing, Fire Nation, if you're young, if you're 18, 22, 26, and you don't have massive responsibilities at that point in your life to be a little selfish because it can be about you at that point.

8:13It was about me for basically the first 43 years of my life. I didn't have a child until I was 43 because I wanted to do a lot of things before I got to that point. But now I want to talk about first-time founder grit. I mean, starting a PE firm as a first-time founder, it's no small mountain to climb. So what were some of the biggest obstacles that you faced getting traction? You know, in fact, just give us the one, the biggest obstacle you faced getting traction. Yeah, you know, look, when starting there, there was no outside investors. There was there was no institutional capital behind me.

8:47It was it was just me taking steps. Right. It's like going up a mountain. You're you're overwhelmed if you look at the top of that mountain thinking, you know, how much you have to actually hike. But, you know, it was just kind of looking down and focus on what I needed to do step by step. And for me, it was I knew I had I had an insight on where a lot of these opportunities existed within these large public companies. And, you know, I was talking to the C-suite of a lot of them. That was part of my job early days is, you know, building relationship capital where we could deploy capital at my predecessor firm, the first firm I joined to learn private equity.

9:22So I knew where those opportunities were. And I knew that if I just was able to acquire one of these companies, the way I thought that I could structure it was, you know, obviously I had no capital, but, you know, bringing one of these companies online, I would be able to then, you know, be in a position where I could have enough resources to jump on planes, check into hotels, hire consultants to really be able to go after my second, third, fourth, fifth company. And that was really what happened. Our first carve out or first division of this public company that we acquired allowed us to ride this cycle.

10:03And the business started flourishing, obviously, with a lot of work that we put behind it. And that was really the traction point for us. Fire Nation, this has been a powerful conversation for all the reasons you've already heard. And of course, for the reasons you're about to hear, we'll be talking about crossing borders, we'll be talking about the open gate edge, when we get back from thanking our sponsors. Okay, let's talk about a platform that's completely changing how entrepreneurs are running their business, and they are also our featured partner, HighLevel. If you're an entrepreneur, coach, agency, or a course creator looking to grow faster and smarter, HighLevel is the all-in-one platform that replaces your entire tech stack.

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12:32Pair that with a community of entrepreneurs who've got your back. You've got everything you need to finally create income freedom and time freedom in just 90 days. So Fire Nation, stop reinventing the wheel. Start following the proven path. Visit freedom-circle.com to learn more. That's freedom-circle.com. Andrew, we're back. And as I shared before the break, I want to talk about crossing borders. I mean, you've grown OpenGate into a true transatlantic player. Why did you choose to build across both the US and the EU? And most importantly for us, What have been the biggest lessons you learned of scaling globally?

13:14Yeah, that's a great question. I mean, I think it's the biggest challenge has been really finding the right talent and really are aligned with the culture, the focus, the mission, the strategy. And, you know, it's taken, you know, I always say we're, I kind of view it as like this 20 year startup, right? We're a 20 year old startup who's, we're constantly retweaking and, you know, rethinking about how we're going to grow this organization. and we're nowhere near where we need to be in terms of scale. Although we do have a very good group of individuals that have been together for over decades.

13:53So I do think the ability to have cultural alignment and having the right talent to seize opportunity and value alpha through the same lens is super critical. And that was critical in having an office for many, many years in L.A., now just moved to New York, and Paris. And so having that ability to speak the same language, you know, business language, and really being together and going through the ups and the downs allowed us to really scale the global team the way we have. And so, yeah, I would say that's probably the biggest, biggest denominator there, right? is like you're having the right talent.

14:38I love that. And now that kind of moves us into the open gate edge. I mean, private equity often gets tagged with quote unquote financial engineering, but you built your reputation on operational improvements. How do you and your team create real lasting impact inside these companies that you're acquiring? Yeah, well, look, we don't, you know, there's two sides of the strategy, right? One is, you know, the entrance strategy and then there's the exit strategy. You know, a lot of people get excited about, you know, acquiring businesses. I think that's exciting that you're an ability to really execute the plan that you've been underwriting for thousands of hours.

15:15But I think the operation, the alpha really, I call it operational alpha, right? The ability to actually structure a transaction intelligently with the right capital structure, the right management team, I think is super critical. Right. And there is there is a sort of element of the market that sort of influences the final sort of outcome. But the majority of the outcome is certainly around the investment strategy and the operational plan. And for 20 years, we've had a playbook that we've exercised and augmented and perfected that has yielded great results in operational alpha. Right. So, you know, whether it's cash optimization, optimization, working capital, whether it's, you know, cutting duplicative, you know, GNA or relaunching an entire commercial strategy around pricing and customers or R &D and innovation.

16:09That's a big area that we actually spend a lot of time on is, you know, how do we take some of these products that perhaps are on the sort of, you know, kind of edge of a legacy state to a new product, right? And enhancing that product offering. So there's a lot that's involved there. And that's why we have the ability to do a lot of the operational transformation so quickly because we have an in-house operating team. So that is part of the playbook is the 100-day plan or the add-on acquisitions one does once you acquire a platform from a large corporate. How do you scale that organically? You go out and acquire other businesses that could create synergy.

16:52So it's fun, and it's fulsome, and it requires a tremendous amount of time, therefore the opportunity. So let's push this out by talking about the shifting investor landscape. gate? Because family offices, they've become a bigger piece of the LP base. That's just a reality. So how has that shift changed the way that you both raise and deploy capital? You know, to be honest, John, it doesn't really change the way, it doesn't change our offense, right? We're, you know, open gate, we're identifying divisions of large public companies, the Fortune 500 company in Europe, US, within the industrial space.

17:30And so we bring, obviously, a playbook and offense to the journey, right, from start to exit. Now, family offices love carve-outs. They're attracted to them because the deals are complex, they're hard to price, they're hard to execute. Therefore, you know, complexity is priced in. You get attractive purchase price multiples, you know, because of the complexity. And it's a highly specialized investment strategy. And that's what we've been able to do for 20 years, and family offices really understand that. so there's lower competition given complexity and and there's a lot of our large operational upside right that a lot of these family offices really enjoy and so we've been seeing a huge pickup in in family office you know investors lps within our vintages and future funds is because you know they understand the alpha there right that yeah family offices are all following absolute returns like all of us.

18:28And so there is a lot of alpha generation there and therefore the interest, but it doesn't really change the way we kind of deploy our capital or view the opportunity set. Well, I do love talking about breakthrough deals. So looking back, maybe share one of those early deals or opportunities that really put OpenGate on the map and gave you momentum to grow. Like when you look back and you smile and maybe you're just kind of like, you know, holding that champagne bottle and give it a little cheers? Like what's that one? You know, we started the firm in 05, right? So I would say the most notable investment we made, it was a carve out.

19:06It was TV Guide Magazine, right? TV Guide Magazine goes back to the days of Walter Annenberg, 19, you know, close, I think it was the 1950s. And then later sold to the Murdochs and later sold to MacroVision where we acquired. It was a division neglected, orphaned. MacroVision wanted the scrolling technology we wanted the tv guide business the magazine we carved it out i think it was in less than we purchased it in less than 60 days the turnaround was pretty extensive it was we owned it for about seven years but i think that business you know was probably gave us the most notoriety uh and and really put us on the map to be honest i mean we had an office right across bryant park met a lot of folks and this is pre-fund met a lot of folks in the media space made a run at business week newsweek thought we had a deal on business week but it was an opportunity where look we we didn't you know this is pre-fund we we bought the business for a dollar we had an operational plan to take the profitability we did we sold it to another media company but that was you know an interesting experience and run for us but although you know i have to say media in today's institutional world and sort of in our investment strategy is not an area we're playing we're primarily industrials now but it was probably the one that put us on the map in terms of brand name i mean i'm definitely old enough to remember like sitting on my couch turning on the preview channel and then just sitting there watching the you know it was three channels at a time that were displayed it would slowly go down and then it would stop it would stop for a second and then it would start up again and stop.

20:46And I remember, you know, the most annoying thing was like, you turn it on, you'd be like, oh, what's on SportsCenter right now? Channel, you know, which for us was like channel 30. And it'd be like, oh, it's on 32. I've got to sit through this whole entire cycle now. Like, I completely remember that. It's so crazy because I haven't thought about that forever. But oh my God, how many hours, hundreds of hours that I probably spent. Yeah, the tagline was what's worth watching, right? Right. I mean, Andrew, you've dropped a ton of value today. What would be one thing that you would want our listeners to walk away with from our conversation today?

21:20Yeah, I think what's really important, what I've learned over the 20 years is really knowing what you're really, really good at. Like, I wanted to be like a fighter pilot and a basketball player. I was 4 '11". You're probably a good height for a fighter pilot. Yeah, exactly. But discipline, right? Knowing your edge, knowing where your full potential could be. The other one is, I think, risk management. I think it's super important. We always look at our downside more than return chasing. So that's understanding your downside is super important as a fund manager or any business where you have the privilege of managing other people's capital.

21:59And I think the other one is really, I think humility is really important. Having the right level of humility, finding comfort in being wrong, it's okay. you know, process over ego, I always say that. Yeah. And last but not least is really what keeps a lot of people driving forward is this emotional stamina. You know, there's going to be losses and there's going to be more losses. There's going to be more problems in portfolio companies. And just having that emotional stamina is clutch. It's key. And you can never get, you know, too bogged down in any one loss. celebrate the wins for sure, but really focus on the losses and lessons learned and how you can come out stronger and stronger and stronger.

22:46Andrew, if Fire Nation's really digging what you're putting down, what's the best way to connect with you to learn more about your company? What is your call to action for our listeners today? Opengatecapital.com. So my email is A-N-I-K-O-U at OpenGayCapital.com. I'm happy to talk about how I could inspire her. You know, like I'm paying it forward. I'm still, you know, constantly looking to, you know, grow and learn. And if there's ways that I could help the younger community in any way, I'm for it. I'm fortunate and grateful for where we are and happy to pay it forward. Fire Nation, you're the average.

23:26Of the five people you spend the most time with, You've been hanging out with A-N and J-L-D today, so keep up the heat. For links to everything we talked about, visit eofire.com. Type Andrew in the search bar. The show notes page is going to pop right up. And Andrew, thank you for sharing your truth, your knowledge, your value with Fire Nation today. For that, we salute you and we'll catch you on the flip side. Thank you, John. Appreciate it. Hey, Fire Nation, a huge thank you to our sponsors and Andrew for sponsoring today's episode. And Fire Nation, are you an entrepreneur on fire who's looking to share?

23:57your amazing message with the world. If yes, we are now accepting applications for entrepreneurs on fire. To learn more about becoming a guest, visit eofire.com slash guest, or I'll catch you on the flip side. Are you ready for the ultimate all-in-one platform for entrepreneurs, marketers, coaches, and agencies? Build funnels, automate follow-ups, manage clients, and even white-label your own software. Say hello to our featured partner, High Level, and visit highlevelfire.com to start your free trial today. Fire Nation, it's time to stop guessing and start winning with a proven playbook. Inside the Freedom Circle, you'll have access to my step-by-step systems for creating offers, building processes, and driving traffic all in just 90 days.

24:47Ready for freedom? Visit freedom-circle.com to learn more.

24:56Thank you.